Unethical Behavior and Sales

What are the costs of doing business irresponsibly? Studies show that it harms sales. People don't like to buy from companies that act unethically. According to a survey conducted by Wirthlin Worldwide in 2003, 80 percent of people choose to purchase a company's products or services based partly on their sense of the company's ethics.

Social irresponsibility can destroy goodwill and lower productivity. “It takes years to build a good business reputation, but one false move can destroy it overnight,” says Edson W. Spencer, the former chairman of Honeywell. Kenneth C. Frazier, the chairman of the Ethics Resource Center and vice president and general counsel of Merck, says, “Nobody should have any doubts of the linkages between poor ethics in the workplace and low productivity.” The 2003 National Business Ethics Survey showed that lack of trust in the workplace increases stress and reduces output.

Retention and recruiting is hampered if a company isn't acting ethically. People prefer to work at companies that have good character. Ethical firms attract top talent more easily. They also minimize turnover, thereby keeping qualified employees and wasting less time training new employees. Companies with the highest employee retention keep customers the most effectively, too. Customers usually follow their sales rep, and if a sales rep leaves because a company is unethical, the customers will hear about it.

Being socially responsible is an effective employee motivator. Studies show that motivated employees enjoy their jobs more and are more productive as a result. When you establish and use your business code of ethics, it becomes simpler to do what's right rather than what's easy, because you are following your code of values. Some business people believe you can't be socially responsible and make a profit, but that's a myth. The large number of socially responsible companies that are extremely profitable are a testament to that.

A fivefold increase in customer retention typically boosts profits by 25 to 100 percent. Companies looking to boost profits by keeping their work teams intact have a higher success rate than those with higher employee turnover.

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