PM Essence

                                                 Ethics = Profit

                                                  -Alankar Karpe, PMP, PMI-ACP
“Any idiot with a strong enough stomach can make quick money, sometimes a lot of it, by slashing costs and milking customers, employees, or a company’s reputation. But clearly that’s not the way to make a lot of money for a long time. The way to do that is to create so much value that your customers wouldn’t dream of looking for another supplier. Indeed, the idea is to build a value creation system of superior products, service, teamwork, productivity, and cooperation with the buyer.”
― Thomas Teal in Fortune Magazine

“Ethics is the new competitive environment.”
– Peter Robinson, CEO, Mountain Equipment Co-op

[Image taken from: here ]

Ethics, as a term, is often believed to be an expensive practice that causes the organization to forego profits. Organizations must remember that any benefits from lying, cheating, and stealing usually come at the expense of their reputation, brand image, shareholders. Therefore, leaders and managers should work hard to be ethical and remain that way. Some project managers believe that being ethical is too expensive for the project and that it may cause them to forego profits. It’s not true. It’s not unethical to make profits, but it does matter about the way profits are earned.

Ethical companies are more trusted by people and this trust provides higher chances that the organization will remain profitable and continue to grow for many years. There are studies which show that people are willing to pay a premium for an ethical company’s products and that ethical organizations have continued to survive and grow.

Organizations should not to resort shortcuts and unethical means in order to generate profits because that will be disastrous for the project, client, and the organization in the long run & highly damaging to the social image and brand. For new-age companies, being ethical is becoming an increasingly important component of their business practice, particularly in the era of fast Internet, powerful social networks and smart instruments where opinions and perceptions can flow at lightning speed.


Short term vs Long term
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Why Being Ethical Matters
Unethical behavior can be extremely profitable in the short run. But a business is supposed to create long-term value for its customers and shareholders.  These tricks will not last for long .

It is observed that sometimes the ethical violations committed by the project manager(s)/ team member(s)/ organization looks profitable for the short term.

Being ethical in projects and organizations also pays future dividends. If a project manager or business leader is ethical, often the employees or team members feel very safe and secure enough to air their thoughts & promoting innovation. Today’s young workforce is very dynamic and full of new-age ideas and therefore, they feel comfortable joining teams/companies which feed their imagination and ideas. Leaders who are ethical in their practices are the most sought after by the millennial generation.

According to one of big four consulting organization’s fourth annual Millennial Survey, which includes 7,800 of tomorrow’s leaders from 29 countries, the value of strong business ethics is increasing. This accentuates the fact that today’s young workforce also prefers to join ethical organizations that they can trust for their future growth.

 Ethics = Profits

There are clear examples cited by an experiment conducted in 2008 by Remi Trudel and June Cotte, that prove that ethical behavior and actions appear to be a wise investment. It showed that if you act in a socially responsible manner and advertise that fact, you may be able to charge slightly more for your products. On the other hand, it appears to be even more important to stay away from goods that are unethically produced. Consumers may still purchase your products but only at a substantial discount.

In this study, when customers were told of the practices of the companies producing the coffee they bought. They did not mind paying a premium for the company with ethical practices, as opposed to the price where there was no information about the company’s practices. But when customers were told that the company was involved in unethical practices, they punished the product by asking heavy discounts and the customers were not willing to pay the regular prices. There were customers who were not willing to buy the product at all.

The lesson is very clear. Customers, who care about high ethical standards, are the ones who can contribute to biggest potential profits on ethically produced goods. There should not be any hesitation in being ethical as this is a long-term investment in making current and future customers your loyal partners. When companies work ethically, they naturally outpace competitors who are unethically working for expanding profits. It is simply because customers see them as a trusted partner, not only for what they do, but for how it is delivered.