I tried on the pair of sunglasses and smiled satisfactorily as I admired my reflection in the broken sliver of mirrored glass in my hand. The salesman hovered closely, whistling in exaggerated admiration. “Sister, this one na your own!” He piped enthusiastically. He knew he had made a sale. I haggled with him, settled on a price, counted out the cash, and handed it to him.
As I turned to leave the small shop in Ogbete Market in Enugu, I took off the glasses, to wipe them clean. Then I noticed that the right handle of the glasses was loose. As I frowned and lifted the glasses to examine them closely, I sensed a flurry of movement and looked up to see the sales boy quickly toss the money I had just paid him into a wooden desk, shut the flap, and then secure it with a padlock.
He looked up at me with a wide grin. I then understood. I had just bought a broken pair of sunglasses, and even though I was still in the shop when I discovered the flaw, getting my money back would be an uphill task.
This was the trader's idea of doing business. Granted, he probably did not want to sell broken glasses to unsuspecting strangers. He had probably paid full price for the glasses and did not see why he should bear the loss because the glasses were damaged. After all, he was in business to make money, therefore, the logical conclusion to him, was to pass off the loss, to a gullible customer, AKA, me.
When business goals are only profit-related and unfettered, they introduce a tension between the virtues of an individual and the actions required to achieve those goals. (Schweitzer, Ordonez, Galinsky , & Bazerman, 2009) This conflict shows up in banking sales executives, engaging in compromising relationships, because the targets set by their organisations are unattainable through normal business activities, or tax collectors shaking down businesses because their targets are based on commissions and many other unethical practices that individuals engage in to meet corporate demands.
What the trader in Ogbete market did not count, was the value of my return business over time, the cost of his reputational loss, and also the effect of the behaviour he was modelling, on his staff. He was signaling to his staff that it was acceptable to behave unethically. This means that they would feel justified in short-changing him when his needs came in conflict with their personal gain.
Advantages of Running an Ethical Business
There are many advantages of running an ethical business, including building customer loyalty, enhancing your organisation’s reputation, avoiding legal troubles, attracting high-quality employees, and creating a positive work environment for your team. (Hill, 2019). We will discuss a few below.
Customer Loyalty
While consumers may let you take advantage of them once, if they have a choice, they are not likely to come back again. Research shows that 56% of American consumers stop buying from companies they believe are unethical. (Mintel, 2015) While there is no information readily available on Nigerian consumers, we can extrapolate from our personal experiences and knowledge of human nature, that people will prefer not to deal with unethical businesses. On the other hand, an ethical business, over a sustained period retains its customer base and even grows it over time, because customers trust them and want to do business with them.
Reputation
A dissatisfied customer will tell 9-15 people about it. And approximately 13% of your dissatisfied customers will tell more than 20 people about their problem (CSM, 2024). This means that when you deal unethically, the impact goes far beyond your customers to people in their network. The impact is clearly exponential. Over time, an unethical business develops a bad reputation and loses business because of a lack of trust in its brand reputation.
Quality of Employees
A business with a reputation of high integrity will attract workers that are seeking a place to work that aligns with their values. They are confident that they will not be required to make compromises they believe are unethical. Having ethical employees also means you don't need to watch your back all the time, as the old adage goes, there is no honour among thieves. In this instance, there is a sense of honour and trust within the organisation.
Dealing Ethically With Suppliers
In creating an ethical work environment, one aspect often overlooked is the relationship between a business and its suppliers. Some business deal unfairly with their suppliers by engaging in opportunistic behaviour, like owing them for inordinate periods and not paying up as agreed. Some businesses also unilaterally change the terms of contract midway, while refusing to accept the cost of such changes. Where the judicial system is sluggish like in Nigeria, this sort of conduct by larger organisations goes largely unchecked. According to a former Chief Justice of Nigeria, it could take 20 to 30 years to resolve a case in the Nigerian courts. (Ajaja, 2023).
Societal Transformation:
A business growing sustainably and ethically while lifting an entire ecosystem of other dependent or interdependent businesses, employees, and their families while providing much-needed value to their community is where true societal transformation occurs. If running a business is mainly to add value and create profits for its shareholders, then the sustained profits gained in the long run from running an ethical business, are another reason why it is possible to do right well and do right.
References
Ajaja, T. (2023, November 18). Disappointment, frustration for litigants denied justice by snail-speed proceedings. Retrieved from Punch Newspaper: https://punchng.com/disappointment-frustration-for-litigants-denied-justice-by-snail-speed-proceedings/
CSM. (2024). Customer Service Facts. Retrieved from CSM The Magazine for Customer Service Managers and Professionals: https://www.customerservicemanager.com/customer-service-facts/
Hill, B. (2019, October). The Advantages of Ethical Behavior in Business. Retrieved from Chron: https://smallbusiness.chron.com/advantages-ethical-behavior-business-21067.html
Mintel. (2015, November). 56% of Americans stop buying from brands they believe are unethical. Retrieved from Mintel: https://www.mintel.com/press-centre/56-of-americans-stop-buying-from-brands-they-believe-are-unethical/
Schweitzer, M. E., Ordonez, L. D., Galinsky , A. D., & Bazerman, M. H. (2009). Goals Gone Wild: The Systematic Side Effects of Over-prescribing Goal Setting. Harvard Business School.
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