The Importance of Business Ethics 17

essential employees both within and among departments throughout an organization share a common vision of trust. The influence of higher levels of trust is greatest on relationships within departments or work groups, but trust is a significant factor in relationships among departments as well. Programs that create a trustworthy work environment make individuals more willing to rely and act on the decisions of their coworkers. In such a work environment, employees can reasonably expect to be treated with full respect and consideration by their coworkers and superiors. Trusting relationships between upper management and managers and their subordinates contribute to greater decision-making efficiencies. One survey found that when employees see values such as honesty, respect, and trust applied frequently in the workplace, they feel less pressure to compromise ethical standards, observe less misconduct, are more satisfied with their organizations overall, and feel more valued as employees. 40

The ethical culture of a company matters to employees. According to a report on employee loyalty and work practices, companies viewed as highly ethical by their employ- ees were six times more likely to keep their workers. 41 Also, employees who view their company as having a strong community involvement feel more loyal to their employers and positive about themselves.

Ethics Contributes to Investor Loyalty Ethical conduct results in shareholder loyalty and contributes to success that supports even broader social causes and concerns. Investors today are increasingly concerned about the ethics and social responsibility that creates the reputation of companies in which they invest, and various socially responsible mutual funds and asset management firms help investors purchase stock in ethical companies. Investors also recognize that an ethical cul- ture provides a foundation for efficiency, productivity, and profits. Investors know, too, that negative publicity, lawsuits, and fines can lower stock prices, diminish customer loy- alty, and threaten a company’s long-term viability. Many companies accused of miscon- duct experienced dramatic declines in the value of their stock when concerned investors divested. Warren Buffett and his company Berkshire Hathaway command significant respect from investors because of their track record of financial returns and the integrity of their organizations. Buffett says, “I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper—to be read by their spouses, children and friends—with the reporting done by an informed and critical reporter.”

When TIAA-CREF investor participants were asked if they would choose a financial services company with strong ethics or higher returns, surprisingly, 92 percent of respon- dents said they would choose ethics while only 5 percent chose higher returns. 42 Investors look at the bottom line for profits or the potential for increased stock prices or dividends, but they also look for any potential flaws in the company’s performance, conduct, and financial reports. Therefore, gaining investors’ trust and confidence is vital to sustaining the financial stability of the firm.

Ethics Contributes to Customer Satisfaction It is generally accepted that customer satisfaction is one of the most important factors in a successful business strategy. Although a company continues to develop and adapt products to keep pace with customers’ changing desires and preferences, it must also develop long- term relationships with its customers and stakeholders. As mentioned earlier, high levels

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