Business Ethics

A culture based on values and focused on ethical behavior protects reputation and brand. As an individual, your name is your brand and a trusted brand provides the credibility needed to be effective in your organization. For an organization, a trusted brand gives the credibility to be effective in the marketplace. It gives staying power when reputations can be ruined overnight in our hyper-fast world of social networks.

Reputation is built on the beliefs and actions of its leaders and employees. Reputation is fragile, however, and it is difficult to resurrect it after a serious misstep. Leadership's focus on organizational values will attract and retain talent with character and good independent judgment. These qualities will help organizations succeed during this time of heightened scrutiny.

Many executives intuitively believe that they can achieve better financial returns by commitment to ethical values that establish and protect reputation. This intuition is confirmed by data from numerous studies including those by the Harvard Business School and The Economist Intelligence Unit, which show that the quality of an organization's reputation is strongly correlated with financial performance. Ethics pays and reputation is key.

The CEO, the board and senior management must ensure a culture of ethics that protects reputation. McKinsey& Company provides a case study of what can happen when the actions of a few shake a firm's reputation. The name of this global firm, with 1,400 partners and 18,500 employees, was tarnished after two partners were criminally convicted in securities-related cases. A recent article in the New York Times, "In Scandal's Wake,McKinsey Seeks Culture Shift", reported how McKinsey's CEO and its board implemented new rigorous policies to restore its reputation in the marketplace.

Dominic Barton, global managing director of McKinsey, was determined to change the culture of the firm as a result of these two convictions. McKinsey had prided...