”A company’s operating philosophy should, as a best practice, be reduced to writing as its mission, vision and values.”
One highly effective method to arrive where you are going is to get, and actually use an accurate and up-to-date map. Or a GPS program. Or a sextant, if guiding a boat by celestial navigation — a not-so-subtle reference to one of my favorite “The West Wing” episodes.
The same notion applies to operating a business to stay in compliance with the applicable laws, rules and regulations. But, those constitute just the baseline — the minimum requirements on a company in the local, national and even international markets. Above that level are business ethics, the aspirational guideposts that serve to keep an enterprise, and its management, clear of questions as to whether it is doing the right thing. Ethics in business derive from a variety of sources. Academic research. Theological literature. Professional associations and chambers of commerce. And from a company’s corporate culture.
Corporate culture, in turn, emerges as a direct byproduct of a business’s operating philosophy. Does the company place an emphasis on means to an end, on the next quarter’s results, on the long game and big picture, or on some other focus, descriptor or metric? None of them are wrong, provided they do not involve criminal conduct, turning the other way, sloth or cutting corners. These are reasons there are laws protecting whistle-blowers who observe these types of intentional shortcomings.
A company’s operating philosophy should, as a best practice, be reduced to writing as its mission, vision and values. A mission statement sets the boundaries for the venture’s intended direction, and it often starts with the verb predicate “to” — as in, “To manufacture the highest possible quality widgets.” A vision statement illustrates the perceived way forward to achieve that mission and often starts with the preposition “by” — as in, “We will achieve our mission by focusing on research and development in the field of widgetry.” A values statement specifically addresses the underpinnings and the underlying philosophy, with no particular grammatical template — as in, “We will do all that with an intentional observance of [fill in the blank].”
None of that should happen accidentally. Since the mission, vision, and values will serve both to hone in on the business’s core business and to propel the enterprise through the marketplace over the long run, a company’s founders, managers, employees, and other internal and external stakeholders must be invested, that is, involved in preparing these fundamental principles. This is often done during facilitated workshops and retreats. This takes time, talent, treasure and patience to achieve. Seasoned with a good helping of a sense of humor and humility by all concerned.
Why bother investing in those kinds of resources? Why not just get going and see what happens? Who really cares if a company is ethical, operates on a holistic philosophy all participants can understand and implement and sticks to its core business? The response is based on three letters: R, O and I. Which, of course, is a wordplay way of expressing return on investment.
Some ROI thoughts to consider in this context:
1. Assuming equal pay, benefits, and work conditions, will higher-performing employees gravitate toward higher or lower ethical workplace environments? From a rational mindset, higher.
2. Assuming uniform performance and price, if a company’s ethical culture is projected into the marketplace through charitable activities, recognitions, and testimonials will customers gravitate toward higher or lower achievers? From an affiliation mindset, higher.
3. Assuming parity of rates and terms, will investors and lenders put their funds into companies with higher or lower integrity to ensure timely payment? From a fiduciary mindset, higher.
4. Assuming similar loss predictions, will insurance companies offer preferred premiums and coverages to companies with higher or lower standards for quality standards? From a risk perspective, higher.
A venture’s ethics and operating philosophy, then, ultimately impact its bottom line. Companies that, on an ongoing basis, pay heed to their goods and services, employees, investors, and communities served attract more and better resources, and from those resources, they produce more effective, efficient, and economical outputs and outcomes. And higher profits.
To remain consistent with other pieces in this series, in the end, an intentional focus on ethics and philosophy plays out through a company’s risk management activities, which have been discussed previously and in-depth.*
So, pull out the company’s map and chart (or revise) a course. Put it in writing and, while being flexible to changing conditions, implement it.
For more information, call Philip N. Kabler, Esq. of the Gainesville office of Bogin, Munns & Munns, P.A. at 352-332-7688, www.boginmunns.com/gainesvillelawoffice, where he practices in the areas of real estate, business, banking and equine law.
* businessmagazinegainesville.com/the-road-to-success-is-fraught-with-risk-and-failure/
businessmagazinegainesville.com/stop-look-and-listen/
businessmagazinegainesville.com/leadership-in-business/
businessmagazinegainesville.com/you-are-no-average-business-owner/
NOTICE: The article above is not intended to serve as legal advice, and readers should not rely on it as such. It is offered only as general information. Readers should consult with an attorney regarding their legal matters, as every situation is unique.
Philip N. Kabler is an Incubator Resource for the Santa Fe Center for Innovation and Economic Development (CIED), will be teaching a fall 2016 semester course in the UF Warrington College of Business Administration’s Master of Science in Real Estate program, has taught various courses at the UF Levin College of Law and the UF Warrington College of Business Administration (undergraduate and graduate), and was a member of the Gainesville Area Innovation Network’s board of trustees. He is also the current president of the North Florida Association of Real Estate Attorneys.