Open Eye: How to be good and still make a profit

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The Independent Online
Businesses have a privilege denied to mortals, reflects OU honorary graduate and management guru Charles Handy: they don't have to die. But if they have special privileges, do they also have special obligations? Is the only duty of business to survive and make profits for its shareholders?

As globalisation embraces consumers, producers and suppliers, those businesses which remain profitable in the long term will surely be the ones which seek to maintain positive relationships with customers and stakeholders.

It is now rare for a chief executive to argue that business is only about a series of short term transactions made at a profit. The new "triple bottom line" of financial, environmental and social accountability will surely feature strongly in the annual reports of the new millennium.

The OU Business School's Alan Lawton, author of Ethical Management for the Public Services (OU Press), argues for an ethical dimension in all business decision-making. "Within the OUBS, we have ensured that ethics is now an integral part of the School's vision statement. We have also developed a 'decision tree' which actively helps in evolving our strategy for international business and in our work with companies."

Avon, B&Q, Shell and BP have now accepted that human rights and sustainability should be a key part of their operating policies with responsibility held at board level. The lessons of Greenpeace and Brent Spar seem to have been learned in the boardrooms. Employees are treated as important resources because this results in increased productivity, higher quality, better staff morale and - critically - enhanced corporate reputation.

"We in the School ensure the ethical dimension is strongly represented in our Human Resources Management course and throughout our Diploma," says Lawton.

Research by Ogilvy and Mather suggests that organisations considered ethical by the public have some of the strongest brands. They include Boots, the Co-op Bank, Cadbury's, Sainsbury's, Tesco and Body Shop. But outside the company, corporate philanthropy is simply not enough. As Timberland's mission statement points out: "It is not smart or wise to approach social problems with the financial leftovers of companies."

Glen Peters, who led a team at PricewaterhouseCoopers developing the 'Reputational Assurance Framework', vividly illustrates the issue. "You want to buy a new computer for your home. The mind-boggling choice of bits, bytes, RAMS and ROMS has you confused. Then you remember that one computer company has an extensive schools programme. You're a mother of two kids starting school. Any company that looks after the community will also look after you as a customer. The choice is made."