Once it’s online, it can never be removed. In the internet age we now live in, a company’s reputation can be found at the click of a mouse. It is not just positive branding such as your website, blog, awards and press releases that potential customers are finding, but the negative as well. Non-compliance reports, government fines and reprimands, news reports of major injuries and/or death among employees can also be found. One only needs to look at the OSHA website to see reports of corporate malfeasance in regards to employee health and safety.
Potential customers today, perform due diligence and if they do not like what they find, then they are on to the next supplier. How a company treats its employees is often a good indicator of how a company interacts with its customers and society as a whole. With that in mind, are effective safety, health, and wellness programs an example of company ethics or of a corporation managing their risk and safeguarding their brand?
In short, it’s both.
Studies continually reveal that businesses with a solid reputation for ethical business practices and good governance have higher stock prices, lower costs, and more productive, satisfied employees. This phenomenon has the attention of both customers and competitors. Executives are now recognizing that taking a proactive approach to managing ethics and compliance risk offers their company a competitive advantage in the marketplace.
Ethics and Risk Management Inextricably Tied
Ethics and effective risk management are not mutually exclusive but are, in fact, woven together. An ethical business decision has risk management automatically built into the result.
For example, most will agree that it is an ethical decision for a business to employ an effective program to prevent workplace injuries and deaths. It’s an ethical decision based on a concern for others’ health and well-being. From a risk management perspective, the same decision works to “minimize the adverse effects of accidental or business losses on an organization by reducing the number or size of these losses or by cost effectively financing recovery from any such losses,” to borrow a definition from by George L. Head, Ph.D. of the American Institute for CPCU.
Ethical decision-making and effective risk management go hand-in-hand. As Dr. Head puts it, “Good risk management requires good ethics; and good ethics require good risk management.” An effective safety and health program is both an ethical decision and risk management strategy. And it will aid in protecting your reputation from the investigating eyes of your customers and prospects.