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From Ethan Eisner – CEO, Venio Systems
As the field of eDiscovery becomes larger and more complex, both in the amount of information to be handled and in the increasing number of forms that information takes, the ethical issues become more complicated as well. As with any industry, providers of eDiscovery solutions have varying ethical standards, and some companies are more concerned with their own bottom line than meeting their customers’ needs or operating in an above-board manner.
An ethical business policy is vital for a number of reasons:
- Customers should expect ethical behavior, and they should change companies if they’re not satisfied.
- Ethical behavior offers strong benefits for the businesses who practice it, including:
- Increased productivity
- Positive brand image
- Prevention of negative publicity
- New business opportunities
- Ethical behavior is becoming more and more important in business, and more customers than ever are demanding it.
As a customer, you deserve to get more than just the product you’re paying for. You also deserve to deal with a company that operates ethically. If the corporation you’re dealing with is unethical, you risk more than just getting cheated out of your money. You risk the company worrying more about covering its own tracks than delivering what it promised, and not focusing on providing goods and services of the highest possible quality. You also risk damaging your own reputation simply by associating with such a company.
When examining the importance of ethics in business, it’s useful to recall the story of Enron. Based in Houston, it grew from a small natural gas pipeline company to an energy-industry giant. At its peak, it had more than 29,000 employees, claimed annual revenues of nearly $101 billion, and was named “America’s Most Innovative Company” six years in a row by Fortune Magazine. In December 2000, Enron’s stock was priced at $83.13, and its market capitalization was more than $60 billion, 70 times earnings, which was an indicator of the market’s high expectations about its future.
But now, if Enron is remembered at all, it’s as an example of the catastrophic damage that can be caused when a company acts in an unethical manner. Enron’s collapse in 2001 represents the biggest business bankruptcy in history, and serves as a stark reminder of what can happen when business leaders put their own wants and ambitions ahead of their customers, their partners, and their employees. As Justin Schultz, a Denver corporate psychologist said in Forbes, “Just as character matters in people, it matters in organizations.”
Enron, an energy-trading and utilities company, perpetrated one of the biggest accounting frauds in economic history. Through deceptive practices, Enron’s executives falsely inflated the company’s revenues and briefly made it the seventh-largest corporation in the country. But when the fraud was revealed, the company fell apart, and Enron filed for Chapter 11 bankruptcy. It quickly became a symbol of corporate misdeeds and unethical behavior at their worst. As a result of Enron’s crimes, Congress passed the Sarbanes-Oxley Act to hold corporate executives more accountable for their company’s financial statements.
Enron’s victims were its stakeholders: investors who lost billions, employees whose jobs vanished, business partners who were left hanging, and communities and individual customers who counted on the company to provide the energy they needed in their daily lives. Enron manipulated the energy market almost every day during the 2000-2001 power crunch, and took customers for at least $1.1 billion. Tapes revealed Enron traders proudly bragging about ripping off “those poor grandmothers” in California during the power crisis, when millions of Californians were suffering blackouts and struggling with high electricity bills. According to reports, in a single scheme, Enron made $222,678 in three hours by shipping power from California to Oregon, hiding the original source of that power, then selling it back to California at drastically inflated rates.
Enron’s customers paid the price.
Enron’s history reinforces the point that if a business does not depend on physical assets — and more and more businesses these days do not — then a critical element of that business is the trust and goodwill it has with its customers. If the business is not operating in an ethical manner, customers should be worried that it does not have their best interests at heart, and rather than providing them the services and solutions they rely on, that business is more concerned with protecting its own interests — which, in the case of an unethical business, may involve covering up their own lapses and shortcomings.
Customers Should Expect Ethical Behavior
The companies you deal with should have strict ethical guidelines in place. That doesn’t merely mean conducting day-to-day business in an ethical manner. It also means ensuring that when you, the customer, are dissatisfied with a product or service, the company addresses your concerns. In cases such as these, having high ethical standards means that a company stands by the promises made, whether in writing, spoken, or implied.
As an example on a smaller scale, consider restaurant customers who feel their meal wasn’t prepared to their liking. They’re dissatisfied now, but they could be turned into loyal, satisfied customers if the business makes it right — say by giving them a coupon for their next meal. Even if the restaurant owner knows the meal was prepared correctly, that owner made the decision that pleasing customers is more important than the cost of the coupon, and keeps the promise of a satisfying dining experience. If you’re a customer — whether of a restaurant or a large eDiscovery company — that’s the sort of dedication to service you should expect.
Benefits for Businesses
As it turns out, customers will reward businesses that subscribe to ethical practices with more than just loyalty — they’ll reward them with better financial performance, too. Studies have shown that customer support driven by ethical practices results in increased revenue. Research found that 55% of online shoppers in more than 50 countries are passionate about businesses that make a positive social and environmental impact, and what’s more, these customers will pay a higher price for related products and services. Also, the marketing intelligence agency Mintel released a study that said more than 50 percent of U.S. consumers will stop buying from companies that are seen as unethical, and more than one-third of those consumers will stop buying from an unethical company even if there is no available substitute. Clearly, customers value a business that takes an ethical stance. They know it’s in their best interest — which means it’s in the company’s best interests as well.
It’s also been found that, when companies act in an ethical manner, they tend to outpace their competition. That’s because, as we’ve seen, customers see ethical companies as trusted partners who are worth supporting because they have their best interests at heart.
In addition to the benefits for customers, a strong business ethics policy benefits the company in other ways:
Increased productivity: If a company follows a strong ethics policy, that behavior has an impact on more than just their customers — it affects its relationship with its employees as well. If workers believe they are being treated fairly by a company that values them and their work, they’re more committed to helping that company achieve its goals. This results in greater productivity, which in turn results in lower production costs and, eventually, better financial performance. This also means that there is likely to be less employee turnover, and the best employees are likely to stay even when outside job opportunities arise. The ethical standards of the company’s leaders also can have a strong effect on its employees. Workers who trust their supervisors are more engaged at work and less emotionally exhausted. Dr. Jim Harter, Gallup’s chief scientist of employee engagement and well-being, said “Engaged workers … have bought into what the organization is about and are trying to make a difference.”
Positive brand image: We’ve seen that customers value and remain loyal to companies that exhibit strong business ethics. As a result, those businesses gain a reputation for having high ethical standards and stand apart from other, more ethically questionable companies in the same industry. This recognition allows companies to attract the most desirable employees, and that helps the company build its competitive edge in the marketplace. Also, businesses with an image for having strong ethics attract more customers, thanks to the perception potential clients have regarding how they’ll be treated. They know they don’t have to worry about the company putting its own interests above their own.
Prevention of negative publicity: Along with gaining a positive brand image, companies with strong ethics can avoid acquiring a negative reputation in the marketplace. As I said earlier, Enron became synonymous with terrible business ethics and a history of cheating its clients, shareholders, and anyone else associated with the company. That’s an extreme example, of course, but on a more consumer-oriented level, clients who are unsatisfied with a company share those feelings on social media, which can damage a company’s reputation. If the complaints become frequent enough, that can have a dramatic and harmful impact on sales and, eventually, the bottom line. The best way to avoid this is to maintain ethical standards. That way, customers will have no reason to complain.
New business opportunities: Growing a business depends on finding new ways to attract customers, and that often involves making alliances or partnerships with other businesses. The willingness of two or more companies to partner up relies upon both parties believing their potential partner is reliable and worthy of doing business with. Any business relationship demands trust between all the parties involved, because you can’t always keep an eye on what your partners are doing and if they’re behaving in an ethical manner. That means it’s necessary, in a successful partnership, for all involved parties to follow ethical standards.
Growing Importance of Ethics
Business ethics are of vital importance to today’s customers, and that importance is expected to grow. Millennials have more access to information than any previous generation, and that, combined with their access to social media, gives them the power to drive the discussion surrounding business ethics. What’s more, as millennials move into positions of corporate power, their standards will have more of an impact. Consumers and even business leaders who have little or no memory of the Enron scandal have come of age in a world where corporate ethics have been a source of continual debate, and the majority of them expect more from the companies they deal with than just basic financial benefits.
An ever-growing number of consumers are choosing to invest in brands that they feel make ethical decisions. That means the purchasing process — whether we’re talking about products or services — is transforming to one less about what’s most affordable and more about what’s most honorable.
Venio Systems’ Ethical Stance
At Venio Systems, we follow a strict set of ethical guidelines at every level. Venio’s mission statement is to “Empower organizations to discover the unknown and achieve the best possible outcome in every single matter.”
Our official set of company values is based on “CLARITy”:
Everything we do is ultimately centered on the needs of our customers and supporting their success. In every action, we ask “How does this help our customers?”
Regardless of our roles, we are all one team, and we each strive to lead by example, going above and beyond expectations.
We hold ourselves accountable, take responsibility to be dependable teammates, and perform to the highest standards.
We are proud to operate in a diverse world and a diverse company. We aim to be supportive, inclusive, and respectful of one another in order to raise each other up to do great things.
We thrive on solving complex problems and finding innovative solutions so our customers can exceed their goals faster and more efficiently.
We work together to deliver the best for our customers and our teammates. We solve problems, lift each others’ spirits, and strive to have fun.
Those values ensure that as our customer, you can rest assured that Venio will behave ethically in all aspects of every business transaction. We will deliver the products and services we’ve promised, and you don’t have to worry about our company’s actions having a negative impact on your business reputation — or your bottom line.
What do you think? Do you believe that it’s important for you to partner with companies that operate ethically? Or do you believe that vendors’ internal policies and processes are their own private matter and do not impact your business reputation in any way?
Share your thoughts about the importance of ethical behavior below:
Ethan Eisner is the CEO of Venio Systems. A Baltimore native, he attended Penn State and the Wharton School of The University of Pennsylvania. Prior to joining Venio, he was with LexisNexis, Worknowledge (a training solutions company he helped found), the Franklin Mint and Bain & Company.