Reports and Studies Show That Ethical Businesses Grow Faster and Are More Profitable

The Presidents Economic Forum
Corporate Responsibility Session
August 13, 2002,

Ron James, CEO of the Center for Ethical Business Culture in Minneapolis, MN, was able to speak when the President was present. He told the President "that business leaders do two things very well". One, "they are concerned about all of their stakeholders". Two, "they balance long and short-term trade offs. They create value for the shareholder over the long-term by serving all of these stakeholders. Reports and studies show that companies that practice this grow revenues four times as fast, workforce eight times as fast and stock prices twelve times as fast as companies that don't. It is not about doing either or. You can do both. You can create an ethical environment that serves multiple stakeholders but can insure your are creating value for the shareholders."

SECRETARY EVANS: Talking about somebody who is teaching people the difference between right and wrong, Ron James, who runs Center for Ethical Business. And so, Ron, I mean, to you, how are you teaching the difference between right and wrong and running an ethical company?

MR. JAMES: Thank you, Mr. Secretary.

Mr. President, we really believe that business leaders do two things very well. They're concerned about all of their stakeholders, that's their customers, their employees. Yes, the shareholders, but the suppliers as well as their communities. And they balance short- and long-term tradeoffs. They really create value for the shareholder over the long term by serving all of these stakeholders. Reports and studies would show that companies that practice this literally grow revenues four times as fast. They grow the work force eight times as fast as companies who don't, and they grow stock prices 12 times as fast. So it's not about doing either/or -- you can do both. You can create an ethical environment that serves multiple stakeholders, but you can ensure that you're creating value for the shareholder.

It really boils down to leadership. Leadership has got to walk the talk, they've got to set the tone. Leadership has got to instill the right mission and vision and values for the organization and then people fall in line and we can see the real benefits.

THE PRESIDENT: Where are you --

MR. JAMES: Center for Ethical Business Cultures. We're in Minneapolis, Minnesota.

THE PRESIDENT: Oh, great.

MR. JAMES: We partner with a couple of academic institutions. The Carlson School of Management at the University of Minnesota and St. Thomas's College of Business.

THE PRESIDENT: But is there a trend in these business schools, like this person pointed out to me, that there's kind of a --

MR. JAMES: Yes. At these two schools, ethics is a core part of the curriculum and it's literally not just taught as a stand-alone course, it's actually ingrained in the various disciplines -- whether it's marketing or finance or manufacturing -- ethical dilemmas are surfaced so that the students have got to wrestle with those.

And one of the interesting things we're seeing is that students are raising questions about not just what's my next career move going to be, but what kind of organization am I signing up to work for. Does its values and what it stands for line up with who I really am?

THE PRESIDENT: That's interesting.

The full text of this Corporate Responsibility Session is available at
http://www.cebcglobal.org/Newsroom/News/News_081302.htm.