Leading Question

"I think that a lot of people are now realizing that ethics add underlying value because [they] really help people understand what the company would like them to do in a difficult situation," Driscoll says.

While ethics can mitigate loss, and therefore save money, they also add value in the marketplace and in attracting a workforce, says Vince Crew, founder of Naples-based Reach Development Services, which aids companies around the United States with leadership development, staffing issues and ethical decision-making.

"Certainly investors, lenders and community supporters, not to mention customers, want to do business with and want to be associated with firms that are regarded as being ethical in nature. So it has everything to do with purchase and investment decisions," he says.

Crew adds that the reputation advantage can sustain a company in tough times. If a business puts a focus on ethical practices and policies from the beginning, it will be given the benefit of the doubt and extra time to find a remedy during a crisis.

The time and financial investment in developing ethical practices and monitoring and measuring procedures, as well as training, "far outweigh" the expense that businesses would face in the case of a regulatory intervention or legal investigation, Crew adds.

Driscoll, an executive fellow at the Center for Business Ethics at Bentley College in Massachusetts, says senior executives and boards of directors often have trouble understanding what it means to have a culture formed by ethics. It’s essentially how a company operates, from traditional to entrepreneurial, or fast-paced to thoughtful.

The challenge for companies is to create a culture driven by the top that underscores ethics and values. "Then, what happens is—and here’s the real value—people tend to do the right thing, or more important, they know what the company would like them to do," she says.

That prevents people from making the wrong decision, resulting in financial losses as well as damage to the company’s reputation, which is hard to get back, Driscoll adds. Despite witnessing the Enron, WorldCom and Tyco train wrecks, most businesses have to experience a reputation incident, governance impropriety or leadership mishap before they truly appreciate the value of ethical conduct, says Crew.

There are few company officials who say, "‘You know what? We need to get out in front of this issue of how we make decisions and how we want people to conduct themselves before something goes wrong,’" he says.

"You really don’t get that message until you touch the stove. Once you’ve been burned, all of a sudden you get it."