What’s the ROI of an Ethical Culture?

By Caveni Wong, Founder and Principal

(First published on LinkedIn)

At a recent dinner with fellow Duke MBA alumni, after explaining what I did for work (helping companies sustain an ethical culture), I was once again hit with the question “Yeah but how do you measure it?”

Even as our profession tries its darnest, there’s still no clear-cut answer. In fact, at the SCCE Compliance and Ethics Institute this year, over a hundred of us spent a 3-hour workshop dedicated to answering that question, which resulted in something like “It’s not easy but start with something and let’s keep working at it.”

Frankly, I’m sick and tired of the question.

To this alumnus, I responded, “Yes, it is difficult to measure. But how do you quantify being a good person? How do you quantify raising kids with good values? Do you measure how much more money they make by being good people vs. criminals?

“However there are proxies. Retention rate – how many people stay because they like their company and don’t leave any time someone offers them a bit more money? By productivity – how much more productive are your employees if they come to work not having to worry about being harassed?

“And reputation. How do you measure having a good reputation that makes employees join your company and clients buy from you?

“What do you think makes up ‘good will’ when you valuate a company?”

Another alumnus at the table, a Chief Operating Officer, chimed in: “At our company, culture is everything. We keep good people from taking other external opportunities because they like working here.” At his company, all employees are “team members,” the culture familial. It thrives by having a good reputation and by building strong relationships. That doesn’t happen if the company cuts corners and operates unethically.

He also gave an example of a partnership that ultimately didn’t work out because the cultures and values of the two parties didn’t align. His challenge in the future as the company plans to double and triple in size is to sustain this culture.

So no, I don’t feel compelled to spin my wheels trying to come up with an ROI for an ethical corporate culture. And MBAs who know a thing or two about running a business should stop asking.