Return on Ethics (ROE): Does your organisation pay attention to this?

When you or your loved ones fall ill, your wish is that you receive the best possible care. You
would like to be attended to by physicians and nurses that are well trained and who act with
compassion. You also want medicines that have been engineered and manufactured to the
highest level maintaining safety and quality standards so that they reach you in the purest
form. What you do not see is the hundreds of people behind this process whose actions will
have a direct impact on your health. Your hope is that they have acted professionally to
safeguard you and other patients and consumers. When it comes to decisions that affect us
directly, we always want to choose organizations that we believe have our best interests at
heart.

In the recent years we have seen the chaos that can be unleashed when unethical behavior
begins to infect organizations’ cultures. Ultimately, the economics of such behavior exacts a
heavy toll that is often paid in damaged lives, tarnished brands and crippled bottom lines. The
world has witnessed large corporations fail from unethical behavior and some of their actions
have caused harm to their customers who should be the center of everything they do. Stories
of brand value erosion and even product withdrawals are not uncommon. It is only recently
that one of the local dailies carried a story of how public listed companies have seen massive
erosion of their paper wealth largely due to actions of their leaders. The periodic Auditor
General’s reports have also laid bare this fact.

The opposite is also true. There are real, recurring and significant returns, for organizations that
base their actions on a strong sense of ethical conduct. A 2009 research by Ethisphere showed
that the world’s most ethical companies see their stock grow at a rate twice greater than that
of the standard companies evaluating this over a period of time. This makes sense when you
consider that organizations with superior ethical track records can attract the talent and
customers they need to sustain their growth far more easily and with less expense than those
burdened with questionable reputations. Trust is always a vital ingredient in enduring business
relationships, and its importance in today’s challenging economic environment cannot be
overstated.

The power of return on ethics is exponential. When any business relationship is established
with trust as its cornerstone, everyone can win. On the other hand, with predatory one-time
encounters that is the economic equivalent of hit and run, nobody wins- in the long run.

Traditionally, companies have been evaluated based on how much profits they generate from a
unit of investment employed or the amounts of assets availed. The two have been termed as
return on investments (ROI) and return on assets (ROA) respectively.

A new concept coined Return on Ethics (RoE) is fast gaining momentum. ROE is really more
mindset than measure, an approach to encouraging the highest standard of business behavior.
It is based on the premise that ethical decision-making can lead to strong performance and
competitive advantage, while unethical decision-making leads to very different outcomes.
And when your most important offering is trust, it’s crucial that you have structures and
mechanisms in place to safeguard that trust. The multinational research based pharmaceutical
companies have taken this very seriously and have established formal elements of an ethics
programs that include leaders to guide it, policies and procedures, regular trainings and
feedback mechanisms through hotlines and many others measures.

Locally, Kenya association of pharmaceuticals industries (KAPI) has a code of ethics as a self-
regulation tool for its members. It became the second country in Africa, after South Africa, to
achieve this milestone in a sector where high ethical standards are needed and in fact
demanded.

It is my hope that business leaders and employees in all sectors of our economy will not only
dedicate time and effort thinking about the return on investments (ROI) but now also about
return on ethics (ROE) for their companies and organizations.

(Dr Jack Kileba, is a medical doctor and the chairman of the ethics and compliance at Kenya
Association of Pharmaceutical Industry (KAPI) Email: kapi.secretary@gmail.com)

Dr JACK KILEBA :