Leadership And Management: What's Wrong With B

Leadership And Managementbernard Liebowitzwhats Wrong With Being Bor

LEADERSHIP AND MANAGEMENT Bernard Liebowitz what's wrong with being "borderline ethical"? Everyone would agree that lying, cheating, stealing, or creating dangerous working conditions just to increase profits are unethical business practices. Examples abound in the news today of business leaders that have been charged, and sometimes convicted, of such practices, to their shame and the general condemnation of the public. But what about business practices such as cutting prices not just to make the sale but to purposefully destroy a competitor, or keeping employee salaries low without compensatory benefits just to increase profitability? Perhaps such "borderline ethical" practices could be characterized as acceptable in a highly competitive environment.

Indeed, it could be argued that in such an environment, ruthless business practices are necessary for a business to survive. Yet something is wrong with this picture. Engaging in borderline ethical behaviors is ultimately self-defeating. Businesses, whether for-profit or not-for-profit, should always strive to operate profitably. However, borderline ethical behaviors can curtail profitability.

Maybe not today, maybe not until the market has redefined itself, but sometime in the future, it will happen. The Costs of Borderline Ethical Behavior Consider the following two examples. A firm is out to destroy its competitors, and it is in a good position to do so. The organization's culture emphasizes competitiveness and rivalry among its management team and its departments. Micromanagement is the order of the day, and reprimands for not meeting stiff goals are doled out liberally.

As a result, employees face a great deal of stress in their work environment. Turnover is high and the cost of replacement (including money spent finding, qualifying, and training new employees to rebuild the "team") is also high. The organization also incurs costs that are much higher than the industry norm for employee visits to physicians (for problems such as marital and individual therapy, ulcers, and tension), workers' compensation (for an unusually high number of accidents occurring within the company), and poor-quality workmanship. The organization succeeds in destroying its immediate competition, but soon, a more efficient and productive competitor appears on the scene to "eat their breakfast, lunch, and dinner."

Another firm, which specializes in home construction, pays its employees the bare minimum wages and demands that its employees work long hours with minimal compensation. It "nickels and dimes" its suppliers with bare-bones orders and late payments. The firm cuts corners wherever possible, neglecting to provide custom features originally promised to wealthy customers at no extra costs. When a customer argues for the feature, the firm adds it to the price of the home and hopes the customer won't notice. The firm has been able to get away with this type of behavior without serious consequences to its revenues and profit only because of a lack of competition in its area. An influx of strong competitors changes everything, however.

Suppliers become increasingly unwilling to work for the firm, forcing the owner to pay higher fees and demanding more prompt payment. Employees find opportunities elsewhere, with bigger pay. As a result, turnover, which had been high before, becomes even higher, and new employees demand higher salaries and more reasonable hours. Although the firm's revenues keep pace, it faces mounting challenges managing ethical boundaries in competitive markets and the long-term implications of borderline practices.

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In the contemporary business landscape, the debate surrounding ethical conduct and its boundaries remains critically relevant. While traditional views strictly condemn unethical practices such as lying, cheating, or stealing, there exists a nuanced discussion about what constitutes acceptable behavior amid fierce competition. Bernard Liebowitz and Linda Fisher Thornton provide insights into the complexities of ethical leadership and the dangers of borderline unethical practices that businesses often rationalize to gain short-term advantages.

Borderline ethical behaviors are actions that exploit grey areas in ethical standards, often justified by the competitive environment. Practices like aggressive price-cutting intended solely to eliminate competitors or maintaining minimal employee benefits to maximize profits are frequently dismissed by some as necessary evil or strategic moves. However, evidence indicates that such practices are ultimately detrimental, not only to societal standards but also to the long-term viability and profitability of organizations. These behaviors erode trust, damage organizational reputation, and foster toxic work environments that undermine sustainable success.

For example, a firm pursuing market dominance by destroying competitors through aggressive tactics faces significant costs. Employee stress, high turnover, and increased health-related expenses accrue, reducing overall profitability. Although the firm temporarily succeeds in outperforming rivals, the cumulative costs of a toxic culture and elevated employee attrition often outweigh short-term gains. Over time, more efficient competitors emerge, leveraging ethical practices to build loyalty and innovation — advantages that borderline ethics cannot sustain in the long run.

Similarly, a construction company that cuts corners by offering subpar quality and exploiting suppliers incurs hidden costs. Although it may achieve initial profits by undercutting competitors or neglecting consumer rights, the eventual impact of poor reputation, customer dissatisfaction, and supplier reluctance results in increased costs and operational challenges. The short-term benefits of these borderline practices diminish as market dynamics and consumer awareness escalate, underscoring the importance of ethical conduct for sustainable growth.

Leadership’s role in fostering an ethical culture is paramount. Linda Fisher Thornton emphasizes that ethical leadership begins at the top, where leaders demonstrate respect, inclusiveness, and accountability. Effective leaders recognize the importance of addressing ethical complexities, engaging in open dialogues about grey areas, and embracing ongoing education regarding ethical standards. They must advocate for a culture where ethical conduct is integral to everyday decision-making, not an afterthought or compliance requirement.

One central aspect of ethical leadership is accountability. No employee or leader should be exempt from adhering to established ethical standards. Enforcing consistent accountability promotes trust and integrity, which are fundamental for long-term success. Celebrating positive ethical behaviors and practices further cultivates an environment where integrity is valued and reinforced, encouraging employees to act ethically even when no one is watching.

Moreover, ethical leadership entails proactive engagement. Leaders should not just react to ethical lapses but actively promote and celebrate ethical decision-making. Regularly discussing what positive ethical conduct looks like helps embed these behaviors into organizational culture. This process requires continuous learning, adaptation, and reflection, acknowledging that ethical challenges evolve with societal changes.

The long-term consequences of borderline ethical practices expose organizations to significant risks. These include legal penalties, reputational damage, loss of customer trust, and internal discontent. Ethical lapses often lead to scandals, declining market share, and eventual financial decline. Conversely, organizations that prioritize ethical principles tend to enjoy enhanced stakeholder trust, employee loyalty, and sustainable profitability, which are critical for enduring success.

In conclusion, while ruthless business strategies may seem tempting in highly competitive markets, engaging in borderline ethical practices is ultimately self-defeating. Ethical leadership, continuous education, accountability, and fostering a respectful organizational culture are essential to navigate ethical complexities. Organizations that commit to high standards of integrity position themselves for sustained growth, customer loyalty, and societal respect, thereby reinforcing the alignment between ethical conduct and long-term profitability.

References

• Bernard Liebowitz (n.d.). Leadership And Management. Retrieved from source.
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