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TESCO and the lesson from Warren Buffet

If you are running a successful business it is likely that you will have experienced a multitude of scenarios where you would have to question your ethics and thinking on a matter.  We tend to find that those scenarios are heightened and more prevalent when business is tight, cashflow is drying up or when an opportunity not to declare income for tax or VAT purposes comes to the fore.

Our work with a plethora of businesses has identified that the best businesses have a clear vision and culture which embrace the whole subject of ethics.  Below are a number of tips to ensure your organisation does not fall into the same situation as Tesco’s and the LIBOR shenanigans of the banks.  You may say these tips are obvious.  Yet it is the obvious that is left behind on establishing the ongoing growth, health and legacy of a business.  So ask yourself these questions:

  • Are people clear about the vision of the business?  By having a clear vision and articulated goals people are constrained by the focus of the business and less likely to deviate from it.
  • What culture and values underpin how the business operates?  Spell it out.  Write down the non-negotiables of how you do business, how you treat your customers, how you treat your staff and how you treat even your suppliers.
  • Do all leaders in the organisation model the culture and values in the organisation?  The falsification of profits at Tesco’s was supposedly underwritten by a number of key directors in the UK business.  It is very rare that ethical issues leading to the problems or the demise of a business are not known or sanctioned by the leaders.  Be comfortable with the leaders you have around you.
  • Give a voice to your staff to communicate ethical issues?  Many of our clients use our tailored 360o feedback which incorporates questions for staff and peers to comment on the ethical behaviour of a manager or business leader.  Very powerful process as well as anonymous.
  • Always seek independent advice from someone who will tell you as it is without fear of them not receiving a pay cheque or invited back to speak?  Many a non-executive unfortunately do not communicate loud enough on these issues for fear of losing their jobs or position.

We could go on but if you are still not stirred to take the right business course by our comments above, then please heed the words of Warren Buffet to his organisation about their code of ethics, which has insured that his reputation as well as his organisation, Berkshire Hathaway, continues to be one of the most respected investment businesses in the world.

“…I want employees to ask themselves (when they are in doubt about whether a particular conduct is ethical or not) whether they are willing to have any contemplated act appear the next day on the front page of their local paper – to be read by their spouses, children and friends – with the reporting done by an informed and critical reporter.”

By Wayne Wright on 2nd October, 2014

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