When discussing the relationship between ethics and customers, you first have to ask yourself, “Can an organization really influence customers with the way that it conducts its business?” My answer to that question, having been in this business about 28 years, is yes.
Let me begin by making it clear that influence does not mean attempting to muscle a customer into behaving one way or another. Rather, influence comes from integrity and trust. Integrity, to me, is the foundation of trust, and trust is the grease of commerce.
At Clorox, we know that in order to build and maintain trust with our customers we have to first develop a strong, company-wide reputation for integrity. We accomplish that through clearly established, internal ethical principles. For example, all of our employees are required to take part in annual online training with ethics courses. They also participate in refresher courses throughout the year, covering various ethical
practices and, of course, all relevant laws.
We also establish strict ethical processes for our customer facing teams and their support folks, all with appropriate checks and balances. These methods give us a very transparent way of going to market.
We currently have a company-wide code of conduct to which all employees, directors, vendors and suppliers must adhere. And we also have a formal Supplier Code of Conduct that articulates our expectations with respect to human rights and labor, health and safety, the environment, business conduct and ethics. When retailers and suppliers know that an organization lives by a principled code of conduct—and the policies that result from that code—we are able to build a business relationship upon a foundation of trust.
But the line doesn’t stop at internal controls and ethics policies. In order to truly develop trust with their customers, companies must walk the walk. For example, any activity that we engage in with customers will be fair and defensible, no exceptions. This means we can approach our biggest as well as our smaller customers in the same manner. We let all of our potential and current customers know that everybody gets a fair chance; everything in the process will be transparent.
Likewise, to maintain a reputation of trust, ethical companies must take a principled stand against customers that behave in a less than ethical manner. That includes making the difficult decision of cutting off a large customer if that customer is attempting to exert influence on the company to act in a way that it can not fairly defend with other customers.
At the end of the day, when a company models that behavior inside and out, when they walk the walk, then they establish a solid foundation of trust. They solidify their reputation and cause business transactions and partnerships to happen much more quickly. Whatever a management team can do to engender that trust with customers, with suppliers, or with whatever constituency they’re dealing with—consistent with a set of values and principles that they just will not violate—is only to their long-term benefit.
Of course, the natural push back that many executives will receive when taking these types of stands with customers comes from the need for constant quarter by quarter growth. Certainly all organizations must balance the need to further top line growth while maintaining their ethical principles. It can be a tough balance. It is important to stick to one’s principles, to one’s code of conduct, while working toward delivering an outlier performance quarter after quarter.
When you come across a red flag from a customer, you just have to be principle-based, keep that long-term view and say, “I’ve got a long-term view of this business and I’m not going to worry about it in the context of the next quarter. We’re going to be doing the right things for the business in the long haul.”
This is the stand that Clorox has taken, and we are a 96-year old company. We take this stand because we want to be around for another 200 years, not the next two. Quite simply, companies without an imbedded foundation of principles and values will not survive.
If you model that behavior, if you lead from the front like that, I can tell you from my own experience that over time your business relationships improve, you win more deals and you gain the respect of all your constituencies.