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Ethic Management Company Makes More Money

Posted October. 24, 2003 23:08,   


Saving the Corporate Soul

Written by David Batston, translated by Shin Chul-ho

352pages 15000 won Gurm

In 1982, eight people died after taking Tylenol, an analgesic. The managers of Johnson & Johnson, the producer of Tylenol, took the measure quickly to collect the entire quantity of 31 million boxes of Tylenol provided in drugstores all over the U.S. before the causes of death were examined.

After the close examinations, Johnson & Johnson was cleared of any faults, but due to this case, the company suffered a loss of $240 million dollars and sales declined by half to $50 billion. However, the prompt decision of managers revived Tylenol and kept the faith of customers.

Towers Perrin, a management consultant company analyzed the business performance of 25 of the most desired to work for companies over 15 years, all of which have reputations of practicing Ethic Management. The average earning rate for stockholder of the companies practicing Ethic Management such as Johnson & Johnson, Southwest Airlines, and Proctor and Gamble was 43 percent. On the other hand, the average earning rate of the 500 corporations registered in Credit Research Company S&P was 19 percent.

The author, a founder of Business 2.0 and has written mainly about corporate ethics, affirms that very successful corporations cannot be made with only technical innovation these days. A successful company depend on whether it is shown that the company is practicing Ethic Management with a sympathizing level by worker and customers eyes.

Ethic Management, insists the author, is not inactive, meaning that it is not corrupted nor does it observe social responsibilities. It is started by clearly recognizing the fact that transparent management and trust management is the core capacity which assures a company’s long term gains.

He questioned what it would be like if the company sells its soul like the way Faust sold his soul in transaction with Mephisto. He emphasized that the company can revive as a company holding its soul only when it invest its resources to service for workers and customers.

The eight principles outlined by author in order to practice Ethic Management are:

-The directors and executives of a company should align their personal interests with the fate of stakeholders and act in a responsible way to ensure the vitality of the enterprise.

-A company`s business operations should be transparent to shareholder, employees and the public and its executives will stand by the integrity of their decisions.

-A company should think of itself as part of a community not a market.

-A company should represent its products honestly and honor their customers beyond a transaction.

-A company should treat its worker as a valuable team member, not just a hired hand.

-A company should treat the environment as a silent stakeholder, a party to which the company is wholly accountable.

-A company should strive for balance, diversity and equality in its relationships with workers, customers and suppliers.

-A company should pursue international trade and production based on respect for the rights of workers and citizens of trade partner nations.

Hyoung-Chan Kim khc@donga.com