Photo: ihtatho / Flickr
Listen in on MBA classes and corporate conferences and you will hear a lot of talk about the need for inspiring missions, ethical behaviour and transcendent purpose. And judging from the “core values” statements in most annual reports, the vast majority of business leaders want their companies to grow by enriching the lives of their customers and employees.And yet, this can often sound like so much fluff in the real business world. Our system of financial accounting rewards quarterly profits, but struggles mightily to place a value on ethical behaviour. Even accounting rules specifically dealing with reputation — goodwill and intangible assets — are subject to frequent rule changes and endless debate.
Perhaps the accountants are just overcomplicating a basic idea. Reputation is earned through the simple, age-old concept of the Golden Rule: treat others as you yourself would want to be treated. Each time you live up to the Golden Rule, your reputation is enhanced; each time you fail, it is diminished. And the mathematics of long-term financial success — revenues, profits, cash flow — square perfectly with this scorecard.
We all want to be treated with honour and respect in ways, large and small, that enrich our lives. Such experiences not only make us happy, we want to share them with people we care about. By recommending an experience, we’re signaling our trust that our friends will be treated similarly. Recommendations also signal to businesses how customers view their relationship with the company. When customers feel so well treated that they enthusiastically recommend a company to friends, they are promoters. When treated so badly they recommend avoiding the company, they are detractors. Both have direct and measurable economic consequences.
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