Understanding the Impact of Unfavorable Practices on Entrepreneurship
Entrepreneurship with personal resources is common in many countries, making it crucial to maximize available resources. However, there are instances where founders engage in unfavorable practices, such as misusing financial resources. This not only harms their reputation but also that of the company.
When founders fail to make proper payments to their employees or prioritize personal expenses over business investments, they damage both their reputation and the company’s standing. According to a study by Ipsos, 38% of workers value ethical leadership, honesty, and transparency.
Reasons Behind These Unfavorable Practices
One reason for these practices is the lack of ethics and principles, coupled with the misconception that successful entrepreneurs should prioritize their image over the company’s well-being. This approach, however, can harm profitability and potentially lead to business failure.
Karina Rodríguez, a team and executive coach, explains that in Japan, businesses are nurtured during their early stages, with profits reaped later. In contrast, Mexico often prioritizes immediate personal benefits over long-term company growth.
Consequences of These Actions on the Company
When decision-makers focus on strategies that personally benefit them, rumors arise within the organization, damaging the work environment and eroding trust and commitment among employees.
This leads to increased staff turnover, as 79% of professionals who trust their employers are more motivated to work and less likely to seek new jobs, according to Deloitte.
Rodríguez emphasizes that neglecting employee well-being for short-term gains results in lost opportunities to retain talent and increases staff turnover.
Loyalty is another crucial factor; negative word-of-mouth, especially on social media, can lead to lost customers.
The Importance of Ethical Leadership
For long-term success and better results, ethics and transparency are essential. Companies that project trust outperform those with low trust levels by up to four times in market value, as per Deloitte.
Rodríguez stresses the significance of ethical leadership, which is based on personal principles and resisting external influences that question credibility and reputation.
Gender Differences in Ethical Leadership
Ipsos reports that women are more attached to ethical leadership than men. Additionally, 27% of women prioritize ethical values and aspects in work decisions, compared to 8% of men and 56% who view it equally.
Three Advantages of Ethical Leadership
- Increased Credibility: Ethical leaders who adhere to principles and avoid improper practices gain respect from both employees and customers. They also make fairer, more sustainable decisions.
- Inspiration for Others: Ethical leadership inspires positive habits and serves as a good indicator for investors.
- Improved Organizational Culture: When leaders prioritize employees and the company’s future, their teams follow suit, creating positive, respectful environments.
