Creating competitive advantage through the ethical treatment of employees

The well-known adage states a business should take care of its employees first and foremost.  If it does, the employees will treat customers well.  There is certainly some good sense to it, but we need to dig deeper for some meaningful understanding and application.  The treatment of employees is one of the biggest ethical concerns facing any business.  Small businesses are especially vulnerable as resources may be lacking in training, human resources and formal grievance procedures.  Satisfied employees are beneficial in a number of ways and add value to business.

1.       Empowerment produces competitive advantage.  One of the first questions asked at a typical gathering involving new introductions is “What do you do?”  Especially prevalent in Western society, one’s work has a tendency to overshadow one’s value as a person.  Transcending culture is the need to be accepted, valued and appreciated.  Workers are more than job titles.  When employers understand and implement this important principle, employees respond positively.  The motto at the Ritz-Carlton is “We are Ladies and Gentlemen serving Ladies and Gentlemen.”  The service at the upscale hotel chain is legendary and it begins with treating workers the right way.

2.       Engagement produces competitive advantage.  An intriguing study by Savitz and Weber discusses sustainability at a quick-service chain.  Research suggests that customers of the chain did not really care about sustainability issues like water conservation, eco-packaging and reducing waste.  Instead of filing the report and carrying on as usual, the management focused on the key stakeholder group that cared about sustainability – employees.  The results at this particular chain are compelling: customer satisfaction increased as employee engagement levels rose, employee turnover decreased as employee engagement increased and the company saved significantly by implementing some basic principles of conservation.

3.       Excellence produces competitive advantage.  Employees motivated by excellence share a number of common traits including integrity, compassion and diligence.  The job isn’t just a set of rules and functions but a way to make a difference – whether undertaking the role of janitor or president.   Tim Sanders discusses how sharing kind words, knowledge and business contacts builds success in Love is the Killer App: How to Win Business and Influence Friends.   Going above and beyond creates bonds and differentiates from the competition.  When my wife and I stayed at a W Hotel in Chicago several years ago, this excellence was on display.  After Jacquie offered some painting tips to a member of the housekeeping team, we discovered a bottle of champagne in our room later that same day as a gesture of gratitude.  We were, of course, thrilled and although I don’t normally gush over brands (even the ones I appreciate on a daily basis), this experience I won’t soon forget. 

Businesses face ethical quandaries everyday.  The potential challenges are opportunities to add value and build brand equity.  Whether heading a company with an employee count of two or two thousand, competitive advantage is found in treating employees fairly and humanely.  Added value comes from empowering, engaging and encouraging employees to excel in their roles.