SPIRITUALITY AND ETHICS IN BUSINESS - Research on Spirituality and the Bottom Line

 Research on Spirituality and the Bottom Line

Are spirituality and profitability mutually exclusive?  Bringing ethics and spiritual values into the workplace can lead to increased productivity and profitability as well as employee retention, customer loyalty, and brand reputation, according to a growing body of research. More employers are encouraging spirituality as a way to boost loyalty and enhance morale.

In the Corporate Social and Financial Performance report, Mark Orlitsky of the University of Sydney (Australia) and Sara Rynes of the University of Iowa (USA) reviewed studies over the last 30 years and found a significant relationship between socially responsible business practices and financial performance that varied from “moderate” to “very positive.”

A study done at the University of Chicago by Prof. Curtis Verschoor and published in Management Accounting found that companies with a defined corporate commitment to ethical principles do better financially than companies that don’t make ethics a key management component.  Public shaming of Nike’s sweatshop conditions and slave wages paid to overseas workers led to a 27% drop in its earnings several years ago. And recently, the shocking disregard of ethics and subsequent scandals led to financial disaster for Enron, Arthur Anderson, WorldCom, Global Crossing, and others.

Business Week magazine reported on recent research by McKinsey and Company in Australia that found productivity improves and turnover is greatly reduced when companies engage in programs that use spiritual techniques for their employees.

In researching companies for his book, A Spiritual Audit of Corporate America, business professor Ian I. Mitroff found that “Spirituality could be the ultimate competitive advantage.” 

Ed Quinn, a top business consultant in Philadelphia, found that many companies he works with demand confidentiality about the spiritual techniques he teaches them—but not because they’re afraid of publicity about unconventional approaches.  The real reason is they don’t want their competition to learn how effective these approaches are.

A study reported in MIT’s Sloan Management Review concluded that, “People are hungry for ways in which to practice their spirituality in the workplace without offending their co-workers or causing acrimony.”  The word “spirituality” is used generically and seems to emphasize how one’s beliefs are applied day to day, rather than “religion”, which can invoke fears of dogmatism, exclusivity and proselytizing in the workplace.

Research by UCLA business professor David Lewin found that “companies that increased their community involvement were more likely to show an improved financial picture over a two year time period.” A two year study by the Performance Group, a consortium of seven leading European companies such as Volvo, Monsanto, and Unilever, concluded that environmental compliance and eco-friendly products can increase profitability, enhance earnings per share and help win contracts in emerging markets.  Investment returns on the Domini 400 Social Index (publicly traded, socially responsible, triple bottom line companies) have outperformed the S&P 500 over a ten year period ending last year.  

Business Week reported that 95% of Americans reject the idea that a corporation’s only purpose is to make money. 39% of U.S. investors say they always or frequently check on business practices, values and ethics before investing. The Trends Report found that 75% of consumers polled say they are likely to switch to brands associated with a good cause if price and quality are equal.