Honesty is The Best Policy
What is the best business policy? Honesty of course. Because the cost of hiding the truth can be very expensive. As high as half-a-billion dollars and more. Consider what happened to Ranbaxy very recently. Its U.S. subsidiary has agreed to pay $500 million in fines and civil penalties for selling adulterated drugs and lying about tests of the medications to federal regulators, the U.S. department of justice said on May 13, 2013.
The prosecutors said that the company agreed to a fine of $150 million as well as an additional $350 million penalty to settle civil claims, that it submitted false statements to Medicaid, Medicare and other government healthcare programs. About $48 million of that penalty will go to Dinesh Thakur, a former Ranbaxy executive, who is the whistleblower in this case for providing information that resulted in a settlement.
While Ranbaxy is not alone in paying the fines for hiding the truth and its unethical behavior, this is the largest financial penalty paid by a generic drug maker in the U.S. for violating the provisions of the Federal Food Drug and Cosmetic Act (FDCA). There are many members of the Big Pharma such as Pfizer, Merck, Glaxo SmithKline, Sanofi Aventis, Eli Lilly, Astra Zeneca, Abbott, Johnson & Johnson, Novartis, and Boehringer Ingelheim, who collectively had paid over $13 billion in fines mostly for illegal uses for indications that were not approved and for hiding safety data since 2009.
Hiding the truth is indeed very expensive not only in monetary terms but also for eroding trust. And erosion of trust is far more expensive. In today’s turbulent times and rampant unethical corporate conduct, Honesty, which was a given as a basic human value in the past, has become a distinctive competitive advantage.
It is not that these companies are not aware of the fundamental fact that honesty is the best policy and that one should not lie. But why did they do it? Greed? Taking the system for granted?
As the world is increasingly becoming more interactive and transparent (transparency is not a choice any longer) companies and individuals would do well if they improve their Trustability. Trustability, advocate Don Peppers and Martha Rogers in their insightful book, Extreme Trust: Honesty as a Competitive Advantage, that consumers will hold the businesses they buy from to a higher standard. They cogently argue that organizations do well to practice or rather move up from trustworthiness to trustability. They expect a company to be proactively trustworthy – that is, to protect their interests by preventing them from making a mistake, overlooking or forgetting something, paying more than they actually need to pay, or even buying more than they need.
What is the best policy for succeeding in life or business? Honesty, most certainly is the best policy!
Image credit: M.S.V.K. Prasad