Honesty and Trust in Law

Abstract

The paper presents an argument that demonstrates that honesty is a better policy in the business step-up, as compared to promoting trust. The paper illustrates that honesty in a company results in strong relationships, a better reputation, and excellent communication. The data was gathered from secondary sources, both printed and online, that documented the issue. Books, peer-reviewed articles, and online blogs were analyzed and ultimately employed in creating cohesive research on the topic of honesty.

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The results from the analysis have indicated that honesty is helpful in good customer relations, better employee management, genuine feedback from all involved sides, as well as avoidance of lawsuits, enhancement of suppliers and investors’ relationships, and creation of good leaders. The paper concludes by arguing that honesty is better than trust as it increases the likability, efficiency, and productivity of any business.

Introduction

Honesty and trust are two significant traits in the business world as they are the ones that define how people relate to each other. Being honest means that a businessperson discloses all the material and non-material information about the business to all the interested groups as it is. Therefore, being trusted means that the concerned teams in the organization, like customers or labor unions, have faith with a business partner due to his/her convincing conduct. There is always a discussion on which of these two attributes is more important for a successful business. Some scholars argue that honesty is the best policy for a successful enterprise, because it gives a rise to other admired traits and benefits, like respect and loyalty (Ciulla, 2017). Others state that even with full dedication to honesty, the business cannot be successful if the interested group does not show trust to its operations and owners. Therefore, for a company to be prosperous, there has to be mutual trust between business owners and all the stakeholders. The current paper endeavors to present an argument that proves that honesty is a better policy in the business step-up, as compared to promoting trust. It illustrates that honesty leads to strong relationships, better reputation, and excellent communication, therefore, increasing the likability, efficiency, and productivity of the business.

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Honesty in Employees’ Management

Employees’ management is one of the areas, which determines if a company will succeed over its competitors or not. Workers’ motivation in their work defines the business’ productivity, its ability to innovate and invent, and the profit that it makes. If employees are not empowered, they lose their focus in the workplace, which results in lowering a company’s efficiency. Wiltshire, Bourdage, and Lee (2014) have identified that honesty is among several factors which motivate employees to work harder, at the same time, improving the success of the organization.

When the management uses the honesty policy to their employees, it leads to the faster resolution of issues, arising in the human relations department. Employees always have recurring problems with their employer’s systems, payment, and other small issues in the workplace. Most of staff shy away from communicating about their concerns, because they do not know how the management would react to those complaints. Managers may have problems with their employees concerning lateness, and noise in the workplace, among other small issues, which affect day-to-day operations. However, they may avoid telling the employees about such matters due to the fear of them leaving a company or destroying the excellent working environment (Johnson, Rowatt, & Petrini, 2011). Nevertheless, regardless of who goes away from pointing out problems in the workplace, the result is that the organization suffers from those issues that may seem insignificant at first. This outcome is actually avoided, when a company adopts the policy of honesty, where either part points out the problems that bug them, once they arise, they are being solved immediately. Such a system gives rise to better human relationships and better interactions in the workplace.

Another important function of honesty in an organization is that it enables managers to keep positive and negative feedback apart. When employees’ performance improves, a line manager should identify their efforts and praise them for the positive changes. It is also the work of managers to point out negative behaviors or trends, associated with employees. However, most companies have embraced the ‘sandwich approach’ to addressing their employees. In this approach, the manager starts with positive compliments on what the employee has done, followed by all the wrongdoings, and, finally, ending with some positive remarks. Such an approach always leaves the employee confused about his/her progress in the position; thus, it can result to stress, as employees are trying to impress the manager by achieving what might seem impossible (Wiltshire et al., 2014). The resulted stress, however, can be avoided, if the manager would be straightforward in his/her feedback to employees. It takes honesty to tell workers that they are doing well, and should keep up the good work; also, employees should be informed that they have deteriorated and they need to improve. When a company chooses the honesty policy, its employees are certain about the feedback that they receive; hence, they are not stressed with the unnecessary anxiety about job security.

Honesty also increases the level of social networking in the business environment. When the manager, employees, and co-workers interact freely in the organization, it means that they are likely to create a synergy, which improves productivity in a company. However, this is not a simple thing to achieve in the organization. Most employees have personal matters in their lives that they would not like their managers to be aware of, therefore, they would prefer to maintain a low profile with their bosses. In most cases, however, open relations translate to better work environment for the employee; thus, employees benefit more from communicating freely, rather than from keeping all problems to themselves (Ciulla, 2017). It is, for this reason, that organization adopts the honesty policy, whereby the employees and managers communicate about their issues without negative repercussion, consequently, improving the social networking.

Additionally, honesty in the workplace increases a company’s retention rate, as well as attracts the best skills in the industry. A survey of employees has shown that they appreciate more when managers maintain open channels of communication with each other (Johnson et al., 2011). When managers are honest, it means that they treat their employees well, thus increasing their satisfaction with the workplace. These employees continue to work in the same company for a long time, due to the assurance that their employers will not let them down. Those looking for employment are looking for a company where they will be treated with respect; therefore, they apply to organizations that have an honesty policy.

It can be agreed that employees’ satisfaction in the workplace is mostly determined by the relationships based on honesty between them and the management. Even if the employees trust the administration, and the management is not honest, it means they will be mistreated at one point, thus lowering their job satisfaction level. Honesty is, therefore, more critical in the human relations department, as compared to trust.

Honesty in Customers Relations

Good relations with customers are essentially important for the business, as such relationships result in loyalty and free publicity. When the management is honest before its employees, it creates a strong bond between them. According to Ciulla (2017), due to openness, customers gain a good understanding of the business operations and activities, and, thus, customers then feel like a part of the process. This bonding, therefore, leads to overcoming several issues that affect the level of customer satisfaction.

First, honesty kills the impatience that most customers have, and converts it to understanding. Clients are always eager to see that their projects or products are delivered to them within the shortest period. This does not transpire all the time due to many issues, both natural and unnatural, which generate the delay. When the shipment does not arrive on time, the customer may start complaining and be impatient, which may lead to termination of the contract, or refund (Ciulla, 2017). This mostly occurs when the business is dishonest about the reason for its delay; the delay may take place if, for example, management accepted a commitment that they would not deliver, or they had too many projects that were due at once. Nevertheless, for those businesses that engage in honesty, such complaints and impatience are converted to understanding, if the management provides enough information about the incidence. For example, if a person bought books online, and they were supposed to be delivered after two days and that did not happen, the management could explain that the delay was caused by an irresponsible worker, who forgot to pack the books on time. Even though this statement gives a poor impression about a company, it manifests a lot of honesty from the business and provides understanding to the client; hence, reducing impatience.

Honesty also leads to strong publicity among potential and actual customers, thus increasing the brand image. According to Ciulla (2017), most clients of a particular product tend to be homogeneous in characteristics. For example, customers who buy skate shoes are mostly young people with outgoing personalities. Thus, if one person buys the shoes from a given store, and he/she received honest information about the benefits or demerits of the shoes, he/she is likely to suggest to his/her friend to use the same store, when looking to buy the skate shoes. Such publicity from the customers themselves increases the reputation of a company, promoting its brand and widening its customer base. However, it would be a different case if a customer was assured that the shoes will last for a year at least, but, in reality, they do not even last for a few months. Such a customer is likely to advise his/her friend to avoid the business, hence lowering its image and reputation.

Honesty has also been credited for its ability to increase the company’s bottom line. Customer happiness is achieved when the organization works with integrity. According to Watson (2009), most clients, who are happy with the services and products of a company, tend to buy more than they need. For example, it was observed that in Zippos, an online shoe company, the customers changed their buying habits, when the company decided to disclose all material and non-material information to their clients. The firm offers an inventory management system, which is 99% accurate, thus giving customers a high percentage of buying the product that they need (Solomon, 2017). Since adopting such an honest and precise system, the company started recording higher sales than ever before. The organization improved its profits, and, since then, it has remained an online shoe-selling giant in the United States. Such success can, therefore, be attributed to the effect of honesty on the customers’ service.

Finally, honesty also increases the loyalty of customers, as has been demonstrated by a few companies across the world. For example, most individuals perceive that Apple is honest before its customers, based on the information that it provides about its products to its clients. Apple products are durable and diverse, compared to those of its competitors in the market. People have, thus, gained faith in the company, and have remained loyal to the company’s products due to its honesty.

Law and Honesty in Business

Business laws and honesty work hand in hand with each other. Those organizations that are honest in their operations and do not break the general rules, thus, their activities are not interrupted by constant lawsuits. According to Baumann and Friehe (2016), managers are supposed to act with high integrity to avoid losing thousands of dollars in legal cases, leading to compensation. Below are some examples of how businesses can demonstrate honesty, thus preventing legal actions.

First, it has become common for most states to impose laws regarding waste disposal and management by organizations. Today, companies are regulated on the toxic levels that they emit into the soil, water, or air. However, the relevant authorities only conduct periodical supervision for the companies to ensure that those regulations are followed (Baumann & Friehe, 2016). Some corporations take advantage of this situation, by emitting the toxic waste to the environment, and only complying when they learn that there is supervision going on. This is a high level of dishonesty in the business, and it shows less responsibility before society. When such enterprises are identified, they always end up facing numerous legal charges, which could lead to the forceful liquidation of the business or heavy penalties that directly affect the ability of future operations. However, all of this can be avoided, if companies would just opt to be honest and stop destroying the environment intentionally.

Another way in which honesty is essential is when executing the registration memorandum. When companies are formed, they state the industry they intend to venture into, and the products or services that they wish to deliver to people. The registration and its content thus serve as a binding contract between the state and the business; hence, the enterprise is expected to stick to such an agreement. However, since the state’s authorities cannot keep an all-time check on the business, some enter into illegal practices, just to get the cash faster (Baumann & Friehe, 2016). For example, a store selling guns might decide to sell guns to individuals without thoroughly screening them, even when the law of the land requires so. Such a practice can be adopted by some stores to avoid keeping off potential clients, who have perpetrated crimes in the past. However, regardless of the reason, such practices are illegal and lead to court action in all instances, once the relevant authority discovers such activities. Nevertheless, if the management just acts honestly and avoids engaging in unlawful practices, it can be agreed that the business could not face the risks of license withdrawal or the loss of money on the massive amount of fines.

The rights of customers are also other issues that a business should observe at all times without breaching the rules to favor their operations. Leaders with high integrity are always honest to provide their services and products to their clients without violating any laws. Baumann and Friehe (2016), however, observed that many other organizations do not care about their customers as much as they care about their profits. These agencies are known to breach the law of contract by not delivering the goods in the agreed condition and refusing returns, or not delivering at all. They also refuse to observe clients' safety when selling products, thus leading to health deterioration or even deaths, in some instances. Refusal to disclose material information also affects the consumers, who buy the product by not meeting the required expectations.

An excellent example of how an organization may act dishonestly is the current discussed case of Johnson & Johnson. This American giant in the pharmaceutical industry has encountered many lawsuits from customers who argue that the company refused to disclose material information, which leads to diseases and various side effects. An example of such a case was one held in Missouri state court, where a Virginia woman was suing the company for not disclosing that its talc-based products, used for feminine hygiene, would result in ovarian cancer. The court commanded the firm to pay a total of $110 million to the woman for the caused trouble (Raymond, 2017). However, if the company had remained honest about its products, it would not have faced such enormous penalties.

From the above argument on the importance of honesty in business law, it is clear that business that decides to do the contrary always faces many troubles in the end. Sometimes customers trust the organization’s products, even without knowing that they are being poisoned just like the Virginia woman, who ended up with ovarian cancer. For any organization, it is the honesty policy, which should be followed to enhance legality in operation, unlike the trust policy, which can be manipulated.

Honesty in a Business to Investors and Suppliers

According to Cohn, Fehr, and Mar? call (2014), when people are served with honesty in an enterprise, they spread the good news about those services to their friends, colleagues, families, etc. Such publicity results in an excellent reputation for the business, consequently, increasing its goodwill value. Based on their research, Cohn et al. (2014) found that companies which manifested honesty in their operations were more likely to be involved in social activities than those with less sincerity. The researchers argue that this phenomenon occurs because, due to openness, people have faith in the enterprise and have a firm conviction that such organizations are the best to help with social issues. Likewise, with a good reputation, the company also attracts a large number of potential investors and suppliers. They are attracted to those businesses that have a good reputation because then they feel their money is well protected.

The honesty policy also results in good leadership, thus influencing the operation of the organization positively. Good leaders are the ones who refuse to compromise, even when such an option would mean a better fortune for the company. They develop strategies, which are apparent to the investors and the supplies without fear of losing them. Such strong leadership, driven by honesty, gives a rise to shareholders’ and suppliers’ dependence on the management of information and services, thus resulting in a more prosperous organization. Cohn et al. (2014) in their research pointed out that what makes honesty important in leadership is that it is a state of mind. If a manager compromises on small things for minor benefits, it also means that he/she can comprise on significant issues, thus risking the business’ reputation. However, that would make him/her a dangerous lead and put off the investors and suppliers from the company.

 
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Dishonesty, on the contrary, leads to more severe practices in the business, affecting its operations, and even threatening its future. Cohn et al. (2014) pointed out that when the company operates in a dishonest environment, it results in the coercion of its activities. For example, if the company is obligated to publish its financial status each year through an external auditor, the auditor might be forced to give a statement that does not reflect the actual financial position. The management, due to its dishonesty, might use threats, like termination of the contract, to coerce the external auditors to change their reports. Therefore, even if the shareholders trust the management, it does not count if the administration is not honest about its operations.

Fraud is another adverse outcome of lack of honesty in day-to-day business operations. When the management is crooked and self-centered, they can alter the books of accounts, giving them a chance to steal some company money without the knowledge of the shareholders (Cohn et al., 2014). They might also conspire with other relevant authorities to fraud their supplies by not paying them for services or goods delivered. These detrimental practices may occur, even when shareholders and suppliers trust the organization. Hence, honesty is an essential trait in the business.

When a business is dishonest, it results in higher suspicion from the shareholders and the suppliers. Shareholders and potential investors in the business no longer feel that their money is safe within the organization; thus, they always want assurance. Others decide to sell off their shares from the company to avoid the possible loss of their money. Suppliers might demand payment on or before delivery, or withdrawal from the services if they are afraid to lose their finances. Sonea (2016) retaliates that all of these do not begin with mistrust, but it occurs as a result of past dishonesty; hence, if the business had an openness policy, their shareholders’ and suppliers’ relations would be excellent.

Role of Honesty in Acquiring Better Feedback

Feedback is the information that a business receives from customers and other stakeholders after using the enterprise’s services or goods. Based on Watson (2009), feedback quality is determined by people’s perception of how the organization will react to their comments and suggestions. When the stakeholders are certain that the organization is honest enough to accept criticism and appreciate a compliment, they are more likely to give very truthful feedback. Nevertheless, even if the stakeholders trust the organization, but do not believe in its ability to execute their feedback, they are more likely to not give straightforward feedback. Honesty is, thus, the fundamental trait, which results in genuine feedback.

Organizations require truthful feedback from the people for several reasons. First, when the comments from the stakeholders are negative, it means that the operations are not aligned with customers’ preferences, and some improvement is needed (G? chter & Schulz, 2016). For example, if a company is offering telecommunication services, it is likely to receive more clients due to its ability to listen and care for them. The customer develops trust in the company, as a result of its honesty in delivering better services. The clients are, thus, more likely to complain genuinely, when the organization's products reduce in quality. Such truthful feedback is attained due to people’s faith in the organization. The business will, consequently, utilize the feedback and make some improvements in its services, thus aligning them to the best interests of its customers.

The organization also uses feedback to learn new things in the industry. When the feedback is truthful, the organization learns more than its competitors, giving it more benefits in the industry. For a company to get the best feedback to be able to grow and improve, Yang (2014) suggests that honesty is the key because those giving feedback needs to be assured that their suggestions will not be useless. People spend a lot of time, sometimes hours, writing feedback; however, it would be a waste of time if people would recommend a new way of doing things, but no one would read this information. Companies are required to be honest and tell their stakeholders about the importance of feedback in the business; hence, the stakeholders are more likely to give helpful suggestions on new ways of operation.

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Genuine responses to a business are vital, as they help to determine people’s perceptions about the offered products. If the business needs truthful comments about its operations, it should demonstrate honesty to its customers, so that they will be able to respond freely. From the responses, the organization can determine if it has the right perception, based on its goals and vision. Consumeristcarey (2008) gives an example of Southwest Airlines, which uses people’s perceptions to maintain its status, as a leading low-cost airline in the world. The company always presents itself as honest before its customer when any issues, involving their travels, occur. For instance, if there is an expected delay, customers are told about it in advance, even if that means they will not book their tickets. The company, therefore, does not take advantage of its clients, and, for that reason, clients always give truthful responses about how they feel about Southwest Airlines' services. It is through the provided feedback, based on honesty, that the company has managed to maintain an all-time positive perception.

Based on the above argument it is fair to generalize that the reason why people give good feedback is that they are motivated to do so by the organization. When the business asks for comments and takes necessary measures to reduce criticism or enhance its activities, people perceive their actions to ask for feedback. Therefore, as a result, they give truthful feedback. However, if people only had trust in business, but did not believe it had any honest interest in feedback, then they would not bother to give any.

Honesty in Personal Life as a Businessperson

Individuals produce business, and for the organization to succeed, the owners must be good leaders with exceptional leadership qualities that would help them manage other resources efficiently. One of those qualities that make managers good leaders is honesty in their operations. Rosenbaum Billinger and Stieglitz (2014) argued that when people lead with integrity and honesty, they increase their chances of success in business because they demonstrate valuable qualities, like maturity, caring, and courage to their followers; therefore, creating a broad group of admirers. Below is an analysis of how honesty can help to enhance the ability of people to lead.

First, when people are honest, they are more likely to be respected by others, as compared to those who are not honest. Honesty is a rare trait in the business world as profits drive the actions of most people. Rosenbaum et al. (2014), thus, observe that when customers, employees, or investors come across managers who have high integrity and honesty, they tend to appreciate and respect them. Such appreciation is always important to business operations, and it leads to loyalty and long-time relations, which are based on truth. Companies with honest leaders have a guarantee of loyal longtime partners, who support the operations at all times.

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Dishonesty to stakeholders is a business setup, which also means that a business person is likely to live a stressful life due to deception guilt. This is the bad feeling of betrayal that a person experiences, once she/he keeps on lying about something he/she is certain of not accomplishing. For example, when a manager promises to meet a deadline for delivering a project and fails to do so, he/she might avoid even taking phone calls from the said client due to the feeling of deception guilt. Rosenbaum et al. (2014), therefore, argued that dishonesty is one of the reasons why managers lose their courage to lead and lose self-confidence to make decisions. When managers are honest all the time, they do not face the feeling of deception guilt; thus, they have nothing to shy away from in their line of duty. It means that they are always confident in their ability to lead and are courageous to make decisions, even those that might upset others because people will believe they were made for a good reason. Such courage and self-confidence occur mainly because of honesty, and, thus, all leaders should adopt honest behaviors.

Another reason why businesspersons should adopt the honesty policy is that it demonstrates their concerns and care for others. If a manager is honest before his/her employees, it shows that he/she cares about them, and that is why he/she tells them truthful information about their ability to work and areas that require improvements. Watson (2009) points out that once the managers are honest before their workers, the employees have an opportunity to respond to such honesty by acting genuinely. Therefore, the employees are more likely to be retained due to the caring attitude that the managers demonstrate.

Maturity is also a trait, which is reinforced by honesty. All stakeholders in an organization are more likely to feel safe in the hands of individuals who understand them fully and act honestly all the time. Such individuals demonstrate that they are mature enough to serve faithfully and can even take personal responsibility without blaming others for their flaws (Rosenbaum et al., 2014). They give or share credits, where they are due, without taking it for themselves selfishly. Moreover, they are always open-minded; therefore, employees and other stakeholders feel safe around them. Mature leaders do not limit their needs to personal benefits, but the interests of the organization at large.

From the above assessment about honesty and the ability of the businesspersons to lead, it is vivid that honesty plays a big role in their leadership. Even with trust from customers and other stakeholders, the manager cannot run away from deception guilt, lack of maturity, or decrease in self-confidence. It is only through honesty that a manager can get rid of these bad traits that hinder them from good leadership.

Conclusion

The above research has presented an argument which has demonstrated that honesty is a better policy in the business step-up, as compared to promoting trust, because honesty gives a rise to excellent relations, better reputation, and effective communication. It was illustrated how honesty improves the business likability, efficiency, and productivity. Concerning employee management, it has been revealed that honesty results in good relations in the workplace, networking, high retention rate, and improved productivity due to high motivation. Customer relations are also positively impacted by honesty by improving understanding, loyalty, and bottom line. Customers who experience honesty of the business often choose to promote the brand through the word of mouth to other potential clients. Moreover, it was also stated that companies by adopting the honesty policy are likely to avoid legal charges, like environmental chargers and customer lawsuits, because they do not deal with illegal practices. Concerning suppliers and investors, honesty gives a rise to sound practices, thus eliminating frauds, coercion, or suspicions in the process. The business is also likely to receive genuine feedback because honesty always attracts honesty. Finally, the paper has established that businesspersons, who are honest, tend to be respected, self-confident, courageous, and mature in their actions. From the points made above, it has been demonstrated that honesty has a tremendous role in the success of the business.

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