Ah…spring!  It ushers in a sense of redemption and starting over. It's a time to stop and smell the roses, a time to review the past, enjoy the present, and look ahead with hope.

Something that I've been pondering this spring is whether there is any solid evidence that being a "good" company with a reputation for strong ethics is related to strong financial results. With so much press given to the "bad" companies, the good companies don't get much ink.

Picture the spectacled nerd who is the leader of the chess club in high school and who, 30 years later, shows up at the class reunion as the founder of a billion-dollar-plus business. Does that same kind of success come with being a "nerdy" company? Can businesses set ethical and financial expectations and succeed at fulfilling both?

When I was in school studying works by Milton Friedman and Theodore Levitt, those esteemed experts said no. But as I matured in business, this question bugged me enough that I did some research, and I found that the answer is an irrefutable yes. There is a definite correlation between financial success and social responsibility.

Excellent Companies Are Ethical

I'll start with the best known of recent studies on this topic, a five-year research project that resulted in the bestseller Good to Great by Jim Collins. His team analyzed mountains of data to learn whether a mediocre or worse company can become a great company-"great" defined in this case as generating cumulative stock returns that beat the general stock market by an average of seven times in 15 years. That's better than the results of some of the world's best companies, including Coca-Cola, Intel, General Electric, and Merck.

Collins and his team found that the answer is yes, and that a certain set of characteristics distinguishes great companies from the rest. Collins created his own jargon to describe these characteristics (I guess that's what you have to do if you want to sell books), but I'm just a kid from Nebraska, so I tend to read between the lines that great companies are ethical and have strong corporate values. They value honesty, modest yet determined leadership, and self-discipline, and place great value on their people.

An even more exhaustive analysis was conducted by professors at the University of Sydney, Australia, and the University of Iowa. They were looking for the answer to a question that Business Week asked in 1999: "Can a business meet new social, environmental, and financial expectations and still win?"

After analyzing other studies spanning 30 years and thousands of examples, they concluded that there is, indeed, a positive relationship across industries between corporate social/environmental performance and corporate financial performance. These findings pour cold water on Friedman and Levitt's teachings that corporate social performance is inconsistent with shareholder wealth maximization.

In fact, in today's world the public, media, shareholders, and analysts are beginning to base their assessments of the sustainability of a company not only upon its financial results, but upon its value system. This is a trend that I believe will continue. Business leaders who don't adopt this idea will not succeed and will be replaced by more contemporary thinkers.

"But wait, there's more!" as the infomercials say. Another research team of professors from Boston College and Australia's Curtin University of Technology found that excellent companies are ethical companies. The study explored the relationship between corporate ethics and excellence as defined by Thomas Peters and Robert Waterman in their 1982 book In Search of Excellence, and found that where there is excellence, there are ethics. (The reverse is not always true, however.)

This is bona fide evidence that clearly demonstrates a correlation between corporate values and financial performance-which only an imbecile would ignore! As I mentioned earlier, spring is a good time to start over. Let's think about changing values as a process not unlike the growing and harvesting of a crop.

A Time to Plant

When spring arrives, farmers find hope in the warm soil, rain, and sunshine, and they prepare for planting. Similarly, business leaders can begin to establish what will be the souls of their organizations.

Demonstrate values and set standards through your own actions. Do everything with integrity and credibility. Establish a concise written set of corporate values that reflect the desired culture, and then start to talk about these values with everyone in the company. Remember that change starts at the top and slowly drips through the organization, so be patient. Learning happens when one person at a time accepts responsibility for change.

Have one-on-one meetings with each manager on a regular basis. Hire the smartest and best people you can find whose values fit your organization's values, and then let them do their jobs. This is what Peters and Waterman describe as "simultaneous loose-tight properties," giving people discretion to make decisions and do their jobs within a tightly controlled framework of shared values.

A Time to Cultivate

When a farmer's seeds start to grow, he fertilizes and cultivates the young, tender plants. As your organization begins to change one person at a time and grow in its ethical practices, continue to communicate so that everybody has a clear understanding of what constitutes exceptional individual and group performance.

Corporate values should be enacted through everyone's daily activities. Celebrate successes, reward good performance, and weed out those whose value systems don't match the organization's. Systems should be in place to enforce your company's value system and discipline those who do wrong. Your customers should experience the change in your company's value system, too. Ethical companies are close to their customers and build strong relationships based on honesty, trust, and a win-win environment.

A Time to Harvest

The farmer's hard work during spring and summer culminates at harvest time. If your organization is running with its value system at the forefront of everything it does, results will improve in a variety of ways.

Top talents within the company will be more loyal, because they'll be proud of the organization and know what's expected of them. The quality of work will improve, and customers will see more value in their relationships with you and be more likely to commit to you for the long term, allowing your company to better weather the inevitable ups and downs of business. Shareholders will have more trust that their investments are not at risk.

All of these good labors will result in a bountiful harvest of improved financial results for the long term. Now, cynics will say that focusing on profit is at the root of greed, but I disagree. Seeking profit at the expense of values is not acceptable; realizing profit by following values is what we're here for.

I think by now you get the picture. And it's spring, so why not get started planting those seeds of integrity, virtue, and honesty to harvest sustainable profits?