What Is Business Ethics and How Does It Relate to Your Work
In the broad spectrum of business subjects — finance, operations, sales, and marketing — business ethics has been relatively easy to overlook. It doesn’t come up during Monday meetings, it’s not in the office memo, and for the most part, the bulk of day-to-day business can run without it.
Instead, business ethics is a more high-level way of thinking. It considers the ethical principles that guide an organization and its activities, and for a long time, business ethics was something taken for granted. People didn’t give much thought to whether a business was “doing the right thing” or “doing good.”
Thankfully, recent years have seen a rising regard for business ethics. People are demanding fair and equal practices, and companies are overhauling their outdated business conduct. But what should the new policies be founded on? What exactly makes a business ethical?
This article explains the basics of business ethics, how it relates to personal ethics, and more importantly, how it applies to your work life.
So What Is Business Ethics?
The Cambridge Dictionary defines business ethics as the “rules, principles, and standards for deciding what is morally right or wrong when doing business.” What’s right and wrong, however, can have many interpretations, and businesses today undertake ethical decision making in different ways.
Ethics generally revolve around the primary purpose of the company. Does it aim to produce the best all-natural products? Does it hope to support local communities? Or does it simply want to earn money for shareholders? Whatever it may be, corporate ethics are guidelines intended to uphold and protect these purposes.
A business’s ethics are best seen through its behavior. While often highlighted in more sensitive ethical issues, such as employee treatment, corporate governance, or social responsibilities, ethics also dictate everyday business practices. For instance, how a business treats employees, responds to customer feedback, or deals with its supply chains — all these reveal something about the ethics of a business.
Personal Ethics and Business Ethics
Most of us are already familiar with the concept of personal ethics. And whether we’re conscious of it or not, we all approach life with our own codes of ethics. Personal ethics are cultivated at an early age, usually based on the things we pick up from people around us, the examples we see, and the books, shows, and media we’re exposed to. Of course, this changes as we learn and experience new things, but for the most part, personal ethics are not something we easily let go of.
Whereas personal ethics are internal to an individual, business ethics are internal to an organization. If you consider that a business is an ecosystem, made up of multiple parts and individuals working together, then business ethics are the standards that govern that ecosystem.
Similar to personal ethics, however, business ethics are more than just a set of rules or laws. Although most laws have been written with ethics in mind — and there are several instances when what’s ethical and what’s legal overlap — the two are not exactly the same.
For instance, although it’s completely legal to offer your services to a potential client at a lower than industry rate, it may be considered unethical for you to do so if you know your competitor is already in talks with them.
Rather than a simple cut and dry approach, ethical standards take a more personal, holistic standpoint. They draw from several disciplines, including economics, law, psychology, public policy, and moral principles.
The Importance of Business Ethics
Whenever there’s an interaction or exchange between two parties, there’s also a possibility for conflicts of interest. In business, this can mean a number of things, from an under-appreciated employee to a major dispute with customers. Failing to please any one of these parties can lead to a significant loss for a business.
But how do you make sure that you’re acting in everyone’s best interest, while still building a competitive advantage and profit? The answer lies in business ethics.
A set of good business ethics can help a business not only achieve its purpose and profit, but also do so in a way that’s fair and positive for everyone involved. Examples of this can be a company’s mission to donate a share of its profits to a local cause or to extend a free return policy to all its customers.
By establishing ground rules for all business behavior early on and being proactive in their implementation, a business effectively creates goodwill and a strong reputation for itself. Plus, if applied alongside a strong business plan, business ethics can help a business achieve a greater purpose and more success in the long run.
How to Build Business Ethics Into the Workplace
The ethics of a business usually originate with its founders or shareholders. Even if not explicitly stated, the personal ethics they exhibit are often naturally adapted by the business as a whole. For example, if an owner is inherently frugal and slow to spend, it’s likely that the employees will also take care when charging anything to the company.
Even so, it’s best to take the time to intentionally establish a firm code of ethics. Not only does it indicate a business’s commitment to values beyond the bottom line, it also sets the bar for what the company expects of its employees.
While each business is free to figure out its own set of ethics, the following are a few that are generally accepted in doing good business.
A business should strive to always operate fairly and justly. Even if there are underlying intentions or advantages to gain by treating particular individuals with favor, acting on a bias creates an unfair work environment. An ethical businessperson, on the other hand, treats everyone with equal human rights and acceptance, whether it’s an employee, customer, or any other individual.
For instance, a skincare line would act unethically if they only hired a certain type of employee for their company (i.e., a particular sex, ethnicity, or age).
As a personal trait, integrity indicates that someone is honest and morally upright. Applied to business, it typically refers to one that is consistent in both words and actions. If a business states something, it should have the integrity to follow through, even if there’s pressure to do otherwise. Conversely, if a business makes a mistake, it should have the courage to own up to its actions and admit its faults.
An example of this would be an all-natural, organic brand that discovered one of its suppliers actually applied chemicals in the material. Rather than simply sweeping this under the rug, an ethical brand would inform their customers of this fact and do their best to remedy the situation.
Honesty is the first step a business should take toward building public trust. It indicates transparency and openness — that there is nothing to hide. People appreciate it when a business doesn’t misrepresent themselves or exaggerate their claims. If consumers can take what a business says at face value, they’re more likely to go with that business.
A common case where transparency is very important is in the food industry. Consumers have the right to know exactly what goes into their bodies, and producers of meat, milk, or other animal products would do well to offer information about their practices and principles on their labels.
Introducing Ethical Guidelines to Employees
Once a set of business ethics is complete, it’s best to personally introduce it to employees and teach them how to implement it. Give them actionable steps for how to exhibit these ethics in everyday situations and decision making (i.e. greet everyone in a similarly friendly manner, consult with a supervisor if they don’t know the answer to a customer question).
If possible, hold regular meetings that focus on understanding business ethics. This helps to instill its importance as part of the business, provides an opportunity for employees to share personal experiences, and unites everyone under a shared goal.
Examples of Implementing Business Ethics
While it’s easy to cite business ethics when things are going smoothly, it’s just as easy to forget them when things aren’t going as planned — which is when business ethics are needed most. Here are a few common cases that require a strong set of business ethics.
Corporate Social Responsibility (CSR)
Corporate social responsibility is a means of self-regulation, keeping a business conscious and accountable for its impact on society, the economy, and the environment. Essentially, it recognizes that a business creates a series of effects, some of which may not be too positive (i.e. pollution, consuming resources). CSR is a business’s way to help offset that, usually through a range of volunteer work, philanthropic efforts, and other programs.
Corporate responsibility is considered part of business ethics as it requires a portion of resources and profits to go toward something aside from business. And while a business may otherwise prefer to put all its profits back into operations, CSR does offer a lot of benefits, such as being a good team-building opportunity, increasing community engagement, and outwardly expressing the company’s contributions to the public. Many consumers prefer to support socially responsible companies, so a company may even see returns on their ethical investments.
Discrimination is both an illegal and unethical business practice. The United States Civil Rights Act protects against discrimination based on an individual’s race, color, religion, national origin, or sex. Some local governments may also add their own laws preventing discrimination against sexual orientation, marital status, or other classes. Therefore, not only is it important for business ethics to address discrimination as a way to maintain professional ethics and fair working conditions, it also prevents the likelihood for any unnecessary lawsuits or legal issues.
Business in Social Media
This is a more recent concern in business ethics, with social media playing an increasingly larger role within a business’s marketing strategy. Being active on social networks has a lot of benefits, providing businesses with a way to interact and engage directly with customers. However, it can also be tricky to navigate. One wrong post or hasty comment can easily be taken the wrong way, and once published, can be screenshot and spread in an instant.
As such, it’s best to approach your social media as you would any other form of marketing or customer service. Set guidelines for what words, tone, and language your business uses (and doesn’t use), and make sure this is clearly communicated with all employees.
Getting Down to Business
These days, having a strong set of business ethics is important when doing any type of work. Not only does it ensure that unethical practices are avoided and ethical dilemmas are addressed, it also helps guide individuals through day-to-day business. So whether you’re a business owner, professional, or independent contractor, make sure to establish a firm code of conduct that helps guide all your business activities.