Business Ethics | What You Need to Know About Running an Ethical Business
Tuesday, January 12, 2021
From sustainability programs to anti-discrimination policies, since the 1960s, business ethics has become more and more important to consumers and staff. In the current work environment, running an ethical business is also a drawcard for new and potential staff.
So, what does ethical mean in business terms? It’s not something that can be easily summarised. So, here, we’re explaining business ethics, common ethical business policies, and how you can run an ethical business in 2021. Let’s get started.
What is business ethics?
To explore what it means to be an ethical business, let’s first have a look at ethics in general. On a personal level, according to the Oxford Dictionary, ethics are “moral principles that govern a person’s behaviour or the conduction of an activity.”
So, then what is ethical responsibility in business? Business ethics refers to implementing moral principles that guide business decision-making by implementing appropriate policies and programs.
The tricky part is that in business, morals can easily go out the window for the sake of the bottom line. But business ethics are crucial. Consumers are watching how your business reacts to controversial topics and will make buying decisions based on your moral actions.
In Australia, there are two variations of business ethics. There are business ethics that businesses are legally required to abide by such as anti-discrimination and fair wage policies. However, there are business ethics that are engaged in based on the individual values of a business, such as sustainable sourcing or other social programs.
Types of Business Ethics Programs and Policies
What is an ethics program of a business organisation? Well, there are actually many forms of business ethics. These policies and programs include:
- Social responsibility including anti-discrimination policies
- Sustainable sourcing and other environmentally responsible programs
- Ethical staff management programs
- Anti-nepotism policies
- Proper business governance
- Quality control programs
Having strong business ethics can mean a lot of different things. It’s not a cut-and-dry process that looks the same for every business.
Of course, you won’t be able to make everyone happy. But, if you think about what’s important to you as an individual, you can set programs in place to make sure you and your staff are operating as ethically as possible.
How can ethical issues affect a business?
Your business ethics affect your company culture. In short, how you act in business is a reflection on you. So, if you feel you have a strong moral compass, those values should come through in the way you run your business.
Consumers are also aware of when you cut corners or make sketchy decisions. Now, more than ever, customers won’t buy your products or use your services if your business practices go against their ethical values.
So, how can you make sure business ethics are making their way into your company model?
How to run an ethical business?
Start by considering your own values and thinking about the businesses you prefer to interact with. Again, you might not be able to tick every box for every customer, but if you stay true to your values, it’s possible to make sure they shine through in your business practices.
For example, you might focus on sustainability and eco-friendliness as a way to run an ethical business. That means focusing on making sure your sourcing, packaging, and other practices are as sustainable as possible.
Or, you might focus on anti-discrimination policies in your hiring process or in your marketing messages by increasing diversity or implementing anti-discrimination training programs.
The way you run your ethical business is up to you. But by looking at your personal morals, you can bring those values into your business.
Why does ethics matter in business?
You might be wondering why business ethics matters. As we’ve mentioned, poor business ethics can affect how customers view your business and can, therefore, affect profits and the overall viability of your business.
However, it also matters because strong business ethics creates a deeper level of trust between businesses and consumers.
For example, job seekers must trust that they’re receiving the same scrutiny that a manager’s friend or relative would receive. This is where the ethical policy against nepotism can breed trust in the wider community.
All the business ethics programs and policies listed above help to earn trust which can boost your business both from the inside among your staff and on the outside from your customers.
How are business ethics relevant to leadership?
As a leader, you set the tone for your business. So, if you expect your staff to act ethically, leaders have to role model ethical behaviour themselves. This also means in your personal life.
As much as we sometimes try to keep our business lives and personal lives separate, there’s no doubt that your staff and customers not only watch you in the office but in what you decide to do in your spare time as well.
So, for example, it won’t look very good if you run a vegan foods company but you’re not vegan off the clock. This breeds a lack of trust and is just downright confusing.
In most cases, you’re running a business because you’re passionate about sharing a certain message through a product or service. So, the leaders of that business should be practising what they preach, so to speak.
This is how business ethics relate to leadership. To run an ethical business, you have to not only talk the talk but walk the walk.
What is business ethics management?
Especially for larger companies with large staffs, you might need to think about bringing on a business ethics manager. In some cases, there should be a team of people in charge of managing business ethics to ensure the policies and programs are functioning properly.
Why is ethics important in business management? Well, ethics in business should be just as important to manage as other areas. For example, you probably focus on financial management because the bottom line is important. The same should go for business ethics.
Overall, business ethics might be the last thing on your mind but is an essential piece of the business ownership puzzle. Consumers are switched on to how businesses are making decisions and if those consumers feel that what you’re doing is unethical, they’ll go elsewhere.
Again, it’ll be impossible to please everyone. After all, our values might differ here and there to our customers. But, but focusing on your personal values and living those out through your business endeavours, you’re likely to be on the right track toward a more ethical business.
Want to read more about how to boost your business through marketing strategies that work?
Check out our other blogs below: