Putting Good Business Ethics into Practice
by Carrie Hinkel on February 5th, 2008
The biggest threat against the survival of any business isn’t the competition…it’s the company’s understanding and practice of good business ethics. It’s hard to turn on the news without hearing about yet another business scandal that drove a company under. But it’s not just the big mega-corporations that are in danger of falling prey to bad business ethics. Small businesses are just as vulnerable. Think about it - would you give your business to a store you saw overcharging for items at the register? No, and I bet you would tell others about that experience too. Negative word of mouth spreads fast - especially in the age of emails and text messaging!
What does it mean to have good business ethics?
Having good business ethics means that with a choice of right or wrong, you choose right - even if it means lower profits or less productivity. It means putting employees and customers before the company’s bottom line. Having good business ethics isn’t the same thing as following the law. Ethics goes beyond the law - just because a certain business practice is legal doesn’t mean it’s the "morally right" thing to do. Here are some examples of common business ethics issues in several divisions of a company:
Human resources - The way a company treats its employees (and potential employees) is a gray area for many businesses. In human resources, having good business ethics means treating others with the utmost respect. Ethics involving human resources are important issues that could result in a big lawsuit against your company if they are not taken seriously.
* Examples: Discrimination - (based on race, gender, religion, weight, or attractiveness), sexual harassment
Finances - This is the most common form ethics scandal - think Enron and Worldcom. For many companies, profits are always the most important factor - and that means at any cost. That kind of thinking can quickly result in a company’s downfall or even prison time for those who participated in the wrongdoing.
* Examples: Insider trading, misleading financial analysis, hiding finances, trying to avoid paying taxes
Marketing - Good business ethics means always thinking in your customers’ best interests. If you are proud of your company and your products or services, you shouldn’t have to scam or trick your customers into buying from you. Think how you like to be treated as a customer and bring those guidelines into your own business.
* Examples: Bait and switch, price skimming, pyramid schemes
Production - In recent times, following bad business ethics in production (for example, using lead paint in toys) has given many companies bad reputations, early closings and expensive recalls. Trying to save money in production by using products that could potentially be harmful to others (or the environment) is not always against the law, but it is always unethical.
* Examples: Inferior goods, harmful ingredients, product testing procedures (for instance, on animals).
So, how can you ensure that your business is practicing good business ethics?
If your company has employees, it’s important that the owners begin practicing good business ethics right away. If employees see the owners cutting corners, then they will see that as acceptable behavior and will most likely begin to follow the same procedures. The next step is to create a document called a Code of Ethics - this should cover every aspect of your business, and determine what’s acceptable and what’s not acceptable. If you are unsure of where to start, you can Google "code of ethics" and take a look at the documents that other companies have created. Then, distribute your business’ Code of Ethics to every employee and schedule an in-depth staff meeting to talk about it and to let the staff know that the company is serious about practicing good business ethics. You may also want to go as far as creating an Ethics Board within the company. This would consist of a few employees who would regularly meet to discuss the company’s current practices and what could be done better.
Practicing good business ethics means you can feel better about your company; knowing that you are doing the best for your customers and your employees. You might just find that the positive word of mouth results in more customers and higher profits!