We’re taught the importance of ethics and morals from a very early age. We’re taught right from wrong – that stealing, lying, cheating and bullying are things that bad people do while caring for others, working hard and taking care of the environment are some of the fundamentals of being a “good person”. But how do those ethics we learn in the early stages of our childhood relate to business? How can big companies ensure that their businesses are operating in an ethical way – and why is it even important?
Writing for Forbes last year, CEO of the Institute for High-Character Leadership, Bruce Weinstein argued that “The principles of ethics that help us solve ethical dilemmas in everyday life are the same principles that provide guidance in business, health care, law, and education” and cited “1. Do No Harm, 2. Make Things Better, 3. Respect Others, 4. Be Fair and 5. Care” as those key principles.
Maintaining good practices and strong business ethics should be a key consideration for all organisations, whatever the size, for numerous reasons, but the first and foremost is reputation. A positive reputation is an invaluable asset and once lost, it is incredibly difficult to rebuild.
Leon Bracey of Business in Focus explains: “The trust and confidence of the consumer can have a direct and profound effect on a company’s bottom line. Recently, the importance of reputation has become increasingly apparent, as companies such as BP and Toyota have had to cultivate their responses to crises in order to maintain the reputation and standing of their companies to the world.”
A positive reputation can hugely impact the performance of a business. When corporations develop trust and decency, consumers tend to respond positively, opting to patronise businesses which appear ethical over their competitors. But strong business ethics go beyond the consumer too – investors are offered piece of mind when they know that the company they deal with aims to work in an ethical and responsible manner while share prices tend to remain higher in organisations that possess a strongly positive reputation. Not only that, but staff retention is often higher in ethical companies and they often appear more attractive to prospective candidates, allowing businesses to attract the very best talent. Customer loyalty, strong partnerships, reduced risk, staff morale and long term gains are also cited as benefits that come as a result of having an ethically focused business.
According to the Institute of Business Ethics, “Operating according to ethical values is playing an increasingly important role in business today. Companies do not operate in a vacuum, but are part of a society which expects a certain standard of behaviour from businesses” and it’s completely true that society holds businesses to high standards and reacts accordingly when they feel their expectations haven’t been met. But even with companies who are nailing their ethical responsibilities there’s always room for improvement. According to global Ipsos MORI research in April 2013 74% of the public within the 24 countries surveyed believe that companies should do more to contribute to society.
So how can businesses operate with integrity and present themselves in a way which demonstrates the ethics at the core of their business? It goes back to Bruce Weinstein’s principles. Creating a business model which has doing good, giving back and respecting consumers, employees and the environment at its heart is crucial, while established corporations have a responsibility to amend their business policies and models to ensure sustainable success moving forwards.
If you’d like to know more about business ethics, values and responsibilities, join us online for our next MidtownBigIdeas event. We’ll be live streaming the debate with our expert panel on Facebook and Twitter from 6.30pm on 21st March. We’d love to have you join the conversation.