The Importance of Ethics in Business
For a business owner, there is a very fine line between doing what's best for the profitability of the company and crossing the line over into the unethical. While many may argue that there is no place for personal values in the dog eat dog world of business, the truth is that ethics can make or break a growing business in a number of ways.
It is generally accepted that society values ethics from their businesses. Companies are boycotted for unethical behavior and profits go down as does consumer trust in the company. When consumers and clients feel they cannot trust a business, their natural reaction is to end their loyalty in that business which in turn, lowers the company's profits. If a company can maintain their clients’ loyalty by acting reasonably and ethically while still remaining in the black financially- no small feat for even the most moral business owner- they will find continued success as the business grows and expands.
But how exactly does a business remain ethical? The question is one asked time and time again and often there is no clear answer. The ethics of a business are determined by those running it, and understanding the concept does not make for an ethical business owner. He or she must have strong moral values and beliefs and have a determination to uphold those beliefs before even entering into the business world. The person must also have a strong character and be able to handle challenging situations. Oftentimes it is a difficult decision to choose between doing what is ethical and doing what is best for the business.
Take the example of grocery stores. Food is a necessity in every person's life and the food industry is of course aware of this. During a seller's market- that is, there are more buyers than sellers, reducing the variety of choice available to the customer- if a store maintains their prices and does not increase to take advantage of the consumers who have little other choice, they will gain the respect and loyalty of their customers during the subsequent buyer's markets, when consumers have more choices for shopping and stores are generally competing for customers. The stores that remained fair to their customers even when they could have raised profits by acting unethically, increase their profitability in the long run.
However, the consumer is not the only one that businesses must act ethically towards. It is equally important that they have their employees’ best interests in mind. Let's look at the grocery store again. During the buyer's market, when profits are presumably down and the store may be having trouble attracting new customers or keeping the old, the store may need to lay off a number of employees. However, in times of low profits, the owners and those high up on the corporate ladder should also be feeling the heat from the troublesome times. If a C.E.O. keeps his current, million dollar salary while hundreds of thousands of minimum wage workers get cut, word will soon get out that the company is acting unethically and not only will they lose customers but when the business is ready to rehire, qualified potential employees who may have applied in the past will not out of fear that they may just get laid off when times are tough.
However, if the owners are responsible and share the financial hardships with their employees, with those on the upper rungs taking pay cuts and laying of a reasonable number of lower rung workers, both the employees and customers will have nothing but respect for the company and will be much more willing to support it, with hard work from the former and higher profits from the latter.
While it is the choice of the owners of a business whether or not to remain ethical, it is certainly better in the long run for profits and consumer and employee loyalty to operate with ethics in mind at all times.