Business Ethics | The Impact of Ethics on Business
Business Ethics: Doing What is Morally Right
Business ethics is not just about adhering to the legal requirements; it encompasses going above and beyond to do what is morally right. Operating as an ethical business means ensuring fairness for employees, suppliers, customers, and the environment. Sometimes, this approach may conflict with profit maximization. However, businesses can implement various changes to enhance their ethical profile.
Treating Employees Well
The first step toward being more ethical is treating employees with care and respect. This includes providing a safe work environment and offering a fair wage. Fair wage implies more than just the minimum wage; it is about compensating employees adequately for their work so that they can lead a comfortable life. Companies can also introduce financial incentives that reward employees as the business flourishes, such as bonuses or share schemes that allow employees to own a part of the company they work for.
For instance, Google consistently ranks high for employee satisfaction. They not only provide competitive salaries but also a plethora of benefits promoting a wonderful working environment. Some of these perks include free meals, health and dental care, gym facilities, support for student loan repayments, and flexible working hours. By offering these amenities, Google aims to create a happy, productive workforce.
Treating Suppliers Fairly
The second step towards ethical practices is treating suppliers with integrity. This can be achieved by paying fair prices and ensuring timely payments. Fair trade pricing is an established guideline helping ensure that suppliers receive fair compensation for their products. Businesses like coffee producers display fair-trade logos on their products, signifying ethical treatment of suppliers.
Ethical businesses also focus on sourcing materials responsibly, avoiding exploitation, and considering social and environmental impacts. A stellar example of this is Lush, which follows an ethical buying policy that secures decent worker rights, safe conditions, and sustainable practices. With these robust policies in place, Lush commits to ethical supplier treatment and sourcing practices.
Paying Fair Taxes
Another cornerstone of ethical business practices is fulfilling tax obligations. Paying taxes can significantly impact a company's reputation. While some major corporations leverage legal loopholes to minimize their tax payments legally, this practice can tarnish their image. For example, Starbucks faced public backlash after paying zero corporation tax in the UK in 2011, which led to a boycott and resulted in an eventual payment of 20 million pounds to HMRC.
The Profit-Ethics Debate
Many argue that prioritizing ethics can lead to decreased profit margins. Paying employees well, sourcing ethically, compensating suppliers fairly, and meeting tax responsibilities all incur higher costs, potentially impeding profits compared to less ethical counterparts. However, there is a compelling argument against this idea. Businesses with ethical credentials can often charge premium prices for their products, compensating for increased operational costs.
Moreover, ethical operations can enhance public perception, improve brand image, and build customer loyalty, as consumers are increasingly aligning with brands that share their values. In today's digital age, a lack of ethical practices can lead to negative exposure on social media and press, adversely affecting a business's reputation and profitability.
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