The importance of business ethics in long-term corporate success
Many business failures in recent years are the result of unethical behaviors of company leaders. One example is Tyco International, which broke up in 2007 after a theft case against two of its executives caused great damage to the company’s reputation. Such cases show that while knowledge and strategy are essential to business success, ethical practice is even more important.
Business ethics refers to the individual conduct of a company’s employees, from the rank-and-file to the CEOs. Doing business ethically not only ensures efficient operation within the organization, but reflects positively to potential clients and partners. Here are a few pointers for ensuring ethical practice within your business.
Ethics is learned over time
Your employees won’t adapt to new codes of conduct within their first week of work. You can teach them ethics and professionalism in theory, but it will take time for them to adapt these principles in practice. To help them grasp the concept, use actual work problems as examples and guide them in making the right decisions in such situations.
Set a good example
Employees look up to their leaders as role models, at least at work. By setting a good example, you can serve as their yardstick for good behavior, and eventually, earn their trust and respect. This gives them the confidence to offer their own opinions, and motivates them to help your business by simply doing their job right.
Establish friendship and teamwork
The best leaders maintain a friendly yet professional relationship with their employees.
This is because people tend to work more efficiently with people they feel comfortable with. Keeping your distance in a hierarchical structure can intimidate your employees, making them feel pressured to deliver and often affecting the quality of their work.
Keep open communication lines
Be as transparent as possible with employees’ performances, the company finances, and the organizational structure. You don’t have to disclose everything, but make sure your employees know how they’re doing and how the company is holding up. This way, people will trust you enough to approach you with their problems instead of letting these affect their work and conduct. They are also more likely to bring up their concerns with your management and help you better run the business and change in a constructive way.
Know your stakeholder obligations
Often, business owners have to deal with conflicting interests between their stakeholders and the community. An expansion project may promise great profit, but also require you to buy out local establishments. In such cases, you have to choose between meeting stakeholder expectations (revenue) and community interests (local industry). It’s important to define exactly what your obligations are to both to avoid such conflicts.
Final tip
As a business owner, your obligations run not only to your employees and stakeholders, but to the community. According to the International Business Ethics Institute, businesses are expected to give back to the community for letting them operate in its jurisdiction and use its resources. You can do this by contributing to charities, launching community projects such as cleanup drives, or simply paying taxes and following the local environmental standards.