Everyone knows the difference between right and wrong, and it’s especially important you have a moral compass when it comes to running a company. Business ethics are there to guide you on your way.
What is business ethics?
The most basic business ethics definition describes a set of rules that is designed to protect the business and its stakeholders. Business ethics ensure that a company is operating in the best interests of its stakeholders at every level. In the simplest sense, business ethics might simply be a set of rules that stop a business and its people from doing anything that harms its reputation. Most basic life ethics can apply to business ethics, i.e., don’t perform fraud, don’t mistreat people, and stay within the law. The Hippocratic Oath, for example, is a form of business ethics concerning the work of medical professionals.
The importance of business ethics
Business ethics are shared values between a company, its staff, and its customers. Knowing you all have the same basic morality is key to trust, and trust is vital to a successful business. You could have business ethics engraved above your office door, but the proof is in the way you act. That said, a business is a group of all sorts of people who may have different life values, and key to the importance of business ethics is knowing what you collectively stand for as a company.
Ethical dilemmas in business
Unfortunately, sometimes businesses run into situations that aren’t as clear cut as ‘right’ and ‘wrong’. You’ve probably seen ethical dilemmas in business highlighted in the news. Businesses that don’t pay their staff well, but deliver large bonuses to executives, for example, is a common issue that might seem unethical to customers. However, the business as a whole may view this practice as necessary for growth. As a small business, you’re unlikely to face issues concerning a huge team of workers vs. your board of executives, but that doesn’t mean you won’t come up against challenges. Some ethical dilemmas in business that you may run into, even as a small business, include:
Creating a brand character
Giving your brand a voice and a theme is vital to marketing, but taking that theme too far might just alienate, or even offend your customers. There have been plenty of examples of brands reading the room wrong. Marketing is an incredibly careful balancing act and you need to reconcile your business goals with your human values.
Corporate social responsibility and your bottom line
Business is about more than working in an office, and you need to consider your wider impact and corporate social responsibility (CSR). For example, if you’re a beauty company and you haven’t made efforts to go plastic-free, your investors and customers might view this poorly. That said, realizing your need to go green might be a real hit on your bottom line, risking your employees’ future.
Creating a great place to work vs. offering a great rate of pay
Most startups have an awful lot of work to go around, but not a lot of funding. This means that you might not be able to pay people the sort of salaries that match the competition, but you can offer an exciting workplace where they will be valued and rewarded in other ways. This can pose ethical issues. After all, even if you invest in a better workplace, employees might be resentful that you’re spending more on your office than your people.
Developing a business code of ethics for small businesses
When it comes to creating your own business ethics, consider the following:
The company vision
Your mission statement
How you want people to act as representatives
How you want people to act as colleagues
How you will monitor your chosen ethics – will you appoint an ethics officer?
You need a 360-degree view on your business and the people it interacts with. Customer segmentation analysis can be useful here, as the ethics and priorities of one generation or income bracket may be different to another. Don’t go it alone, either; talk to your staff and make sure you’re creating a business code of ethics that directly aligns with them. Ultimately, your business ethics should be the embodiment of your business’s values.
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