Good ethics are important in business because they establish the foundation for responsible decision making and behaviors. Creating and adhering to ethical principles can help to build trust and credibility among customers, employees and other stakeholders, and are key elements in creating a positive company culture. In other words, good business ethics are good for business.
What are Good Business Ethics?
Good business ethics are the moral principles that guide the behavior of individuals and organizations in the business world. Some of their key elements include:
- Honesty: being truthful and transparent in all business dealings, and avoiding deceit or manipulation
- Fairness: treating all people equally and without discrimination; avoiding conflicts of interest
- Responsibility: taking ownership of your actions and holding yourself accountable for their consequences
- Respect: treating everyone with dignity and empathy; avoiding exploitation or abuse
- Sustainability: ensuring the long-term viability of the business; considering the impact of your decisions on future generations and the environment
Unethical behavior can lead to negative results such as the loss of customers, damage to the reputation of a business or individual, and even legal consequences.
Examples of Good Business Ethics
The following are ways you can incorporate good business ethics into your company:
- Be honest and transparent in communication with customers, employees and stakeholders
- Be transparent in your business practices, and about pricing
- Provide quality products and services
- Avoid deceptive marketing practices
- Respect the privacy and personal data of your customers and employees
- Comply with relevant laws and regulations
- Stay in compliance with labor laws and fair treatment of employees, especially with fair compensation and safe working conditions
- Treat suppliers fairly and ethically; pay on time and avoid exploitation
- Avoid bribery or corruption
- Support your community through philanthropy or community involvement
- Promote sustainable business practices, and take responsibility of your role towards the environment
Ernst & Young Required to Pay $100 Million for Cheating
An example of bad business ethics is indicated in this report by the U.S. Securities and Exchange Commission (SEC) when it imposed the largest penalty ever against the audit firm Ernst & Young (EY).
Ernst & Young was charged for cheating by its audit professionals on exams required to obtain and maintain Certified Public Accountant (CPA) licenses, and for withholding evidence of this misconduct from the SEC’s Enforcement Division during its investigation. EY admitted to the facts underlying the charges and agreed to pay a $100 million penalty and undertake extensive remedial measures to fix the firm’s ethical issues.
Over multiple years, a significant number of EY audit professionals cheated on the ethics component of CPA exams and various continuing professional education courses required to maintain CPA licenses, including ones designed to ensure that accountants can properly evaluate whether clients’ financial statement comply with Generally Accepted Accounting Principles. They further admitted during the investigation that they did not have current cheating issues, when in fact, the firm had been informed of potential cheating on a CPA ethics exam and did not take action to correct its submission.
Do Good Ethics Come Naturally?
The easy answer is “no,” good business ethics do not always come naturally, they may need to be developed and refined. Some people have a strong moral compass and instinctively behave ethically while others may need to be conscious of their decision making behaviors. Factors that can encourage—or discourage—good behaviors can include personal values, cultural norms and incentives.
A business owner should establish a clear code of ethics and create a culture that values and promotes good ethical behavior. By making ethics a priority, companies can create a positive and responsible business environment. Some ways to do that include:
- Training and education
- Establishing clear expectations and consequences
- Regular reinforcement of ethical behavior
What are Some Ways to Practice Good Ethics in the Workplace?
Through promoting and practicing good business ethics, a quick and correct response can become automatic. Compare it to a fire drill. You’ve learned where the exits are and where to gather, and not to panic if a fire alarm is sounded because you have practiced the correct behavior. Here are ways to practice good ethics in your workplace:
- Create a company code of ethics
- Understand the principles and values that guide your workplace’s ethical behavior
- Be honest, transparent and truthful
- Treat others with respect, dignity and empathy; respect cultural differences
- Lead by example; be a positive role model in demonstrating behavior you’d like to promote
- Set the tone for the workplace
- Have the courage to speak up if you witness unethical behavior
- Don’t let your personal interests interfere with your professional responsibilities
- Promote ongoing education about ethical issues and developments
- Seek guidance if you are unsure
Overall, companies that prioritize good business ethics often perform better financially, and are better equipped to navigate complex and challenging business situations. By incorporating good ethics into a business practices, companies can build a positive reputation, foster trust and collaboration, and promote responsible and sustainable business growth.
Get Advice on Issues Like Good Business Ethics from AEG
The Association for Enterprise Growth (AEG) supports and promotes the growth of businesses, and is committed to providing its members with the resources, connections and knowledge they need to succeed. Through our team of experienced business advisors and services, you’ll build important relationships with other business owners like yourself, and be able to get advice on issues like how to establish and support good business ethics in your workplace. We’re here to help.
To learn more about AEG or to become a member, contact us at info@enterprisegrowth.org.
