Effects of a Lack of Ethics on a Business Environment
Businesses small and large must act ethically to protect themselves and their business environments. Otherwise, they pose a threat to their employees, customers and communities. A lack of business ethics endangers the future of your company, jeopardizes the public good and can have many other negative effects on a business environment.
Unethical businesses can act as parasites, drawing local resources to turn a profit but failing to reinvest in and develop the community they depend upon. For example, a company might exploit its workers by offering low pay, knowing they have no other options in the region. While this approach might secure short-term profits, the long-term effects are regional distaste for the company and worker dissatisfaction, as well as high turnover if employees find other career options. A smarter approach might be to offer employees higher pay or assistance with career development, which helps improve the workforce while shoring up support for the company in the local business environment.
Other unethical actions also impact public goodwill in a business environment. For example, companies that put locals in danger by neglecting to follow safe operating procedures risk a public relations disaster, not to mention legal ramifications. Similarly, companies that exploit workers risk negative publicity, even if the customer base lives elsewhere. Public outcries against clothing companies that rely on sweatshop industries in developing countries exemplify the type of negative publicity that can result from distant unethical behavior.
Some businesses unethically pursue temporary profits without considering the long-term impact of their actions on the physical environment. For example, if timber companies fail to plant trees to replace the ones they harvest, sooner or later the industry will destroy itself, as well as the world. Ethical businesses, on the other hand, recognize that sustainable practices maximize their future prospects and have the added benefit of minimizing environmental damage.
If unethical business practices are prevalent, everyone in a business environment is at risk. For example, if financially reckless companies fail to follow ethical accounting guidelines, shareholders can’t make informed decisions. Consequently, some investors might lose everything if a company’s true financial position is shakier than revealed. Similar risks exist even on the level of small businesses. If a local company lies about its finances, its employees can’t make informed decisions about their futures with the unstable company.