Ethics are the standards of behavior that are expected, accepted and tolerated. Society derives its ethical values from its culture, religion or even laws. Businesses are seen as members of the society, and as a business owner, you must bear in mind that your customers are more aware of this status. Their awareness leads them to expect that your business will make ethical decisions.

Analyzing Business Processes

The business you run or oversee may have processes where there lies a high risk of ethical lapses. You need to analyze your company's highest risk areas. For example, if you own a small meat shop, you need to make sure that you provide fresh and healthy meat. This means that you should package and store meat products properly, maintaining proper temperature on all meat products and disposing of products that are outdated. You also need to assess which business processes directly affect your company's goodwill, because ethical lapses can ruin your company's reputation and its standing in the community.

Encouraging Ethical Behavior

Being aware of the source of ethical lapses will help you in identifying the source that needs to be addressed and refined. For example, having an all-out contest that encourages account managers to bring in the most contracts by any means necessary might encourage them to participate in kickback schemes. Healthy competition is good, but make sure that your company's core values promote fair play and ethical policies outline unacceptable behaviors and the consequences for participating in these behaviors.

Managing Ethical Lapses

Many businesses have experienced ethical lapses from time to time, but failure to act ethically does not have to be the end of your business. When a famous sportswear company was found responsible for buying supplies from businesses that exploit children, the company responded by updating its worker treatment standards. You need to decide how you will manage an event that causes others to question your ethical practices. Your business or its relevant processes should have an ethics-based approach laid out beforehand. Being proactive in your approach means that you consciously make efforts toward carrying out ethical business practices and accept your responsibility beforehand.


Ethical practices, or lack of them, can be a point of differentiation between your business and the rest of the competition. Ethical lapses can severely damage your company's future. For one thing, a large percentage of your customers might choose to do business with your competitors because they no longer trust you. Your company's goodwill and that of anyone attached to it might also become severely damaged. Additionally, some unethical behaviors, such as kickback schemes, are illegal. On the other hand, ethical behavior can bring in additional business, because your customers will see you as caring about them and the community.