Ethics is an important part of a business. If a company is run unethically, it not only runs the risk of losing valuable customers and workers but may also run into legal problems. Unethical practices can even lead to a company shutting down if the public ends up turning against it. To avoid these worst-case scenarios, it's important to understand the role that ethics plays in running a successful business. By understanding and applying fundamental principles of ethics, your company can grow its business while less ethical competitors falter.

Why Define the Principles of Ethics?

What are ethics? Some believe that ethics are subjective, with different situations calling for different ethical views. As an example, ask yourself questions such as what are the ethical issues to consider when conducting a research study? Do they differ from the issues faced when making new corporate acquisitions? From a subjective view, there might be little overlap between the two. However, there are vital ethical principles that should apply to your business in just about any situation.

If you aren't sure how you can incorporate ethics into your business or how they might apply, take some time and list the key principles that govern your business now. Once you've created that list, look it over and see how it compares to some of the following ethical principles.

Honesty Principle

There's an adage that claims honesty is the best policy, and that's true in both your personal life as well as the business world. When it comes to principles of ethics, few are more important than honesty. Without a focus on honesty, a company can mislead business partners and consumers alike. Many of the major scandals in the business world come from a lack of honesty, ranging from a company actively lying about products or events to attempts being made to cover things up and save face.

Embracing honesty as a company value is an integral part of running an ethical company, especially as there are so many examples of companies that have suffered from their lack of honesty.

Integrity Principle

Integrity is another important part of operating ethically. If you have a focus on integrity within your company, it means that you'll draw a firm line between right actions and those that are morally wrong. Executives and others within your company should be free to show their integrity, and the company as a whole should avoid crossing the line you've established between right and wrong. Too often, you see companies abandon their integrity in favor of easy profits; if something is wrong, the ethical thing is to take a stand even if it means passing up easy money.

The more focus you put on developing integrity within your company and its management team, the easier it will be to incorporate ethical principles into your entire operation.

Integration Principle

Ethics cannot stand alone in the business world. To truly be an ethical company you have to integrate ethical practices into your company at every level. This includes ethical hiring practices, ethical termination practices and an ethical approach to production and product sourcing. By integrating principles of ethics into your company's policies and business practices, you will create an ethical company from the inside out.

Without this integration, you'll struggle to keep your company ethical since there will be nothing in the company's infrastructure to ensure that employees and management don't resort to unethical means to get what they want.

Trustworthiness Principle

Trustworthiness may seem like the same thing as honesty, but it's an ethical practice that relates to how your company handles itself over time. Trustworthiness is built by showing that your company will act ethically in good times and bad, again and again. As you stand by your ethical policies and stand up for what's right, both other companies and consumers will realize that they can trust your company to do the right thing. Not only is this ethical, but it can also improve your relationship with customers and business partners as well.

Over time, a trustworthy company will build a strong reputation and may very well enjoy more business than it would have by taking the quick and easy way out when times are tough.

Compliance Principle

Compliance with ethical standards and laws seems like it should be easy for a business to achieve, but think of how often you've seen scandals break out when a company tried to circumvent the law to make a quick profit. There's more to compliance than just following the law, however. Compliance also means making sure that the company follows its code of ethics and other ethical standards that are not codified into law. Without compliance and enforcement of ethical standards, a company can wind up with significant internal problems.

Often, this is how scandals begin. A lack of compliance with ethical standards lets managers or employees start taking unethical actions and hiding them within the company's standard operations.

Responsibility Principle

A business has an ethical obligation to its employees, its partners and its customers. If this responsibility is ignored, that business will often take unethical measures or shortcuts to maximize profits or avoid unfavorable situations. To truly run an ethical company you have to recognize the responsibilities that your company has to others. Once realized, you then have to take steps to ensure that your company lives up to those responsibilities and acts ethically toward all involved. This extends to every branch of your company's operations, from shipping fulfillment to protecting visitors to your company's website.

If your company interacts with someone or has dealings with another business, you have a responsibility to ensure that those interactions are performed ethically and that any obligations are met as well as can be expected.

Fairness Principle

In business, sometimes it's difficult to be fair. There's often an unfair option that's both easier and potentially more profitable, but going down that route is unethical at best and in some cases may even be illegal. Act with fairness, both internally and toward customers or business partners. Treat employees fairly, providing opportunities for advancement and perks to all who qualify. Treat other companies fairly, avoiding the temptation to give one company or another an unfair advantage in your dealings in exchange for some hidden perk. Treat customers fairly, making sure that you don't build unreasonable expectations through marketing or adjust pricing to take advantage of market trends.

Treating all concerned with fairness not only ensures that your company is doing the right thing, but it can also improve your trustworthiness and have greater returns down the road.

Loyalty Principle

Another important aspect of ethical business practices is loyalty. This is often applied to employees being loyal to the company, but it also applies to the company being loyal to its employees and affiliates as well. A company shouldn't chase profits with no regard to how it might affect suppliers, business partners or employees. It shouldn't lay off workers or cut jobs without exploring other cost-saving options first. If the company does have to take adverse actions, do your best to provide some form of severance or other benefits to try and maintain the relationships the company has created. These relationships play a large part in maintaining a company's reputation, and putting effort into these relationships is required to claim that your company is ethical.

It is impossible for a company that does not display loyalty to operate ethically.

Consideration Principle

Stop and consider whether actions are ethical or not before you take them. If you find yourself facing an ethical dilemma while running your business, ask yourself questions such as "In this situation, what is an example of ethical behavior?" Putting this sort of focus on the situation will help you approach it without taking unethical actions. Weigh your decisions against the possible negative outcomes of acting unethically and consider how your actions will affect both your company's reputation and those it interacts with. If there are multiple ways to achieve your goals, look at all the options to see which is the most ethical and which could require unethical actions.

The more active consideration you put into keeping your business operating ethically, the less you'll have to worry about becoming unethical in your business practices.

Caring Principle

Caring about others is essential ethically, even when those ethics are applied to a business. When speaking of corporate ethics, caring includes caring about the well-being of employees as well as that of customers or business partners. If practices potentially harm workers, those practices are unethical. If it's discovered that a product is potentially harming customers, but a decision is made to keep it on the market because of its profit potential, that decision puts profits over the well-being of customers and is unethical.

This is what makes caring so important to a company's ethical stance because it places individuals over the company's bottom line. Caring provides a great litmus test for ethical action, since any action that can't be made while honestly saying that you care about the people it affects is unethical.

Awareness Principle

The actions you and your business take may have consequences. Some of the consequences may have a positive outcome, but some can be negative. It's important that you remain aware of this since without this awareness it becomes easier to lapse into unethical behavior. A lack of awareness often leads to a lack of caring, especially if that lack of awareness puts workers or consumers at risk. If you assume that your behaviors only affect you or your business and have no greater impact on the community or world around you, it indicates you may take increasingly unethical steps over time. This can wind up causing a major fallout when those steps come to light, especially if it turns out that awareness could have prevented some major problem.

If a business owner can't see how his business or operating decisions affect others, that's a pretty good sign he's lacking in awareness and should spend a little more time considering the issue.

Implementation Principle 

The final ethical principle you need to consider for your business is implementation. Without implementation, discussions about the ethical positions of your company do not necessarily result in ethical actions. For a company to truly be ethical, it's important that it creates a code of ethical conduct and implement the code into its business strategy. This affects how your business operates, what its acquisition strategies look like and even how it hires employees and lets them go.

Implementing a code of ethics and taking other steps to make your company more ethical isn't always easy, especially if you've been in operation for some time, but it's more than worth the time and expense that it takes to get it done. Whether your business is a startup that's fixing to launch or a family business that's been passed down from generation-to-generation, it's never too soon, or too late, to put plans for ethical operation into practice.