Many business owners strive to operate ethical businesses. This is often partially driven by law – federal agencies like the Occupational Safety and Health Administration (OSHA), the Equal Employment Opportunity Commission (EEOC), the Department of Labor (DOL) and the Federal Trade Commission (FTC) impose legal requirements on businesses that keep their employees, consumers and shareholders safe and ensure they are treated fairly. The drive to utilize ethical practices in business often also comes from a sense of personal responsibility to avoid actions that can be seen as cutting corners or relying on exploitation to operate successfully in the marketplace.
There are hundreds of specific ethical practices companies abide by. Certain ethical practices are incredibly niche and only applicable in specific industries and operations within industries, while others are broadly applicable to all types of workplaces. Here are 10 important business ethics that companies across market sectors strive to abide by:
- Fairness to employees, suppliers and consumers
- Maintaining safe workplaces
- Advertising products fairly
- Protecting consumers’ privacy
- Providing equal career opportunities for all employees and job applicants
- Working only with vendors who maintain similar ethical definitions
- Compliance with all reporting requirements
- Investing only in industries and investment vehicles with similar ethical alignments
- Ecologically sustainable practices
Not every one of these 10 important business ethics will make their way into your company’s ethical code. Some might just not be applicable to your industry, or you might be too small of a company to be subject to certain reporting and environmental requirements. For many companies, going above and beyond what is required by the state and federal governments is a way to improve employee morale and connect with ethically minded consumers.
Many companies create and publish ethical codes for their employees to follow. By making its personal ethical definition public, a company can gain support from like-minded consumers and connect with similarly aligned brands operating in the same space. Publishing an ethical definition is a way for a company to advertise itself and its commitment to ethical practices.
Once you have defined your ethical code, the next step is working it into your day-to-day activities. Most changes to comply with the ethical code cannot be accomplished in a day, a week or a quarter and instead, require incremental changes leading to eventual full compliance.
Commitment to an ethical company mission can require steps like:
- Diverse hiring initiatives
- Changing suppliers
- Making changes to the product or operation
- Reorganizing the corporate structure
- Changing how the company records and reports financial figures
- Connecting with non-profits that focus on making ethical changes in business
Creating a set of ethical practices to follow and sticking to it has many positive outcomes for a company. These include:
- A positive public perception of the brand
- Increased brand recognition
- Connection with other ethical businesses in the company’s industry
- Retaining talented, skilled employees
- Maintaining a positive workplace environment
- Qualifying for grants and tax breaks based on ethical initiatives
- Avoiding lawsuits for legal violations
Failing to follow ethical practices can similarly have repercussions for a company. These include:
- Facing lawsuits related to legal violations
- A negative public perception of the company
- Discouraging skilled employees from pursuing work with the company
- Driving away talented, skilled employees
- Maintaining a toxic workplace environment
Even following ethical practices without publishing them can have unintended consequences for a company. Though the company might not face lawsuits by quietly complying with laws and maintaining ethical standards, it can also miss out on opportunities to connect with consumers, partners and prospective employees looking to connect with ethical companies.