The entrepreneur’s guide to business ethics
Ethical business is popping up everywhere as the latest buzzword. Ventures that sell everything from ethically-sourced meat to clothing and essential oils are using the “E” word to get an edge over their competitors. The truth is, every business has a set of business ethics they work and act within, whether these are spelt out in policy documents or just implied as a ‘do as I do’ from the boss.
Where business ethics meets the cold light of day
In business, you’re faced with lots of tough choices. Often it comes down to money, such as the cost of recyclable packaging vs. cheaper plastic versions. Making the right choice, especially as a small business owner who pays the bills, can be hard.
Your head argues with your gut while you’re worrying about staying within your budget and pleasing your customers.
With so many factors to consider, how do you choose?
When your business has a clear set of ethical principles that are non-negotiable, it’s easier to make clear-cut decisions. And the best way to build business ethics into your daily routine is by writing them up in a guide or policy.
Such a document will make it easier to engage with the community because you have nothing to hide. This leads to your community feeling supported and heard. They know that you’re results-focused, but not to the detriment of others.
What do ethics mean for your business?
The values of your business are the foundations for your ethics structure. This means the decisions and actions you and your employees make will fall in line with what you value most.
Focusing on the following five principles will help you build a reputation as an ethical business.
This applies not only to the privacy of your customers and staff but in the way you talk about and to others — in person, online and in private.
This means keeping conversations professional and using language that shows respect and courtesy.
When you have clear guidelines around respect, it’s easy to create a supportive and caring environment where your employees and customers know what they can and can’t say at the workplace. This extends to policies such as not tolerating abuse from customers and making it clear you expect them to respect your staff.
Being truthful is a core principle in business ethics, whether it’s in regard to your products, services or the way you conduct your business.
This is especially important with factors that could influence purchasing choices, such as:
- Organic status
- Australian made
Customers will check and they won’t appreciate deceit.
On the same note, it’s also important to own up to your mistakes. Rather than losing customers, you’ll find that being honest gains respect far more than being sneaky. Your followers will appreciate your transparency.
Having integrity means following the law and doing what you tell your customers you’ll do. A clear policy that outlines how you’ll deal with potentially grey areas will help you and your staff make decisions more quickly when you need to.
Policies can be as simple as:
- Not working with two competitor companies in the same industry
- Ensuring that all transactions are processed with the correct taxes and fees
Remember, if you choose to act in a way that’s misleading, you’ll lose any chance of getting repeat clients, and might even be breaking the law.
Everyone deserves equal treatment, but sometimes our unconscious biases come out when we don’t realise it. No matter the gender, race or age of your customers and employees, it’s critical to evaluate whether you’re being inclusive in your words and actions.
Ask honest friends to look for any unconscious biases that might be playing out anywhere in your business. One example of this is fashion labels wanting to jump on the “body positive” bandwagon, but then only showing young, slim, blonde females in advertising campaigns.
When conducting your business, you have a responsibility to create a positive impact on the community. After all, you owe it to them to return the favor of their support and goodwill. Making ethical choices in this regard might include:
- A review of packaging and processes to ensure you’re choosing environmentally friendly options
- If you work in public areas, being mindful of effects such as noise and light that might affect your neighbours
Having clear ethical practices means spelling out where the boundaries are. This gives staff members clear policies to fall back on when they need to make an ethical decision.
If you embrace and share the clear ethical principles of your business, your staff and customers will pick up on that, and spread the word to others looking for a business with similar business ethics.
That’s why it’s important to model ethical behaviour from the highest level to create that flow on effect.
Does it really matter?
A number of factors go into decision-making. Often, you’ll ask questions like:
- Do I have enough time to evaluate all my options?
- How do I fit ethics within my resources?
- Does it really matter where I source my materials from?
It’s tempting to cut corners when it comes to starting up your business. But choosing your actions based on ethics sets you up for long term success. You’ll save time, money and your reputation — which is often lost when a company has to clean up mistakes — by committing to ethical choices early on.
Making the wrong choice can lead to severe consequences for you and your business.
You risk being taken to court, losing respect and gaining a negative reputation that will be hard to change.
Sometimes it’s hard to know whether you’re doing anything wrong. For example, favouring family and friends when recruiting and using company resources is okay, isn’t it? No, it’s not.
While it might seem natural to give a little extra to those closest to you, that doesn’t mean it’s right.
Some types of misconduct have heavier ramifications for businesses, such as:
- Violating safety laws
- Harassment and bullying
It’s vital to create a culture in your business where everyone knows such behaviours aren’t tolerated.
The consequences of unethical behaviour
Optus, a large Australian telco, was penalised $10 million in 2019 for misleading customers in regards to their digital products. It ended up costing them approximately $21 million in total, as well as damaging their reputation.
Franchises have recently come under the spotlight for ethical behavior, including burger chain Grill’d. The chain was previously investigated for the source of their meat products, and more recently for using traineeships as a way to keep staff underpaid.
Celebrity chefs, Neil Perry and George Colambaris, have both closed down their restaurants and been made to pay back millions of dollars as a result of underpaying workers.
Do ethics vary between industries?
Yes, ethics can vary because each industry has different factors to consider.
For example, in the fashion industry a business needs to consider where they source their fabrics from and ensure that they pay a living wage to employees all along the supply chain. The expectation in the medical industry is that doctors and nurses will respect patient confidentiality by keeping details of who they see private.Ask yourself, am I conducting my business in a way that is fair to all? And most importantly, what does this choice say about my brand?
Stay on track
Along with writing up your ethics policy or code of conduct, it’s important to check in regularly to make sure decisions and actions align with company values. You’ll also want to make sure that all staff receive a copy of it when they join the company.
Sometimes we all get lost in the excitement of watching our businesses grow. But referring back to a widely-shared ethics policy allows you to keep choosing a positive path.