The importance of ethics cannot be stressed enough in one’s life, and no amount of justification can undermine the relationship between ethics and a guilt-free and life of integrity. The same can be applied for running a business; just because there are more moving parts, it does not mean ethics can be done away with. In fact, it becomes even more important than the owner who runs the business remains keen on a business based on ethics.
When it comes to small businesses, it is often seen that ethics are brushed aside for growth. However, in most cases, the business may grow in the short term; the same cannot be said about it for the long term. Doing business the right way keeps all stakeholders happy and attracts more prospects and customers who naturally get drawn to your upright way of doing things.
People do not have second thoughts when dealing with you, and this can remove a whole lot of friction & trust issues that are seen during critical transactions in today’s day and age. In this blog, the attempt is to make small business owners understand the importance of ethics and how they can build a business on the strong foundation of good ethics.
This is extremely relevant today because when everyone is trying to outdo each other, there has to be a certain moral compass that keeps businesses in check where there are clear red lines.
Pointers to Doing Business Ethically
Now let’s look at how small businesses can develop a business based on good ethics; we have enlisted pointers for doing so. Here they are:
1. Put it Down on Paper
A company’s culture begins with its mission and vision statement. Do not make assumptions as a small business that things like mission and vision are only for large enterprises. Once you have business in place, ensure to introduce every employee that joins the company with your vision and mission statements. And these should be closely aligned towards ethically doing business without short-cuts, no matter how attractive they look. This would not only help employees from crossing limits, but it also would nurture a deep sense of respect from employees towards you as the business owner.
2. Introduce an Ethics Policy
While mission and vision statements are overarching principles that can govern a company. Taking a step forward, a small business can enlist the help of a legal professional to build a code of ethics. These can be part of the employee onboarding process, and it will help specify what kind of behaviours will not be tolerated by the business in the strictest way possible. This will allow the creation of tangible boundaries for employees which must not be crossed unless there are exceptional circumstances. Businesses that speak highly of their mission and vision statements often forget to follow up with concrete actions. An ethics policy can be that concrete step that helps steer the company in the right direction.
3. Set Priorities
Companies have individual departments such as sales, marketing, accounts, admin, and so on. Here each employee is faced with a different set of roles and responsibilities. Hence it becomes important that employees who are highly prone to unethical practices or situations are given priority when enforcing the ethics policy. Such employees need to be briefed beforehand that the company is not looking for the “easy way out.”
Sensitising the employee about the ethics policy will ensure that the employee remains within the constraints of the policy. For instance, an employee from sales and marketing should be restricted from selling company products using false promises or non-existent product benefits. They should always be told about pursuing business interests in the long term and not in the short term.
4. Consult Employees
Your employees are your biggest asset apart from your customers. They must feel truly valued and have a deep sense of belonging to the company. Such beliefs can be improved upon if employees are asked before framing the ethics policy. By soliciting inputs from employees, you are truly signalling the importance of ethics to the employees. Such a step also helps in rolling out the ethics code in a smooth manner without surprising the employees. The gradual roll-out would also mean a slow but effective change in mindsets, even for employees who currently are not on the same page with the company. Overall, the success of the ethics code depends on the employees, and set the process in motion with the employees makes it all the more achievable.
5. Be Specific in Most Instances
Although you do need an ethics code, you do not want it to be extremely detailed, that enforcing it becomes more of a dilemma. Always keep it flexible enough to accommodate outliers or discrepancies. But surely topics like workplace romance, nepotism, and so on can find a place in the ethics code. Make sure such practices are not “straight-jacketed” but remain keen on corrective measures if such situations occur more than often before they get out of hand.
Benefits of Doing Business Ethically
Now that we have enlisted pointers for doing business ethically, let’s focus on the benefits of doing business ethically, which are:
1. Good for Business
Research has shown that businesses that exhibit strong ethical principles have increased their profit margins. Customers prefer companies who are inclined on doing business the “right” way. People often take notice of the simple things that a business does, like returning the balance or not overcharging during an extreme situation and so on. Such ethical behaviour will help the company retain customers, who will choose to remain with the company in the long run. As a small business, you can feel more confident about your services by being ethical. Your confidence is easily going to rub off on your prospects and customers, bringing in more business.
2. Improves Reputation
A company can easily carve out a name for itself in the marketplace for being ethical. Such solid credentials can easily spread through word-of-mouth, giving the company some “free-marketing.” In contrast, if a company is often seen in a bad light in the media and on the news, it is less likely to attract any new business. This is especially true in this age of social marketing, where bad news spreads like wildfire. As a business, even if you stumble with one of the aspects of the business, let’s say customer service, your ethical reputation will help you walk out of a dicey situation with the least amount of damage.
3. Retain Good Employees
Talented individuals in every organisation want to be treated fairly. They also expect their work to be acknowledged through career advancement in the company without favouritism. Any company that remains open and transparent about its dealings with employees stands a good chance of retaining its best employees. Even in tough situations when there is an imminent lay-off or reorganisation, you would not expect your best talents to jump ship when you need them the most. Thus, treating employees ethically also means investing fewer resources in sourcing talent from the fiercely competitive job market.
4. Nurtures Positive Environment
When a company creates an ethical environment and culture, it is often seen to attract individuals with a similar mindset. Honest employees come with incredible credentials as team players and are seen developing positive relationships with their co-workers. Their supervisors’ in-turn trust them and give them more autonomy in their assigned job roles. A company can ensure to percolate ethics throughout the organisation if it includes ethics as part of the training within the company. Even sceptical employees are likely to be on board when it is channelised appropriately.
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Q. Is ethical business possible in today’s environment of cut-throat competition?
Ans. Yes, when you see the number of publicly listed companies that are thriving, it shows a lot about doing business ethically. Especially when they are required to disclose their financials openly to the public every quarter.
Q. Is ethics relevant for small businesses?
Ans. If you are a business owner looking at the long-term, then “the ethical way” is the way to go. Instead, if you are looking only for short-term gains, then not only is your future bleak, but it is also detrimental to the growth of your business.
Q. Are the pointers mentioned above really implementable?
Ans. It may not be implementable initially, but as a business owner, if you put your foot down. Then the resistance to the idea of ethics is likely to evaporate. In any case, the onus is on the business owner to get started.