While very few companies work outside of the law intentionally, it is becoming increasing important to make sure your business is operating ethically. In a time when profit margins are the primary focus, morality often takes a back seat to money. But marketing, profits, and operations costs can actually be improved by keeping a few key aspects of business ethics in mind for your business.
A business’ reputation is one of their most important assets and can be very difficult to rebuild once it is damaged. Your reputation, respectability, and trustworthiness within a community or market can be absolutely crucial to your business success and profits.
A majority of your business’ reputation is likely to be based on how your company looks from the outside. People notice when companies take steps to avoid polluting the environment, for instance. Recycling waste, donating to charities, contributing to volunteer efforts, and even sponsoring local events are seen as a show of good will and will help to build a positive reputation in the public eye. The key to securing a reputation in a community is looking beyond the business and giving back. No matter how small the company, these efforts rarely go unseen.
The rest of a company’s reputation has to be formed from the inside. A company with an established code of ethics, complete with penalties for violations, can keep a company on the right track. The ethics of the business can also be conveyed through a good mission statement. If you enforce ethical behavior, handle violations with grace, and reinforce your company’s aim for ethical behavior, customers and partners will be happy to keep doing business with you and refer others.
Customers and Employees
Your loyal customers and business partners are the lifeblood of your success. Therefore, keeping them happy must be at the top of your list of priorities. People may allow themselves to be taken advantage of or mistreated once, inadvertently, but they will learn from that type of experience. It can be extremely difficult to get customers back after a bad experience, so you can’t afford to make a bad impression. On the other hand, keeping them happy can pay you back in droves. Happy customers can carry a company through tough times with their repeat business and free referrals. A loyal customer base that doesn’t cost extra marketing dollars is a key to business success.
Your employees are similar to your customers. If they are treated badly, they can serve to damage your reputation even more. However, and ethical company that treats its employees fairly and with respect will foster a healthy work environment and benefit from employee’s best work. A few things that go into this are fair pay, opportunities for growth, and well established policies about how everyone is to be treated. Happy employees help their company grow, promote it to the public, and do better work.
Inspections and Whistleblowers
The penalties of unethical behavior in a company can be catastrophic. Corporate lawsuits and fines for illegal or unfair actions can damage any business and sink a small one. There are a few ways this can happen.
If your company works in a regulated industry with scheduled inspections and intensive record keeping, following any and all guidelines as closely as possible must be part of your code of ethics. Workplace safety hazards, defects, and cut corners can lead to large fines and reputation damaging recalls and can be even worse if it can be proven that the company was aware of the problems and allowed them to happen.
Another part of these types of violations is whistleblower laws. While a company in an unregulated industry might not be subject to regular compliance inspections, they can still land themselves in trouble if they have any unethical practices that an employee whistleblower reports to authorities. Whistleblowers are people who provide specific and certifiable information about issues such as tax fraud, underpayments, or other criminal acts to the IRS or other authorities. In the case of tax fraud, the IRS can award a whistleblower up to 30 percent of the tax, penalties, and interest it collects, and that money comes from the bottom line of the offending company. These employees can also employ a law firm like Kohn, Kohn & Colapinto, LLP that specialize in whistleblower laws that can protect them in court.
Occasionally a company may be tempted to cut corners, like not complying with laws and regulations, ignoring safety issues, or using substandard materials, but fines and sanctions for such offenses can easily make them costly to the business.
There are many benefits to operating a company ethically. A few of them are a clear conscience, a good reputation, and added value to investors, customers, and employees. The benefits outweigh the costs, and any business ready to go big should keep that in mind.
I hope you enjoyed this article about why to keep your business ethical in an age of "Greed Is Good" (as Gordon Gekko would say).
Interested in more articles about business management?
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Published by Michael J Schiemer
Owner of Bootstrap Business
Money - Marketing - Motivation
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