Business Ethics have only come to the fore recently. They state that there is more to business than just making a profit. The new focus is also on how the business treats the environment, reacts with the local community and works with its staff to build a responsible company that is both sustainable and adds value to the people that it interacts with.
“Greed is good” is no longer acceptable to most consumers. The consumer is now better educated with new means at his disposal. High speed internet access and forums like Ecademy now mean that good and bad news travels almost at the speed of thought. They are now demanding more from businesses even though their own ethics at times might be questionable!
Business ethics are now included in most business courses and the top management schools. The top graduates enter the corporate world ready to incorporate what they have learnt in the classroom.
Businesses need to have specific programmes in place to manage their staff and workplace in a responsible manner. They must give social welfare a high priority if they are to maintain their public image. They have to be seen to be recycling their waste and disposing of old equipment in an environmentally friendly way.
Businesses now have to be wary of using sweat shop labour in the third world especially if they treat them badly. Everybody realises that third world country wages are lower but they expect Western companies to treat their employees with some respect and dignity. Businesses that employ children are now frowned upon even though child labour is the norm in these countries.
Many “watch dogs” now exist that “police” most large companies and report any blatant abuse of ethics. Most of these have only been set up in the last twenty years. Most large media organisations also have special reporters whose sole purpose is to identify where breaches are taking place and publicise them.
The top brands in the world need to be extremely careful now. The value of a brand might have taken decades to build but can be destroyed in a matter of weeks. An example of this is when Gerald Ratner made a speech to the Institute of Directors and in humour referred to a cheap necklace that “everyone knows is crap”. These comments served to wipe out over a half a billion dollars of the companies value and played a major part in the downfall of a once thriving jewellery retailer in the United Kingdom.
There are now funds that specialise in only investing in ethical businesses. They refuse to invest in companies that produce weapons or manufacture cigarettes as an example. These funds have taken of spectacularly and have billions of dollars to invest in the stock markets. Before they invest in a business they send their fund managers in to investigate the business fully to see if they comply with their guidelines. If the company is not willing to answer all their questions fully then they might not get approved for investment.
When properly managed and executed the use of business ethics can actually serve to enhance the profitability of the company concerned. The business can proudly declare their values in brochures, newspapers, internet and television marketing campaigns. Reputation is the strongest asset that a company has and maintaining this and the value of their brands is essential to the long term future of the business.