One of the contributing factors to the overall success of a business, is the ethics behind how it is run. Unethical practices may be used to obtain a short term result or success, but will most likely cause internal damage to a company later on down the road. In a Forbes article conducted late last year, Tim Erblich, CEO of Ethisphere Institute stated, “‘Good Ethics is Good Business.’ In fact, there is a growing body of data, including our own, that shows that the financial return of ethics (ROE) is significant.” Not only do positive ethical practices show a significant financial return, but they also directly contribute to other factors that make a business successful.
Avoid Legal Trouble
As mentioned earlier, unethical practices within the workplace may be used to obtain short term goals or success, ultimately cutting corners on doing things the ethically correct way. Actions such as these can often results in significant legal trouble for a firm. A few examples of this may be management cutting corners on legal safety regulations, or not abiding by labor laws. The repercussions behind unethical practices like this can result in significant negative publicity, consumers loss, and hefty fees and fines that can affect the firm’s financial stability.
Retain Upstanding Employees
A company’s employees are a fundamental part of its foundation and success. Businesses that hold positive ethical practices are likely to high a higher employee retention. Employees and potential candidates are seeking employers that practice the fundamentals of business ethics regularly. This means, honesty and transparency from management and C-Level executives, fair compensation for job requirements, and fair opportunity for growth within the organization.
Build and Maintain Customer Loyalty
In addition to employees, a company’s consumers are also a large part of its foundation and success. Organizations that practice good business ethics have the ability to not only maintain relationships with current customers, but also build customer loyalty by obtaining new business. If a consumer is treated unfairly, or does not approve of an organization’s processes, it is likely they will take their business elsewhere, to a company that will be more in line with their personal morals. Treating consumers like they are a fundamental part of your success, will help you maintain a positive reputation and relationship with consumers.