Business Ethics

Definition

• Business ethics involves going beyond legal requirements.
• Focuses on doing what is morally right.
• Emphasizes fairness to employees, suppliers, customers, and the environment.

Importance of Ethical Practices

• Ethical policies can sometimes reduce profits.
• Ethical practices contribute to a positive work environment and overall satisfaction.

Steps to Become More Ethical

1. Treating Employees Well

• Safe Work Environment: Ensure employees have a safe workplace.
• Fair Wages: Pay a fair wage that allows a comfortable living.
  • Not just minimum wage; fair compensation for work performed.
• Incentives: Offer bonuses or share schemes where employees benefit from company success.
• Example: Google
  • High employee satisfaction due to:
    • Good pay
    • Extensive benefits (free food, medical care, gyms, etc.)
    • Flexible working hours

2. Treating Suppliers Well

• Fair Pricing: Pay fair prices and ensure timely payments.
• Fair Trade: Example in the coffee industry with fair-trade products that ensure fair compensation for growers.
• Ethically Sourced Materials: Ensure materials are sourced without exploitation and consider environmental/social impacts.
  • Example: Lush
    • Ethical buying policy ensuring good rights and conditions for suppliers.
    • No animal testing and sustainable practices.

3. Fair Tax Contributions

• Importance of Tax Compliance: Paying full taxes is essential for an ethical reputation.
• Tax Avoidance Concerns: Many companies use legal loopholes to avoid taxes, leading to a negative public perception.
  • Example: Starbucks
    • Paid 0 corporation tax in the UK in 2011, resulting in public backlash.

Ethics vs. Profit

• Increased ethical practices lead to higher costs impacting profit margins.
• However, ethical businesses can:
  • Charge premium prices due to ethical credentials.
  • Benefit from improved public opinion, brand image, and customer loyalty.
• Customers are increasingly aware of unethical practices, leading to financial repercussions for unethical businesses.

Conclusion

• Emphasizing ethics in business can enhance reputation and profitability.
• Encourage viewers to like and subscribe for more business content.