Business Ethics in Large or Small Businesses

Ethics in large companies or small businesses is critical.  No company is immune from participating in ethical business practices whether your business is Fortune 100 big or “mom-and-pop” small.  To be ethical in our dealings should be a part of our core values and an inherent part of our company’s culture.  The definition of ethics that is easily understandable is “standards for ‘‘right,’’ ‘‘just,’’ and ‘‘fair’’ treatment of others.” But some companies feel that profitability trumps ethics.  What are the consequences of being an unethical company?

  1. Media backlash. We have seen that the media has the ability to make or break a company.  If your company portrays itself as holding itself to the highest standards for customers and is caught in unethical behavior, the public relations ramifications can be devastating to that company.  People take notice when it is a large corporation that we know because it is in all media; however, ethical and unethical behaviors are practiced in our own small companies.   Currently, Samsung is recalling the Galaxy cell phone that is exploding in their customers’ pockets, causing harm.  If Samsung knew the potential risk with the Galaxy and still sold it or not recall it, that will have a detrimental effect on future sales.  If they did not know that the phone can explode, and they moved to inform customers immediately upon finding out, a case can be made that it was a simple product malfunction and not unethical behavior.  When was the last time you “let something slide?”
  2. Loss of trust. Customers will still use your product even though trust is gone!  Companies that sell necessity items such as electricity, gas and oil are impacted when unethical behavior is discovered; however, the immediate impact is not as great in the long term.  For example, the Exxon-Valdez oil spill caused devastation to the environment and the people who lived and worked in those communities.  After the oil spill, customers were outraged and did not purchase from Exxon.  However, over time, customers tend to be more forgiving and put their needs in front of the company’s behavior.  Are they going to stop buying oil or gas? If so, what is the alternative?  They see the spill as a sad event, but will return to purchasing oil and gas from Exxon.
  3. Customers and employees will second guess your motives. When a company is caught – because they never “out” themselves – customers, employees and shareholders will always wonder if your motives are right even after the reputation management is over.  Shareholders sell their stocks, customers think twice about making a purchase and even employees lose faith in the company.  How long will it take to regain that confidence in that company?

Ethics is an intangible thing – you cannot touch it or feel it, but you know when it is there and when it is missing and is demonstrable through actions.  The leadership in a company is responsible for being proactive with adhering to ethical standards – it will trickle down to all employees and set the tone of the company’s culture.