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BUSINESS

The Essentials of Business Ethics: What It Is, Why It’s Important & More

The Essentials of Business Ethics

When you’re in charge of running a business, you’ll be required to take on the incredibly challenging task of overcoming certain moral dilemmas when putting business policies and practices into place.

Some of the controversial issues you’ll be tasked with tackling when deciding how your business will operate will include subjects of discrimination versus social inclusivity and equity, as well as instances of bribery and insider trading, and of course, the need to make financial decisions that are both viable and ethically-sound.

But how do you navigate these difficult concepts as a business owner? For starters, if you complete a tertiary qualification in business, such as an online MBA AACSB accredited, this will arm you with the know-how you need to do battle in the field of business ethics. Otherwise, just keep reading, and we will take you through the concept in further detail.

Business Ethics: What is it, and Why is it Important?

As an upstanding business owner, you must take pride in listening to your inner moral compass. Doing this will help you overcome challenging and at times controversial situations fairly and with integrity, while still striving to achieve the best possible outcomes for your business.

As a concept, business ethics is fundamentally tied up with our innate sense of morality as human beings and is heavily contingent on us being able to conduct ourselves ethically. It means having genuine compassion, understanding, and empathy for others, as well as knowing how to take the high road when faced with morally challenging decisions. Of course, best practice in business also requires you to have a strong understanding of mutually beneficial outcomes. You don’t want to be so pious that you end up undercutting yourself. You are running a business to make a profit, after all.

Being aware of the importance of business ethics as a leader requires you to possess certain core values and personal attributes. Some of these qualities include:

  • Compassion, empathy, and understanding for others around us, including our employees, our business partners, and stakeholders – and just as much, our competitors.
  • Integrity and moral responsibility, as well as a genuine concern for social and ethical issues.
  • Fairness and sound judgment, as well as the ability to hold ourselves accountable for our actions.
  • Honesty, transparency, and the ability to communicate openly with others.
  • Respect and loyalty – both for other people, and for the law, business legislation, and other regulations.

Navigating Ethical Dilemmas in Business: How to Avoid Controversy?

Let’s not dance around the subject: if you’re a business owner, you’re here to make money! But at what cost?

When you’re charged with operating a ‘fast fashion’ eCommerce business, for instance, where do you draw the line in terms of using cheap labor to bolster your profit margins? The ethical ramifications of engaging in sweatshop-driven child labor are dire. If you have any sort of moral compass, how do you sleep at night knowing that you are robbing innocent kids of their childhood, and just as importantly, their schooling and education? In third-world nations where child labor is rife, providing more educational opportunities (rather than sending kids to work from an extraordinarily young age) could assist in breaking this cycle of poverty, and what is essentially modern slavery.

In a recent business ethics case study, the global furniture and homeware magnate, IKEA, was found to be abusing child labor by selling products obtained via Pakistan’s rug manufacturing industry. In this example, the accusations eventually saw IKEA end its contracts with the rug manufacturers they were dealing with in Pakistan. Despite this, the ongoing repercussions in terms of the damage that was done to IKEA’s brand image and reputation could not be avoided. Can IKEA be trusted now, as an ethical business, given their previous dealings in child labor? Perhaps not.

As a business owner, these are moral ramifications you want to avoid at all costs. The blow to your business’s reputation by neglecting ethical considerations is simply not worth it. For this reason, taking business ethics into account as a leader is critical. Perhaps, it could be argued that this is even more important than turning a high profit.

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