How to Navigate Ethical Considerations In Your Decision-Making Business decisions often involve weighing ethics against profits. Find ways with a few tips to prioritize ethics and build trust with employees and customers.
By Murali Nethi Edited by Micah Zimmerman
Key Takeaways
- When employees feel their company prioritizes ethics, it fosters trust and loyalty.
- Establishing a strong set of values and operating principles for a business is crucial in retaining customers.
Opinions expressed by Entrepreneur contributors are their own.
Business owners and managers often face difficult decisions that involve weighing ethical and unethical options. However, making choices that consider ethics can have significant long-term benefits for a company.
When employees feel their company prioritizes ethics, it fosters trust and loyalty. They'll be more motivated to give their best work. Customers also care deeply about supporting businesses with strong values. An ethical reputation builds goodwill that leads to repeat customers and word-of-mouth marketing.
Moreover, in today's transparent world, unethical actions usually don't stay hidden for long. A single lapse in judgment can go viral on social media and seriously damage a brand. Several large companies have suffered enormous financial losses due to ethics scandals. Clearly, incorporating ethics into decision-making is simply a good business strategy.
Still, ethics are not always black and white. Managers must thoughtfully weigh various factors like short-term profits versus long-term impacts. Here are some practical considerations to guide them.
Related: More Than Just A Moral Compass: The Power Of Ethical Business Practices
It's not just about the bottom line
Many business owners fall into the trap of focusing exclusively on financial outcomes when making choices for their companies. While profits are important, they should not be the sole criteria against which options are judged. Remember that your business does not operate in a vacuum — it has an impact on employees, customers, suppliers and the wider community. Ignoring ethics can seriously damage relationships and goodwill over time.
For example, cutting corners on product safety or quality to reduce costs may lead to higher profit margins in the short term. However, it also risks harming customers, resulting in negative publicity, and losing the trust that has been built up. In contrast, prioritizing ethical practices shows stakeholders that you value more than money and helps ensure the sustainability of the business.
Think through unintended consequences
Most organizational decisions are complicated, with outcomes that are difficult to predict with certainty. Hasty or self-interested choices often fail to consider all angles. It is wise to carefully weigh both intended and potential unintended consequences before acting on an idea.
Imagine, for instance, a clothing company that decides to significantly lower the wages of its factory workers abroad to reduce production expenses. While this may boost profits in the accounting ledgers, have leaders fully contemplated how it impacts livelihoods and morale? Have they accounted for the possibility of quality or retention issues down the line from unhappy employees? Stepping into others' shoes and viewing decisions from their perspective can surface important uncertainties or ethical issues to address.
Staying consistent with core values
Establishing a strong set of values and operating principles for a business is crucial. These provide an agreed framework and shared understanding for navigating complex choices. However, values only matter if teams consistently work to uphold them in both good times and bad.
When under pressure to cut costs or hit unrealistic targets, it is all too easy to compromise on ethics "just this once" and rationalize it away later. Over time, these mini-exceptions can erode the integrity of an organization. By openly discussing values as part of decision-making, leaders can ensure options align with what the company stands for - not just what seems expedient right now but damages credibility in the long run.
Related: Stand for Something: How to Establish Authentic Core Values
The power of stakeholder feedback
No business exists in isolation from those it interacts with. Customers, employees, and community members all have useful perspectives informed by their experiences. Making time for open communication and stakeholder feedback can be eye-opening, revealing both future opportunities and potential pitfalls that leaders may have overlooked.
For instance, regularly surveying frontline workers gives insight into day-to-day operational realities and early warning of any brewing issues. While undesirable information requires courage to hear, ignoring problems often makes them worse. Building a two-way dialogue shows respect for others and improves the quality of choices by grounding them in reality.
Related: What Does It Mean to Be An 'Authentic Leader,' Anyway? Here's What You Need to Know.
Consider all parties affected
Many ethical lapses occur due to a narrow focus. It's important to map how decisions reverberate throughout extended networks. For example, while optimizing one department may slightly benefit shareholders, what consequences ripple to suppliers, the environment or society? Taking a systems view ensures no one is left shouldering undue risks or costs.
Review with hindsight
Revisiting earlier choices allows for spotting patterns and blind spots. What could have been done differently with the benefit of hindsight? Lessons learned should inform future policy settings and discussions. It also reinforces wisdom gained over time. Through experience, judgment improves at building ethics seamlessly into a business' strategic priorities and daily operations.
Weighing ethical considerations cannot be set aside or delayed when times get challenging. On the contrary, it becomes even more crucial. Leaders who thoughtfully consider the impacts on all stakeholders, stay consistent with core values, and invite diverse input tend to build businesses that endure because they have wisely constructed strong foundations of integrity and trust.
In the end, the most successful organizations are usually those deliberately guided not only by profits but also by principles.
