Which of the following practices increase the likelihood that a company will pursue unethical business strategies?

A number of factors play a part in making a business profitable, including expert management teams, dedicated and productive employees, consistent consumer demand, and a careful watch over the bottom line. In addition to these well-known business practices, companies that implement a management philosophy that relies heavily on business ethics are proven to be more successful than those that operate in an unethical manner.

Although it may not be the first variable considered in analyzing the profits of a company, business ethics is an equally important catalyst to the success of a company.

Key Takeaways

• A number of factors play a part in making a business profitable, including expert management teams, dedicated and productive employees, consistent consumer demand, and a careful watch over the bottom line.
• In addition to these well-known business practices, companies that implement a management philosophy that relies heavily on business ethics are proven to be more successful than those that operate in an unethical manner.
• Research has also shown that emotionally intelligent bosses make for happier, more creative employees.
• Consumer purchase habits also change to favor environmentally conscious brands.

Business Ethics in Management

The leadership of an organization holds the key to its long-term success, and remaining consistent with a management philosophy built on a foundation of ethics creates a positive example for all workers. Ethical accounting practices, treatment of employees, interactions with the public, and information disseminated to shareholders are all responsibilities of the leadership team and can have a direct impact on the overall profitability of the company.

When these integral aspects of a business are not performed with a resounding theme of business ethics from the top-down, each facet of the business beneath the management team has a greater potential to falter in the short or long term.

Business Ethics and Employee Morale

It has been proven time and again that employees who are satisfied with the environment in which they work are more productive than workers who are unhappy. Unethical practices in the workplace can cause widespread unrest with employees, leading to a greater sense of dissatisfaction with the work that they are doing and with their employers.

However, when business ethics are encouraged by management and company executives lead by example, the ability of employees to focus on the work they need to complete increases exponentially. Productivity increases when fewer distractions are present and the morale is high, and this leads to greater profit levels for the company.

Research scientist Zorana Ivcevic and colleagues at the Yale Center for Emotional Intelligence surveyed close to 15,000 people across the U.S. Their findings revealed that emotionally intelligent managers—those who read and acknowledged employees’ emotions, helped them channel feelings, inspired enthusiasm, and capably managed their own emotions—resulted in employees who were happier, more creative, and who perceived more opportunities for growth.

Employee happiness can also have an impact on turnover and retention, as unsatisfied workers are more prone to seek out other opportunities, regardless of higher pay or benefits offered by their current employer. Continuous recruitment and training of new employees can reduce the capital a company can otherwise spend on revenue-producing activities, ultimately shrinking its long-term profits.

Business Ethics and Public Image

Companies would be nothing without shareholders and investors, and as such, operating with business ethics in mind is most important when interacting with these crucial players. It is common for the profitability of publicly traded companies to decline rapidly when they encounter situations where information regarding unethical behavior is discovered. When confidence is lost, it can be a struggle for a company to regain the trust of the public, its investors, and its shareholders; profitability may take years to build up again.

All companies rely on consumers for profits and consumers prefer doing business with ethical companies. In 2019, Toluna, a consumer intelligence provider, released a study that showed that consumer purchase habits change to favor environmentally conscious brands. The report, which surveyed 1,000 U.S. consumers, confirmed that almost one-fourth (or 37%) of consumers are seeking out and willing to pay up to 5% more for environmentally-friendly products. This is particularly easy given the number of substitute products available in the global economy.

The Bottom Line

Implementing a sound ethical policy at a company ensures a positive impact on all stakeholders, from investors to employees to consumers. Companies that lay the framework for business ethics in all facets of operations are more likely to become and remain profitable than those that conduct business in an unethical manner.

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