Why ethics are important in business

Stories about underpaid staff in several Australian franchises, not to mention allegations that Australia biggest bank has aided and abetted criminal syndicates to launder ill-gotten gains, often leave us shaking our heads. Why do people do it? How can they get away with it? How can we trust institutions and businesses?

Ethics is a topic included not only in most university courses, but right through our education system. You don’t have to have a law degree, or be a moral philosopher, to understand ethics. Anyone who has been exposed to religion – no matter the faith or denomination – would be aware of some variation of the universal ‘golden rule’: treat others as you would be treated. It permeates most societies.

If the ‘golden rule’ is universal, the question remains: Why do individuals still rort the law, the system, or others? Why do people behave badly? The answers are complex, but in many cases, people may use unethical practices to obtain some advantage. In the case of a franchisee underpaying vulnerable staff, to improve the profit margin; in the case of a car manufacturer tricking an emissions test, to sell more cars; in the case of a bank continuing to handle black money, to improve profitability.

The trouble with this behaviour is short-term thinking. In the desire for a quick buck, individuals and corporations risk long term damage to their reputation. They might make money to pay today’s bills, but tomorrow may extract a hefty penalty in fines, or in some cases, even jail.

Ethics and business are not incompatible, as some people might think. Business people can be both ethical and profitable. But the thinking needs to be long-term, not short-term. Business owners need to pause for thought, about the long-term implications or their actions, before engaging in questionable practices. A good guide to this process can be to ask the question: How would I feel if my behaviour was the leading headline on a national newspaper? How would I feel if my closest friends found out the secrets to why I appear successful? Do I need to worry about my behaviour being exposed in the future?

These questions can help guide our business decisions. If we base our decision-making on the answers to these questions, our behaviour will be modified towards an ethical standard of which we can be proud.

About the author
Mr David Noble is an Associate Lecturer, Doctoral Researcher and the online Master of Project Management course coordinator at Southern Cross University.