Business Ethics: What Are Ethical Business Practices?

BUSINESS ETHICS
What Are Ethical Business Practices?

Before going further, it’s important to understand the definition of ethical business practices. Let’s start by
thinking about what we mean by ethics.Ethics are the principles that regulate our behavior and ensure we
do the right thing. Therefore, ethical business practices are a set of principles that govern your business.
Top Ethical Business Practices

1. Define Your Values
Everyone at your organization needs to be familiar with your business values. The best place to include
these values is the employee handbook, under a code of ethics section. When writing this section, be as
clear as possible to avoid any opportunity for misinterpretation.
A code of ethics is critical for everyone at your company, but it’s most important for those in a leadership
position. Leaders should refer to your values when making important decisions, such as implementing a
new strategy for dealing with employees. Your values are critical for everything from hiring and firing to
figuring out how to improve operations.
2. Decide on Appropriate Disciplinary Action

There will be times when employees fail to adhere to your ethical standards. It’s crucial to be consistent
with disciplinary action and ensure the punishment does fit the crime.
Create a set of policies from the start and enforce the rules. This will demonstrate that you stand by your
values and have no tolerance for unethical behavior. It will also show employees what to expect if they are
considering acting inappropriately.
3. Hold Your Leaders to High Standards

Leaders have great influence over their subordinates. By holding your leaders to a high standard, you show
your employees what you expect from everyone and inspire each individual to act with integrity. This will
also help you to develop future leaders in your current employees.
4. Incentivize Ethical Behavior

To increase ethical behavior, you need to use rewards as well as punishment. A reward can be as simple as
praise in the face of good behavior — particularly when it would be easy for an employee to act unethically.
Another option is to use a reward program, such as employee of the month. Most programs rely on pro-
self-bonuses, but you may see even better results if you use prosocial bonuses. For instance, you could
encourage winners to use their bonuses to treat the rest of their team or you could donate the bonus to a
charity of their choice. The benefit of this strategy is that it promotes good behavior in the short term and
leads to a lasting sense of having done something important.
Non-financial incentives are also effective — often far more than business owners believe they will be. Just
reminding employees of how actions can impact other people can incentivize them to make the ethically-
right decision. Alternatively, you can emphasize how behaving ethically will ultimately improve the
employees’ own lives.
5. Keep Ethics Top of Mind

Everyone from leaders to entry-level employees will behave more ethically if you frequently remind them
of your company values. They’ll be less likely to justify an action that (deep down) they know is ethically
wrong.
There are many ways to create constant reminders of values. One thing to do is to include an honor code
at the beginning of forms. Too often, companies need to check a box and sign after they’ve already
completed a form. By this point, it’s too late to change anything if the person has already provided
dishonest information.
6. Become Active in Your Community

Just because you’re a for-profit company doesn’t mean everything you do needs to be about making
money. Volunteering in your community can be a humbling experience and it can serve as a reminder to
everyone at your company that other activities are perhaps more important than what your business is
doing. You’ll also show customers that you care about enriching the lives of others.
7. Hire a Diverse Range of Employees

More companies are trying to increase diversity in their workforce — and their reasons extend beyond
creating a better public image. Hiring employees from a diverse range of backgrounds brings a wider variety
of perspectives. Not only will you receive fresh ideas for solving problems, you may even avoid introducing
unforeseen problems into your products and services.
8. Monitor Your Suppliers

It’s important to hold suppliers and other professionals you outsource to the same standards as your own
employees. Choose suppliers whose values align with your own. It may we worthwhile to go so far as to vet
them to ensure they are behaving ethically.

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BUSINESS ETHICS

What Are Ethical Business Practices?

Top Ethical Business Practices

2. Decide on Appropriate Disciplinary Action

3. Hold Your Leaders to High Standards

4. Incentivize Ethical Behavior

5. Keep Ethics Top of Mind

6. Become Active in Your Community

7. Hire a Diverse Range of Employees

8. Monitor Your Suppliers

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