The relationship between ethics and profits

What does being an ethical business mean? In the modern day, the word ‘ethics’ is thrown around constantly. An ethical business can be defined as one that behaves with morals and acts in the best interests of its stakeholders. However, the question poses, does social corporate responsibility have to be compromised to maximise profits?

Business ethics is something that is very important to us. Here at HolyBrook, we consider ethics every day and make it part of who we are. We pride ourselves in upholding strong ethics and values. For example, when taking on a new client, we will research the client and their values and compare them with our own, if there is significant disparity between the two, we will consider declining an engagement. (you can read more about our values here)

To maximise profits, some believe that a business must cut costs and increase sales. Mathematically, reducing your outgoings and increasing your income will be correct, but this is a very short-term way of thinking. By only focusing on maximising your profits, this will have a ripple effect on all your stakeholders. Businesses trying to maximise profits may pay the minimum amount to employees, which benefits them financially, but by doing so, employees may not feel valued, so may not work as efficiently, and productivity will be lower. By prioritising profits, staff levels will be kept at a minimum, and those working may feel overwhelmed by the amount of work that they have, this can create a low morale and increase in sickness days, which can potentially cost the business more than extra staffing costs would. Monopolies often exploit suppliers by pressuring them into paying a very little amount for their products and then selling them in their stores at significantly higher mark-up prices by threatening to buy from another supplier. Although, it does decrease outgoings, it creates bad business relationships and can damage your reputation.

However, when businesses operate with a focus of corporate social responsibility they are focused on long-term goals opposed to short-term goals. Rather than being concerned about the sales and profits, they are more concerned about the happiness and welfare of their employees and such the impact upon the stakeholders. Taking this stance over profits will indeed be more expensive in the short-term but have long-term benefits, by taking on clients that share the same values will improve your reputation and have a positive impact on the way your company is run. As a manager, it is important to show this throughout your practice too, as a standard is set by you which follows down the chain of command.

Therefore, there is no trade-off between ethics and profits, it is only one that is perceived. When businesses trade in an ethical manner, the profits and the benefits of this soon follow.