Ethics in Business

The Honest Company began by promising to tell customers the truth and make products meant to be safe for families and kind to the environment. It sells baby shampoo and household cleaning sprays. The company says it aims to use gentle ingredients, sell products and act responsibly. These promises do not prove that every product meets them.

Customers who trust a business may return and recommend it to friends. Honesty can therefore support growth.

Imagine buying a toy labelled safe. You would expect that label to be truthful. An ethical business honours its promises even when doing so costs money.

What could a business change to give customers more honest information?

A person's idea of fairness guides their choices. Workplace rules and rewards also influence behaviour. They can support honesty or make cheating seem acceptable.

In one investment fraud, customer accounts appeared to hold over $65 billion, much of which was invented. The adviser received a 150-year prison sentence. That account total was not the amount of real money stolen. In another case, an airline leader departed following a government investigation.

Rewarding earnings alone can encourage some people to cheat. Recognising fairness and honesty can support better decisions.

Businesses can explain their rules, teach staff to recognise problems and welcome workers who raise concerns.

If you managed a shop, what rule would help staff treat every customer fairly?

Ethics concerns ideas about right and wrong. Business ethics applies those ideas to companies and the people working in them.

One way to judge a choice is to look at its results. The aim is to do the most good for as many people as possible. A company considers its customers, workers and community, as well as its owners.

Another way asks which duties a business should follow, whatever the results. Telling the truth and keeping promises are examples. A business should follow these duties even if lying would earn more money.

Should a company only try to make money, or should it also care for people and the environment?

Many people expect both. Money keeps a company running. It should also treat workers fairly, be honest with customers and avoid harming the environment.

Name two groups a company should care about besides its owners.

People disagree about a company's purpose. Some say a company's main job is to make as much money as possible for its owners. Another view includes duties to the surrounding community. Courts have heard cases about these duties, and people still disagree.

Corporate social responsibility, or CSR, means caring about how a company affects society while also earning money. Examples include fair pay, less pollution, gifts to charities and choosing safer products over cheaper, less safe ones.

A business can obey the law and still face questions about what is right. Doing the right thing may mean doing more than the law says it must.

This can help several groups. Workers may feel happier, customers may trust the company more, and the neighbourhood may become healthier. These benefits are possible, not guaranteed.

How could your lemonade stand help its community while earning money?

Suppose you manage a hospital that needs to reduce spending.

One hospital announced plans to dismiss more than 80 technology employees and move their jobs overseas, where wages were lower. It estimated savings of over $30 million over time.

Those savings could fund equipment and patient care. However, more than 80 workers would lose their hospital wages, affecting their families too. Some had served there for years.

People disagree about the best response. Some would protect those jobs and seek other savings. Others believe the savings could eventually benefit more people. Neither choice removes every difficulty.

Business decisions affect finances and people's lives. Both deserve attention before a decision is made.

What would you choose as the hospital manager? Explain your reasons.