How ethics can make or break a company
Tied with obligations to make profits and responsibilities to cater to society, "ethics" plays a principal role in shaping the success and renown of organisations. The way corporations go about with their affairs and deal with their stakeholders, starting from owners to employees to customers and the surrounding community at large, has a profound impact on their long-term sustainability and growth. However, in the quest for profitability and market dominance, ethical considerations often find themselves caught in the midst of hope and despair.
One of the burning concerns in the domain of business ethics is the widening gap between promises made and possibilities actualised. Companies love to boast of their commitments to nobilities as profound as corporate social responsibility, sustainability, and equitable empowerment, but often fail to translate these lofty ideals into meaningful practices. It is essential for organisations aspiring prominence to make certain that their actions are remarkably aligned with their stated commitments, fostering a culture of uprightness and accountability.
Another pressing issue is the ethical implications of emerging technologies. In today's digital age, businesses are increasingly leveraging technologies like artificial intelligence, big data analytics, and automation to streamline operations and enhance productivity. While these advancements bring immense opportunities, they also raise ethical dilemmas. For instance, the use of AI in decision-making processes can perpetuate biases, discrimination and undue leverage if not carefully monitored and regulated. Organisations must proactively address these ethical considerations and ensure that technology is deployed responsibly and in line with societal values.
Distressingly, some corporations go a step further and seek unethical corporate intelligence, which refers to the use of illicit or unethical means to gather information about competitors, customers, or other stakeholders in the business environment. This practice involves activities such as remote eavesdropping, hacking, bribery, or various sorts of unauthorised surveillance. Unethical corporate intelligence not only violates privacy laws and ethical boundaries but also undermines fair competition and creates unrest within the business community. Apart from the potential legal headaches, it further tarnishes the company's reputation and damages relationships with stakeholders. It creates a haunt of suspicion and hostility, complicating collaboration and disrupting the free flow of information.
Nepotism and favouritism form another kind of malice that challenges fairness, meritocracy, and the overall morale within an organisation. The undue existence of nepotism and favouritism creates a sense of injustice among employees who feel that the prospects for growth and advancement they deserve are limited. Most of our corporations are unfortunately infected with this ailment. And people of the affected organisations as such are led to decreased motivation and job satisfaction, and increased turnover as talented individuals seek opportunities elsewhere, where their skills and contributions are recognised and rewarded on much fairer grounds.
Moreover, this partisanship damages the credibility within an organisation. When the perception grows among employees that promotions and opportunities are not based on merit and meaningful contributions through efforts but rather on how strong the grapevine of personal connections is of an employee, it handicaps the integrity of people and culture processes. This subsequently results in a toxic workplace environment where people become disengaged and lose faith in the leadership's ability to make fair and unbiased decisions.
The treatment of workers and labour rights is another intertwined critical aspect of corporate ethics that has been screaming for attention for decades. In our industries, exploitative labour practices, such as low wages, long working hours, and unsafe conditions, have been persisting since forever.
Although it is very late already, our capitalists must be taught the crucial lessons of prioritising the well-being of their employees, ensuring fair compensation, a safe working environment, and opportunities for professional growth. However, such transformations shall remain impossible even in our dreams until and unless the government acknowledges these concerns, more through actions and impact. Only by championing workers' rights, businesses can foster a culture of equity and inclusivity which shall eventually benefit the economy as well.
As we are moving forward, the global fight against corruption remains another big concern for corporate ethics. Irrespective of the clear fact that corruption hampers economic growth, distorts fair competition, and impairs trust in institutions, this rotten practice has existed in corporations and authorities around us. While strides have been made in combating corruption in pen and paper, there is still much left to act upon.
Then comes a more destructive ethical concern which has the full potential to make even the largest corporations bite the dust. Financial misconduct encompasses a wide range of unethical practices related to financial reporting, accounting, and transactions within organisations. These usually include fraudulent issues, such as falsifying financial statements, misrepresenting financial information, or the most fashionable in our country currently, embezzlement. Financial misconduct not only eyewashes stakeholders, including investors and shareholders, but also diminishes the reliability of the organisation and the financial markets as a whole.
The consequences of financial misconduct can be devastating and points of eruption of such mishaps are diverse. It destroys investor confidence, leading to reduced access to capital and higher borrowing costs. Provided the authorities concerned are appropriately effective and intolerant towards monetary atrocities as they should be, it can also result in regulatory penalties, lawsuits, and damage to the company's reputation. Moreover, financial misconduct often has an internal ripple and a macroeconomic effect, impacting employees, suppliers, and the broader economy.
Strong internal controls, transparent reporting mechanisms, and very much essentially, an ethical tone at the top can only establish a firm and financially ethical foundation in an organisation. Implementing strict governance practices, including independent audits and regular internal reviews, helps detect and prevent fraudulent activities. With that, whistleblower protection programmes safeguarding informants from potential harm can also play a crucial role in encouraging employees and stakeholders to report unethical behaviour without fear of retaliation.
It is no surprise that supply chain management has also emerged as another area calling out for ethical consideration. Organisations have a responsibility to ensure that their supply chains function in an orderly and sustainable manner. This includes scrutinising that suppliers are adhering earnestly to fair labour practices, human rights standards, and environmental obligations. By conducting regular inspections, engaging in supplier capacity development and collaboration, and promoting responsible sourcing, businesses can mitigate the risk of unethical practices and contribute to positive social and environmental impact throughout the supply chain.
Business ethics also extends to the aspects of responsible marketing and consumer protection. In today's interconnected world, companies have become prominent enough to swiftly influence consumer behaviour and shape societal norms. This makes it crucial for organisations to engage in honest and transparent marketing practices, avoiding deceptive and manipulative tactics. Protecting consumer privacy and data security is equally important in an era marked by frequent data breaches and privacy concerns.
Responsible corporations should ensure that their marketing messages align with their offerings, and they should prioritise delivering value and meeting customer expectations in order to protect their wellbeing from any unsolicited risk and uncertainty. Unfortunately, where ethical marketing practices hold paramount imperative for businesses seeking to build trust and maintain long-term relationships with their customers, there still exist multiple instances around us which have had detrimental impacts to the point which cost consumers their health and even dear life.
To positively drive ethical awareness and unbiased decision-making within businesses, it is nonetheless important to provide ongoing ethics training and education to employees at all levels for awareness building. Training programmes have a very good chance in being a guidance for employees to understand ethical dilemmas, and learn in more detail about ethical operating procedures, and encourage open dialogue about relevant issues that may arise in the workplace.
Indeed, the oscillation between hope and despair in the dominion of corporate ethics demands unwavering commitment from organisations and leadership. Bridging the gaps between words and actions is the way forward for corporations to navigate the complex ethical scenario with dignity, purpose, and impact. It is through these ethical endeavours that organisations can contribute to a collective corporate culture where business thrives hand in hand with societal well-being and prosperity.
Nafis Ehsas Chowdhury is a columnist and studies business at United International University.
The author acknowledges valuable insights and guidance from Piana Monsur Mindia, assistant professor of HRM at United International University.
Views expressed in this article are the author's own.
Follow The Daily Star Opinion on Facebook for the latest opinions, commentaries and analyses by experts and professionals. To contribute your article or letter to The Daily Star Opinion, see our guidelines for submission.