Importance of Ethics in Business
Matthew 7:24 "Everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock."
Ethics and guiding principles provide the most solid foundation for any business. This is true no matter what industry you are in, your business model, or your niche. Building a business on strong principles and ethics from the start is like building a house on a rock—as described in the verse cited above. In contrast, commencing business operations with a "profit at all costs" or "anything goes" attitude is like building a house on the sand. Ultimately, irresponsible and unethical behaviors will bring your business crashing to the ground.
What Are Business Ethics?
According to the Merriam-Webster dictionary, ethics are defined as "principles of conduct governing an individual or a group." Business ethics, therefore, can be thought of as principles of conduct that govern the behavior of the people involved in a business (owners, managers, employees, and so on).
Some examples of ethical conduct in business are accepted globally. Universal business ethics include such things as:
Honesty and transparency (especially in marketing and contracts)
Accountability
Providing excellent customer service
Inviting and accepting feedback
Paying workers fairly
Fairness in hiring and firing
Taking responsibility for the business's social and environmental impact
As Christians, our moral and ethical beliefs are not only guided by what is universally accepted but also by the principles taught in the Bible. The following are a few examples of Bible-based business ethics that might not necessarily be embraced by secular businesses:
Tithing and charitable giving
Closing on Sundays (or Saturdays, depending on your denomination)
Servant leadership
Allowing the land to rest
Exercising forgiveness, when appropriate
Canceling debts
Why Are Ethics Important in Business?
There are many reasons to embrace ethical practices in business. In addition to the fact that God expects it of us, ethical behavior also has practical benefits.
Avoid Legal Consequences
Every business is governed by laws—including tax laws, labor laws, workplace safety laws, building codes, and others. Diligently complying with the relevant laws is not only ethical (many of our country’s laws are based on Biblical principles) but also protects your business from receiving fines or even being shut down for non-compliance.
Maintain a Positive Reputation
Establishing and applying business ethics protects your business's reputation whereas a lack of integrity damages it. For example, BP has faced public distrust over concerns about the company’s environmental impact. BP chairman Helge Lund promised in 2019 that the company would transition to a low-carbon energy system in response to shareholder demands. However, the company went back on its promises in February 2023 after oil prices surged in the wake of the Russia-Ukraine war. While people will probably keep buying gas, these actions demonstrate a focus on profit over corporate social responsibility (and integrity) and damage the company’s reputation. This is something that we as Christians should be careful to avoid.
Attract and Retain Talent
Businesses that operate according to ethical principles tend to attract highly talented, like-minded employees whose principles align with those of the company. The company's ethical business practices and culture motivate these employees to stay with the company rather than look for employment elsewhere.
Inspire Ethical Behavior from Employees
An ethical culture starts with business leaders and flows down the chain of command. Ethical leaders inspire ethical behavior and ethical decision-making from their employees. In contrast, the use of unethical practices by leadership can lead to moral disengagement on the part of employees. Moral disengagement, in turn, can lead to insider trading and a host of other corrupt practices that we definitely do not want in our businesses.
Increase Customer Loyalty and Revenue Resilience
Data from the 2022 Conscious Consumer Spending Index shows that 67% of consumers feel that it is important to buy from socially responsible companies. In times of economic recession, ethically-minded consumers will often continue to support ethical businesses even if they feel the pinch. As a result, a business that is grounded in faith and wisdom, and trades ethically is more likely to withstand market fluctuations than one that is not run in an ethical manner.
How to Ensure Ethical Business Practices
As Jesus himself said, the key to standing firm in a storm is to put these teachings into practice. It is only by implementing God's teachings in your business that you can hope to enjoy sustainable growth. The following are some practical ways to run your company according to ethical standards:
Determine the ethical (and Biblical) principles upon which your business will be run. Entrepreneurs should do this when writing their initial business plan. Established companies can perform a company audit to assess how ethical their company is and how they need to improve.
Use the ethical principles you identify to guide your business decisions from then on. This involves everything from the way you set up your company's budget to supply chain considerations, opening hours, the wording of client contracts, marketing strategies, and setting up ongoing opportunities for reflection. You may need to commit to a transition process with a determined time frame for becoming a more ethical company.
Communicate clearly and ensure compliance. Once you have a plan in place, it's essential for the company leaders to communicate your ethical standards and requirements to all of your current, new, and future team members along with consequences for unethical behavior. It is also helpful to develop a framework for ethical decision-making so that team members can make ethical decisions when "gray-area" situations arise.
We share more of these kinds of practical faith-based business insights in our devotionals and will also discuss similar questions in our podcast. Join our community and request details about our membership options for the inspiration you need to run an ethical business that effectively reflects and expresses your faith.
Build Your Business on a Solid Foundation
Building your business on Biblical principles and ethics gives you a solid foundation for weathering the inevitable ups and downs. Ethical companies that remain true to their values avoid a host of potential legal problems and fines, maintain a positive reputation, and gain the loyalty of ethically-minded employees and customers—making them more resilient in economic downturns.
The importance of business ethics cannot be underestimated. And while it may not lead to the same short-term gains as unethical practices like underpaying employees or sourcing cheap materials at the cost of the environment, trading and acting with integrity—day in and day out—will help your business stand firm in the end.
Related verses:
Proverbs 29:18