Why Business Values and Ethics Matter
14/10/20, 8:08 am
Do ethical business values really matter? Can they impact your business practises for the better? Can they change your position, trust and legitimacy in the market? Do they help you to circumvent difficult social, political and market challenges? The short answer for these questions is, yes.
What are Business Values?
Business values are the principles that drive company behaviour and business purpose. They help inform standards of behaviour and desirable goals. Values drive company decision-making processes and growth direction.
Large enterprises will often have known and defined company values. New enterprises do not have explicit values in their early stages. However, company culture and business values are evident if we dig a little deeper.
Mature enterprises, on the other hand, are continually evolving and changing. They need to revisit and update their defined business values to accurately reflect their desired direction and growth.
How Values Drive and Impact Your Business
Prevailing company values are the ‘filter‘ in which decisions are sifted through. Values are embedded in all aspects of a business’ operations – from marketing and sales; to product development; to solution delivery and deployment.
For example, profit and economic gain can be a company’s primary driver and most important business value. For a less mature entity, it might be the enterprise's only ‘expressive value’. This value might trump all others, including unspoken ones. For example, a misogynistic company culture will establish an unspoken preference and value for predominantly male business partners and customers. This hypothetical company will thus prioritise profit and low-cost manufacturing, squeezing competitors out of markets at all costs.
Whilst simplistic, mono-focused value strategies and structures may lead to short term economic gain and growth, they are likely to lead to low employee engagement and public mistrust due to internal (political) conflicts and lack of transparency.
Mono-focused value strategies and structures may lead to short term economic gain and growth, they are likely to lead to low employee engagement and public mistrust due to internal (political) conflicts and lack of transparency.
A Complex World
We are living in a highly complex and inter-connected world. From the perspective of liberal democracies, Western societies emphasise democratic values; free markets; human rights; and individualism (i.e. humanism). Companies with limited values usually don’t fit these underlying systems and belief structures. They will struggle to survive and thrive long term, particularly the more emergencies (natural disasters, pandemics, economic collapse and shockwaves) we experience. Limited values do not help companies make considered decisions when it comes to complex market problems that have underlying social and political effects. The larger a company grows, the greater their impact on the global system. They can either perpetuate the status quo or change it.
An example of the critical role values play in the development of a business are the limitations imposed on particular 5G infrastructure providers by concerned governments across the globe. Differing political systems move to change the international system status quo because of underlying national and political interest. A lack of liberal democratic values (for example, holding up the values of privacy and transparency), causes concern when certain corporate entities move to monopolise certain markets.
Ethics established the principles whereby we mediate our interactions and learn to live together in harmony1. This harmony extends from how we deal and treat our employees and customers, to how we better manage global resources, protect institutional diversity and how our leadership skills form2. All this indicates that ethical values need to be formed with a common purpose to help societies solve social problems, achieve better equality and access to resources.
OF SURVEYED STUDENTS
Agreed that companies should have more social outreach and be more environmentally conscious.
In 2016, the United Nations initiative, Principles for Responsible Management Education, conducted a survey revealing a generational shift from a profit-driven attitude to a more society-driven attitude in business students.
75% of the 1,700 business students surveyed agreed that companies should have more social outreach and be more environmentally conscious. The study’s lead author, Debbie Haski-Leventhal from the Macquarie Graduate School of Management, commented that the most recent group of Millennial students surveyed, “exemplify a remarkable set of values we haven’t seen before.”3
Profit and growth allow a business to survive and thrive. However, there is growing demand for corporate responsibility and ethical behaviour from populations all over the globe. In an age of climate change, health reform, economic downturn, political upheaval and social unrest – corporations will have to become more considerate of their operating practices and the impacts they are having on staff, society and the environment.
- Mark Crossweller, Petra Tschakert, "Climate change and disasters: The ethics of leadership" (October, 2019).
- Elinor Ostrom, Joanna Burger, Christopher B. Field, Richard B. Norgaard, "Sustainability : Revisiting the commons: Local lessons ; global challenges" (April 1999)
- Sarah Ertelt, "Does Business Ethics Depend on Economic Growth?", The Prindle Post, 12 June 2017