The balance between Profits and ethics

The balance between Profits and ethics

Introduction

The main aim of conducting any business is for-profit gain, and therefore, profit is deemed to be the right of any business organization. However, in the process of realizing this profit, the operations must be done within ethical means. It follows, therefore, that a paramount question that we need to ask ourselves is that, is there a possibility of a business being successful, and at the same time, be ethical? Most of the time, since most of the companies mainly focus on the profit-maximizing goal, and since the emphasis is mostly on profit-making, then the business becomes unethical. This, therefore, calls for a balance between profit-making and ethics. That is why Brunello Cucinelli, the CEO of the humanistic Italian fashion brand, once said that ‘’I believe in capitalism. I need to make a profit, but I would like to do it with ethics, dignity, morals. It’s my dream.’’ Therefore, in this paper, we are going to elucidate how corporates can strike a balance between profit and business ethics while putting up an argument whether profit, whether business, profits, and ethics, are compatible in corporate governance. While generating profit is the number one objective of all businesses, organizations have the responsibility of developing codes of ethics and conduct that can be put into action and abided by all organizations.

Profits and ethics

A company’s ultimate goal is profit maximization, and many profit-making organizations make their profits ethically. However, other companies make their profits in an unethical way through false marketing, compromising the quality of the products, negative environmental impacts, employee exploitations among other practices (Ghosh, Dilip and Angie 72).

For instance, despite the efforts being made by humanitarian organizations to petition many companies not to use child labor, many profit-making organizations still use children in their labor force. It is understood that many organizations in the world have come to increasingly rely on a globalized supply chain, and this complicates matters since some companies along the supply chain are engaging in unethical practices. However, it is time organizations took more responsibility in ensuring that they know that their products are sourced and produced ethically (CareerEdit).

While the generation of profit is directly related to reducing costs, one of the main ethical issues in business is the means by which companies produce their products. Traditionally, it has always been believed that profits and ethics, in the world of business, are odds with each other (Ghosh, Dilip, and Angie 72).

Many businesses use unethical practices to lower their costs, when others who focus on ethical labor practices may have an advantage in the market. Low-Cost country sourcing, as well as the firm’s polluting practices, are some of the ways in which companies minimize the cost of production. This is one of the most basic strategies used by many multinationals, like Walmart, Starbucks, Apple, etc.  By prioritizing profits instead of ethics, these companies take advantage of countries where laws on labor and environment are less strict, like Uganda, Bangladesh, China, Tanzania, etc. Consequently, this leads to high pollution and exploitation of cheap labor in those countries (Ghosh, Dilip, and Angie 74).

However, this practice is increasingly criticized, and more and more companies differentiate themselves by only using fair-labor, or even local workers. By using this more ethical practice, some companies are able to make more revenue as people want to encourage their practice. One way that a business can strike a balance between profits and ethics is through corporate governance. However, for many enterprises, corporate governance has been viewed as a drag to profit maximization. It should, however, be noted that if business incorporates social values, public interest, and moral codes in their operations, they pose no threat to their profit maximization agenda (CareerEdit).

One of the unethical business practices that are dominant in many companies is employee exploitation by employers.  However, this can be mitigated by ensuring that a healthy employee and employer relationship is maintained. Scholars argue that when there are a more robust employee and employer relationship, the business can ultimately succeed. It is intimated that when this relationship is strong, employees are bound to be loyal, efficient, productive, and there is less conflict in the organization, which implies that more time and resources are focused on improving the productivity of the business (Business 2 Community).

Strong employment relations can be achieved through first, proper management. It has been found out that if the employer is respected by the employees, they are likely to do better in the duties that they have been assigned. Proper management is achieved through employee motivation, setting of goals, delegating, effective communication, and embracing equality. Through these sound management practices, the employees are likely to surpass their designated duties, which is of great benefit to the organization (Business 2 Community).

Social responsibility is another way businesses use in ensuring that they strike a balance between ethics and profit-making. Many profit-making organizations are upscaling their effort on social responsibility. Some are aggressively being involved in championing the rights of women and children. Some are into environmental protection, while others are engaged with poverty eradication. Studies show that those companies that are socially responsible always project an attractive image to both their customers and investors, which positively impacts on their growth (Investopedia).

Socially responsible companies always ensure that consumers matter. This is a vital way of ensuring that customers are attracted to the company and are retained. Consequently, customers are even ready to pay more for the goods and services that they purchase when they know that some of the profits that the business realizes will be used for social projects that are dear to them. Companies that are socially responsible are also able to have a head start over their competitors. For instance, Tesla Inc. has been able to attract environmentally-minded consumers through the use of automotive products that are electrically powered. The Coca-Cola Company has also been involved extensively involved in activities that ensure that women entrepreneurs are equipped to overcome their economic and social barriers by providing them with skills and financial assistance (Investopedia).

Conclusion

Profit and ethics have been seen over time to be in conflict. However, many companies now realize that conducting in an ethical manner is more beneficial to the growth of the company. When consumers’ attitudes towards those companies that are embracing corporate social responsibility are examined, it has been discovered that consumers are inclined to pay more for sustainable products. It’s now time companies became deliberate in ensuring that the goods and services that they produce and consume are produced in an ethical manner. It should be noted that if business incorporates social values, public interest, and moral codes in their operations, they pose no threat to their profit maximization agenda.