For
every study claiming that ethical behavior pays, there will always be another
claiming that it does not. The reality is nuanced. There are companies that
have made money through moral indifference and companies concerned with social
responsibility that have not made much money at all. Other firms have lost
billions as a result of ethical miscalculations, just as some can attribute a
proportion of profits to their moral character, or exist solely for it. The
issues of profit, its moral meaning, justification and role, need careful
examination. Mistakes to be avoided in making moral sense of profit include the
assumption that profitability establishes company’s moral rectitude (Camenisch,
1987)
A
business is any undertaking whose goal or was established to make a profit.
Profits on the other hand is the excess of inflows over the outflows or simply
the difference between the benefits obtained during the period over the
sacrifices you’ve made. Simply speaking, business exists because of profit.
Miksen (2015) said that a company’s ultimate goal is to gain and increase
profits. Many companies grow profits ethically, while others maximize profits
unethically via marketing frauds, slashing employee expenses, lowering product
quality or impacting the environment negatively.
Questions
involving moral justification for profits requires us to look into the
definition of what values, morals and ethics are in relation to a business
organization. How are values, morals and ethics different from each other? How
do they relate to business and what has profit got to do with it. According to
Mcnamera (2012), values are things that have an intrinsic worth in usefulness
or importance to the possessor or principles, standards or qualities considered
worthwhile or desirable. Values are driven by culture, religion, habit,
circumstance or environment. From the definition of it, we may say that values
are something good, but the definition of what is good or not is relative.
Mujtaba (2005) further states that, values are core beliefs or desires that
guide or motivate our attitude and actions. Moral values, on the other hand,
are relative values that protect life and are respectful of the dual life value
of self and others (Mcnamera, 2012). Morals are judgements, standards and rules
of good conduct in the society. They guide people toward permissible behaviour
with regard to basic values. Mjutaba (2005) defines ethics the branch of
philosophy that theoretically, logically and rationally determines right from
wrong, good from bad, moral from immoral and just from unjust actions, conducts
and behaviour. Some people define ethics simply as doing what you say you will
do or walking the talk. A person who knows the difference between right and
wrong and chooses right is moral. A person, whose morality is reflected in his
willingness to do the right thing, even if it is hard or dangerous, is ethical.
Ethics are moral values in actions. Simply stated, values are professed statement
of one’s beliefs, ethics is delivering on one’s professes values and morals are
actions of good conduct as judged by the society that enhance the welfare of
human beings.
A
business with an understanding of values, morals and ethics, the management could
then develop a framework for effective decision-making with formalized
strategies.
In
the perfect world, all business would be ethical (Ong, 2014). A business has an
underlying objective to create wealth by meeting human demands at a profit. The
survival of a business through the fulfilment of this objective is thus
dependent on its ability to secure monetary gain. Ethical businesses recognizes
the power of conducting business in a socially responsible ways and they
realize that doing so leads to increases in profits and customer satisfaction
and at the same time decreasing employee turnovers. However, among the key
performance indicators of the best performing companies in the world, is
financial rather than altruistic. These measures may lead to companies doing
unacceptable means to achieve it such as slashing employee benefits, fake
advertising and sacrificing quality. It shall also be noted that instilling
ethical policies in the company involves or entails cost which would most
likely lessen our gain.
Business
ethics is concerned with applying a moral framework to the way organizations do
business, from dealing with human resources issues to sales and marketing
policies. Ethics defines the good as
being that which corresponds to the nature and the bad that which does not
correspond (d’ Estaing, 2001). We may then conclude, ethically speaking, that
there is a good and a bad profit. However, keep in mind that profit, in itself,
is neither good nor bad for it is only the result of an activity you been involved
to. The question on what is good or bad shall not be directed on profits but in
the processes a company has undertaken to obtain it. Profits are just results.
Incorporating
ethical frameworks into business has to be done with a great amount of respect
and appreciation for others’ views. We shall give importance to respect.
Stakeholders, consumers and employers, come from various social and economic
backgrounds; therefore any attempt to institutionalize an ethical principle
must be balanced with a sense of respect from other that you serve. Business
ethics can thus be a fruitful venture for small business owners who are willing
to take the time to incorporate ethical principles with care and patience.
Most
ethical companies reinforce that ethics should take precedence over profits.
They consciously think decisions through and are focused on the long term
benefits. Unethical companies are typically focused on short term gains. They
are typically followers. They are lacking innovation (White, 2014). Many of the
ethical issues in profit maximization center on customers. Profit maximization
dictates that you attract customers and create sales. However, ethics demands
honesty and sometimes being honest in the short-run could make you miss sales.
There
is a long list of potential intangible benefits available to firms that act
ethically-including better commitment, ease of business improvements resulting
from increased levels of trusts between businesses and stakeholders, avoidance
of opportunistic behavior between owners and managers, employees’ moral
satisfaction leading them to reduce their salary demands and strong moral
identity attracting higher quality recruits.
Companies
behaving unethically often lead to bad publicity and would fail to appeal to
potentially high level customers at the same time higher quality staff. This
will ultimately increase costs the company incurs.
According
to Stolyarov II (2006), the goals of a life properly lived have two folds:
survival and flourishing. Survival is the goal of sustaining one’s biological
existence and prevents one’s downward slide toward poverty, ruination and
death.Flourishing on the other hand is the extension of one’s control over
external reality which is the ability to harness ever more elements in the
service of one’s life. Simply stated, flourishing is your desire for growth and
improvement while survival is existence.
In
the process of living, every man will gain benefits from the external reality
at the same time will be incurring certain expenses. If he breaks-even, then he
has accomplished the goal of survival. Surviving results to no gain or a loss,
but how long are we going to sustain this? As time goes by, without improving,
the resources you have will gradually deplete. He is no worse than yesterday
but at the same time he is no better off. In order to accomplish the goal of
flourishing, he must have gains or profit. He must be able to utilize what he
have in such a way that he would be better off tomorrow than yesterday and
today. Flourishing is improving and we all seek improvement.
It
shall be kept in mind that making profits is the only way to flourish. We could
just not live to merely survive. We could not simply live, just for the sake of
being alive. In life profits could come in different forms, they could be
intellectual, physiological, technical, material social and monetary. Monetary
profits has always been an issue in ethics. It has always raised moral dilemmas
and conflicts. In the context of business, profits are said to be unethical if
it is excessive or are obtained via unjustifiable means. When we say excessive,
we are referring to profiteering, which involves making profits in times of
scarcity.
Companies
which ignore profit, or which do not pay attention to it, collapses (d’
Estaing, 2001). Businesses are establish with the purpose to earn it. It shall
be emphasized that flourishing is one of the two goals in life, and businesses
are no different from it. You cannot just establish a business just for the
sake of existing. Consumer’s needs are always changing and a business needs to
be better tomorrow than today to cope with it. Failure to do so may lead to a
company’s collapse.
The
problems with profits is not the profit itself. The problems is whether the
outcomes justify the means. How were you able to obtain it? It is the process
that should be questioned or the means that shall be criticized and not the
profit itself. To have profit and to strive to flourish are inherent in all
humans. The drive to be better than yesterday is innate. Harper (2001) said
that what is ethical and unethical often depends on what part of the world you
came from and your cultural or religious backgrounds, rather than universal.
The
most sustainable companies seem to have a strong set of core values and an
entrenched clearly defined purpose beyond profit. They understand why they
exist, which takes precedence over how theyexist and drives what they sell to
exists. They understand the importance of long-term thinking and the benefit of
taking a broader view of what holds value to their business (Landolt, 2006). In
other words, they are not blinded by short-term gains. They tend to think
things through and plan every move in order for them to achieve it. Long term
sustainability is not possible without being ethical. There may be short term
gains for being unethical but sooner or later, the market will catch up. Build
a long term relationship where customers know and feel that they are being
taken cared of and that profit is not your only goal. With these, you would
paradoxically be making profit.
In
the biblical system of ethics, profit is godly if it is obtained in God’s way,
and this means that not making profit may also be a in against God, one’s
neighbor and oneself (Naselli, 2011). Profit maximization is a must for any
business to survive and flourish in a competitive market. The problem lies with
what you do to ensure profit. The way you do it shall be the one questioned for
ethics.
Adam
Smith established by rational valuation that profit making was an inherent part
of human conduct as it worked itself out in the social environment of human
culture. If human flourishing is moral, if improvement of individuals is moral,
then so is the pursuit of profit. Profit, by definition, cannot be destructive
in one’s life. Under laissez-faire capitalism everyman has sovereignty to
decide the value he will assign to each type of profit. The ways he will pursue
it and the exchanges he will make with other consenting individuals in order to
flourish.
Ultimately,
business always have the responsibility of profiting. Before we can expect
businesses to be ethical, we need to accept the profiteering agenda underpinning
all businesses and understand that ethical businesses can be a profit making
strategy on its own terms (Ong, 2014). Thus if becoming ethical were so
strategically beneficial, all businesses would have practiced it. So the
strategic case for ethical business alone is insufficient. We need to have the
right mix of strategy and morality.
In
my opinion, Profit in itself is NEVER unethical nor is beyond the bounds of
morality. All businesses are established to seek it. There cannot be a business
whose ultimate goal is not profit. We all seek profit, we all need to flourish,
to grow, to improve. The question on morality shall not be on profit and profit
alone. What shall be questioned as to fairness and ethics, shall be the means,
process the ways we have undertaken to earn it.
References:
D’Estaing,
O. (2001). The Ethics of Profit. Retrieved from: http://bahai-library.com/destaing_ethics_profit
Feloni,
R. (2016). Is there such thing as “too much” Profit? Retrieved from: https://amp.businessinsider.com/there-is-such-thing-as-too-much-profit-heres-why-2016
Frank,
R. H. (2004) What Price the Moral High Ground? Ethical Dilemmas in Competitive
Environments. Princeton University Press
Harper,
J. (2001). Business Ethics-A Contradiction of Terms?. The World of English.
Retrieved from: www.woe.edu.plcontract/business-ethics-contradiction-terms
Joyner,
B. E. & Payne, D. (2002) Evolution and Implementation: A Study of Values,
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Miksen,
C. (n.d.) Ethical Issues in Maximizing Profit. Retrieved from: www.smallbusiness.chron.com/ethical-issues-maximizing-profit-34328.html
Mujtaba,
B. (2005). Understanding Ethics and Morality in Business. Smart Business.
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www.sbionline.com/article/understanding-ethics-and-morality-in-business-there-are-distinct-differences-between-ethics-and-morality
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A. (2011). Are Profits Moral. Retrieved from: http://andynaselli.com/author/any-naselli
Salahi,
A. (2006). Definition of Excessive Profit. Arab News. Retrieved from: www.arabnews.com/node/282026
Stolyarov
II, G. (2006). Profit is Moral. Retrieved from; www.quebecoislibre.org/06/060813-2.htm
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A. (2013). The Purpose of Business. Retrieved from: www.contrarianconsulting.com/the-purpose-of-a-business