Most people would agree that companies should stick to certain ethical standards, but does it make good businesses sense when a firm needs to make a profit to survive? Yes it does, writes Professor Emma Borg, who has recently led development of a Code of Ethics for Reading businesses.
Business delivers things societies want or need, from goods and services through to things like wealth creation and employment. But in turn they also enjoy a range of benefits from society: access to an educated workforce; reliable transport links; and the protections of a legal system.
My research explores the nature of this complex relationship between business and society from the perspective of what is called ‘social contract theory’ in philosophy.
Why should businesses be ethical? Most people would agree that upholding certain ethical standards is the right thing to do, but does it make good businesses sense? Businesses need to be profitable to survive, and it may seem that acting more ethically could reduce profits, but, as our research shows, this is not the case. There is an ‘ethical dividend’ for firms which behave in a moral manner.
For instance, treating employees fairly results in a more diverse workforce, better staff retention and therefore the preservation of institutional knowledge. Treating employees with compassion improves their wellbeing, leading to less sickness and better motivation and productivity.
Research shows that employees that are treated ethically are happier, feel they are making a positive impact, and are more comfortable taking responsibility. This in turn leads to more committed and engaged employees – better at problem solving and creativity, with a better attitude to their work, and better health and wellbeing.
Furthermore, organisations with strong reputations for integrity, honesty and what is often called ‘social purpose’ inspire greater customer and supplier loyalty, and they are able to attract and retain the best staff. All these things can be shown to benefit a business’s bottom-line.
28 June saw the launch of a Code of Ethics by local not-for-profit organisation Ethical Reading, which works to improve business practices in the Reading area. The code was launched at a busy breakfast event hosted by Shoosmith’s Law Firm, with 50 registered attendees representing 34 local and global organisations.
The Code of Ethics, in part funded by a grant from the University of Reading, was created by Professor Brad Hooker and myself, and developed with Ethical Reading. It is evidence-based, comprising of values that benefit employees, customers, the businesses themselves and wider society.
Building on research findings and consultation with local business leaders, the seven values the Code of Ethics is based on are: Compassion, Responsibility and accountability, Fairness, Respect for rights, Integrity and honesty, Teamwork / Collaboration and Social purpose.
Ethical Reading also provides organisations with guidance on embedding the values in their processes and practices. The areas businesses need to look to when embedding a Code of Ethics are:
- Identify specific exposures to dilemmas likely to call for an ethical response.
- Ensure a ‘speak up’ culture.
- Move towards learning rather than blame.
- Review hiring and employment practices in line with your values.
- Make sure reporting practices support your organisational values.
The launch event received extremely positive feedback with the vast majority of attendees saying they would recommend the event to a colleague and two more companies – Vail Williams and Riddlebox – intending to sign up as Ethical Reading partners after attending the launch.
David Thomas, Regional Managing Partner at Vail Williams, said: “[This is] such a fantastic and needed initiative in a volatile environment and I’m looking forward to getting more involved with Ethical Reading.”
Also at the event, Natalie Ganpatsingh, Director of community interest company Nature Nurture praised the initiative’s “ practical ways individuals and companies can take action.”
Dominic Hall, Global Head of Ethics at BAE systems, commented: “If you’re an an SME and you’re saying I don’t know anything about this, how do I do this as a business, I haven’t got time, I haven’t got the budget, how do I build this in? I think the work and the resources of Ethical Reading would be really useful.”
Watch a video about Ethical Reading and the launch of the Code of Ethics here:
Ethical Reading is a not-for-profit social enterprise, run by a team of volunteers, that is helping organisations to incorporate ethical values into the way they work. It has 35 partners and supporter organisations. Visit Ethical Reading’s website to find out more and see the Code of Ethics.
Emma Borg leads the University of Reading’s Centre for Cognition Research and she is a Professor in the department of Philosophy. She specialises in the philosophy of language and mind, and the study of the relationship between business and society. She has worked with Ethical Reading since 2018. In November 2019 she will give a public lecture on this topic – see our events listings for details.