Customer Loyalty and Public Image – When it comes to business, having a positive public image means getting more customers. Numerous studies have indicated that behaving ethically improves the way in which a business is perceived, for example a report on the insurance industry carried out by INSEAD in 2006 concluded that companies providing financial cover could improve their images simply by fulfilling their social responsibilities. Research conducted by Bozell Worldwide, Nihon Keizai Shimbun and the Wall Street Journal in 1996 concluded that most consumers believe business ethics to matter so customer loyalty is likely to be exhibited more towards ethical companies than those that do not behave in an ethical manner. When compared to nine important corporate citizenship activities or categories, values and ethics ranked highest in Europe and the United States and third highest in Japan. Customers who are loyal are more likely to keep buying a product or service from the same company, meaning that loyal customers can help to boost the profits of a business.
Avoidance of Fines – Companies and their workers are required to comply with local, international and national regulations that govern the way in which they operate. Failing to adhere to these standards can have a high cost in terms of resources, time and brand image. The development of ethics initiatives can significantly reduce the chance of fines that result from illegal, discriminatory, fraudulent or wrongful activities. Companies that have developed good corporate citizenship can greatly reduce potential penalties stemming from acts of misconduct.
An information survey of workers’ views on business ethics carried out in 1997 saw forty-two percent of respondents state that the ethical integrity of a company directly influenced whether or not they would choose to work for it. This means that ethical companies are likely to have more committed employees and a wider choice of employees to choose from. A survey carried out in 1994 concluded that the most important factors for workers when deciding where they wanted to work were business practices and employee treatment. These factors rated above price, service and quality.
The main motivation for behaving in an ethical manner should be the desire to uphold strong moral principles but that is not to say that companies cannot also benefit from the financial gains that are to be made from conducting business ethically. Fulfilling corporate social responsibility can lead to more loyal customers and employees, improved brand image, less fines to pay and increased annual sales. It can also improve the motivation of individuals who are working at a company, as if people know that they are working for a business that truly cares about society then they will be more likely to work to the highest possible standard. However if they believe that they are working for a company that pays little attention to the needs of other people then there will be a greater risk of them failing to take their roles seriously, which could potentially reduce productivity and significantly negatively impact upon your business. Ultimately, people like to be employed by businesses that they believe to be a source of good. Therefore in order to gain the most out of your workers, it is essential to conduct ethically sound business.