May 17, 2022

How an Ethical Workplace Can Positively Impact Your Bottom Line

A lot has changed in the business world in the last few decades. We’ve transitioned through the age of industrial entrepreneurs to the production and marketing era and are now neck-deep into the relationship era. Modern organizations are mainly focused on building products and brand image in the hope that enough customers will buy from them to generate healthy revenue.

Many are also taking a careful approach to actively nurture employee loyalty and build a transformative culture in which employees not only adapt to different situations but develop innovative (and profitable) solutions to ensure continuity and success.

The last thing you want as a company is a misstep that hurts your relationship with these valuable stakeholders. This is especially true for startups and small businesses that typically lack the resources to recover from a reputation setback. Therefore, they need to prevent any mistake, bad decision, or wrongdoing that can damage everything they’ve built. The best way to do this is by understanding the importance of business ethics.

The fact is, most businesses remain blissfully unaware of the relationship between ethical practices and profitability. Therefore, in this post, we’ll share how an ethical workplace can positively impact your bottom line.

How Business Ethics Improve Your Bottom Line

Ethical practices can improve your bottom line in the following ways:

1. Increased Employee Productivity

The modern workforce, which typically includes millennials and gen Xers, wants more than just a paycheck from their employers. They want their organizations to treat them fairly and care about them. In return, they work harder and longer to ensure the company reaches its goals.

For instance, many businesses choose to pay below-market wages to employees that are unlikely to find better opportunities. In contrast, others make the moral choice to offer good pay even though they don’t have to. This trade-off offers several other benefits along with improved productivity, such as loyalty and word-of-mouth marketing.

2. Greater Customer Loyalty

Many businesses are susceptible to making shady decisions to make a quick sale. For example, some fail to fully disclose the terms and conditions of their business and use a customer’s unawareness to their advantage. In most cases, customers are at a disadvantage even with the abundance of information available at their fingertips.

As a result, they often succumb to questionable deals and never do business with them again. The penalty for the business, in this case, is the lost customer, and if you know anything about sales, it costs a lot more to acquire a customer than to retain one. More importantly, with social media being ubiquitous, there’s no place for businesses to hide.

Unsatisfied customers waste no time sharing their negative experiences on Facebook, Twitter, and other platforms. In the end, these companies often make a few dollars in the short run while losing thousands in the long run.

3. Reduced Costs

Many popular brands, such as Microsoft, PUCCI Cafe, Disney, Adidas and Happy Breath invest in many social responsibility initiatives and environmental drives to maintain a positive image in their respective communities. By aiming to have a positive social impact and make a profit, many businesses are seeing significant reductions in expenditure.

For instance, PepsiCo Inc recently announced that it saved nearly $380 million since taking on different sustainability initiatives like waste reduction, green supply chain, energy conservation, and green packaging.

4. Changing Consumer Sentiment

Businesses rely on customers to generate sales and revenue. Today, there’s strong evidence suggesting that modern consumers are more likely to purchase from ethical brands with social initiatives, such as public development and environmental drives.

Some are even willing to pay more for their products to give them a competitive edge over unethical businesses operating within the same industry. For instance, as per a recent report, workers from Amazon warehouses in China were paid well below living wages. This news led to social media outrage against Amazon and a drop in its sales.

5. Growth Opportunities

Startups and small businesses usually attract new customers to generate sales and revenue. One effective way to do that is by building mutually beneficial relationships, such as joint ventures, partnerships, and affiliations, to name a few.

However, you need to have more than a great product or service to reap the benefits these opportunities provide. By creating an ethical workplace, you can significantly increase another company’s or person’s willingness to do business with you.

6. Positive Brand Image

Businesses that establish high ethical standards in their workplace culture can become leaders in their respective industries. Not only do they make the headlines on most mainstream and social media platforms.

However, they also win awards in multiple categories and boast positive reviews on most professional sites, such as LinkedIn. The most ethical brands also find it relatively easier to attract and retain customers by building a good perception of their products, services, and practices.

7. No Bad Publicity

Companies with low ethical standards usually make the headlines for the wrong reasons and acquire a bad reputation due to shady practices, questionable policies, and faulty products. They’re usually subject to frequent complaints and scrutiny on mainstream and social media.

Negative press usually leads to a significant impact on sales and profits. If the negative news about a company becomes public, most consumers start avoiding its value offerings.

Wrap It Up

The business world is rapidly evolving. Even minute changes significantly impact your operational efficiency and brand reputation. By learning how business ethics improve your bottom line, you can create an ethical workplace by igniting cultural change across every department within your organization and setting the tone from the top.

You can also take on different environmental or social initiatives. You can gain your community support and build better relationships with new and returning customers with such initiatives.

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by Bobby J Davidson

I love our companies  and we love what we do.  For more information on the Davidson Family of Companies, visit  Sign up for my Newsletter at the bottom of this page.