How Ethics in Business and Social Responsibility Can Improve Profitability

Ethics in business has always been important, at least to a point. If there comes a time when customers don’t believe you’re honest about what you’re selling, they can abandon you overnight, ultimately ruining your business.

It’s becoming more apparent all the time that going a step further and practicing a higher standard of social responsibility can ultimately be more profitable.

Businesses don’t exist in a vacuum. Instead, they exist within the complex circumstances of their customers’ lives. As a result, everything from customers’ disposable income to the number and quality of competitors impacts how a business performs.

These days, consumers are increasingly tired of businesses that exist solely to profit with no regard for the cost of their actions. Imagine a 20-year-old in college studying the impact of climate change, then looking at businesses contributing to that trouble. Sure, the companies may be profitable, but that income isn’t something everyone will admire.

Ethics in business isn’t just about going green, either. Most people want to be treated fairly. If your job offer doesn’t address the rapidly rising cost of living, yet you demand your employees work 20 hours of overtime a week with no overtime pay and you yell at them the whole time, you can’t expect them to be loyal. You’re acting unethically.

The Benefits of Ethics in Business

There are many benefits to acting ethically in business. For example:

  • Employees work harder and are more loyal when they’re paid well and treated fairly.
  • Customers are increasingly more likely to buy from businesses with a good reputation.
  • Other people are more likely to help you when you need it.

Being ethical isn’t nearly as challenging or expensive as some people think. Giving back to your community isn’t throwing away money. It’s investing in the place where your employees live and work. A community that receives more gives more. Besides, reciprocity in marketing is a thing.

Why Should Businesses Be Socially Responsible?

Most businesses value profit ahead of everything else, which means there’s ultimately only one reason for businesses to be socially responsible: it makes more money. Ethical business practices impact a company at every level.

Be honest: Do you think an employee will give their full attention and work their hardest if they’re wondering where their next meal is coming from, or whether they can afford rent this month? Will customers come through your door if word is spreading that you’re hurting the community and making it a worse place to live?

Profit is not something you can measure exclusively by sales and income. It’s complicated, with factors like public opinion, employee morale, and external market forces impacting your success.

Businesses cannot exist without a good environment, and businesses have an enormous impact on that environment. If your customers and community are in a better spot, they’re more likely to spend money on you.

Is Profit Incompatible with Social Responsibility?

The short answer is no. Most people won’t argue that businesses trying to be profitable are fundamentally wrong. However, if profit is the only goal of a business, that can lead to more significant issues.

Many government regulations exist as a way to mandate a minimum level of social responsibility. For example, let’s say that your company produces medicine. You can reduce expenses by adding cheap filler, then increase the price of your product because people will pay almost anything to maintain their health.

Both of those are profitable strategies, but often not ethical ones, and that’s why they are (sometimes) regulated. Keeping tabs on regulations is essential, so make sure you know how business owners can monitor government updates.

Ethical business practices can also prevent constrictive legislation. For example, a company that willingly provides accessibility services might pay less than if legislation comes out demanding more.

The truth is that there’s no magic number where profit, in itself, becomes bad. However, businesses that focus on short-term gains at the expense of long-term profit often cause more harm than good, and that’s where people tend to draw the line.

In other words, social responsibility is essentially a company acknowledging that it wants to keep operating. If you destroy the foundation below your building, you have no room to complain when it collapses.

Example of Ethics in Business

Here are some examples of ethics and social responsibility in business.

Carbon Negative: Forget trying to be carbon-neutral. There’s almost no cost difference for going carbon negative, which means actively reducing the amount of greenhouse gas in the atmosphere.

Fair Pay: If the cost of living increases 10% in a year and employees get a 1% raise, they know they’re worse off than before. Fair pay means at least keeping up with the cost of living. Otherwise, all the skilled employees will leave, and you’ll be saddled with the cost of training replacements.

Good Customer Service: People love companies that have excellent customer service. If people trust that you’ll make any problem right, they’re far more likely to tell their friends about you.

Socially Responsible and Profitable Companies

Some of the most profitable companies in the world are socially responsible.

Microsoft, which needs no introduction, has an impressive track record in areas of social responsibility. Their offerings include tens of millions of people learning new skills through their systems, a carbon-negative plan that drastically reduces their environmental impact, and protection against billions of threats to electronic devices.

Consider that last one for a moment. Microsoft deals with technology, and people are far less likely to use it if they think it’s unsafe. People don’t buy a new copy of Windows OS every time Microsoft stops a virus for them, but making technology safer has a significant impact on people’s willingness to use it.

Wrapping Up

In the end, being socially responsible is about learning how to find opportunities in every situation. Ethics may not bring obvious and immediate profit, but socially responsible policies are ultimately better for the company.

Click here for more details on financing options or call 214-629-7223 or email for more information. Or, apply now.

An Outsourced CEO and expert witness, Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting, turnaround and brokerage firm specializing in the gym and sports industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars, webinars and workshops across the globe on the practical skills required to successfully overcome obscurity, improve sales, build teamwork and market fitness programs and products. Visit his Web site at: or

Get Our Latest Blog Delivered To Your Inbox

Invalid email address
We promise not to spam you. You can unsubscribe at any time.
Our Other Sites
close slider

Subscribe To Our YouTube Channel

Gyms For Sale

Pin It on Pinterest

Share This