Unit 4 Assignment 1: Ethics and Values in Business

Unit 4: Assignment 1: Launching Your Business Vision

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    In this assignment, I will be defining the difference between ethics and values, I shall create a leaflet defining my own ethics and values, I shall go on to write an email outlining the positive and negative effects my ethical values will have on my business plan and finally, I will write a report detailing how my ethics and values have affected the operations of my business.

What are Ethics and Values?

Ethics

Values

Ethics are moral principles a business adheres to enable them to make better business decisions and it affects how they make money to where they produce their items to who their business will effect both positively and negatively. For example, Sports Direct is arguably unethical in their treatment of staff whereas Starbucks is slightly more ethical in their sourcing of coffee beans and their enrolment into Fair Trade. Simply put, ethics is the difference between right and wrong

Values are behavioural traits exhibited by members of the organisation (usually staff but can refer to values looked for by businesses in investors, partners, suppliers and even customers) that allow a business to adhere to its ethical code and ensures that the members of their organisation are the right fit.

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It is ethical for businesses to reduce their waste and as such, Tesco PLC have values in customer satisfaction, environmental improvement and treating people how they want to be treated. Their environmental value is that “Every little helps make a big difference” and they go on to explain that this means reducing food waste in-stores, by giving food away to food banks and heavily reducing prices when food items are near their “best before” dates, and by their customers, they force their customers to waste less by offering a 50% discount instead of buy one get one free on non-essential, perishable items.

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What is an ethical code?

    A code of ethics document outlines the core mission and values of a business or organisation, it defines how professionals within the business are supposed to and should approach problems based on principles defined by the organisations core values.

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What are the benefits of having an ethical code?

    It allows businesses to make better decisions however, it increases the difficulty of decision making as the code of ethic will define how a decision is made. This can mean making the hard decision instead of doing what is easy, depending on the robustness of your code of ethics.

    Another benefit is the increased customer reputation from maintaining a strong code of ethics, the downside of this is that if your ethics are wrong or otherwise aren’t appreciated by consumers, it could have a negative impact on your company reputation.

    A final benefit of a code of ethics is that it mitigates legal risks and implications. A larger company would benefit from a code of ethics especially as it enables them to better train their staff in how they deal with customers, manufacturers and suppliers. This is why John Lewis put a lot of emphasis on customer service staff training to ensure that staff are able to communicate with customers in line with their code of ethics.

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Leaflet:

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What are my values and ethics?

Ethics:

• Everybody should have somewhere to call home.
• Homelessness should not be an issue in Britain. Out of 18 million households in England (according to Office of National Statistics), 57740 households will find themselves homeless (according to Crisis.org), that’s more than 2% of our population.
• Many homeless people are capable of working but do not have an address or means of maintaining hygiene, this is unattractive to employers however, there are services available to enable them to improve their hygiene considerably and use as a correspondence address.
• People should be given an opportunity that motivates them to better themselves.
• Many people suffering from homelessness, drug abuse or financial issues do so as a result of poor education or lack of motivation. A person working in a factory for fifteen years on minimum wage and unable to support their family and cover the cost of living on their low income may lack the motivation to search for a better paid job that, with their experience, they will be well suited to.
• A person stuck in the revolving door effect of homelessness do so as a result of continued negative behaviour that constantly sets them back, whether it’s anti-social behaviour due to a lack of interpersonal skills (which is often a result of poor upbringing or lack of discipline).
• Drug use which is often used as a comfort mechanism to dull the impacts on their emotional state that the hardships they are facing may have.
• Empowering an individual to give themselves a hand up instead of giving them a hand out will be far more beneficial to the individual than allowing them to expect others to solve their problems for them; it will improve their independence, enable them to understand the value of work and discipline and enable them to better reintegrate with the wider community with the skills they need to function properly as adults in the world of work and business.

Values:

• Treat distribution partners (leaflet distributors and cyclists), staff, investors and customers how I expect to be treated; with respect, dignity and honesty.
• Be inclusive to all regardless of social, financial or personal situations and ensure those who are suffering from the most difficult of hardships are signposted to the right support services and given support from us before enrolling them as a distribution partner to protect company reputation and to ensure client relations are maintained.
• Assist distribution partners by signposting them to relevant services to enable them to overcome any issues they may be facing such as homelessness, drug addiction or engaging in criminal acts.
• We would allow distribution partners to use the business address as correspondence for any other employment they embark upon whilst working with us until they secure their housing. They will not be allowed to use the business address for personal correspondence.
• We will give people in hardship an opportunity that will enable them to earn an income which they can use to assist them to overcome any hardships they are facing.
• We will support distribution partners to create their own plans of action to overcome their hardships, develop the skills they need to maintain a decent quality of life and optimise their work capability.

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What are the rules to be about ethical accounting?

• We will use ethical accounting principles to ensure honesty, integrity and transparency with accounts and we will allow our distribution partners access to records of revenue earned from orders they have fulfilled themselves to be able to ensure they are receiving the right amount of pay as per their commission rate. They will only be given access to basic revenue information and customer information will be withheld in line with data protection.
• We will also register yearly accounts with the HMRC in line with tax law and HMRC.
• There will be a ration sheet which defines daily spending on non-essential business expenses such as in-office lunches, these expenses will be exempt from tax and any other non-essential expenses will be subject to tax out of choice if we are operating in profit according to end of year accounts.

What are the rules to be about ethical marketing?

• We will only distribute advertising material or otherwise work with companies operating within the law. We will not accept any orders for misleading advertising.
• We will not accept orders which request distribution of advertising of extremist opinions; this includes extremist religious, political or ethical beliefs, material which promotes or sympathises or otherwise condones any acts of violence or terrorism, any material which does not provide an English translation for purposes of review, any material that is designed to encourage people to make economically damaging or otherwise unhealthy decisions such as advertising material which misleads their audience into believing there is an offer of employment when in fact, it is an opportunity to own your own business distributing another companies products such as Avon, Herbalife, Forever Living, Kleeneze or other multi-level marketing businesses which have high start-up costs and low sales commissions.

What are the rules to be about ethical purchasing/manufacture?

• We will try to purchase from and work with British suppliers and manufacturers where possible, where this is unfeasible, only then will we look for non-British suppliers and manufacturers. This does not extend to British suppliers and manufactures who source their own products from overseas.

What are the rules to be about ethical employment practices?

• We will aim to maintain a majority-British born workforce as it is important to me to ensure the financial security of our own citizens before those citizens from overseas with the right to work in the UK. However, we will always be inclusive on non-British citizens and shan’t discriminate between British and non-British employees. If a non-British candidate for employment is better suited to a position than a British candidate, they will be given the job. However, if a British person and a non-British person are both suitable for one position, we will offer both employment on part-time rotor basis. This does not apply to distributors whom are self-employed.

How will the code of Ethics be communicated to those involved?

• This leaflet will be available upon request and will be understood by employees before starting work.

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To whom it may concern,

    I write this email to explain how the core values and ethical codes of my business will impact on my business plan, both positive and negative.

    First, we will look at my ethics which are very much people-oriented. It is my personal belief that homelessness shouldn’t be an issue in Britain in the 21st century but unfortunately, it is. I also feel that the majority of those who are unattractive employees for an employer are only unattractive due to circumstances that can be managed if not controlled. Therefore, it is my opinion that with the right services available to maintain hygiene, cleanliness and develop inter-personal skills such as independence and the ability to communicate with employers and colleagues appropriately and in general, function within a society that they’ve otherwise been rejected from, any individual can get back on their feet and obtain the same opportunities presented to those of us who haven’t experienced such hardships.

    There is a stigma surrounding those who I have documented in my business plan and with the right support and the ability to maintain hygiene and, for lack of a better term, disguise their hardships, this will help to alleviate this stigma which will benefit all parties involved as nobody likes the idea of a drug addict carrying out work for them when the truth is, drug addiction affects more people in society than we will ever realise – because of the stigma, it is frowned upon to share such health issues with our peers, employers and colleagues. If we can remove the obvious indicators of homelessness and drug addiction then we should begin to alleviate the stigma and allow our distributors and those we are trying to help to experience life without the stigma that often leads them to continue their poor behaviour because they simply know no better.

    My ethics require me and my staff to take time out of operating the business to meet with our distributors and others to discuss their needs and create action plans that will best assist those. This will of course take us away from the logistical planning of operations mostly and may, as a result, impact on our ability to take on as many orders as our competitors, this may mean an impact to our revenue but this can be mitigated by increasing costs slightly, however this may be unattractive to customers and therefore it may be wise to keep prices low but focus on promoting what we are doing for the community which will, of course, massively benefit our business reputation.

    As per our ethics, we believe in second chances where most would simply turn their backs on the individual and just hang them on the line, so to speak, this is going to receive a mixed response, especially when we help those who are drug addicts and those with a history of crime, after all, should we help those who are where they are as a result of their own poor choices? Perhaps. But what if those poor choices were made as a result of the poor treatment of others? Can we expect everyone to maintain a thick skin and abstain from drugs and crime because someone told us to but didn’t tell us how to cope with hardship? Perhaps people turn to crime and drugs for reasons which aren’t their own; I agree that it is an individual’s choice to behave a certain way but would the individual behave the same way if their circumstances were different? Perhaps not. It is important to educate the communities to understand this and more importantly, our customers, who will frown upon the fact that those who aren’t the most productive within society are being given the chance to distribute their advertising materials. We may lose customers as a result which could affect our revenues short term, however, we may be able to replace these customers with others who are more in line with our ethics such as Shelter, The Big Issue and other homelessness charities/organisations.

My final point regarding my ethics is that by giving those the opportunity to pick themselves up from rock bottom instead of giving everything to them on a plate like many of those I am trying to help will expect and will be sadly mistaken, will improve relations with my customers. It is all too easy to solve a problem for someone and not give them the tools to ensure the problem does not arise again, this is what we see when a person enters the hostel system, secures their tenancy, are unable to maintain their tenancy due to lack of the required interpersonal skills and end up homeless again, back in the hostel system and stuck in the revolving door effect of homelessness. If we give individuals the tools they need, our customers will see that there is a significantly less chance that these somewhat undesirable individuals returning to the behaviours that they engaged in which resulted in the circumstances they found themselves victim of.

Now, we will look at my business’ values and explain how they impact my business. The first value we will discuss is the fair treatment of others. It is my opinion that certain salutations give some individuals an undeserved air of importance, because of this, I believe it is important to refer to everyone I work with, with the exception of my customers (because you know, their ego is important) as “Sir”, “Miss” or by their name or informally, “mate”, “buddy” or even, on a good day, “old buddy, old pal”, customers shall always be addressed as Sir or Miss unless they request to be addressed less formally. This will create a welcoming, fair and pleasant environment for my staff and bullying shall not be tolerated at all, whether inside or outside of work. All incidents and reports of bullying will be investigated thoroughly and those involved will be dealt with accordingly. Violence is unacceptable however, if violence is used to defend themselves then this will be assessed on a case by case basis. Any incidents of violence, harassment or intimidation will be referred to the police regardless of any outcome of internal investigations. This may impact the opinion some of my distribution partners have of me as the business owner as there is a common agreement in the homeless community that one should not involve the police but the time has come for these individuals to join me as a law abiding citizen and this will mean turning them turning their backs on the vigilante style justice they have known for the term they have spent homeless.

Next, we shall discuss my values of inclusion. I have a friend who has recently crossed the £1million bank balance line from his sports bets winnings. He retired in his 30s from Ladbrokes, a popular bookmakers, after amassing half of his small fortune. When he turned 40, out of boredom, he went back to work in a hardware store on Melton Road in Leicester called Machine Mart. This is relevant as it highlights the fact that you can be exceedingly wealthy and choose to work for minimum wage or you can be exceedingly poor and choose to work for minimum wage; the point is, when you wear a uniform, you can’t tell one person’s situation from the next, even without uniforms… The state of clothing, hygiene and presentation in general is a good indicator usually but then I know a person who you often see in the peak of summer wearing an old-man’s vest (he’s in his 70’s), cargo shorts, socks and sandals, for all intents and purposes, one would be forgiven for believing this chap was in receipt of the basic state pension and that is all. In fact, he amassed an undisclosed fortune into the hundreds of thousands from investing his lifetime savings in a Fidelity mutual fund, very risky but it paid off. My point is, how a person looks doesn’t necessarily indicate their level of wealth, their personal situation or other factor about their life. I could buy a Ferrari on finance and a stranger in the street would think I earn enough to cover such a luxurious expense when in fact, I’m paying £30 a week for the next 205 years… The benefits of being inclusive is that we will be able to find a wide range of individuals to work with us from a range of different backgrounds where some will be able to assist others through sharing personal experiences and advice on how to better themselves and their lives.

    My values of maintaining a primarily British workforce may seem non-inclusive but as stated in my Ethics and Values leaflet, we wouldn’t turn a person away for not being British, instead we will hire both on part time contracts. This will impact the two employees but will be the fairest way forward. The other impact this will have is in the way of costs; it is legally required for employers to pay into a work-place pension for our employees and this will mean two different pension contributes, more administration and potentially higher costs associated with using payroll services to manage this. The employment of a majority British workforce will increase my overall reputation amongst those who appreciate putting British citizens first (to clarify, I refer to British workforce in the sense of British citizens; the individual races, religions, family backgrounds of those British citizens I employ will have zero effect on whether I hire a person or not. If a British citizen has non-British parents or a non-British born person secures British citizenship then I will be happy to employ them. I think British citizens should be given priority over those, when it comes to employment, who have requested the right to work in the UK by purchasing a temporary visa.

    Finally, as we will refuse any work which is extremist, offensive or otherwise damaging to others, this can have an impact on our revenues but this does not matter as the safety and security of the vulnerable people within my communities comes above the revenue generated by the orders from those with negative intentions.

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    I hope this email helps you to better understand how my business works.

All the best,

Andrew Hill.

Founder & CEO of InFront Advertising.

Report: How has my values and ethics affected the running of my business?

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    In this report, I will explain how the values and ethics I have been able to implement have affected the running of my business in the short time my business has been operating.

    When I first started my business, there were no ethics or values. I wanted to take on orders, fulfil orders and get paid. However, this was unfulfilling and it was decided that I would implement my code of ethics and values into my business. As a result, it was almost impossible to continue to operate effectively.

    I found that transparency appeared to be my downfall; when I informed my customers of my intentions of taking on board distribution partners from more undesirable backgrounds than they might expect, it was received with mixed opinions. Some understood the reasons behind my wish to help these individuals whereas others were concerned about reliability, which is fair enough and was an oversight on my part. To mitigate this, I will implement GPS tracking far sooner than my business plan entailed as this will improve reliability and peace of mind with the policy of “No GPS, No Pay.” Whereby, if the distribution partner does not provide their full GPS route, they shan’t get paid as this money will be used to refund the customer in line with Distributor and Customer contracts.

    I have seemingly lost a large amount of orders from previous customers but these have been replaced by new customers who support the social side of my business. Some of these include organisations who provide services to those in hardship including food parcels which are somewhat more ethical than my previous range of customers, therefore the impact has been a small-term loss of customers which has been replaced with more ethical customers.

    The values of maintaining a British workforce has been received with mixed responses, I had to explain that I would take both candidates on instead of turning one away based on not being a British citizen but still holding the right to work in the UK (as this would be illegal under the equalities act). However, those British individuals interested in becoming a distribution partner in the future highly approved of this. The truth is, there’s not as many British citizens who would be willing to put in the physical effort to distribute leaflets and other advertising materials at a lower wage than other companies offer, at the same time, however, the intention is not to give these individuals a high wage but instead, to give them enough of an income to be able to motivate them to find something better and to do so, would mean improving themselves. I have also begun to understand that a mix of employees from different backgrounds is largely beneficial for my business in particular, as I work with a large demographic of Asian customers, some of whom speak very little English, therefore having a diverse workforce would improve my relationships with these customers especially in a country like England which is very multicultural. As a result, I have chosen to withdraw this value completely and as a result, I have found an increase in customer and community approval.

Finally, by supporting our distribution partners to develop and maintain and adhere to their own plans of action to overcome their hardships, we have found that we have been able to alleviate the issues of homelessness, drug addiction and crime in so far one person’s life. Unfortunately, when they left us, they returned to crime and drug abuse as their reason to stop was no longer present. This has highlighted the need for aftercare, even when a partner leaves us, they should be sign posted to support services that may be able to help them maintain the healthy behaviours developed whilst working with us.

    In conclusion, it has been decided that some of my values and ethics should be revised and through my values and ethics, I have had a mix of positive and negative impacts on my business operations. I could not gain a full view of the impacts all of my values and ethics would have on my business as we are still in the start-up phase and the majority of my ethics and values involve staff who I have not yet been able to employ due to employing others is non-financially viable at this time.

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    To highlight the effect my ethics and values have had on my financial forecasts, I have added the increased costings to my cashflow and we can see that employing staff alone will cause my business to be bankrupt within the first year with my end of year total balance being less than a quarter of a million pounds, as you can see below;

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Appendix A: Loros Hospice Presentation – Core Values and Ethics