Business Ethics - Pay and rewards 3.4.4.

Business ethics - The moral principles that guide the way a business behaves

Remuneration - Reward for employment in the form of pay, salary, or wage, including allowances, fringe benefits, bonuses, cash incentives etc.

Ethics can be reflected in the way the business recruits, motivates and rewards staff.

• Is it ethical to pay just the living wage?
• Should London businesses pay above the living wage?
• Should senior managers be paid higher remuneration than others in the business?
• Is it ethical for CEO's to be paid hundreds of more times better than the average employee in the business.

The recruitment process needs to be fair and free from bias and should at least follow the law. A company needs to spend money regularly on staff training and development. The trade-off is that these strategies require a significant amount of ongoing financial investment which reduces the business's profits, at least in the short term.

Rewards for staff, such as basic pay and bonuses, need to be equal across the business in order to be considered ethical, which incurs greater costs in the short term but in the longer term has a positive impact on staff motivation and higher revenues.

Ethical pay also covers the differences between senior managers and staff. Employees do not expect the approach taken by Dan Price, chief executive of American company Gravity Payments, who cut his own pay so that all staff would receive a minimum wage of $70,000, but ethical decisions would require employees to understand any large issue with the company not being equal.