What are Ethics?
A person’s ethics are the principles of morality that inform how a person behaves. They can be described as that person’s ‘moral code’.
What are Business Ethics?
There are various branches of ethics, and one branch is ‘business ethics’. This type of ethics is focused on how business ought to behave. The type of business ethics that looks at how businesses should act within a society is sometimes referred to as ‘corporate social responsibility’.
Business ethics refers to the application of ethical values in a business environment. Ethics refers to a philosophical branch that deals with human values in relation to their conduct regarding what is good or bad and what is right or wrong. Ethics are the foundation of respect towards others. In business, ethics make sure that profits are made only through the right channels.
Business ethics, also known as corporate ethics, guides company officials to cater for the needs of the employees as well as the community from which they get their resources. Without ethics, most of the products in the market today would be half-baked of phony.
When ethics are adhered to by a company, the needs of the customers are respected. It is through the same codes that companies learn to appreciate and value the environment as their sole provider. Here are some of the reasons that explain why ethics is so important to any business.
Business ethics can examine the actions of particular people within a business (for instance the CEO). Or, it can see the business as a person in its own right.
28 Reasons Why Ethics are Important In business
1. Ethics lays the strategic decision-making. Leaders and workers of a business characterized by ethical behavior make decisions that are socially acceptable. They allow all the stakeholders to participate in the decision-making process.
2. They increase employee retention. Employees always want to stay longer in a business where the employers value their rights and opinions. To them, their basic needs are satisfied.
3. An ethical business attracts investors. A business that promotes ethics in its management and operations create an investment-friendly environment. Investors like putting their money where they are sure it is safe.
4. Ethics minimizes costs. Fewer funds are spent in employee recruitment since most employees are retained in the business.
5. Ethical practices help in building and maintaining reputation. A large part of ensuring business success is down to maintaining a good reputation among your customers. One of the main things that customers will scrutinize when they decide whether they trust or want to engage with a business or not is that business’s ethics. If you can brand yourself explicitly as an ethical business, so much the better!
6. An ethically oriented company is bound to avoid fines. They comply with the law, file their tax returns in time, ensure quality of products and services, etc.
7. Ethics in a business attracts more employees. When your company is reputable, more people will be interested to work for you.
8. Good Business ethics is the key to enhancing productivity. People will work harder at their jobs if they believe that what they are doing is ethical. They will not be held back by moral qualms, and they may feel extra motivated to work because they feel that by doing so they are making the world a better place. So if you want to make a normal profit rise and rise until you are making big bucks, you need to keep your business totally ethical.
9. Ethics create customer loyalty. A reputation build on good ethics helps create a positive image in the marketplace. This, in turn, makes customers trust your products and services. They also pass information to their friends and family, hence, creating more customers for you.
10. Ethics encourage teamwork. Employers and employees who trust one another work together harmoniously and effectively.
11. A business that values ethics attracts more suppliers. A business without suppliers is as good as a failed enterprise. Suppliers are attracted to a company that appreciates what they supply and pay for them promptly.
12. Ethics in enhances partnerships. Partnerships in the business world are very crucial. They help expand your marketplace and improve business relations. In order to get a good partner(s), your reputation must be built on a strong business ethics foundation.
13. Ethics reduces business risks. As trust and loyalty are built on ethics, chances of losing potential customers, suppliers, employees and even the company itself are minimal.
14. It improves a company’s bottom line (last line that shows profit or loss). The bottom line of your business will increase since costs and risks are reduced.
15. Ethics increases business profits. The decrease in risks and costs mean that the output is likely to be higher than the input hence the company makes a profit.
16. Ethics lead to sustainable growth in sales. An increase in customers leads to an increase in demand. Therefore, more goods and services are sold. It may seem that a little selfishness might help your business, however this is never the case. Selfish or unethical actions may seem to give your business a temporary boost, but they will thwart your long term goals. Ethical action is the key to sustainability and success in business.
17. Good ethics in a business boosts the morale of the employees. Good business ethics involves rewarding your employees. When an employee is rewarded, he/she works harder leading to more profits.
18. Ethics helps in building consumer confidence. Other than customer loyalty, business ethics makes consumers believe in you even during difficult times. For example, when a company’s product is found to be faulty and the company takes full responsibility, consumers are bound to trust that it was just a mistake.
19. Ethics enable a company to make good use of the limited resources. Instead of wasting the company’s resources on themselves, company leaders can put them to good use.
20. Ethics in business allows for healthy competitions. It is common to find two or more companies that offer similar services and goods. A company characterized with ethical behavior will not engage in malpractices such as spreading false information about the other company or lowering their prices. Instead, they will allow the customers to choose where they like.
21. Ethics lead to long-term gains. A company that values ethics believes in small, but long-term benefits rather than big, but short-term returns.
22. Ethics helps in maintaining quality. An ethical company will strive to deliver goods and services of high quality to their customers even in times when the demand is higher than supply.
23. Ethics offers extra asset protection. Employees who abide by the business ethics are in a position to respect and protect the business’s assets. For instance, they will not make long personal calls using the business line.
24. Ethical practices foster community improvement. Ethics teaches the art of giving back. Ethically oriented companies will help a community to be better through things like road construction or schools construction.
25. Good business ethics is an end in itself. Both inside and outside of business, having good ethics is an end in itself, and something that we can derive satisfaction from in its own right. So, if you want employees, vendors and consumers to feel satisfied, then running an ethical business is very important. That way, when people go to work they will feel a sense of satisfaction at doing something that is morally sound. And, when people buy your products or services, they can do so safe in the knowledge that what they are doing is ethical.
26. Ethics promote Corporate Governance in an organization. A good corporate governance ensures that the company is working according to the prescribed rules and regulations. The state of affairs of the company is transparently reported to its stakeholders such as share holders, management, creditors, and the government.
27. Ethical practices helps in setting up the internal control systems. It helps in working according to the organizational goals, meet the project deadlines, correct reporting of financial data, and compliance with the existing laws and regulations. Without ethics in place, the internal control mechanisms would fail to achieve a meaningful goal.
28. Ethics is necessary for equality at workplaces. An ethical working environment provides equal work opportunities to all the employees. It is free for gender-inequality and discrimination of any sort. Candidates are promoted solely on the basis on their merit.
Having an ethical business is essential if you want your business to be a real success in the long term. Good business ethics keep your customers satisfied, they encourage people to buy in to your business.
Business ethics and profit go hand in hand. An ethically oriented business with desire to dominate its market niche is likely to reap a lot of benefits. Unethical company, however, is doomed to fail even if they started with high profit records. Ethics are there to make relations better and stronger.