Importance Of Ethics In Business Organization – Why is business ethics important? The importance of business ethics is increasing day by day as more and more people respond positively to an organization that promotes ethical and social behavior. Studies show that about 20% of people speak out against a company that is unethical in its operations.
Business ethics is a code of ethics that guides the actions and activities of an organization and its employees. Business ethics is the promotion of moral and ethical behavior in the activities of organizations.
Importance Of Ethics In Business Organization
Mentioned below are some of the importance of business ethics that you can enjoy when you maintain ethical standards in your organization:
Key Principles Of Business Ethics
Business ethics is a tool for enabling good behavior in a business organization. It aims to prevent unethical business practices like black marketing, unnatural price gouging, adulteration, fraud in weights and measures, selling of low quality and dangerous goods, raising fake commitment, misuse of natural resources etc.
Customers need to be very confident when choosing which products to buy and they trust the company when they receive what they expect. Due to the fact that ethical businesses treat their customers fairly when it comes to product quality, utility, reliability, quantity, price and other factors, making decisions is easy.
Business ethics commits business organizations to maintain trust by providing high-quality goods and services to consumers, which increases people’s level of confidence in using the products.
Corporate ethics is the cornerstone of survival and growth of a business. Because customers have full confidence in businesses that uphold business ethics, customer retention can be kept high.
Business Ethics Are Important. The Smooth Functioning Of The…
However, customers cannot trust a company that has cheated them in the past. Consumers decide not to buy goods or services from that merchant once they realize they have been cheated. Negative word of mouth involves people recommending others not to buy those products.
According to several studies, when a customer feels cheated, they inform 10 other customers, but happy customers only tell 4 other customers. It shows how a company’s ability to grow and expand depends on its ethical business practices.
It protects consumer rights like right to information, right to choose, right to redress, right to safe and healthy products, right to be heard, right to redress etc.
To protect these basic consumer rights, business ethics are essential. This has increased the confidence of customers in the business.
The Advantages Of Ethical Behavior In Business
Corporate ethics adhere to concepts of fairness to customers and society at large. It promotes the growth of positive and friendly relations between the organization and the society.
When a corporate entity behaves ethically, the entire community looks upon it favorably. As a result, it promotes and supports strong social relationships. Business ethics also contribute to a thriving economy and a higher standard of living in society.
Business ethics improves the reputation of the organization. A company is fully accepted by the general public and the society if it adheres to all ethical standards. The business community and entrepreneurs adhere to the required business ethics and refrain from unethical behavior, they are always supported by the society.
If a company is successful in building and maintaining its reputation in the society, it can thrive even in a very competitive environment.
The Value Of Strong Workplace Ethics • Sprigghr
The importance of business ethics is that it protects the interests of employees and other stakeholders of the organization. Business ethics is necessary to protect the interests of stakeholders such as government, shareholders, competitors, dealers, suppliers and customers.
This protects them from taking advantage of each other through fraudulent or dishonest business practices. Ethics requires every person involved in a commercial activity to fulfill their responsibilities under the code of conduct.
Competition can be kept healthy only by practicing business ethics. All corporate entities act fairly if consumers follow business ethics. As a result fair competition will increase.
Healthy competition promotes innovation and creativity, as well as financial services, competitive pricing, corporate accountability and consumer happiness. Competitors cooperate to create and develop markets in a healthy competitive environment. It provides equal access to all business groups, regardless of their size or type.
Code Of Ethics: Why Are They Important?
As discussed earlier, a company that practices business ethics benefits all its stakeholders including its employees, shareholders, customers, dealers and suppliers. Happy stakeholders provide full support to the company, enabling it to conduct business operations effectively.
As a result the effectiveness, efficiency, productivity and profitability of the corporate organization have increased. Business ethics thus preserves the highest level of happiness and protects the company from dysfunction.
Customer satisfaction is the key to a successful business. Corporate organizations can best meet customer expectations by following business ethics.
Organizations in the business world are bound by business ethics to put the needs of their customers first. The level of customer satisfaction increases only when the company operates according to ethical standards.
Why Business Ethics Are Important
After customers, the main players in an organization’s success are its employees. A company’s interactions with its employees must adhere to business ethics. Employee satisfaction can be increased by providing equal treatment in terms of compensation management, opportunities for growth, involvement, providing good working conditions etc.
In addition, the company should provide a comfortable working environment for its staff. The level of commitment is stronger among satisfied workers. Therefore, organizations can preserve positive labor relations and fewer labor-related problems by adopting business ethics. Every day, managers and business owners make business decisions based on what they believe is right and wrong. Through their actions, they demonstrate to their employees what is unacceptable behavior and shape the moral standard of the organization. As you will see in this chapter, personal and professional ethics are important pillars of an organization and shape its ultimate contribution to society in the form of corporate social responsibility. First, let’s consider how individual business ethics are formed.
Morality is a set of moral standards for determining whether something is right or wrong. The first step in understanding business ethics is learning to recognize an ethical problem. A moral dilemma is a situation in which someone must choose between a set of actions that are moral or immoral. For example, Martin Shkreli, the former CEO of Turing Pharmaceuticals, raised the price of a drug used for newborns and HIV patients by more than 5000 percent, defending the price hike as a “great business decision.” But consider the actions of lonely, hungry people in New Orleans who lost everything after Hurricane Katrina. They broke into flooded shops and took food and bottled water without paying for them. Is this unethical behavior? Or what about a small Texas plastics manufacturer that employs over 100 people and specializes in the Latin American market? The president was upset because he knew the company would go bankrupt by the end of the year if it did not receive more contracts. It is known that the business is losing due to refusal to pay bribe. Bribes are part of the culture in his major markets. The closing down of the firm will put many people out of work. Should he start paying bribes to stay in business? Would it be unethical? Let’s look at the next section to get some guidance on identifying unethical situations.
Brigham Young University researchers tell us that all unethical business practices fall into one of the following categories:
Pdf) The Battle For Business Ethics: A Struggle Theory
After recognizing that the situation is unethical, the next question is what do you do? The course of action a person takes depends partly on his or her moral philosophy. The environment we live and work in also plays a role in our behavior.
Another factor influencing personal business ethics is fairness, or what is fair according to the prevailing standards of society. We all hope that life is reasonably fair. You expect your exams to be fair, your grading to be fair, and your pay to be fair based on the type of work you’re doing.
Today we understand justice as the equitable distribution of burdens and rewards offered by society. The process of distribution varies from society to society. Those in a democratic society believe in the doctrine of “equal pay for equal work,” in which individuals are rewarded based on the value a free market places on their services. Because the market places different values on different occupations, rewards such as wages are not necessarily equal. However, many consider the rewards fair. A politician who argues that a supermarket clerk should be paid the same as a doctor, for example, will not get many votes from the Canadian public. On the other hand, communist theorists argued that justice is provided by a society in which burdens and rewards are distributed to individuals according to their abilities and their needs.
Individuals choose between right and wrong based on their personal moral code. They are also influenced by the moral environment created by their employers. Consider the following points:
Ethical Marketing: 5 Examples Of Companies With A Conscience
As these true stories illustrate, poor business ethics can create a very negative image for a company, be costly to the organization and/or the executives involved, and result in
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