Human beings have evolved a lot over the centuries. But with them, they have advanced their economic awareness and business ethics as well. From the barter times, where trade was merely a necessity, to the East India Company, where wealthy English businesspeople discovered the cheap Indian land and labor; we have come a long way.
After the British left India, we Indians became well-versed with the idea of business. Our natives started launching businesses and exploited the land and labor to their full potentials. During this time, the companies gave much more value to the profit than the people or society. The businessmen were profit-oriented and were willing to go to any lengths for the maximization of their profits.
Today, with the moral sense, we have developed to put ethics and society before profits. We have learned to value society’s tastes, preferences, and treatment. We have also understood the need to implement values in our businesses. Ethics has gained importance not only because of the businessmen’s conscience but because of its vast social acceptance. Let’s learn a little more about business ethics and its significance.
What is the Meaning of Business Ethics?
Business Ethics is an arrangement of moral values and rules of the activity applied to the business. Because a company is social conduct, it should not be carried out in a harmful way to the industry’s interest and society as a whole. Every business makes a protocol for its members. The members are given a standard to operate. Existing economic and social circumstances influence such standards.
Business ethics can be defined as a study of ethical morals, principles, and problems in a business environment. In simpler words, it is an amalgamation of the everyday morals and ethical norms of the business. It applies to all types of companies.
Organizations use ethical policies as guidelines for all employees of a company to behave at high standards and do the right things at all times. This policy may outline the mission and values of the business or the organization. Also known as an ethical code, it envelopes the business ethics and code of conduct expected to be followed by the business’s employees.
What is the Need for Business Ethics?
In the modern world, where the social perspective means everything, business ethics is a must-have. There are a few reasons why business ethics are necessary to survive in the market. They do not benefit solely the profits but also the overall environment of the business.
With increasing social awareness, the society supports businesses that are lawful and fair towards the employees, customers, potential consumers, investors, and other stakeholders. With business ethics in place, the organization can maintain justice and compliance with every component of society and law.
An ethical business is always more likely to attract more investors and shareholders. From the investors’ point of view, any company that is not fair to its customers and employees is expected to be unfaithful to the investors. But if the organization is lawful and just towards its employees and customers, the investors would be ready to be a part of such a system.
Apart from that, any managerial decision needs to be differentiated as right or wrong within an organization. Having business ethics helps the employees to make the right choice when faced with such a dilemma. Moreover, it has been ascertained over time that companies that practice and promote ethics and social responsibility have excelled in competitions and growth. It is for these reasons that every establishment needs to adopt business ethics.
Why Business Ethics Is Important Factor?
Trustworthiness, transparency, and equality are some of the many components of business ethics. These practices can be towards employees, customers, or other groups of society. Ethical business practices fuel customer relationships. For longstanding organizational success, customer relationships hold prime importance. It creates and maintains an everlasting impression in the customers’ minds. With such a reputation, the business can win customers, employees, and society’s confidence to bring success to its doorstep. The following are the benefits of business ethics.
1. Meet the Society’s Expectations
All the stakeholders, be it internal or external, look out for the business’s culture and behavior. The expectations of the general public increase with the business’s increased share in the market. Once the company starts becoming successful, the society expects it to become a “good example” for the community and new, upcoming businesses.
society expects two things from any organization: “Do the right thing and be good to all” and “Do no harm.” When the company follows these norms, it is respected in the society. For example, Porsche has recalled approximately 34 Coupe cars for fuel leakage and other safety hazards. This increases the respect the society has for Porsche. Despite incurring losses by calling back the vehicles, Porsche did it anyhow because it was “the right thing to do.”
2. Generate Good Will
An ethical organization grasps the confidence and respect of all its stakeholders. This builds a positive picture of the business in society. The companies have to exist in harmony with society. It is they who allow the business to run, and they who purchase their goods and services. If word of mouth spreads any rumor or news about the company being unethical or wrongful, the business will cease to exist. However, by having a good reputation in society for its ethical and fair trade practices, it will gain goodwill. It will increase the customer success of the business’s trade practices. It shouldn’t be forgotten that in the corporate world, goodwill is a monetary term.
3. Overcome Malpractices
Many industrialists participate in unfair trade practices. These practices can be adulteration, black marketing, piracy, product hoarding, etc. to name a few. They are beneficial to nobody but the businessmen himself; the consumers are harmed and deceived by these practices. Society does not appreciate these activities because they hold a threat to its safety.
When the business implements appropriate work ethics, there is no place for these malpractices in the organization. With that in practice, society will not feel like its safety is at risk. Business ethics create a healthy business environment for every component of society.
4. Employee Satisfaction
Business ethics include treating employees with fairness, equality, justice, and motivation. Healthy work culture is also considered apart of this. The company’s employees feel more motivated and bring out more productivity when the business follows ethical practices. When treated well, the employees feel a connection towards the company. The organization and the employee form mutual trust and become more loyal towards each other. Employees feel more secure when a business prioritizes employee welfare.
On the other hand, if a company treats its employees as nothing but just labor, they stay dissatisfied with the way they are treated. These actions may lead to the employees migrating to a more ethical company that treats their employees right. Hence, treating your employees ethically will only increase their satisfaction and prevent employee turnover.
5. Attract Potential Talent
The new applicants come from all walks of life. However, despite the differences, they all expect to be treated justly and ethically. Companies with strict ethical protocol assure these potential talents that they are safe from discrimination, bullying, intimidation, sexual harassment, or any other unjust treatment at the workplace. With this security, more applicants would be willing to apply in ethical business. The company is benefited by not having to spend a lot of time and effort by gathering applicants as they have already applied to the company. The business’s task of onboarding the employee becomes effortless because the employees are partially aware of the organization’s culture.
6. Walk Hand In Hand In Hand With Law
When a company is very ethical about its trade practices, they follow every law that applies to them. They are aware of the latest amendments to the law. These companies do not allow any leniency in their compliance with the law. It is due to this reason that they are always up to date with the legislation. This generates substantial goodwill for the company in the eyes of the law and society.
7. Maintain Professionalism
In any organization, the employees are inspired by the top management. If the top management is unethical and is indulged in malpractices, so will be the employees. If the top management sets a perfect example by being just, truthful, and ethical, the employees will be inspired to do the same. Employees will be inclined towards ethical behavior because they have been surrounded by the organization. Whenever a person in the organization, from the top management to the employees, follows their ethics, the professionalism maintained in that company will ascend.
A progressively positive public image comes with undeviating ethical behavior. No matter the business’s size, it only cannot withstand the magnanimity of time, customers, and market circumstances without having ethical standards. The integrity, prosperity, and stability of the business stand on the pillars of business ethics. If the business wants to survive in the modern world’s competitive market, it must never take business ethics for granted.
In this phase of economic development, the businesses have caught on that they are accountable for social well-being because they exist and function within a social structure. No company can anticipate surviving without winning social acceptance.