Business ethics refers to a code of conduct for business activities that are considered morally right or wrong. Understanding and valuing good business ethics is an essential business characteristic. It promotes integrity and honesty in business, establishes trust amongst stakeholders, and substantially raises its value.
People often confuse ‘ethical’ with ‘legal’ and consider them as interchangeable terms. However, what’s ethical doesn’t necessarily have to be legal. For instance, carrying out beneficial community initiatives isn’t mandatory for businesses by law. But, it is an impressive business ethic. Also, business ethics sometimes overlap with the law. Paying employees with a predetermined minimum wage rate is a part of the law and a good business ethic.
Some other ethical aspects a business must practice include fair treatment of employees, acquiring transparency, and avoiding deceptive marketing. A good CSR standing shows that companies value the environment and realize the importance of their contribution. Diversity and harassment intolerance are relatively recent additions to the business ethics chart. Still, they are the most important ones in this 21st century!
Even though business ethics are usually self-learned, and gaining additional education with the passing time can be quite beneficial. An MBA degree can give you a lot of exposure to various business ethics courses. These courses will provide you with a structural framework that will help you sharpen your skills. If you are thinking about pursuing an MBA, you can look into online degree options as well. The increased demand for virtual classes has led to several institutes offering online MBA no GMAT required programs.
Now that we know what business ethics are, the question arises: why are business ethics important? In this article, we will discuss some reasons behind the need to practice the right code of conduct in business.
1. Attracts more investors
An investor is likely to invest in your business if he is earning a fair amount of returns. However, while this may be a significant reason behind investments, it isn’t the only one. If your business is in line with the set ethical standards, more investors will get attracted to your business. It is so because your business’s code of ethics will make investors feel safe and secure. Moreover, good morals also give the investors a sense of surety that their money’s secured and well spent. An increase in investors can substantially raise your business’s profitability. Hence, maintaining good morals and ethics is key to a business’s success.
Decision-making is the foundation of any business. Efficient decisions can take your business to the skies, while poor choices can even lead to its collapse. Therefore, having a fair and ethically concerned decision-making committee is vital for companies. Ethical practices can prevent businesses from making decisions that can lead to long-term failure. They will also limit impromptu short-term choices.
Good working practices and ethics obstruct workplace toxicity. A toxic culture can be extremely disadvantageous for businesses and might lead to companies falling apart.
3. Encourages staff to stay
We live in a very competitive world. Everyone wants to be the best, and every business wants to hire the best resources. If your company does not comply with the standard code of ethics, you could look at the threat of losing some of your best employees.
Good morals and incentives encourage employees and staff to stay at any organization for longer. It also acts as a potent booster for greater productivity and more efficient outcomes. Making your team feel valued and respected in the workplace is essential. It can lead to your business’s growth. Other than this, going through the entire hiring process, again and again, can be very costly and time-consuming.
4. More qualified employees are attracted
As a business owner, you would want your business to hire employees best in the game. One way to attract such proficient and competent employees is to establish good morals and business practices. When your business shows a reputation for impressive ethical practices, potential job seekers will come crawling in.
Well-trained and qualified employees can guarantee your business’s success. A team incorporating the best talents can take your business to new heights.
5. Customer relations
The world is advancing, and more and more people are becoming knowledgeable about legitimate and illegitimate business practices. If you think customers don’t care about your ethical standards and patterns, you’re mistaken. Customers of the present day are more concerned about a company’s moral duties than ever. For example, there has been a significant uproar on the usage of environmentally damaging products and unsustainable practices lately. So, if your business does not believe in sustainability, you might lose a large proportion of your customer base.
Environmental concern is just one example. Customers consider a lot of other ethical practices before associating themselves with a company. Hence, business ethics play a direct role in making or breaking customer relationships.
As mentioned above, more and more people are aware and concerned about morally acceptable practices. Creating an ethics program and establishing an excellent ethical culture in your workplace can instantly raise your business’s value. It can help polish your business’s reputation and form a positive brand image.
Showcasing your ethical practices can immensely benefit your company’s branding. However, this does not mean deceiving customers. Customers are savvy. If they care about ethicality, they can probably differentiate between businesses that follow morally correct practices and those fooling their customers. Besides, misleading your potential customers by using deceiving marketing gimmicks is utterly unethical in the first place.
7. Personal Empowerment
Lastly, when businesses define a set of rules and regulations, people won’t hesitate in reporting cases regarding violating the rulebook. It gives business employees a sense of empowerment. It also helps in creating trust amongst employees and employers. Moreover, an employee’s confidence towers when someone entrusts him with significant responsibility or task.
Playing by the rules greatly benefits the bottom liners. It can boost sales, define accountability, and reshape your business’s activities for the better. Your business should follow ethical practices as it is the right thing to do. Companies are slowly becoming more transparent, which calls for a greater need to set a good business ethical standard. However, remember while establishing good ethics and morals is vital, maintaining them is even more critical.