Our morals and character play a huge role in how we are perceived by others, and the same thing applies to businesses. Business ethics can create a unique perception in the mind of a company’s customers, employees, investors, and the general public.
Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and academia. For example, most major corporations today promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters.
An organization’s approach to business ethics is the foundation upon which its brands are built. This approach can shape business investors’ and customers’ perceptions of a business. Therefore, developing the right set of business ethics is essential for business growth and can only be achieved by understanding the fundamentals of the concept.
Maintaining an ethical status is the responsibility of the manager of the business. Managing ethical behavior is one of the most pervasive and complex problems facing business organizations today.
WHAT IS BUSINESS ETHICS
Business ethics (also known as Corporate Ethics) is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.
These ethics originate from individuals, organizational statements, or the legal system. These norms, values, ethical, and unethical practices are the principles that guide a business.
IMPORTANCE OF BUSINESS ETHICS.
- Business ethics ensure that companies operate according to all applicable laws. This maintains the company’s respect among its peers and customers and protects it from legal liability.
- A company’s ethics also help it attract quality team members. Businesses that care for their teams according to the highest ethical standards are often attractive to job seekers.
- Ethical treatment can also increase employee retention and reduce hiring and training costs.
- Business ethics help businesses make sound and ethical decisions and also help them to build trust with their customers.
- Business ethics are also important in building relationships between a business and its clients. A business with a defined and transparent operational system that treats its customers well usually develops a long-standing relationship with customers. This makes it easier for consumers to trust the business and its products or services.
- Business ethics also help to maintain a business’s reputation among investors, who look for transparency in a company’s dealings. In other words, they like to know exactly what their money is being used for.
PRINCIPLES OF BUSINESS ETHICS
Accountability means businesses taking full responsibility for their actions or practices. This includes any bad decisions are taken or unethical business practices followed during business operations.
Mutual respect must be maintained between business owners, employees, and customers. Businesses need to ensure a safe working space for employees and encourage a respectful relationship between all stakeholders.
Transparent communication between business owners and employees is much desired. This characteristic helps build trust and establish a relationship between employees and the business. Transparency is also applicable to business relationships with its customers.
Businesses should encourage healthy competition in their workforce and reduce conflicts of interest to a minimum among employees.
LOYALTY AND RESPECT FOR COMMITMENTS
All disagreements between businesses and their employees should be resolved internally away from the eyes of the public. Employees are to stay faithful to upholding the business vision and promoting business brands. Businesses are also to stay faithful to agreements with employees. Businesses unreasonably interpreting agreements or not respecting commitments is considered unethical in business practice.
Important information communicated among a business’s customers, employees, or partners is to be provided comprehensively. This includes both positive and negative information, terms and conditions, or any other crucial information, as it is against business ethics to withhold or hide relevant facts.
RESPECT FOR THE RULE OF LAW
Corporate laws, rules, and regulations guiding business practices are to be respected and abided by, as any flouting of such laws is considered unethical.
TYPES OF BUSINESS ETHICS
There are various types of business ethics adopted by businesses depending on the nature or location of the business.
A level of personal responsibility is expected from business employees. This responsibility may be in completing an assigned task, reporting to work at the expected time, or being honest in the workplace. Employees are also expected to own up to their mistakes and work towards correcting them.
Businesses should honor their responsibilities to their employees, 0, and customers. They need to respect the interests of all parties involved with the business. These interests may take the form of written contracts, verbal agreements, or legal obligations.
Businesses have a responsibility to the environment where their operations are sited. Therefore, businesses are to work towards ensuring environmental protection and giving back to the community through empowerment or investments.
One way businesses have been able to achieve this is through a practice called corporate social responsibility (CSR) which has geared corporations towards environmental protection, community development, and improving the working environment by focusing on people. Figure 1 below outlines the four pillars of CSR.
Corporate social responsibility (CSR) refers to a management concept whereby businesses factor economic, social, and environmental concerns into their business activities while simultaneously looking to achieve their aims and objectives.
With businesses now moving their operations to the digital space through the adoption of e-commerce practices, technology business ethics are necessary. These ethics include customer data protection, customer privacy, customer personal information protection, fair intellectual property practices, etc.
Trust And Transparency
Trust and transparency need to be maintained with stakeholders, including customers, investors, and employees. Businesses must maintain transparency in financial reports to partners and not conceal relevant information from customers.
Biases and personal beliefs are to be avoided in business decision-making processes. The business must ensure a fair chance for everyone and boost their growth and empowerment.
EXAMPLES OF BUSINESS ETHICS
There are many ways businesses express their ethics. Companies often have a code of conduct document that informs team members of their ethical responsibilities.
Businesses often collect information about their customers. This may only be an email address, but it could also be their physical address or health or financial information, depending on the nature of the business. Companies that collect customer data usually promise to secure that information and not share it without the customer’s permission. The same applies to employee information. Business ethics protect employees’ personnel records and allow access only to those with a valid need to know.
One way a business shows respect for its customers is by prioritizing their needs, even at the expense of the company. For example, if a customer purchases goods or services that turn out to be unsatisfactory, the business does whatever is necessary to provide recompense. If it’s a faulty product, the business may offer a replacement or a refund. If the customer experienced poor service, the company usually apologizes and offers a discount or some other form of compensation.
A business might express fairness by placing a high importance on having a diverse workplace. Achieving a diverse workplace means using recruiting practices that give equal opportunity to people from different ethnic, gender, and social groups. This can add time and effort to the hiring process, but it’s often worthwhile. Employing a diverse range of people gives the business the benefit of different perspectives. It also demonstrates that the company is serious about equality and treating all people with respect.
As a business grows, it becomes harder to verify that employees are adhering to the ethical standards set by the company. Sometimes, the business relies on whistleblowers, or a person who informs authority figures about illicit activity, to garner attention regarding unethical practices within the company. To encourage employees to come forward to report unethical practices, businesses often put in place protections against negative consequences. With these protections, employees don’t need to fear losing their jobs or encountering disciplinary action for notifying the company about unethical behavior.
A business that practices transparency is clear in its communication both with employees and customers. This means that communication is unambiguous, so there’s no confusion about the policies or priorities that guide business decisions. Transparent corporate communications are also honest and truthful.
Companies often feel an ethical obligation to help the communities in which they conduct business. This can take the form of volunteer programs for employees, sometimes at the company’s expense. Such programs might include serving in a soup kitchen, helping with home repairs, cleaning up after a natural disaster, or teaching skills at the local community center. These programs not only help those in need but also help develop respect and trust within the community.
Many companies take environmental concerns seriously, whether that means reducing waste or cleaning local land, water, and air. There are various ways businesses act on this, such as reducing air travel and using teleconferencing technology as much as possible. Businesses might also promote recycling in their offices by providing receptacles to collect recyclable waste.
Companies adhering to principles of fairness and respect strive to pay their team members a fair wage for the work they do based on their experience, education, and job duties. They also regularly review compensation and adjust it to make sure it continues to reflect the positions and experiences of employees. Businesses often reward outstanding performance with employee bonuses. These are good incentives for team members to work hard and remain with the company. They’re also a way for the business to express gratitude for their efforts.
A Business can never run well without these ethics in place. Business ethics are policies that guide the behavior of corporate entities, especially regarding controversial subjects.
Business ethics protect companies from legal liability and ensure that they treat their customers and team members with respect.
Corporate ethics codes often include subjects like social responsibility, insider trading, discrimination, corporate governance and bribery.