Ethical people are those who acknowledge the difference between right and wrong and continually strive to set an example of good conduct. Ethical individuals make an effort to treat everyone they come in contact with the right, as they would want others to treat them.
In an official setting, ethical behavior applies to the principles of honesty and fairness to relationships with co-workers and customers.
Business ethics refers to the standards for morally right and wrong conduct in business. Organizations establish business ethics to encourage integrity among their employees and gain trust from key stakeholders, such as investors and consumers. It is the study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.
Therefore, Business ethics help ensure a good reputation for your company. When you have a reputation for consistently being ethical in how you source and build products, and treat employees, customers, and the community, more people will want to do business with you. Even social media ethics is important for your reputation.
The Importance of Ethics in Business Operations
1. Draws more investors towards the business
Every investor wants a safe investment. If investors know that the company they work with prioritizes having high morals and will operate ethically, they will be safe in the knowledge that their money is being used responsibly. This means that they will be comfortable knowing that their funds is in safe hands. This can also give birth to more referrals. Strong business ethics are also an attractive quality, which means other investors are more likely to be interested in investing their money into the company, keeping its share price high and protecting it from takeover.
2. Enhance a company’s reputation
A company’s reputation for ethical behavior can help it create a more positive image in the business space, which can bring in new customers through word-of-mouth referrals. Conversely, a reputation for unethical dealings hurts the company’s chances to obtain new customers, particularly in this age of social networking when dissatisfied customers can quickly disseminate information about the negative experience they had.
3. Retain good employees
Exceptional staffs at all levels of an organization want to be rewarded fairly for their work and dedication. They want career advancement within the organization to be based on the quality of the work they do and not on favoritism. They want to be part of a company whose management team tells them the truth about what is going on, such as when downsizing or reorganizations are being contemplated. Companies that are fair and transparent in their dealings with employees have a better chance of retaining the most exceptional individuals.
4. Provide a competitive advantage in terms of customers
When a company behaves ethically, it can attract customers to its products and services and sway them towards loyalty. This is indicated by a Unilever survey which found a third of consumers (33%) choose to buy from brands that are making a positive social or environmental impact. Whatever the industry, an ethical way of doing business can be that company’s unique selling point. This boosts a company’s reputation which in turn, will boost sales. Customers feel better about parting with their money if they know the goods will have been produced ethically and responsibly.
5. Having a code of ethics provides a moral compass during tough times
Having a code of ethics provides you with a tool to make consistent decisions about what is right and wrong. This is always helpful when making decisions in times of conflict.