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Ethics means moral principles and is important for everyone. But it is particularly crucial for the business for a number of reasons. One obvious reason is that it sets the standards for management, employees and creates a tone for the organization as a whole. Formally defined, ethical behavior is that which is morally accepted as good and right as opposed to bad or wrong in a particular setting. Is it ethical, for example, to pay a bribe to obtain a business contract in a foreign country? Is it ethical to allow your company to withhold information that might discourage a job candidate from joining your organization? Is it ethical to ask someone to take a job you know will not be good for their career progress? Is it ethical to do personal business on company time?
The list of examples could go on and on. Despite one's initial inclinations in response to these questions, the major point of it all is to remind organizations that the public at large is demanding that government officials, managers, workers in general, and the organizations they represent all act according to high ethical and moral standards. It is a renewed concern with maintaining high standards of ethical behavior in organizational transactions and in the workplace. This refers to conduct that organizations expect their employees to hold while at work. Business experts and ethicists alike point to a number of actions that owners and managers can take to help steer their company down the path of ethical business behavior.
Establishing a statement of organizational values also referred to as 'codes of conduct', provides employees and the company as a whole with a specific framework of expected /accepted behaviors within the work place. Such statements offer employees, business associates, and the larger community alike a consistent portrait of the company's operating principles ( the rules and regulations that need to be adhered to by those in their employ), why it exists, what it believes, and how it intends to act to make sure that its activities dovetail with its professed beliefs. Active reviews of strategic plans and objectives can also be undertaken to make certain that they are not in conflict with the company's basic ethical standards. In addition, business owners and managers should review standard operating procedures and performance measurements within the company to ensure that they are not structured in a way that encourages unethical behavior. This is mainly because an individual's conduct can affect the relationships within an organization, thereby taking a negative toll on the overall performance of an organization.
Ethical investment has been a growing aspect of business investment since the 1970s, a business that behaves ethically exercises particular care in meeting all responsibilities to employees, customers and suppliers it usually is awarded with a high degree of loyalty, honesty, quality and productivity. Ethical business and investments regard socially responsible activities and aims with far greater priority and emphasis than the traditional profit and free market business approach. Ethical business or investment is concerned with how profit is made and how much profit is made, whereas traditional profit-centred free-market based business is essentially only concerned with how much profit is made. The ethical approach to business and investment seeks to maximise profit and return on investment while minimising and avoiding where possible negative social effects.
Socially responsible include related factors such as:
globalization effects - e.g., exploitation, child-labour, social and environmental damage anywhere in the world
corruption, armed conflict and political issues
staff and customers relations - for instance education and training, health and safety, duty of care, etc
and other social impacts on people's health and well-being
Behaving ethically also improves the quality of work life. Every employer can play an important role in creating an environment where people are valued as individuals and treated with respect and dignity, fairness and equality, where people perform with unquestionable ethics and integrity. If employees believe all are held to similar high standards, they likely will feel better about themselves, their collegues, and their organization.In such an environment, employee pride blossoms and theft losses disappear. For examples, employees who are treated ethically will more likely behave ethically themselves in dealing with customers and business associates. A supplier who refuses to exploit its advantage during a seller's market retains the loyalty and continued business of its customers when conditions change to those of a buyer's market. A company that refuses to discriminate against older or handicapped employees often discovers that they are fiercely loyal, hard working and productive.
Indeed, some business owners and managers argue that ethical companies have an advantage over their competitors as research proves that consumers are used to buying products despite how they feel about the companies that sell them. A values led company earns the kind of customer loyalty most corporations only dream of because it appeals to its customers on the basis of more than a product, they like how doing business with (a values-led company) makes them feel.
Another advantage of behaving ethically is better staff attraction and retention. The best staff wants to work for truly responsible and ethical employers. Failing to be a good employer means good staff leaves, and reduces the likelihood of attracting good new-starters. This pushes up costs and undermines performance and efficiency. Aside from this, good organisations simply can't function without good people.
Ethical standards also play important role in protection of company assets. A good indicator of high levels of corporate, and hence, employee ethics is how well employees protect their company's assets. Employees who are treated with dignity and respect, who take pride in their organization and its ethics, tend to respect the assets of that organization. One of the most evident indicators of the employees' opinion of their organization is their conduct at work.
Many business want employees to behave ethically because such a reputation is good for business which in turn can mean larger profits. For example, the workplace dictates the dressing protocol (the uniform) for both and women. Men and women are supposed to conduct themselves with utmost dignity in the place they work. The workplace also dictates verbal and non-verbal decorum i.e. polite and socially correct behavior. How one behaves in the workplace goes a long, long way in building a rock solid reputation, praises and accolades in the years to come. Similarly, encouraging employees to act ethically can save money by reducing employee theft, down time and lawsuits. Because many unethical acts are also illegal, a firm that allows workers to engage in unfair practices might be prosecuted.
Employees who have respect for their organization and co-workers will avoid such practices as
Padding of labor charges and expense accounts
Personal long distance phone calls on company accounts
Untidy work areas, break areas and rest rooms
Taking office supplies home
Excessive breaks or sick days
Improper use of copy machines and computer equipment
There are many forms of theft. In addition to lost supplies and equipment, an employee with little self or organizational pride can subject that organization to losses in time, production, overhead charges, initiative, professionalism, customer respect, reputation, attitude, spirit and drive.
Employees must have a clear knowledge of their organization's ethical standards and equally important, a feeling of management support when they act within those standards. The best way to promote ethical behavior is by setting a good personal example. Teaching an employee ethics is not always effective. One can explain and define ethics to an adult, but understanding ethics does not necessarily result in behaving ethically. Personal values and ethical behavior is taught at an early age by parents and educators. Management must demonstrate through consistent examples their personal alignment with documented ethical principles and values, their expectations that employees will do what is right and fair, their support for a work environment that recognizes and respects individual ethical behavior, and their encouragement and support of open communications and candor within the organization.
Ethical behavior in business serves the individual and the enterprise much better in the long run apart from the issue of rightness and wrongness. Ethical behavior means being morally responsible for our actions in the place we work. It is my firm belief that a good man or woman who steadfastly tries to be ethical (i.e. to do the right thing, to make appropriate ethical decisions, etc.) somehow always overtakes his immoral or amoral counterpart in the long run. A plausible explanation of this view on ethical behavior is that when individuals operate with a sense of confidence regarding the ethical soundness of their position, their mind and energies are freed for maximum productivity and creativity. On the other hand, when practicing unethical behavior, the individual finds it necessary to engage in exhausting subterfuge, resulting in diminished effectiveness and reduced success.