Understanding Of Values Of An Organization Commerce Essay

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"Values of Organization" is an overused and perhaps and badly treated term in companies across the world. Organizational values define the acceptable standard which indicates the behavior of individuals within the organization. Without such values, individuals will follow the behaviors that are in line with their own individual characteristics, which may lead to behaviors that the organization doesn't wish to encourage. Organizational values establish standards of behavior, which serve to encourage or discourage certain behaviors. In other words organizational values help people to identify priorities at workplace. Leaders are not only the source but also the most important means of establishing organizational values. Leaders not only set direction for the organization, they also establish the means to achieve the goals. These represent the beliefs and behaviors that cannot be compromised for the sake of results. Clearly, the organization's values must be in line with its purpose or mission, and the vision that it is trying to achieve. Organizational culture refers to the pattern of shared values and beliefs that help individuals understand organizational functioning and meaning, and the norms and rules for behavior within the organization. It is a set of strongly held values, beliefs, norms, habits, and symbols according to which the members of an organization operate. The underlying values, beliefs, and principles that serve as a foundation for the organization's management system as well as the set of management practices and behaviors that both exemplify and reinforce those basic principles are able to show in the terms of organizational culture .In the existing definition of organizational culture, it provides a framework through which members internalize expectations about organizational roles and behaviors and serves to a large extent as an organizational control mechanism. Organizational values are unique to each company. They shouldn't just be politically correct marketing terms. So to summarize, articulated values of an organization can provide a framework for the collective leadership of an organization to encourage common norms of behaviour which will support the achievement of the organization's goals and mission. Value statements are grounded in values and define how people want to behave with each other in the organization. They are statements about how the organization will value customers, suppliers, and the internal community. Value statements describe actions that are the living enactment of the fundamental values held by most individuals within the organization.

Examples of some values:

There are some examples of values are given follows:

Ambition, Equality, Service, Responsibility, Diversity, Improvement,

Accountability, Empowerment, Collaboration, Security, Challenge,

Dependability, Flexibility etc.

Some importance's of organizational values:

Values are guiding principles, or standards of behavior which are regarded desirable.

Values are principles, standards, or qualities you consider worthwhile or desirable, important and held in high esteem by a particular society in which a person lives.

Values will vary greatly from person to person.

Values are the embodiment of what an organization stands for, and should be the basis for the behavior of its members.

An organization may publish one set of values, perhaps in an effort to push forward a positive image, while the values that really guide organizational behavior are very different.

Values exist in every workplace. Your organization's culture is partially the outward demonstration of the values currently existing in your workplace.

What is business ethics:

Business ethics becomes more important for understanding and facilitating business outcomes. It is one of the fundamental objectives of corporate governance. It promotes a business climate and fosters firms to act as a good decision-making element in the international markets. Likewise, business ethics can help develop formal structures and improve informal management behaviors through displaying towards perceived good attitude values and practices. Business ethics is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. Many businesses have gained a bad reputation just by being in business. To some people, businesses are interested in making money, and that is the bottom line. Good business principles should be a part of every business. There are some factors to consider. When a company does business with another that is considered wrong, does this make the first company unprincipled by association. There is some people would say yes, the first business has a dependability and it is now a link in the chain of unprincipled business. If a company does not adhere to business ethics and breaks the laws, they usually end up being fined. Many companies have broken anti-trust, ethical and environmental laws and received fines worth millions. Business ethics should eliminate exploitation, from the sweat shop children who are making sneakers to the coffee serving staff who are being ripped off in wages. Business ethics can be applied to everything from the trees cut down to make the paper that a business sells to the ramifications of importing coffee from certain countries. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values.

Setting business ethics:

While the law imposes some ethical rules, legislation cannot possibly define business ethics as a whole and cannot address every situation in which ethical dilemmas may arise. Sometimes, however, business ethics and personal ethics may conflict. This dilemma occurs commonly in attorney ethics. For example, an attorney may represent a client who commits murder, and that client may tell the attorney where the body is buried. In every other situation, a person would likely have a strong ethical and moral obligation to go to the police. Companies and professional societies such as the American Medical Association or the American Bar Association also set their own ethical standards in an attempt to provide guidance for difficult choices. These ethical rules are often referred to as a code of conduct or rules of conduct, by which those in the group abide. Each group determines their ethical stance based upon different guidelines, whether it is established principals, religious book, or group agreement. However, attorney ethics dictates that the lawyer keep the client's secret. In fact, it would be unethical to do so. In this case, the attorney must put business ethics first in order to protect the structure of the American justice system.


The importance of business ethics are given follows::

Maximum profit: The importance of principles in business can be understood by the fact that moral businesses tend to make much more profits than the others. The cause for this is that customers of businesses which follow principles are faithful and pleased with the services and product offerings of such businesses. Let us take an example. Suppose, there is a business organization named A. Co. which manufactures cosmetics. A. Co. greatly believes in the importance of business principles. When A. Co. advertises its cosmetics in the market, being a principled business organization, it will be very truthful and honest in its communication with the probable customers. It will prove correctly about the kind of ingredients it has used while manufacturing the cosmetics. It will not lie or exaggerate about the benefits or uses of its products either. So when the consumers, who buy its cosmetics, know precisely what they are buying and how useful that product is going to be for them. This way, the product will meet their needs and thus, satisfy the customers. When customers are satisfied, they will become faithful to the company and come back again for purchasing. This will surely increase the sales of the organization and increase the profit. Thus, the importance of business principles is that it creates faithfulness in customers.

Utilization of Business Resources:

In a business concern, people working at the junior levels often try

to be like the ones working at the best. The same applies with moral

values too. If the management of an organization follow moral

business Practices, they do not cheat the customers, investors,

suppliers, etc., the employees also will follow suit.

The employees too will cheek oneself from using the office property

or resources for personal benefits. This will make better and

efficient utilization of the business resources.

Goodwill in the Market: A business organization, which has a very good remuneration in market or well known for its ethical practices, creates goodwill for itself. Investors are more willing to put their money in the businesses because of their Faithfulness of the concern. Thus, the importance of business ethics creates the goodwill and building a long term relationships with the investors which cannot be denied. Also, a fair business puts greater value on its employees and also the employees remain loyal to such an organization. The chief goal of any organization is to maximize its profits. The importance of business ethics can be understood from the fact that it helps the businesses in achieving its goal of profit making by creating goodwill for the business in the market, increasing its loyalty among the customers, by aiding in employee retention and by maximum utilization of its resources.

Business Ethics in finance:

Ethics in general is concerned with human behavior that is acceptable or "right" and that is not acceptable or "wrong" based on conventional morality. General ethical norms encompass truthfulness, honesty, integrity, respect for others, fairness, and justice. They relate to all aspects of life, including business and finance. Financial ethics is, therefore, a subset of general ethics. Ethical norms are essential for maintaining stability and harmony in social life, where people interact with one another. Recognition of others' needs and aspirations, fairness, and cooperative efforts to deal with common issues are, for example, aspects of social behavior that contribute to social stability. In the process of social evolution, we have developed not only an instinct to care for ourselves but also a conscience to care for others. There may arise situations in which the need to care for ourselves runs into conflict with the need to care for others. In such situations, ethical norms are needed to guide our behavior. The ethical dilemma presented by the problem of conflicting interests has been addressed in some areas of finance, such as corporate governance, by converting the agency relationship into a purely contractual relationship that uses a carrot-and-stick approach to ensure ethical behavior by agents.

Business Ethics of human resource management:

'Human resource management' occupies the sphere of activity of recruitment selection, orientation, performance appraisal, training and development, industrial relations and health and safety issues where ethics really matters. The field since operate surrounded by market interests that commodity and instrumentalism everything for the sake of profit claimed in the name of shareholders, it should be predictable that there will be contesting claims of HR ethics. Predictably, ethics of human resource management is a contested terrain like other sub-fields of business ethics.


Both organizational values and business ethics plays significant roles in explaining other business circumstances, especially accounting activities. It tend to help firms improve their earnings quality in their operations. Firms with stronger organizational culture and business ethics are likely to have greater earnings quality. Earnings quality is defined as the extent to which reported earnings faithfully that presents correspondence or agreement between a description and the phenomenon that it purports to represent. It consists of relevance, reliability, and comparability. Hence, the primary purpose of this study is to examine the relationships among organizational culture, business ethics, and earnings quality. In this study, the key research questions are how both organizational culture and business ethics influences earnings quality and how differences of organizational culture and business ethics affect earnings quality.