Keeping the bottom line in the black is what business owners, from small home-based businesses to multinational conglomerates strive to achieve. How to achieve business ethics is what matters.
Proper business practices and policies are guided by business ethics, according to the law or due to the framework a business follows to be accepted by the public.
Business ethics ensure that the public gets fair treatment and consideration through the building of a level of trust between the business and consumers.
It was in the 1960s when the concept of business ethics came about. Companies became more cognizant of the rise in a consumer-based environment. They became concerned with corporate responsibility, social issues and the world around them.
Business ethics evolved from recognizing what’s right and wrong to doing business legally instead of doing everything possible to be one up against competition. While there is a standing moral code businesses follow today, their ways of practicing it vary.
Ethical Principles in Business
It is important for business executives to strive for business growth and success, but equal importance should be placed on establishing guidelines on how they should behave, within the company and when dealing with partners and consumers.
Ethical behavior should be exercised all the time because it is closely related to the values and characteristics the company and individuals want to project.
Ethical company executives are truthful and honest in all their transactions. They should not deliberately deceive or mislead partners and clients through selective omissions, partial truths, overstatements and misrepresentations.
The personal courage and integrity of ethical executives show in their convictions to do what is right even under great pressure. They demonstrate that they are upright, honorable and principled and will not set aside their principles just to attain their goals.
They can be forthcoming and candid in correcting mistakes and giving relevant information but they should be trustworthy.
They should fulfill commitments and promises and honor agreements. An ethical manager will not misinterpret contracts in order to find loopholes, justify, rationalize or find grounds for non-compliance just to evade commitments.
As an ethical leader who is worthy of trust, he or she should show loyalty and fidelity to institutions and people by being devoted to duty, supportive and being a friend.
Ethical leaders do not disclose or use information gained in confidence to advance their careers or kill competition. They avoid conflicts of interest and unwarranted influences to protect their ability to make professionally independent judgments.
They remain loyal to colleagues and company they work for and will not use proprietary information of past employers to secure their position in their new job.
This should be exercised at all times, when dealing with colleagues and clients. Power for them is to be used justifiably. They do not use the difficulties or mistakes of others to their advantage. They welcome diversity. They are tolerant and support the equal treatment of all persons. They keep an open mind and own up to their mistakes.
Being kind, benevolent and compassionate are traits of ethical leaders. They are willing to help people in need and find ways to fulfill business objectives that would cause the highest level of good and the lowest level of harm.
Although business executives may head a department, being ethical means the leader respects the interests, rights, privacy, autonomy and human dignity of the people who are involved in decision-making. Further, an ethical leader should be courteous and treat people with dignity and respect regardless of their nationality, race or gender.
If you are an ethical leader, you should demonstrate to your employees and colleagues that you follow the law, rules and regulations concerning your business undertaking.
Excellence in the performance of duties is a goal for ethical leaders. They should also be prepared and informed and constantly seek to improve their level of competence in every areas of responsibility as a leader.
It’s easy for ethical leaders to admit and acknowledge their personal accountability to always make high quality omissions and decisions, not only for the company but also for the community, colleagues and especially for themselves.
Morale and reputation. Ethical leaders accept that they should always build and shield the good reputation of the company and the employees’ morale by doing only what’s morally acceptable. They bear in mind that they should always show respect and should not condone inappropriate business conducts and other misleading actions.
How Important is Business Ethics?
The success of a company relies on several factors that are deeper than financial statements on paper. It depends on ethics in business, the management philosophy of the company and its organizational culture. If you are after long-term success, keep in mind that business ethics take precedence over the organization’s level of profitability, industry and size.
The employment of business ethics begins with the leaders. The management team establishes the tone for how the day-to-day running of the entire company should be conducted. When the management leaders decide to apply ethical behavior and practices, they, as the leaders must be the examples that employees should follow. They should be trained to make decisions for the benefit of the company and their colleagues.
When the entire company applies ethical behavior, they reap the rewards of its beneficial and long lasting effects. They would be able to retain highly talented employees and attract new ones. They will be able to build an excellent reputation within their niche industry and their community. Employees feel a closer bond with the management team, thus keeping the company stable.
With the company having ethical leaders, getting employees to have ethical work practices follow. They are easier to train and are able to execute better decisions because they use business ethics as their guide.
Business ethics boost employee morale and increase productivity because they believe in themselves, their colleagues and the company. Moreover, they know that they are appreciated; therefore employee turnover is minimized because they will remain loyal to the company.
Benefits of Business Ethics
The importance of business goes far beyond strengthening the bonds of the management team, boosting their morale and improving loyalty of employees. It extends to short-term and long-term profitability of the company. With proper execution of business ethics, a company builds a solid reputation in industry circles, among consumers and in the world of individual investors. Investors buy stocks in companies that have the potential to sustain growth and success over time.
You’ll be able to create a harmonious environment within the company. With employees willing to embrace ethical business practices, they can form teams that are willing to support each other and work together cohesively.
Investors also seek companies that invest time and money to maintain ethical operations – those companies that take their social responsibility seriously and invest/support equally ethical companies.
Excellent corporate governance should prevail. Because you made it a corporate decision to create an ethical working environment, you are governed by business laws, which help you to avoid being fined. You make sure that your processes and your products are within the standards, so consumers do not feel shortchanged.
You save on new employee training costs, because there is less staff turnover. You are likely to gain more because highly skilled and talented individuals would want to be in your employ.
Ethical companies attract suppliers who have the same business values as you. They would want to associate with companies that care for employees, consumers and the environment and want their materials to be created into products that would greatly benefit consumers and Mother Earth.
With an increasingly positive image in the general public, the number of shareholders and potential investors are bound to increase. Retaining a positive image means the ethical company treats employees better, gives respect to the environment, offers fair market prices and improves treatment and service of consumers.
Commitment to Consumers and Society
Business ethics become the driving force for brands to reposition their business focus to putting priority to the wellbeing of society and improving the quality of life of consumers. They develop and sell products and services that truly fill consumers’ needs as well as operating a company that is guided by solid ethical business practices.
You should also understand that values are different from purpose. There are many companies large and small with a similar set of values. However a company or brand’s purpose is from the set of the promises a company offers to deliver. For purpose-driven brands, what is more important aside from creating products that would make money, is ensuring that the products are beneficial to the consumers and the environment.
Although companies are always looking for profit to keep their bottom line healthy, companies adapting good business ethics and have a true purpose anticipate consumer demands. They strive to build trust in what they actually do and not in what they promise to do. They seek to provide easier methods for consumers to reach them and try to cater to the special needs of specific customers as well.
Business ethics help companies espouse corporate social responsibility and behavior that can immediately translate to monetary benefits to the company. It helps attract consumers to the company’s products, which equates to increases in sales and profits.
An ethical company should provide a positive influence on its adjacent surroundings. An ethical company could generate consumer loyalty, trust and support by creating jobs via their contribution to the community’s social welfare and economy.
Good business practice is not all about profit but putting customer satisfaction first. Companies that are only after profit may be able to do it a few times in the beginning, giving themselves false hope that they can do it over time.
However, consumers are gaining more knowledge through the Internet, reading reviews and checking websites. They use social media platforms to learn what other consumers have to say about a new product or service. They can easily identify unscrupulous businesses that are only after their money, and putting their satisfaction as a last priority.
If you conduct your business with high ethical standards and integrity, relationships with customers will be long lasting. There should never be any ambiguity in business transactions and everything should be done fairly. Consumers today can quickly spot companies who are only after their business.
Caring for stakeholders is what carries a company/brand through towards profitability and success. Establishing your own set of ethical business practices goes a long way to creating an organization that serves the interest of everyone who matters to the company. It is also the responsibility of the company to see to it that all employees understand the corporate values of the organization.