The rules of desirable behavior, based on fundamental values, principles and rules of responsible businesses and organizational behavior, are known as ethical codes, representing the most prevalent component of management in global practice.
This article will discuss the benefits of business ethics and explain how it can help increase and maintain a company’s positive reputation. We will also show you the importance of business ethics in setting the tone for employee behavior while simultaneously setting and impacting the bottom line.
What Is Business Ethics?
We could define business ethics as a set of values, such as honesty, fairness, openness, and sincerity, in business operations. In short, it is how a firm or a company operates. Does he treat his employees with respect, respecting their personality and dignity? Are suppliers paid at the agreed time? Is there openness towards the local community and responsibility for one’s own decisions and actions?
The word ethics comes from the Greek words ethos (custom) and ethikos (moral). Ethics is a philosophical discipline that studies morality, its origin, goals and meaning of moral action. Defining ethics in the corporate social world is not simple and can be explained as behavior that should presume own rules of conduct. In the essays about business ethics, the authors presume the way to evaluate the morality of specific behaviors of individuals who perform activities, the habits of leaders of organizations, and how they make their choices in the decision-making process. When it comes to economic activities, as in everyday life, there are specific rules and laws in an economic environment that must respect.
Ethics in business differs from ordinary ethics. Here, the importance of profit is represented as an addition to principles such as fair play or honesty. For business ethics, it is essential that both parties fulfil their obligations and set goals. In the corporate world, we do nothing for the common good, but there is also our benefit. However, even in such conditions, correctness is necessary and appreciated. This discipline also refers to the fundamental areas of decision-making, which can be within legal regulations and broader economic and social issues outside them.
Improve the Reputation of Your Business
Although ethics is not considered essential to successful financial operations, a company can hardly expect to grow profits without ethical behavior. On the other hand, respect for ethical principles does not necessarily lead to increased profits, given the existence of numerous areas that involve the implementation of business ethics and indirectly contribute to the reputation of the corporation and its success.
This aspect is one of the most sensitive and vital issues in companies. Unfortunately, it is often violated in the collective due to numerous personal interests. In addition to material damage, there are primarily non-material ones. We talk about a violation of trust between colleagues, among corporate partners and a violation of the client-company relationship.
Unethical practices lead to immediate profit, but permanent prestige and reputation are lost, a big minus for a company. Scandals, court proceedings, and various media that talk about the infamous way companies operate are certainly not a choice on which a reputation is built.
Business Ethics Set the Tone for Employee Behavior
The importance of ethical behavior for the functioning of any organization is unquestionable. Ethics-based management implies its implementation combined with socially responsible behavior, which will direct employees to the growth and development of the corporation, thus realizing its competitive advantage in the market. From a management perspective, ethics establish standards regarding what is good or bad in leadership and decision-making.
Leading by example and ethical training are just some measures the company can take to raise the ethical climate and social responsibility to a higher level. Namely, in the first case, by respecting ethical codes, the manager presents a formal statement of the company’s values to other employees by personal example. In contrast, the second example manifests itself in employee training and reporting problems.
Business Ethics Impact the Bottom Line
Norms of business ethics are based on values that are based on fundamental ethical principles and, as such, are the basis for creating professional and ethical codes of business conduct. The content of these norms expresses judgments about good and evil, then about successful or unsuccessful business behavior in terms of profitable and ethical business.
Their main goal is to oblige all participants in the overall business process to ethical behavior. Therefore, business ethics defines desirable rules of behavior that represent a framework for actions that may be permitted or prohibited. At the same time, it indicates a person’s basic moral and ethical behavior rules.
The most significant factor in creating the organization’s culture is manifested in the personal philosophy and behavior of the management, given that the specificity of the corporate culture depends on the leadership style and management structure. Namely, managers are the ones who, with their power to decide and impose patterns on others, simultaneously set company behavior models. Accordingly, the characteristics of the owners and leading managers are the most common determining factor in the formation of norms in the organization, so the ethical behavior of the top management of each organization is of crucial importance.
Good Business Ethics Aid in Negotiations
There are no written rules on ethical in negotiation. The basis for solving any ethical dilemma in negotiation is compassion. Understanding other people’s feelings and wishes are the basis for understanding whether the negotiator’s actions are ethical or unethical. Negotiators often use unethical negotiation techniques when they want to make a profit in the short term.
Short-term gain can often be a stumbling block for future cooperation. To the extent that the negotiator wants to preserve good relations and to the extent that he wants to preserve his reputation and the reputation of the company he works for, he will negotiate ethically. Negotiators who behave following moral values are interested in achieving an agreement that meets the needs and wishes of both parties in the negotiation process.
To sum up
The fundamental question that arises in this analysis and the relationship between economics and ethics refers to the boundary that determines whether something in business is moral or not. Determining the limits of business ethics is a big challenge for every leader, manager, and employed person. It is a question of personal decision, one’s own experience of the situation, needs, interests and motives, moral integrity, cultural heritage, expectations and pressures from the organisation and environment.