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In a world where people and businesses are becoming increasingly distrustful of each other, companies that have ethical business models come across as a breath of fresh air for customers that have no choice but to trust their products and services.
Applying ethical practices can sometimes prove to be easier said than done in the business scenario. This is because some business leaders are not as ethical as they claim to be in public.
However, choosing to be ethical or not is strictly a matter of personal choice on part of entrepreneurs.
This is especially so, given the large number of expensive lawsuits that have been filed against many big and established corporations over the years.
What Are Business Ethics?
Corporate ethics essentially entail maintaining high standards and meeting legal and moral obligations.
Since most businessmen think in terms of profit and loss, compromising on ethics may seem like a necessary evil to them.
However, organisations that have been able to successfully create healthy corporate culture are bound to have a happier and more satisfied workforce and customers.
These organisations go on to establish relationships with their internal and external stakeholders based on trust and respect.
It is true that the culture of a company influences its employees and also the decision-making factors at every level.
Most large multinational corporations have policies related to corporate social responsibility in place, stressing the need to give back to society and adopt more environmentally friendly practices.
In this post, we focus on how following ethical business practices make business sense and can be profitable.
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What Are the Benefits of Business Ethics?
Why are business ethics important? There are a few reasons that show how they can benefit a business:
Improves Stakeholder Trust
First, having strong business ethics can help increase trust from customers and investors.
When customers know that a company is ethical and honest, they’re more likely to do business with them and have greater customer loyalty.
Likewise, investors are more likely to invest in a company that has a good reputation for ethical behavior.
Related Read: 4 Tips to Improve Your Business Reputation »
Potentially Reduces Penalties
When companies act ethically, they’re less likely to break the law and risk being sued. Therefore, strong business ethics can help companies avoid lawsuits and penalties.
Promotes Productive Employees
Having strong business ethics can lead to a more productive and stable workforce.
When employees know that their company values integrity and honesty, they’re more likely to be loyal and productive. A positive corporate culture can also help reduce turnover rates and improve morale.
Attracts the Right Talent
Strong business ethics will help you attract people who fit your company culture and relate to your business, thereby ensuring that you have trustworthy employees working for you.
Your employees will respect your company only when they feel they are respected by you, which again boils down to the trust factor.
Once you build a bond based on integrity and trust with your employees, they would feel proud of being associated with your business, avoid malpractices and become loyal instead.
Positive Public Image
The actions of your company and your employees reflect your company culture. It slowly becomes an influential factor in how the public perceives your company.
Based on this, your business can create a positive image and earn respect and adulation for what it does as well as gain a favorable market position, or it can create a negative image and lose out on customers.
Ethical practices will help you create a strong public image which can help your company tide over difficult times and withstand tough competition even in a slow economy.
In fact, in a bad economy, people prefer to put their trust in companies they consider ethical. Hence, ethical business practices are crucial for building a good future for your company.
Positive Impact on Partnerships
Partnerships, joint ventures, and mergers will be a breeze if people feel they can trust you. The only means to finding such trustworthy partners is for you to maintain a good professional and industrial reputation.
Sound Decision-Making
When your employees make note of the fact that your organisation upholds ethical conduct, they will automatically make all their decisions based on these very same ethics.
That will make you a happy and trusting businessman and will also facilitate accountability and transparency in the decision-making process.
Having a strong ethical background also works as a guide to employees when facing tough challenges. It will also prepare you to be able to empathise with your employees thereby boosting the validity of the code of conduct in your organization.
Minimises Distractions at Work
When employees have to worry about ethical concerns at work, it causes a distraction in their minds and that, in turn, results in a loss of productivity.
This adds to your business costs. Such situations can grow if issues related to unethical behavior are not addressed and dealt with straight away.
Furthermore, they can also cause confusion and anger within the employees as they might think that you are practicing double standards. It is important to have a clearly defined policy on following business ethics for employees to avoid such situations.
Boosts Team Spirit
When all your employees are in alignment with your company’s ethical values and vision, it creates a feeling of belonging and unity within the organisation.
Such a connection goes a long way in strengthening the team spirit and motivational levels among your employees.
What Are Some Examples of Good Business Ethics?
Some examples of good ethical behavior in business include being honest with customers, acting with integrity, and being responsible for one’s actions.
Additionally, businesses can promote a positive corporate culture by establishing values and guidelines for ethical behavior. This can help employees make the right decisions when faced with difficult choices.
What Are Some Unethical Business Practices to Avoid?
There are a few unethical business practices a company should avoid, such as lying to customers, breaking the law, and mistreating employees.
Additionally, businesses should avoid committing financial fraud, price gouging, and environmental pollution.
Lying to customers is one of the most common unethical practices in business. This includes making false claims about products or services, hiding information from customers, and bait and switch tactics.
Engaging in law-breaking activities is another unethical practice that businesses should avoid. This includes activities such as insider trading, tax evasion, and price fixing.
Mistreating employees is also unethical and can lead to negative consequences for businesses. This includes things such as sexual harassment, wage theft, and health and safety violations.
Good Business Ethics Are More Than Just Making a Positive Impact
Having ethical business practices can do more than just create a positive impact on the people around you. It also has implications on the world in general as you are contributing towards making it a better place.
It might take a long time and a lot of effort on your part to implement an ethical business model but it is worth striving for, especially when uncertainties loom large over all businesses.
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