These standards are influenced by the prevailing economic and social situations. The codes of conduct are periodically reviewed to suit the changing circumstances. Business ethics is the systematic handling of values in business and industry.
There is no unanimity of opinion as to what constitutes business ethics. There are no separate ethics of business but every individual and organ in society should abide by certain moral orders. Ethics should be fixed for everyone working in the organisation at any level and their implementation should be linked with reward- punishment system. Any violation of ethics should be detected at the earliest and remedial measures taken immediately.
Business ethics should be based on broad guidelines of what should be done and what should be avoided. In every society there are three sources of business ethics-Religion, Culture and Law. The HR manager in every organisation, thus, has to be well versed with the unique system of values developed by these three sources.
Religion is the oldest source of Religion is the oldest source of ethical inspiration. There are more than ethical inspirations. Every religion gives an expression of what is wrong and right in business and other walks of life. Great religions preach the necessity for an orderly social system and emphasize upon social responsibility with an objective to contribute to the general welfare. With these fundamentals, every religion creates its own code of conduct.
Culture is the set of important understandings that members of a community share in common. It consists of a basic set of values, ideas, perceptions, preferences, concept of morality, code of conduct etc. Depending upon the pattern and stage of development, culture differs from society to society.
Moreover culture is passed from generation to generation. Culture encourages the members of the organisation to give priority to organizational goals over and above their personal interests. Culture also serves as a sense making and control mechanism that guides and shapes the attitudes and behaviour of people.
Managers have to run an industrial enterprise on the cutting edge of cultural experience. The tension that their actions create makes the business ethically more complex. The legal system of any country, guide the human behaviour in the society. Whatever, ethics the law defines are binding on the society. The society expects the business to abide by the law.
Although it is expected that every business should be law abiding, seldom do the businesses adhere to the rules and regulations. Law breaking in business is common eg. Investors like putting their money where they are sure it is safe. Ethics minimizes costs. Fewer funds are spent in employee recruitment since most employees are retained in the business. Ethical practices help in building and maintaining reputation.
A large part of ensuring business success is down to maintaining a good reputation among your customers. If you can brand yourself explicitly as an ethical business, so much the better! An ethically oriented company is bound to avoid fines.
They comply with the law, file their tax returns in time, ensure quality of products and services, etc. Ethics in a business attracts more employees. When your company is reputable, more people will be interested to work for you. Good Business ethics is the key to enhancing productivity. People will work harder at their jobs if they believe that what they are doing is ethical.
They will not be held back by moral qualms, and they may feel extra motivated to work because they feel that by doing so they are making the world a better place.
So if you want to make a normal profit rise and rise until you are making big bucks, you need to keep your business totally ethical. Ethics create customer loyalty. A reputation build on good ethics helps create a positive image in the marketplace.
This, in turn, makes customers trust your products and services. They also pass information to their friends and family, hence, creating more customers for you.
Ethics encourage teamwork. Employers and employees who trust one another work together harmoniously and effectively. A business that values ethics attracts more suppliers. A business without suppliers is as good as a failed enterprise. Suppliers are attracted to a company that appreciates what they supply and pay for them promptly.
Ethics in enhances partnerships. Partnerships in the business world are very crucial. They help expand your marketplace and improve business relations. In order to get a good partner s , your reputation must be built on a strong business ethics foundation. Ethics reduces business risks.
As trust and loyalty are built on ethics, chances of losing potential customers, suppliers, employees and even the company itself are minimal. The bottom line of your business will increase since costs and risks are reduced. Ethics increases business profits. The decrease in risks and costs mean that the output is likely to be higher than the input hence the company makes a profit.
Ethics lead to sustainable growth in sales. An increase in customers leads to an increase in demand. Therefore, more goods and services are sold. However, this can backfire and harm the business. If a store pays his or her employees less than the going rate while knowing exactly what the going rate is, several things could happen to damage the business.
Poor ethical decisions can affect a company in a variety of ways. For example:. On a more positive note, an establishment that gives significantly to charity each year is practicing ethical behavior and exhibiting corporate social responsibility. While this practice benefits the company by allowing them to write off the donation against their taxes, it also sends out a positive message and has a positive impact on the community. This practice of giving back can bring in more customers, increase or enhance positive business relationships, and even allow the firm to add new employees.
Ethical practices also help companies develop an excellent reputation , which helps bring in additional customers, generates positive publicity, and can help solidify support for the organization in times of crisis and controversy. Business ethics and personal ethics go hand in hand because a company is simply a community of employees working together to achieve specific goals. As a result, employees must share the ethics the company champions, or at least be willing to practice them while employed.
Some businesses give their prospective employees informational materials that contain a mission statement, policies, and other ethical responsibilities that all employees must abide by. While these efforts are commendable, it does nothing if the employee refuses to respect the organization by following the guidelines laid out for them. Instead, companies should look for employees that fit the culture and ethics of the business from the outset. Understanding the importance of ethics in business is the key to success.
Customers, management, and employees all appreciate honest and ethical practices. Business ethics are vital because they help maintain a great reputation, help avoid significant financial and legal issues, and they ultimately benefit everyone involved.
Business Business Operations, Corporate Management Importance of Ethics in Business Business ethics is more than just a concept used to enhance the image of a corporation; ethics are the very foundation of success. Business Ethics and Individual Behavior The subject of ethics is often considered abstract or relative by those who believe that rules do not always apply to them.
Corporate Social Responsibility Corporate social responsibility is a phrase heavily used in the business world. Business Ethics Examples Business ethics are not as complicated or abstract as one might think. Example 1: Executive Compensation and Layoffs When the CEO of a company accepts a raise or does not take a pay-cut when several people are being laid off, this may be considered unethical.
Example 2: Below Standard Wages Paying a fair wage is an ethical practice, but some companies or managers seek to pay the lowest possible wages to boost profits. Studies show that higher-wage companies within an industry perform better than lower-wage companies. As a result, the store is likely to under-perform.
Poorly paid employees are more likely to quit, costing the store money in turnover, rehiring, and retraining. Underpaid employees are less engaged with their work, less likely to go the extra mile, and less innovative.
Effects of Unethical Business Practices Poor ethical decisions can affect a company in a variety of ways.
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