6 Advantages of Ethical Principles & Ethics in Business

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(Last Updated On: May 7, 2023)

Whether you work for a small business or a large corporation, you follow ethical principles. Ethical principles in business are a basic criterion for winning business growth.

The most recent lesson came about the importance of business ethics with the fall of Wall Street, as the once highly respected financial institutions made headlines for their bad choices and questionable behavior.

When management takes the reins in a business, employees do so morally. Employees that use business ethics as a guiding principle make better decisions faster, which boosts productivity and overall workplace morale. When workers carry out their tasks with honesty and integrity, the entire firm benefits.

Companies should establish ethics policies to encourage moral behavior, not to boost output, revenue, or goodwill. However, a good, properly implemented code may help a business and its stakeholders in a number of ways.

Businesses also have moral responsibilities when it comes to meeting economic expectations. From the bottom of the organizational chart, everyone must take care to carry out these responsibilities.

Ethical Principles in Business

Different companies and consultants may have different ideas about what constitutes good ethical codes, but some generally agree about work ethic:

Honesty: Do not mislead the customer, senior or subordinate, with partial truths and omissions.
Integrity: Do the right thing, even after doing the wrong thing benefits you.
Hard work
Keep your word
Respect others
Obey the law
Appreciate your support and supporters
Take responsibility for your actions, including your mistakes
Don’t discriminate; Treat people fairly

According to Dr. Jill Young, an instructor at Southern University’s College of Business, honesty is the most important ethical concept because it covers such a wide area. “If you deal with devotion, ethical behavior is just a natural progression,” he says. “Those who have integrity are guided by a set of core principles that influence their decisions and behaviors.”

People with integrity value other principles, including honesty, respect, personal responsibility, empathy, and reliability. These features are integrated with the six pillars of characterization provided by the Josephson Institute, a non-profit organization that provides and provides services and content to enhance ethical commitment.

Pillars of ethical principles

Honesty
To give your solution:
Right of the citizen
Credibility
Respect
Responsibility

“The overriding policy that you have as an individual is that you have to make the right decision,” says Rich Jarke, Executive Director of the Josephson Institute. “It’s sometimes very difficult because it can be easy to make decisions, but it’s not right. So making personal decisions requires more of a personal challenge.

Jark says that making the right decision can also be difficult when employees are asked to look beyond their current area of responsibility.

“So, what’s the right thing to do? It depends on the responsibility of the executive, “he says. “Most of us know what we are allotted and if we see something beyond that scope, it can tell us when it’s time to look at others.”

“If you look at a career, if you ignore the wrong thing, it can be a big problem.”

Young says that one of the business conceptual theories that he highlights in his business ethics course is the importance of supporting executive leadership in ethical practice within firms.

Business policy

“If it doesn’t come from the top leadership, it won’t spread to the rest of the organization,” he said. “Employees look to their top leaders for expected behaviors as models.

“The main thing I want to emphasize to my students is that ethical business practices are not necessarily the most profitable method in the short term, but they are essential for long-term organizational survival,” Young says.

However, behaving in an ethical manner can produce positive results for the business. Jerk says that a business environment that promotes and retains strong values is usually a happier and more productive workplace, and customers receive better service so they can keep coming back.

In addition to work behavior, Zark believes that ethical principles can govern our personal and professional lives.

“Becoming ethical requires looking at universal values, and it can use the matrix decision in their business and personal lives,” Jark says.

Business ethics of executives

In addition to the six pillars of character, the Josephson Institute provides 12 ethical principles for business executives:

Concern for others
Respect for others
Obey the law
Commitment is excellence
Leadership
Righteousness
Integrity
Commitment and loyalty
Loyalty
Honesty
Fame and morale
Responsibility

Examples of ethical principles in business

Treat employees ethically

Ethical treatment of employees covers everything from providing fully paid to work conditions that do not hurt them physically or emotionally. Although big retailers like McDonald’s and Walmart have a reputation for making excessive profits and failing to pay employees a fair wage, ordinary business owners will be rewarded for their loyalty and their ability to treat employees objectively through hard work. Inhumane work situations are not only immoral but also bad for business, they create a culture of mistrust and litigate potentially costly litigation.

Ethical employee behavior

In the workplace, employees also have a responsibility to act ethically. Confidence in an employer and its employees depends on employees’ willingness to work in line with their level of pay. They should continue to perform high-quality work even if they are not being closely monitored. Ethical employees pocket money or goods in practice or refrain from stealing while demanding work when they have done nothing.

Treat customers ethically

A business has a responsibility to treat its customers ethically. These include financial integrity, such as giving customers the right changes and, if dissatisfied, please refund them. This involves providing products or services that are well worth their price. The relationship between a business and its customers is also based on an existing agreement that the business will do its best to avoid unnecessarily risking or endangering its customers such that an automobile manufacturer must ensure that its cars’ brake systems are working effectively.

Dealing with the ethics of suppliers

A business must also behave ethically to its suppliers. It involves respecting the terms of the business system, such as paying for goods over time. A business owner has to be honest about the shipment he receives from his suppliers, only if these items are absent, he should only claim missing items. Ethical relationships and behavior with suppliers involve simply rewarding suppliers for great service with ongoing loyalty rather than changing suppliers on a price basis.

Advantages of corporate ethics

The value of corporate ethics goes far beyond employee loyalty, morale, and management team cohesiveness. Like other business endeavors, a company’s capacity to operate ethically has a direct impact on its potential to be profitable over the long and short terms. If a firm is a good investment, it will mostly depend on its standing within the local community, other companies, and individual investors. Investors are less likely to purchase stock in a firm or otherwise support its operations if it is thought that it does not function ethically.

1. Keep Good Employees

Talented people want to be adequately paid for their hard work and devotion at all levels of a business. They desire that their professional development inside the company be determined by the caliber of the job they provide rather than by favoritism. When layoffs or reorganizations are being considered, for example, they want to be a member of an organization whose management team is honest with them about what is happening.

2. Increases investor interest in the company

Investors will feel safer knowing that their money is being utilized responsibly if they know the firm they deal with values has strong morals and will conduct itself ethically. Additionally, it means they may relax knowing they aren’t unintentionally supporting immoral behavior. Strong business ethics are also a desirable trait, which increases the likelihood that additional investors will want to put their money in the firm, maintaining its share price and preventing takeovers.

3. Prevent Legal Problems

The management of a company is frequently tempted to make compromises for the sake of profit, such as refusing to completely abide by environmental or labor rules, neglecting the health risks to employees, or utilizing subpar materials in its products. Legal expenses, fines, and/or punishments by governmental organizations are just a few of the serious consequences of getting detected. Even more costly than legal bills or fines, the ensuing bad press can harm the company’s reputation over the long term. Since organizations that uphold the greatest ethical standards are extremely rare to find themselves in such situations, the benefits of business ethics become abundantly evident in these circumstances.

4. Give yourself a consumer edge to compete

A business may draw people to its goods and services and influence their loyalty by acting ethically. According to a Unilever poll, 33% of customers prefer to purchase products from companies that have a good social or environmental effect.

5. Improve the reputation of a company

A company’s reputation for moral conduct can aid it in developing a more positive brand in the marketplace, which can attract new clients via word-of-mouth recommendations. In contrast, a reputation for unethical behavior harms a business’s ability to attract new clients, particularly in this day of social networking when unhappy clients may easily spread the word about the bad experience they had.

6. Increase Client Loyalty

Consumers could allow a business to take advantage of them once, but if they feel they have received unfair treatment, such as being overcharged, they won’t come back. Since serving a current client does not need marketing expenses, but obtaining a new one does, having a loyal customer base is one of the keys to long-term business success.

Unethical Principles in Business

Some types of immoral behavior, such as lying, stealing, or cheating, terminate or close a job. Other types of bad behavior are unique in the workplace:

Ignore the procedure or policy
Sharing Confidential Information
Make business decisions about personal gain
Prevent important information
Misuse of your computer access (such as when you play online games)
Taking bribes or kickbacks
Ignore the problem

Why do Ethics Matter?

The simplest reason for ethics is that they identify the difference between right and wrong. However, it is also good for business to encourage everyone to follow the work ethic:

If business leaders follow ethical principles, which sets an example for employees.
Ethical behavior promotes confidence in the workplace.
Renting and firing policies such as nondiscrimination create a more diverse workplace.
A moral business has a better public image.
By acting ethically, business thrives in the surrounding community.
If the business team follows ethical principles, its members are less likely to violate legal policies

Establish ethical guidelines in the workplace

Management cannot just say that everyone should work ethically and capture what it takes. The ethical principles of the organization should be written as a code of conduct for directors, executives, and other employees. It is much easier for employees to know what to expect than for them to know how to behave ethically. It is also easy for a company to judge whether a potential employee fits the company culture.

Successful ethical companies provide training on how to resolve ethical dilemmas. Employees respond positively when they work ethically, and provide a feedback system for reporting unethical behavior. All of these things can strengthen ethical workplace culture.