To understand why ethical behavior is important, it can be helpful to know how unethical behavior affects a business. Think, for example, of a company that only hires family or offers inappropriate incentives. While these actions are not illegal, they can certainly have a negative impact on a company`s morale and success. If a company behaves ethically, it can attract customers to its products and services and persuade them to retain them. This is shown by a survey by Unilever, which found that a third of consumers (33%) choose brands that have a positive social or environmental impact. According to the 2018 Global Business Ethics Survey, employees are more likely to apply ethical considerations when their organization clearly shows why business ethics is important. Ninety-nine percent of U.S. employees with a strong ethical culture said they were willing to address ethical issues. Companies that are committed to business ethics motivate their employees to fulfill their roles with integrity. What constitutes good business ethics? We`ll give you some examples and their benefits, as well as proven ways to ensure that ethical behavior applies in your organization. The authors cited some key findings from their research that could help business owners and managers achieve both high-quality service and a corporate culture with consistent ethical behavior: Business ethics help ensure a good reputation for your business. Not only does it feel good to be part of a company with a good reputation, but it`s also great for business. If you have a reputation for always being ethical in sourcing and manufacturing products and treating employees, customers and the community, more people will want to do business with you.
Social media ethics are also important for your reputation. Almost every company now has a business ethics program. This is partly because technology and digital communications have made it easier to identify and publicize ethical errors. To avoid negative impacts, companies are devoting more resources to business ethics. In a survey of accountants, for example, 55% said they thought the importance of business ethics would continue to grow over the next three years. In addition to establishing formal programs, companies create ethical workplaces by hiring the right talent. “High integrity and honesty” is the second most important skill for leaders, according to a recent survey. Today`s business people need to understand the connection between business ethics and business success. The importance of business ethics goes far beyond employee loyalty and morale or the strength of loyalty to the management team. As with all business initiatives, a company`s ethical way of working is directly linked to profitability, both in the short and long term. Regardless of the relationship between two people and what they agree or disagree with, people within an organization should always respect each other. This includes managers and subordinates, colleagues and clients.
When a basic level of respect is established, people take criticism less personally, can communicate more openly, and can see and appreciate the other person`s point of view. When investors know that the company they work with prioritizes high morality and will act ethically, they can be sure that their money will be used responsibly. It also means they can feel comfortable knowing that they are not indirectly contributing to unethical practices. A strong business ethic is also an attractive trait, meaning other investors are more interested in putting their money into the company, keeping the stock price high, and protecting it from a takeover. The first step in building this type of ethical culture is to create an ethics program. According to the U.S. Department of Commerce, a comprehensive ethics program should affect all business functions. These include operations, human resources, and marketing, to name a few. Global research firm Gartner advises companies to integrate their ethics program into their business operations.
Another reason why business ethics are important is that it can improve profitability. The winners of this year`s World`s Most Ethical Companies list outperformed the large-cap index by 10.5% in three years. A well-implemented ethics program can also reduce losses. Twenty-two percent of the cases reviewed as part of the 2018 Global Study on Workplace Fraud and Abuse cost the victims` organization $1 million or more. Companies that practice questionable ethics can also experience a drop in share price and the breakdown of business partnerships, which can impact profitability.