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What is Business Ethics and Why is it Important

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27th Oct, 2022
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What is Business Ethics and Why is it Important

A professional workplace is a space where countless employees work together towards a common goal. Such an environment requires respect for professional and personal space from every individual to maintain organizational discipline. While an unenforceable set of rules is necessary for people to follow on their own accord to maintain decorum, there are multiple instances where inexperienced workers engage in activities breaking the workplace’s code of conduct. This is where knowing what is business ethics and why is it important plays a crucial role.

Business ethics are essential to maintain in any professional space to maintain a healthy environment. Keeping workspace conflict-free can be a hassle, but these ethics are what keep conflicts as much on the bay as possible. While personal ethics evolve as you continue gaining professional experience, it is essential to learn the core ethical value of any workspace, and business ethics include some of the core values. 

Let’s dive deeper into what is business ethics and why is it important in work culture!

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What is Business Ethics?

Business ethics is a set of principles following social, professional, cultural, and legal rules to maintain discipline in a work environment. These rules are backed by law but are unenforceable. While they are often not written in any book, the inability to follow them can cause severe consequences, including financial or employment loss. 

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Both employers and employees must know why ethics is important in business ethics to maintain a transparent and trouble-free environment. It is essential to protect fair business practices and to value individual well-being. Ethics may vary from company to company, but the industry standards remain the same for all professionals. 

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Why Ethical Problems Occur in Business?

Individuals often face unfavorable conduct in workspaces due to unethical practices either by employers or fellow employees, which causes conflicts. While several factors may lead to workplace disputes, the two common reasons why ethical problems occur in business are:

  • Monetary issues cause some of the most frequent conflicts in workspaces. These may include an individual evading taxes or taking financial help from a fellow employee and failing to pay it back. 
  • Unclear and inconsistent policy models in companies can create confusion and conflicts among employees. A company can avoid this trouble by drafting a clear code of conduct and ethical standards. 

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Ethical Principles of Business

A company must establish several ethical principles to protect employees and the organization’s reputation from any possible harm. These are twelve essential principles that all working professionals in a company must follow to maintain decorum and contribute to the organization’s success through sustainable work culture. 

  • Integrity: Individuals and employers can exhibit integrity by following their words and maintaining consistency amid their actions and words for credibility. These include both personal and professional commitments. 
  • Honesty: Misrepresentations and deception must be avoided at all costs. All personnel are recommended to stay truthful in their conduct and work ethics. 
  • Trustworthiness: Individuals must maintain a virtuous account to be reliable for the company and other employees in times of personal and professional help. 
  • Fairness: Fairness in business ethics refers to an individual’s behaviour towards other people, maintaining dignity and extending conduct that you would want others to offer to you. 
  • Loyalty: A fundamental business ethic, loyalty demands employees and employers to maintain confidentiality. Sharing classified information is not only a display of disloyalty but is also legally punishable under some circumstances. 
  •  Compliance: Organizations and their employees must follow legal and organizational policies to avoid legal hassles.
  • Accountability: Accountability holds every individual responsible for their actions, decisions, and delivered work through transparency. 
  • Commitment to Excellence: It refers to employees’ and organization’s dedication to putting out high-quality work and actions to achieve success. It establishes personal goals for employees while helping the company to attain excellence. 
  • Transparency: An organization must extend its policies with as much transparency as possible to maintain a conflict-free environment. From upgrades to the company policy to changes in business operations, employers must share important business updates with employees. 
  • Reputation and Morale: Responsible behavior can be demonstrated through work practices, accountability of actions, compliance with deadlines, and assisting help in crucial times. As an employee of any organization, it is ethical and moral conduct to exhibit responsible behavior. 
  • Leadership: Leadership is demonstrated through consistent effort to deliver ethical behavior, set model examples, and inspire candidates to follow the same. It entails responsible behavior that influences others to partake in the same and creates an ethical working environment. 
  • Respect: This aspect of business ethics is effective for every person participating in an organization to respect and be mindful of different people, their space, interest, opinions, and privacy, without putting off their voice. Valuing feedback and rejecting discrimination in any form must be essential priorities. 

Importance of Business Ethics

Businesses must not partake in any activities that tarnish their reputation. To maintain ethical conduct while encouraging a thriving environment, employees must follow their workplace ethics, which may be perceived as moral and social obligations having a direct influence on several aspects:

  • Work profitability: Adhering to mentioned ethics and regulations improves work productivity within limited resources and boosts profits and ROI, eventually creating a better market reputation for businesses.
  • Increased customer satisfaction: Business ethics stores value for iterating customers to generate high-quality projects at reliable prices. This often entails better relations with customers and enhanced customer-brand connections.
  • Improved employee relations: Business ethics are dedicated to serving the well-being of its employees. Their protection and development through ethical practices ensure an improved relationship between them and their company. 
  • Better decision-making: Drafted rules and regulations allow employees and business executives to refer to them while making crucial business decisions and strategies. These decisions follow ethical boundaries for stable operations and smoother business transactions in the long run. 

Examples of Business Ethics

Let’s look at a few examples of business ethics implemented in professional working spaces to protect workers’ rights and maintain a safe environment. 

  • Data Protection refers to a practice where a company retains their customer’s data for work purposes and ensures that the data is confidential. It is provided to only relevant authorities for specific purposes. The same goes for employees’ personal data. 
  • Workplace diversity in workspaces ensures that people of all backgrounds, cultures, cast, and ethnicity are welcomed without discrimination. Business ethics protects all employees in the workplace, creating a fair and safe environment. 
  • Corporate transparency refers to maintaining communication between employees and organization’s decisions directly affecting employees. It ensures honesty between the two parties through unambiguous communication. 
  • Whistleblower protection aims to maintain privacy and security for individuals who report unethical practices within the organization. It ensures their identity remains confidential and their employment is not compromised. 

Various management courses extend business ethics values to make aware people of the ethical regulations in working spaces. If you’re interested in enrolling in a management course, then upGrad’s Master of Business Administration, extended by Liverpool Business School, is a great choice.

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Conclusion

Every business organization must aim for transparent and clear ethical goals to help their employees grow and add value to the company. Business ethics work to protect brands and their people equally. Thus, it is of utmost importance in the modern corporate world to comprehend why ethics is important in business.

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Kamal Jacob

Blog Author
Kamal is an experienced Online marketing consultant with a high degree of expertise in SEO, Web Analytics, Content/Technical planning and marketing.

Frequently Asked Questions (FAQs)

1Are business ethics universal?

Core business ethics in workspaces are similar worldwide, but following differences in regions and legality on a few subjects, many ethics are not universal. For example, core ethics such as professional responsibility, personal integrity, social responsibility, and loyalty are some of the core values unchanged in every business ethics.

2What are some unethical business practices?

Various unethical business practices include: 1) Discrimination among workers 2) Contract breach 3) Workspace harassment 4) Bribery 5) Poor working conditions 6) Hidden terms and agreements

3What happens if business ethics are not followed?

While business ethics are not legally enforceable, not following them might lead an individual to face financial loss, suspension, or even employment termination. Meanwhile, if an organization fails to comply with business ethics, they eventually lose its credibility in the market and face the consequences like losing clients, diminishing reputation, high employee attrition, low productivity, etc.

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