Everyone has a personal moral code that shapes their behavior, and everyone must make ethical decisions every day of their lives. Businesses also consider ethics when making decisions. A company’s ethical or unethical behavior can significantly impact its reputation, operations, and revenue. Keep reading to find out more about business ethics and why they are important.
What Are Business Ethics?
Business ethics are the fundamental moral principles that shape the goals and conduct of a company. These principles affect every aspect of a business, ranging from hiring practices to supply chains to public relations. A business is typically considered ethical if it takes actions that ordinary people would regard as fair and moral. In some cases government regulations force businesses to act ethically. However, most business ethics are not mandatory and instead are decided by the company’s leaders. Many business leaders choose to make decisions based on ethical principles like integrity, transparency, and compassion, as well as an expectation of corporate social responsibility.
Why Are Business Ethics Important?
Business ethics play a very important role in a business’s long-term success. Good ethics can earn a company a positive public perception and brand loyalty. Today, stakeholders and consumers increasingly expect businesses to have strong values. A global survey found that 94 percent of customers want to engage with companies that have clear purposes, and 83 percent believe that businesses should only earn a profit if they positively impact society. In addition to satisfying consumer demands, business ethics have many other advantages, such as:
- Increasing revenue: Companies that are committed to good business ethics typically earn more money than unethical companies.
- Attracting and retaining top talent: Many employees prioritize corporate culture when choosing a job and are unwilling to take a job with a company if they disagree with its ethics.
- Avoiding legal consequences: Companies that engage in immoral actions can face legal trouble, leading to crime convictions, costly fines, damaged reputations, and loss of shareholder investments.
Becoming an Ethical Business Leader
The ethics of a business reflect its leadership. In order to have an ethical business, it needs to have an ethical leader. This means learning from past mistakes and successes to continually improve in moral decision-making. When trying to determine what to do, an ethical leader starts by asking, “What can be done?” and “What would be wrong to do?” The moral answers to these questions often come from experience and reflection. If you want to become a more ethical leader, you can also gain insights from others’ ethical decisions, both within and outside of your own business. You can look at case studies that dive into real-world business situations where leaders have made ethical and unethical decisions. This can help you decide how to implement business ethics in your own business.
If you need some inspiration in implementing business ethics, take a look at Keith J. Cunningham’s Iron Clad Ethics. Keith set these rules in place when he first started teaching business principles and practices, and he continues to abide by these rules today. Find out more about what Keith has to share by checking out his virtual training courses that teach the most effective way to do business and become a successful leader.
