Business Ethics: Definition, Principles and Importance
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Business ethics represent the moral duty an organisation and its employees have to their customers, clients and wider society. Ethics are the fundamental foundation of trust between businesses and their key stakeholders. As India strives to be a global economic superpower, businesses are putting greater emphasis on ethics.
In this article, we discuss what business ethics are, key principles of business ethics, why they are important and how to maintain them in the workplace.
What are business ethics?
Business ethics are principles, morals and rules that companies follow to establish trust with their customers, clients and employees. It is a set of standards that determines good and bad practices. Organisations seek to uphold business ethics to recognise the impact they have on society.
In India, business ethics have been integral to business culture. The principles of honesty and integrity have solidified business relationships over generations. Indian consumers reward ethical businesses with their loyalty. Therefore it continues to be a key push factor in their growth and longevity.
Read more: What Is a Conscientious Personality?
Principles of business ethics
Here are the seven principles most businesses value:
Honesty: Key stakeholders of a business have the basic right of knowing they can depend on a business. Businesses are able to build trust through transparency and by taking ownership of their actions. An example of honesty is good sales practices that educate customers about products using truthful information.
Integrity: Integrity is the act of holding yourself accountable. To show integrity, you should always seek to do the right thing, even when it may not benefit you. Integrity puts the welfare of society ahead of the profits of a business.
Confidentiality: This principle safeguards the trust people freely give to a business. When customers and clients share their personal information, it is your moral obligation to ensure it is handled with care and respect. If you are in a supervisory role, you also have a duty to protect any personal information your subordinates share in confidence with you, provided that it will not compromise the welfare of others.
Compassion: Treat others the way you want to be treated. Compassion is empathy for others and an inherent value to help those in need. Compassionate businesses are kind and considerate to their colleagues and customers. Compassion is also a sign of integrity. It requires putting your own desires aside for the greater good of your organisation and its customers.
Fidelity: When you make a promise, fidelity is a value that pushes you to deliver on it. As a new recruit, you are expected to perform your duties to the best of your ability. As a member of an organisation, you are expected to continue to strive for the best products and services on behalf of your loyal customers. A hunger to learn and grow your skills shows a commitment to delivering on the organisational objectives.
Privacy: Every organisation has the right to privacy. As an employee, your moral duty is to uphold this right. When you are entrusted with trade secrets or sign a confidential employment contract, this principle means that you respect the information you are given and take their privacy seriously.
Respect: The way you behave, speak and present yourself should reflect respect for both yourself and your colleagues. Dressing professionally in the workplace shows your respect for company culture. Listening attentively to your coworkers even when your views differ demonstrates your desire to maintain a harmonious work environment.
Why are business ethics important?
Companies that show a commitment to business ethics gain the respect of their clients, customers and employees. The reputation of the corporation you work for is also a reflection upon you and can impact your ability to gain future employment.
Here's why business ethics are so important:
Businesses in India have traditionally functioned on the basis of goodwill. In the absence of technology, it was word-of-mouth that allowed businesses to flourish. An organisation known for its trustworthiness attracts more customers and larger investments.
As an employee, you want to support an organisation that has a good reputation. After all, you want to feel proud about the work you do. Thus, a company that values ethics will keep you motivated and lead to greater job satisfaction.
Prevention of malpractice
Business ethics helps you stay accountable. It sets clear guidelines for right and wrong. When your coworkers witness your commitment to the values of honesty and integrity, they too will follow in your example. Key decision-makers in a corporation have an even greater responsibility in acting out the values of the organisation. Showing compassion to your subordinates will inspire them to behave alike.
Reduces risks and costs
Striving to do the right thing always pays back. When businesses compromise on their moral values, they are at risk of losing loyal customers. The rise of social media has made it much easier for followers to challenge a corporation's ethical standards. Consumers will be loyal to your work if you respect their emotional and financial investment in your brand. In a social media driven world, irrespective of your seniority in the company, you become a reflection of the organisation as a whole.
As India emerges as a world superpower, business ethics have become increasingly important. Investors are more likely to invest in you if they believe they can trust you. Similarly, foreign investors are more likely to partner with Indian companies that show a commitment to integrity and fidelity.
Attracts talented employees
Whether you are a highly qualified job seeker or a millennial trying to secure your first job, applying for a job with an ethically sound corporation will be at the top of your list. Not only will you feel more motivated to work for a trustworthy brand, but the experience will also stand out on your resume.
An employer that follows business ethics is more likely to treat their employees with respect. This is vital to your career growth. An employer that respects you will continue to give your new opportunities and constructive feedback.
Promotes business health
Acting with integrity reduces your mental stress and maintains a healthy balance. When you feel you are making a positive impact on society, you will have a more disciplined approach to your work. This, in turn, will improve the quality of your work. A happier workplace leads to greater productivity and profitability.
How to maintain business ethics in the workplace?
Your employee handbook or HR policies will have a section on business ethics that communicates to employees how they should behave and treat others. Reviewing it will help you understand how to maintain business ethics in your workplace.
Here are a few common practices in an ethical work environment:
1. Promote equal opportunities for all
India is a culturally diverse country with people from different backgrounds living and working in close proximity to each other. As an employee, you have the right to equal opportunities such as bonuses, promotions and training workshops, regardless of your gender, caste, sexuality, religion, marital status, disability or political affiliations. Instead, these opportunities are granted to you on the sole basis of performance.
2. Report conflicts of interest
Many organisations have a policy about receiving gifts from clients or external parties. Some may even have rules about part-time work or freelance jobs. It is best to always consult your supervisor about any potential conflicts of interest to protect the organisation's integrity.
3. Respect your workplace
Any equipment that is put into your care, such as stationery, technology and office furniture, is reserved for work purposes only. Store them in a tidy place and use company property respectfully.
How you present yourself also shows respect for your workplace. Act with integrity, complete your assignments on time and follow the appropriate dress code. Conduct yourself in alignment with the occasion. For example, when attending a meeting, you will be expected to come prepared with your presentation, speak with a gracious attitude and dress in a formal work suit.
4. Respect your colleagues
Just as every employee is given the right to equal opportunities, you, too, are expected to treat your coworkers with compassion. Maintain a high level of honesty and communicate your opinions with kindness. Give your coworkers the opportunity to voice their opinions and value their experience and knowledge.
5. Use discretion with sensitive information
Some workplaces and roles may interact with sensitive data or materials, which requires employees to practice discretion through careful organisation, the use of passwords and other security measures.
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