Business Ethics: Why Are They So Important?
Business ethics can either make or break a business. Read about the importance of business ethics in this article.
Business ethics are an integral part of a business or organisation because they guide values, behaviours and decisions. They have the power to either make or break your business’ reputation. But it’s so much more than just reputation. Having good ethics can also help your company retain top business talent and even allow for better risk management. Keep reading to find out why business ethics are so important and key to driving long-term success for your business.
Definition of Ethics
Firstly, let’s breakdown exactly what they are. Business ethics are defined as the study of ‘appropriate’ business practices and policies. This is very different to personal ethics that are based on moral beliefs. They come in handy when a controversial matter arises and a business must make an ethical judgement on how to resolve the dilemma at hand. Controversial issues include corporate governance, bribery, discrimination, insider trading and ‘corporate social responsibility’. The law also regulates ethical business practice, especially fiduciary duties which company directors and executives owe to their employees in accordance with the code of conduct.
Why It Matters
As mentioned earlier, a business’ reputation is at stake but there’s much more to it than that. Having a set of business ethics matters because it’s about building trust between employers and employees, as well as businesses and companies. Treating employees and customers fairly is also a large part of it. Ethical behaviour in the workplace involves respecting individuality and privacy, which allows for honest communication. All of these things add up and ultimately help drive success within the organisation. This goes hand in hand with the business’ reputation because employees feel respected in the workplace.
Allows You To Retain Top Talent
When you have good business ethics, the chances are that employees will want to stay at your company. Bad ethics can drive some of your most talented workers away and that’s what you want to avoid. If you’re in a higher position of power, such as a company director, team leader or senior manager, it’s important to lead employees by example in order to retain top business talent. Your ethical choices influences the choices of those who report to you. This is also key to boosting morale in the workplace, drawing in more workers and can build strong employee retention rates.
Limit Risks Within Your Business
Another benefit for companies with good business ethics is that it allows them to minimise risks within the business. This leads to better risk management. With stricter codes of ethics within the workplace and promoting a ‘no tolerance’ policy to risks, businesses are able to identify and prevent risks faster compared to companies who lack a solid set of ethics.
As discussed, business ethics play a highly influential role in any kind of business. It’s what sets businesses apart of competitors in the same field and is a key driving force to both employee and customer satisfaction. It matters because it builds employer and employee trust, allows companies to have strong employee and skill retention as well as limit business risks.
Mia is a Legal Tech Intern at Lawpath. She is in her Final Year of a Bachelor of Arts and Bachelor of Laws degree majoring in International Law & Global Governance. She is interested in international relations, governance, criminal law and how technology is revolutionising the legal industry.