In todays business environment, who can make the difference in ethical expectations and behavior?

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An ethical workplace environment supports a positive reputation for your company while improving the morale of your employees. Violations of basic ethics can hurt your business or cost your company money due to actions such as lawsuits or theft of goods and ideas. Building off the current ethical climate in your company, work to make improvements and maintain improved ethics for better business.

Policies

1. Written ethics policies establish your expectations for all employees. Spell out exactly what you expect from your employees on topics such as theft, intellectual property protection, proper use of resources and treatment of colleagues. Define the specific characteristics you want the company to represent, such as integrity, honesty and respect. All employees should receive a copy of the code of ethics and sign a form stating they recognize the expectations.

Management Actions

1. The upper level of the company sets the tone for the types of behaviors that are acceptable in the workplace. Leadership that values and acts ethically serves as a role model for all subordinates. This means making ethical decisions for the company as the owner. Expecting your employees to act ethically while making questionable business decisions to get ahead sends mixed messages. Employees may feel they also can make unethical decisions if it gets them ahead in business. Another potential outcome is resentment toward management for creating a double standard for behavior. If you want to maintain the ethical environment, you need all of your management staff to adhere to the code of ethics.

Resources

1. Resources for making ethical decisions enable employees to better function within the code of ethics you establish. Training on ethical issues is one resource option. Plan training sessions on topics such as proper handling of company resources, ethical business decision making and the effects of unethical decisions. All new employees should receive this training, while refresher courses should be held yearly for existing employees. Company newsletters on related topics offer another resource as well as continued education. Offer one-on-one support to employees who face decisions to help them make the ethical choice.

Reporting

1. Despite the efforts you make toward creating an ethical work environment, you may have employees who fail to uphold your standards. A reporting system that allows employees to alert you to possible ethics violations reinforces your commitment to respectable behavior. Employees need to know they can report the violations without suffering repercussions themselves. A reporting system also needs prompt action when a potential violation occurs. The fast action shows the employees you intend to hold them to the ethics standards.

Ethical people are those who recognize the difference between right and wrong and consistently strive to set an example of good conduct. In a business setting, ethical behavior is behavior that means applies the principles of honesty and fairness to relationships with coworkers and customers. Ethical individuals make an effort to treat everyone with whom they come in contact as they would want to be treated themselves.

The advantages of ethical behavior in business include helping your business to build customer loyalty, avoid legal problems and attract and retain talented employees.

Consumers may let a company take advantage of them once, but if they believe they have been treated unfairly, such as by being overcharged, they will not be repeat customers. Having a loyal customer base is one of the keys to long-range business success, since serving an existing customer does not involve marketing costs, whereas acquiring a new one does.

A company’s reputation for ethical behavior can help it create a more positive image in the marketplace, which can bring in new customers through word-of-mouth referrals. Conversely, a reputation for unethical dealings hurts the company’s chances to obtain new customers, particularly in this age of social networking when dissatisfied customers can quickly disseminate information about the negative experience they had.

Talented individuals at all levels of an organization want to be compensated fairly for their work and dedication. They want career advancement within the organization to be based on the quality of the work they do and not on favoritism. They want to be part of a company whose management team tells them the truth about what is going on, such as when layoffs or reorganizations are being contemplated.

Companies that are fair and open in their dealings with employees have a better chance of retaining the most talented people. For instance, employees who do not believe the compensation methodology is fair are often not as dedicated to their jobs as they could be.

Employees have a responsibility to be ethical from the moment they have their first job interview. They must be honest about their capabilities and experience. Ethical employees are perceived as team players rather than as individuals just out for themselves. They develop positive relationships with coworkers. Their supervisors trust them with confidential information, and they are often given more autonomy as a result.

Employees who are caught in lies by their supervisors damage their chances of advancement within the organization and may risk being fired. An extreme case of poor ethics is employee theft. In some industries, this can cost the business a significant amount of money, such as restaurants whose employees steal food from the storage locker or freezer. One approach ethical companies take to avoid this type of behavior is to take the time to train every member of the organization about the conduct that is expected of them.

At times, a company’s management may be tempted to cut corners in pursuit of profit, such as by not fully complying with environmental regulations or labor laws, ignoring worker safety hazards or using substandard materials in their products. The penalties for being caught can be severe, including legal fees and fines or sanctions by governmental agencies. The resulting negative publicity can cause long-range damage to the company’s reputation that is even more costly than legal fees or fines.

The advantages of business ethics become crystal clear in these situations since companies that maintain the highest ethical standards are very unlikely to find themselves in such situations.

Like finance and marketing, ethics has become an essential business function. But why? In this blog, we shall explore the main reasons why business ethics is important for companies as well as budding business professionals.

What Is Business Ethics?

By definition, business ethics refers to the standards for morally right and wrong conduct in business. Law partially defines the conduct, but “legal” and “ethical” aren’t necessarily the same. Business ethics enhances the law by outlining acceptable behaviors beyond government control.

Corporations establish business ethics to promote integrity among their employees and gain trust from key stakeholders, such as investors and consumers. While corporate ethics programs have become common, the quality varies. According to the 2018 Global Business Ethics Survey (GBES), less than one in four U.S. workers think their company has a “well-implemented” ethics program.

Business ethics is an essential skill.

Almost every company now has a business ethics program. In part, that’s because technology and digital communication have made it easier to identify and publicize ethical missteps. To avoid the negative implications, companies are devoting more resources to business ethics. In one survey of accountants, for example, 55 percent said they believe the importance of business ethics will continue to grow in the next three years. In addition to establishing formal programs, companies are creating ethical workplaces by hiring the right talent. “High integrity and honesty” is the second-most important skill for business leaders, according to a recent survey. Today’s business professionals must understand the link between business ethics and business success.

Business ethics drives employee behavior.

According to the 2018 Global Business Ethics survey, employees are more likely to apply ethical reasoning when their company clearly demonstrates why business ethics is important. Ninety-nine percent of U.S. employees who experience a strong ethics culture said they’re prepared to handle ethical issues. Companies that advocate for business ethics motivate their employees to perform their roles with integrity.

The first step in building this kind of ethical culture is to create an ethics program. According to the U.S. Department of Commerce, a complete ethics program should touch on all of the business functions. That includes operations, human resources, and marketing, to name a few. The global research company Gartner advises companies to integrate their ethics program with business operations.

Doing so can maximize the program’s impact by making ethical processes part of employees’ workflow. According to Gartner, an ethics program should:

1. Define the program mandate
2. Mitigate and monitor risk
3. Establish policies and procedures
4. Oversee allegations of misconduct
5. Provide training and communications
6. Reinforce behavioral expectations
7. Manage the function of behavior ethics

Corporations have a critical role in developing good ethics in business. But educational institutions also play a fundamental part in shaping ethical leaders. U.S. News & World Report reported that ethics education is vital to a well-rounded MBA curriculum. At the University of Redlands, we understand why business ethics is important. Business professionals currently face some of the world’s most significant problems. Complex dilemmas like climate change, safety, and security require critical thinking and ethical reasoning. That’s why we equip students with these skills.

Redlands’ ACBSP-accredited MBA program develops students as competitive and ethical business leaders. Through a cutting-edge, interactive curriculum, we prepare students to meet and advocate for the behavioral expectations of an ethical workplace. Our students investigate the ethical, legal, and social factors of decision-making, and cultivate an ethical framework of business decisions in one of four concentration areas. We underscore ethics throughout our online MBA program, preparing students to promote an exceptional culture of ethics wherever they choose to work.

Business ethics benefits the bottom line.

Another reason why business ethics is important is that it can improve profitability. Honorees on this year’s list of the World’s Most Ethical Companies outperformed the Large Cap Index by 10.5 percent over three years. A well-implemented ethics program can also reduce losses. Twenty-two percent of cases examined in the 2018 Global Study on Occupational Fraud and Abuse cost the victim organization $1 million or more. Companies that practice questionable ethics may also experience a decrease in stock price and severed business partnerships, which can affect profitability. In addition, business ethics is linked to customer loyalty. Over half of U.S. consumers said they no longer buy from companies they perceive as unethical. On the flip side, three in 10 consumers will express support for ethical companies on social media. Business ethics cultivates trust, which strengthens branding and sales.

Understanding why business ethics is important

Amidst growing scrutiny of business practices, it’s more important than ever for companies to carry out work the right way. Ethics programs are an exceptional tool for promoting moral conduct. Organizations also need employees dedicated to ethical decision-making.

Learn more about how our bachelors and masters business programs can help enhance your skills as an ethical business leader today.