Today there are a number of factors that make a business profitable, including teams of management experts, dedicated and productive employees, constant consumer demand, and careful monitoring of results. In addition to these well-known business practices, companies that implement a management philosophy that relies heavily on business ethics are more successful than those that operate unethically. Although it may not be the first variable considered when analyzing a company's profits, business ethics is an equally important catalyst for a company's success.
An organization's leadership is the key to its long-term success, and staying consistent with an ethics-based management philosophy creates a positive example for all workers. Horton, E. (2018)
Ethical accounting practices, treatment of employees, interactions with the public, and information disseminated to shareholders are all responsibilities of the leadership team and can have a direct impact on the overall profitability of the company. When these holistic aspects of the business are not conducted with a resounding theme of top-down business ethics, each facet of the business under the management team has greater potential for uncertainty in the short or long term.
It has been proven time and again that employees who are satisfied in the environment they work in are more productive than workers who are unhappy. Unethical practices in the workplace can lead to widespread disturbances with employees, leading to increased feelings of dissatisfaction with the work they are doing and their employers. However, when management fosters business ethics and company executives lead by example, the ability of employees to focus on the work they need to complete in order for them and the organization to be successful increases exponentially.
Productivity increases when there are fewer distractions and morale is high, leading to higher levels of profit for the company. Horton, E (2018)
Employee happiness can also have an impact on turnover and retention, as dissatisfied workers are more likely to seek other opportunities, regardless of the better wages or benefits offered by their current employer. Continuous recruiting and training of new employees can reduce the capital a company can spend on income-generating activities, ultimately reducing its long-term profits.
Companies would be nothing without shareholders and investors, and as such, operating with business ethics in mind is the most important thing when interacting with these crucial players. It is common for the profitability of publicly traded companies to decline rapidly when they encounter situations in which information about unethical behavior is discovered. When investor trust is lost, it can be difficult for a company to regain the trust of the public, its investors, and its valued shareholders; Profitability can take years to accumulate again. Companies that set the framework for business ethics in all facets of operation are more likely to become profitable and remain profitable than those that conduct business unethically.
Why are business ethics important to the profitability of a company?
The moral and ethical belief system that guides the values, behaviors, and decisions of a business organization and the people within that organization is known as business ethics. Some ethical requirements for companies are codified in law; Environmental regulations, the minimum wage, and restrictions against insider trading and collusion are examples of the government setting minimum standards for business ethics.
Ethics in Leadership
The management team establishes how the entire company works day by day. When the prevailing management philosophy is based on ethical practices and behaviors, leaders within an organization can lead employees by example and guide them in making decisions that are not only beneficial to them as individuals, but also to the organization. like an everything. Developing a foundation of ethical behavior helps create lasting positive effects for a company, including the ability to attract and retain highly talented people, and create and maintain a positive reputation within the community. Running a business in an ethical way from the top down creates a stronger bond between the people on the management team, creating even more stability within the company.
Employee ethics
When management runs an organization ethically, employees follow these steps. Employees make better decisions in less time with business ethics as the guiding principle; This increases productivity and overall employee morale. When employees complete work in a way that is based on honesty and integrity, the entire organization benefits. Employees who work for a corporation that demands a high standard of business ethics in all facets of operations are more likely to perform their job duties at a higher level and are also more inclined to remain loyal to that organization.
Ethics vary by industry
Business ethics differ from industry to industry. The nature of a company's operations has a great influence on the ethical problems it faces. For example, an ethical dilemma arises for an investment broker when the best decision for a client and their money does not match what pays the brokerage the highest commission. A media company that produces TV content aimed at children may feel an ethical obligation to promote good values and avoid the use of non-colored materials in its programming.
A striking example of industry-specific business ethics is in the field of energy. Companies that produce energy, particularly non-renewable energy, face relentless scrutiny on how they treat the environment. One misstep, be it a minor coal spill at a power plant or a major disaster like the 2010 BP oil spill, forces a company to respond to numerous regulatory bodies and society at large about whether it breached its duty. to protect the environment.
An aggressive search for higher profits. A rigorous and clearly defined system of environmental ethics is paramount for an energy company if it is to thrive in a climate of increased regulation and public awareness of environmental issues.
Companies like Amazon and Google, which do most of their operations online, are not scrutinized for their environmental impact in the same way as industrial companies. However, when it comes to protecting the privacy and security of your customers, your ethics are closely scrutinized. One particular area in which technology companies must make difficult ethical decisions is marketing. Advances in data technology allow companies to track the movements of their customers online and sell that data to marketing companies, or use it to match customers with advertising promotions. Many people see this type of activity as a major invasion of privacy. However, such customer data is invaluable to businesses,as they can use it to increase profits substantially. Therefore, an ethical dilemma arises:To what extent is it appropriate to spy on customers' online lives to gain a marketing edge?
Companies increasingly have an incentive to be ethical as the area of ethical and socially responsible investing continues to grow. The growing number of investors seeking ethically operating companies to invest in it is driving more companies to take this issue more seriously.
With consistent ethical behavior, an increasingly positive public image emerges, and there are some other considerations just as important to potential investors and current shareholders. To maintain a positive image, companies must commit to operating on an ethical basis when it comes to treating employees, respecting the environment and fair market practices in terms of price and consumer treatment.
Many people interested in business ethics are fascinated by the idea that ethics is good business, or that one can "do good by doing good." Others think that idea is nonsense.
The obsession some people have with the statement, obviously partially true and obviously partially false, that "ethics brings benefits" is regrettable. Because, in the long run, you tend to be successful if you deal honestly with customers, treat your employees well, treat suppliers with honor, etc. But everyone in their right mind knows that the basic axiom doesn't mean that you can never do a little more (sometimes a lot more) by doing something wrong. And so "ethics is good business" is an unconvincing sales pitch, at least when the person trying to sell it implies that it applies to every individual decision, at all levels, and that it implies the highest level of virtue..
Now, of course, there is room for some interesting empirical work. Somewhere between "ethics never brings profit" and "ethics always brings profit" is true, and it would be helpful to know exactly where the truth is and what the variables are. relevant. Although doing the right thing is (by definition) the right thing to do, even when it's not profitable, it would be nice to know under what circumstances those two things can go hand in hand.
The key philosophical mistake people make here is thinking that the idea of "ethics is profitable" is applied by choice. It is not, and cannot, more than the truth that "honesty always pays" in our personal lives. Now, it is clearly true that having a set of ethical rules that we all (the majority) adhere to is "profitable", socially, and it is clearly true that acting ethically is a decent route to the success of any individual or company.
So if people try to sell you or teach you the silly version of the ethical profit connection, they are selling and teaching an obvious falsehood. But that doesn't mean there is no connection, and it certainly doesn't mean that being lucrative should be viewed in any way as contrary to acting ethically. MacDonald, C. (2018)
The profit potential of running an ethical business
A better motivation to inspire ethical behavior is the benefits it provides, both personally and financially. In addition to feeling good about doing the right thing, principled business conduct can also pay off. Ethical behavior is good business.
Best mark
Feeling better about the business has marketing advantages. First of all, the ethical business owner is a safe business owner. It's easier to show off when there's nothing to hide. And honesty breeds passion. The owner believes in the business and wants to tell the world. So when ethical behavior builds trust and passion, you have a business owner who inspires trust. Trust with employees, suppliers and customers. What better way to improve the brand than by building trust?
Improved bottom line
Customer satisfaction is not an amorphous and ambitious goal. It is instant feedback that is driven by technology, companies learn quickly when customers are happy… and when they are not. Angie's List, Yelp, TripAdvisor online services expose everything to the public. This leaves little room for a business to neglect customers. Bad behavior leads to bad reviews. And that's bad for business.
On the other hand, when customers are treated ethically, the news now spreads quickly. They come back for more and make referrals. The business is not only rewarded with good grades; the bottom line is boosted.
Better health
Do you want to relieve stress? Run the business ethically. Adopting and owning a set of ethical standards is not just the right thing to do. It also reduces owner anxiety and improves personal health. We all feel better when we do the right thing.
A business consultant tells you that you can simplify your accounting, expand your brand, increase your bottom line, and improve your health. And the only cost is doing the right thing. Who can resist this offer? Good ethics pays. Parrish, S & Forbes (2018).
The importance of business ethics goes beyond employee loyalty and morale or the strength of a management team bond. As with all business initiatives, the ethical operation of a business is directly related to profitability in both the short and long term. The reputation of a company in the surrounding community, other companies and individual investors is paramount in determining whether a company is a worthwhile investment. If a company is perceived as unethically operating, investors are less inclined to buy shares or support its operations.
