Businesses have an obligation to conduct themselves professionally to best serve their customers and employees. Operating by a list of ethical standards helps businesses navigate challenges, provide exceptional service and retain quality employees. In this article, we explain what business ethics is with examples of common business ethics codes of conduct:
What are business ethics?
Business ethics are a set of moral guidelines that influence how a company serves its customers and treats its employees. Every industry and individual business has its own ethical conduct that affects its organizational procedures and systems.
Why is ethics in business important?
Ethical conduct in business provides benefits for both business owners and consumers, including:
Ensuring legal operations
A code of ethics enforces a set of regulations and rules with the intent to keep the company operating within the parameters of the law, which protects company leaders, employees and customers. Some legal areas include environmental regulations, financial regulations and employment equity.
Building trust between companies and consumers
Ethics in business help build positive and trusting relationships between companies and consumers. When companies demonstrate ethical behavior consistently, consumers feel more comfortable choosing that company over others.
Appealing to shareholders
Ethical businesses may also receive more financial support from shareholders because investors likely want to work with morally sound and legally abiding companies.
Attracting high-performing talent
Businesses that show compassion can attract more top talent because candidates look for companies they feel will appreciate and value their contributions to the company and act in their employees' best interest. This can improve the work produced by bringing in more committed candidates and reducing employee turnaround.
Difference between professional and personal codes of ethics
Here are the differences between these two types of codes of ethics:
- Professional code of ethics: This is a company's or employee's values related to the workplace and business operations.
- Personal code of ethics: This is an individual's own values related to the interactions of their daily life and relationships.
12 examples of general business ethics
Here are the most common business codes of conduct:
- Providing excellence
- Upholding reputation
Transparency involves accurately representing facts, telling a truth in its entirety and communicating clearly and openly about everything a company does and says. It is the foundation of a strong relationship with customers, which directly impacts the success and stability of a company. The more candidness a company shows, the more the public is likely to trust in its service, product or mission. This is especially true during public relations crises when full disclosure is imperative to overcoming business issues.
Sticking with a decision, especially when pressured to do otherwise, shows honor and courage. Companies that do what they believe is morally right based on equality and fairness can demonstrate strength and commendable character.
Companies that keep promises and fulfill commitments to their employees, business partners and customers display their commitment to business ethics. Trustworthiness is a monumental component to success in business because people typically like to work with and buy from those they believe are dependable and principled.
Loyalty encompasses all relationships a business has including those with staff, partners, investors and consumers. Loyalty allows a business to make decisions benefiting these relationships and overcome influences from outside conflicting interests. This shows the business values the advancement of the company and employees over an owner's personal gain.
Companies should strive to act fairly and commit to exercising their power justly. Leaders should only use honorable methods to gain an advantage over the competition. Also, fairness relates to equality, which means having an open mind and treating everyone fairly. Fairness and equality can be involved in hiring practices, marketing initiatives, business partnerships and competing within the market for new consumers or clients.
Ethical companies demonstrate genuine kindness, understanding and care for the livelihood of others. In business, this means accomplishing business goals to produce the most good while causing the least amount of damage. When a business decision needs to be made, careful consideration of the options and how each one may affect a person or community helps reduce the potential negative impacts, depending on the industry.
Having basic respect for the rights, privacy and dignity of people—including individuals within and outside the company—is an important business ethical standard. Companies that treat all humans with respect regardless of religion, sex, race, nationality or other signifier are often reviewed positively in the public eye.
Respect also relates to client or customer privacy since companies are held to the ethical standard of keeping information such as bank account details, health background or social security numbers private. Maintaining this level of privacy shows respect and ensures the company operates within a variety of industry-specific laws, such as the Health Insurance Portability and Accountability Act (HIPAA).
Business ethics also include abiding by legal regulations and obligations regarding their business activities like taxes, worker safety and employment and labor laws. Companies that work within the boundaries of the legal system are more credible and honorable, which can establish a strong positive reputation as an employer that encourages high-quality candidates to apply for roles.
Ethical organizations strive to provide excellence by always working to deliver the greatest quality of service or products to their clients and customers. They pursue creativity and innovation, looking for the best ways to deliver their goods and seek to constantly improve their performance, customer satisfaction and employee morale.
Companies with high ethical standards recognize their responsibilities to their employees and customers and understand how the conduct of their leadership affects the business. Companies have a responsibility to lead with the values and mission of the organization to make logical decisions that benefit everyone. Company leaders should implement ethical standards and model them to others by displaying the standards themselves.
An ethical company seeks to maintain and protect a positive reputation to build a motivating work culture, keep investors engaged and provide exceptional service to customers. Upholding a good reputation means engaging in conduct that uplifts the company. If any action is taken to undermine a company's reputation, leaders need to handle the situation appropriately utilizing other ethical standards such as transparency, accountability and responsibility.
Ethical businesses accept responsibility for all decisions made as a company and admit their mistakes to all of those who may be affected by a misstep including shareholders, employees and the public. In addition to taking accountability, they also accept any consequences that result and do so transparently.