Question

Explain what business ethics is. Discuss whether having an ethics program in the firm may benefit the organization and its shareholders.

Answer 1

Before understand Business ethics we shall first discuss what ethics is.

Ethics: According to oxford Ethics is defined as" The moral principle that governs a person's behaviour or how an activity is conducted". It means it guide a person while taking decisions to choose right course of actions.

Ethics has following features:

(1)Ethics is the conception of right or wrong coduct.

(2) It deals with moral choices that we make in the course of performing our duties with regard to the other members of the society.

(3) There exists no sharp boundries between ethical and non-ethical. Therfore people often face ethical dilemmas wherein a clear cut choice becomes very defficult.

(4) Ethics and legality of action do not necessarily coincide. For example not helping and injured person in a road accident may be unethical but not legal.

Ethics in business:

Business ethics is the application of general ethical ideas to business. Business ethics refers to the moral principles and standards and a code of conduct that businessmen are expected to follow while dealing with others. Ethics in business does not mean just by complying the laws rule and regulations by fear of punitive action but by following good practices, compiance with laws,rules,regulations willingly. Because ethics in business is benicifial for business,all stakeholders and society at large.

Whether having an ethics program in the firm may benefit the organization and its shareholders?

Ethical program in business is the policies,procedures,rules code of conduct which the employees and other stakeholders are required to follow while dealing with others and in performing their own duties as well.

Companies displaying a "clear commitment to ethical conduct" consistently outperform those companies that do not display an ethical conduct.

Benifits of ethical program in the firm:

1. Attracting and retaining talent
People aspire to join organizations that have high ethical values. Such companies are able to attract the best talent. The ethical climate matters a lot to the employees. Ethical organizations create an environment that is trustworthy, making employees willing to rely on company’s policies, ability to take decisions and act on those decisions. In such a work environment, employees can expect to be treated with respect, and will have consideration for their colleagues and superiors as well. Thus, companys’ policies cultivate teamwork, promote productivity and support employee-growth.

2. Investor Loyalty:
Investors are concerned about ethics, social responsibility and reputation of the company in which they invest. Investors are becoming more and more aware that an ethical climate provides a foundation for efficiency, productivity and profits. Relationship with any stakeholder, including investors, based on dependability, trust and commitment results in sustained loyalty.

3. Customer satisfaction:

Customer satisfaction is a vital factor of a successful business strategy. Repeated purchases/orders and an enduring relationship with mutual respect is essential for the success of the company. The name of a company should evoke trust and respect among customers for enduring success. This is achieved by a company only when it adopts ethical practices. When a company with a belief in high ethical values is perceived as such, the crisis or mishaps along the way is tolerated by the customers as minor aberrations.

4. Regulators:
Regulators see companies functioning ethically as responsible citizens. The regulator need not always monitor the functioning of the ethically sound company. Any organisation that acts within the confines of business ethics not only earns profit but also gains reputation publicly.

To summarise,

-companies that are responsive to employees’ needs have lower turnover in staff.
- Shareholders invest their money into a company and expect a certain level of return from that
money in the form of dividends and/or capital growth.
- Customers pay for goods, give their loyalty and enhance a company’s reputation in return for goods
or services that meet their needs.
- Employees provide their time, skills and energy in return for salary, bonus, career progression and
experience.

From the above it is clear that having an ethics program in the firm do benefit the organization and its shareholders.

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