Have you ever given a thought as to why societies function? Why is it that since ages, human beings are in a position to live with each other peacefully? Yes, there have been certain incidences such as crimes and wars which do disturb the delicate fabric of the corporation once in a while, but still, on a whole, people have co-existed and survived for so many years. The main reason why humanity has survived for so long is attributed to certain rules, values, mores and ethics. These all of us abide by. Just imagine, what would occur if suddenly we were left without any sense of morality or values. In such a scenario, no doubt, chaos will prevail everywhere. Thus, ethics and values are the very basis on which this society is standing.
But the truth is that a society without rules is a company that is on the verge of chaos and self destruction. Likewise, a society with the wrong sort of rules will ultimately suffer the same fate. Now I’m not sounding the doomsday bell. We still have much residual ethics left throughout the world to overcome the current trend. But, like a natural resource, our supply is getting lower and we must reverse this downward spiral otherwise a valuable fabric of human society will disappear.
Same is the case in business. Organizations which follow certain business ethics have better chances of survival, compared to the ones whose only goal is to make profits, even though they have to compromise on a lot of stuff for that. So what is the importance of business ethics? How does it benefit the business? Let’s find out…
The importance of ethics in business may be included by the fact that ethical businesses tend to make much more profits than the others. The reason for this situation is that customers of businesses which follow ethics are loyal and satisfaction with the services and product offerings of such businesses. Let us take an example. Suppose, there is an organization named XYZ which manufactures cosmetics. XYZ greatly believes in the importance of ethics in business. When XYZ advertises its cosmetics in the market, being an ethical organization, it will be most truthful and honest in its communication with the probable customers. It will tell correctly about the types of ingredients it has used while manufacturing the cosmetics. It won’t lie or exaggerate about the advantages or uses of its products either. So the customers who buy its cosmetics, know precisely what they’re buying and how useful that product is going to be for them. This way, the product will meet their expectations and thus, satisfy the customers. When customers are satisfied, they’ll become loyal to the business and come back again for re-purchasing. This will certainly increase the profits of the organization. Thus, the importance of business ethics is that it creates loyalty in customers and maximizes the profits.
The Best Part Of Business Ethic
In an organization, people operating at the junior levels often emulate the ones working at the top. The same applies with ethics too. If the management or seniors of an organization follow ethical business practices, I.e, they don’t bribe to get their way or they don’t cheat the customers, investors, suppliers, etc., the employees will follow suit. The employees too will refrain from using the office property or resources for personal benefits. This will result in better and efficient use of the business resources.
An organization, which is well-recognized for its ethical practices, creates a goodwill for itself in the market. Investors or venture capitalists are more willing to place their money in the businesses which they can trust. Shareholders too, remain happy with the practices of an ethical businesses. Thus, ethics creates goodwill and builds long-term relationships, and that cannot be denied. Also, an ethical business puts greater value on its employees and thus, employees remain loyal to such an organization too.
The main goal of any organization is to maximize its profits. The importance of business ethics may be included from the very fact that it helps the businesses in achieving its goal of profit-making by creating goodwill for the company in the market, increasing its loyalty among the customers, by aiding in employee retention and by maximum utilization of its resources.