Have you ever given a thought as to why societies function? Why is it that since ages, human beings are able 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 society 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 due to certain rules, values, morals, and ethics, which all of us abide by. Just imagine, what would happen 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 foundations on which this society is standing.
The world of business thrives on the same principle. Organizations, which follow certain business ethics have better chances of survival, compared to the ones whose only goal is to make profits, even if they have to compromise on a lot of things.
- The importance of ethics in business can be understood by the fact that ethical businesses tend to make much more profits than the others. The reason for this is that customers of businesses which follow ethics are loyal and satisfied with the services and product offerings of such businesses.
- Consider an example. Suppose, there is an organization named XYZ, which manufactures cosmetics, and 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 very truthful and honest in its communication with the probable customers.
- It will tell correctly about the kind of ingredients it has used while manufacturing the cosmetics. It will not lie or exaggerate about the benefits or uses of its products either.
- So, the customers who buy its cosmetics, know precisely what they are 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 will become loyal to the company and come back again for re-purchasing. This will surely increase the profits of the organization.
- Thus, the importance of business ethics is that it creates loyalty in customers and maximizes the profits.
- In an organization, people working 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 do not bribe to get their way or they do not 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 utilization of the business resources.
- An organization, which is well-known for its ethical practices, creates a goodwill for itself in the market.
- Investors or venture capitalists are more willing to put their money in the businesses which they can trust. Shareholders too, remain satisfied with the practices of an ethical businesses.
- Thus, ethics creates goodwill and builds long-term relationships. Also, an ethical business puts greater value on its employees, and thus, employees remain loyal to such an organization too.