What is business ethics How should companies act so that their Behaviour is considered ethical?

The plot of good versus evil, good guys versus bad guys, or right versus wrong has played out in books and movies for ages. It is arguably the most common struggle at the center of narratives of all types. So it should be no surprise that the same struggle is prevalent in corporate environments under the umbrella of ethical or unethical behavior. It’s certainly no secret that the desire to be perceived as ethical is important to organizations as we consistently see narratives surrounding potentially unethical behavior within organizations play out publicly.

Headlines frequently peddle allegations of unethical behavior in the workplace which can create public relations crises, operational distractions, financial liabilities and in some cases lead to the total collapse of organizations. Given the severe financial and reputational consequences of unethical behavior, and the mere allegations of unethical behavior, it is no surprise that organizational efforts to prevent, detect and respond to it are consistently scrutinized by stakeholders. The intense scrutiny makes it critical to understand the definition of ethics in the workplace, why ethics are important in the workplace, and the single most important thing organizations can do differently to encourage ethical behavior in the workplace.

What is the definition of ethics in the workplace?

Ethics in the workplace is defined as the moral code that guides the behavior of employees with respect to what is right and wrong in regard to conduct and decision making. Ethical decision making in the workplace takes into account the individual employee’s best interest and also takes into account the best interest of those impacted. The latter of the definition is often where individual employees struggle to act ethically. Furthermore, ethical behavior doesn’t only apply to individual employees, the organization itself should exemplify standards of ethical conduct.

Why is ethical behavior in the workplace important?

It is important to understand that ethical behavior in the workplace can stimulate positive employee behaviors that lead to organizational growth, just as unethical behavior in the workplace can inspire damaging headlines that lead to organizational demise.

Simply put, organizational stakeholders that include individuals, groups and organizations of various types enter into a relationship with a business organization for that business to protect their interests in a specific way. Therefore, there is a mutual expectation that stakeholders and business organizations act in an ethical manner and in each other’s best interest.

A decision to act unethically, by the organization or a stakeholder, can strain the relationship and damage the reputation of the organization. The increased risk of reputational damage and harm from negative headlines is often the catalyst for organizations to promote and encourage ethical behavior and prevent and report unethical behavior. Furthermore, where many individuals are connected to social media with mobile technology, the risk that unethical behavior will cause reputational damage to an organization is arguably much greater that in decades past, as behavior is more easily recorded on video, captured in photos, shared online and propelled into headlines.

However, there are benefits of ethical behavior in the workplace beyond the avoidance of reputational harm. An organization that is perceived to act ethically by employees can realize positive benefits and improved business outcomes. The perception of ethical behavior can increase employee performance, job satisfaction, organizational commitment, trust and organizational citizenship behaviors. Organizational citizenship behaviors include altruism, conscientiousness, civic virtue, sportsmanship and courtesy.

What can organizations do to encourage ethical behavior in the workplace?

The good news is that organizations can take steps to create a good narrative around their reputation by implementing measures that help ensure ethical conditions and perceptions of organizational support are present in the workplace. Many organizations implement reactive systems to report unethical behavior. However, the single most important thing organizations can do different to promote ethical behavior is to implement a proactive employee voice system and use voice of the employee tools to proactively give employees the capacity to be heard.

Voice of the employee systems that effectively promote ethical behavior and encourage reporting unethical behavior meet five key criteria:

  1. Elegance: be easily understood, applicable to the entire organization and all employees and effectively diagnose issues
  2. Accessibility: be easy to use, widely promoted, accessible to all employees
  3. Correctness: be well-administered and include follow-up to complaints
  4. Responsiveness: be timely, be responsive, be used by management and show results
  5. Nonpunitiveness: be anonymous and be free of retaliation – managers and employees must be protected

The challenge is that many organizations implement voice of the employee systems with good intentions, but the voice of the employee tools used are not effective. Voice of the employee tools, like interviews and surveys, that proactively seek to uncover and stop unethical behavior should be conducted:

  • Using an Open-Ended Question: to ensure all possible issues are uncovered, voice of the employee efforts should focus on asking an open-ended question about awareness of compliance issues. Closed-ended questions do not provide the ability to uncover all possible issues or all details to understand issues.
  • Externally: to ensure accuracy, the research should be conducted through an independent third-party to remove biases and remove barriers to employees feeling they can express their true perceptions related to unethical conduct in the workplace. When conducted internally, it’s likely that true perceptions aren’t revealed because employees aren’t being honest with the organization. Employees may not want to risk burning a bridge or disappointing a manager. When conducted externally, data is systematically collected and thoroughly reported.
  • Using Mixed Methodology – Asking “Why?”: to obtain detailed reasons for perceptions of unethical behavior, it is critical to use a mixed methods research instrument that asks “why?” in an open-ended, qualitative manner to avoid limiting the scope of what can be learned from each individual employee. Third-party researchers can offer high-quality telephonic interviews and web interviews that capture in-depth qualitative responses in a systematic manner. In asking fewer open-ended questions, specifically following up to ask why the participant perceives unethical behavior, you obtain in-depth data and reveal the root causes of perceptions.
  • Systematically: to track trends and progress, data should be systematically captured for use in subsequent data collection and analysis. External research uses a consistent question set, data collection technology and a dependable methodology to capture responses in a reliable system to facilitate future reporting and analyses. This information can then be analyzed to identify issues that might exist in specific employee segments, departments, job groups or even certain supervisors.

The struggle between right and wrong amongst your stakeholders and the perception of good or evil about your organization are a constant. And the implications of a perceived ethical or unethical reputation could be helpful or harmful to your business. Your reputation is on the line and your employees provide valuable information when given a true voice. It’s imperative to proactively promote ethical behavior in your organization before you are potentially destroyed by tomorrow’s headlines.

What is business ethics How can companies behave ethically?

What Is Business Ethics? By definition, business ethics refers to the standards for morally right and wrong conduct in business. Law partially defines the conduct, but “legal” and “ethical” aren't necessarily the same. Business ethics enhances the law by outlining acceptable behaviors beyond government control.

What is ethical Behaviour in a company?

What is ethical behaviour in business? Ethical behaviour refers to the moral principles, rules and attitudes that organisations demonstrate in their conduct and dealings. Ethical behaviours are necessary for maintaining employee safety, adherence to law and regulation, and protection of the environment.

What is business ethics Why is it important for businesses to function in an ethical manner?

Business ethics are the set of practices and policies that companies use to guide them through decisions about finances, negotiations and deals, corporate social responsibility, and more. Without a strong set of ethics, a business can run afoul of the law, encounter financial pitfalls and moral dilemmas.

How can a company demonstrate ethical Behaviour?

Examples of ethical behaviors in the workplace includes; obeying the company's rules, effective communication, taking responsibility, accountability, professionalism, trust and mutual respect for your colleagues at work. These examples of ethical behaviors ensures maximum productivity output at work.