Business ethics is a crucial part of the company-customer relationship. With that, what is the importance of ethics in business?
Businesses need to make sound decisions while also being fair to their customers. Conducting ethical practices will help companies grow and maintain long-term relationships with their customers.
Businesses have to provide value and stellar services to those they serve. It holds true for businesses of any kind- whether it’s offline or online.
There are things in place to keep companies accountable, such as:
- Laws and regulations
- Online reviews from people who have done business with them (i.e. Yelp, Trustpilot)
In this article, I’ll go over how ethics played a role for a major company involved in a scandal. Along with that, I’ll lay out five reasons why ethics is important in any type of business.
- The Importance Of Ethics In An Organization
- Everyone Is Treated Fairly
- Better Employer-Employee Relations
- Reduces Risk And Consequences
- Builds A Better Reputation With The Public
- Drives Business To Do The Right Thing
The importance of ethics in an organization
Not practicing good ethics can harm a company, which can lead to consequences. Not all businesses are created equal, and they can take advantage of their customers.
One relevant example is what happened at Wells Fargo bank a while back. In 2016, it was discovered that the bank was involved in cross-selling.
Cross-selling is a fraudulent practice when an individual or an organization tries to sell multiple products to customers. So without any consent from their customers, Wells Fargo created a dozen of fake checking and savings accounts.
It was an attempt to make more sales, especially since it was in a high-pressure environment. So it ended up being a major scandal and questioned their overall business practices.
There are other examples of unethical behavior taking place in the workplace. But Wells Fargo is one of the latest examples of their business practices being questioned.
What is the importance of ethics in business?
Practicing good business ethics will help companies make sound decisions. While at the same time, they’re being fair to those they serve by providing value and stellar customer service. Value and a “customer-first” approach come a long way in practicing ethics. Let’s go over some reasons why that’s important.
5 reasons why business ethics is important
Everyone is treated fairly
Companies need to provide great customer service regardless. Also, they need to treat those who work for them the same way.
If a company provides decent services but doesn’t give employees the right resources to perform well, that can be a problem. Not only that, it creates some disconnection between both sides.
Instead, companies need to be consistent with how they treat customers and employees.
Better employer-employee relations
There’s a symbiotic relationship between an employer and their employees. Both of them provide value to each other; in other words, they both need each other to succeed in business.
If an employer provides the proper resources for their employees, the better chances of succeeding. Employees can perform well and end up being a great return on investment for an employer.
Having the value component can help a long way- so both the employer and the employee can benefit from one another.
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Reduces risk and consequences
Good business ethics involves complying with current laws and regulations. Despite some of them being unnecessary, it’s still required to follow them until they officially change.
A good example would be labor laws, as companies have to follow those. So employers want to make sure that signs are up or workplace handbooks are accessible to everyone.
These may sound like small things to review, but they can make a difference over time.
In the case of Wells Fargo, they took on big gambles for not following good business ethics. More so, those bad decisions made resulted in major fines and penalties for the financial institution.
Why is ethics important in a business?
Great ethics in business helps define what practices are acceptable or not. Whether that’s through government regulations or what the marketplace demands, it determines how companies should work with their customers.
Builds a better reputation with the public
Having a good reputation can come a long way. If people trust a company’s practices, they’re more likely to purchase its products or services.
So a good reputation can help a business build a better brand, which is key to long-term growth. The more people place trust in a company, the more likely there will be more business and sales down the road.
What is the most important ethics in business?
Based on a company’s values and goals, being honest and demonstrating integrity should be at the top of the list for good business ethics. Showing integrity means doing the right thing regardless of the consequences.
Drives businesses to do the right thing
Upholding good ethics means making better decisions for a company. When things are going well, you tend to do the right thing (at least most of the time).
But if not, some people may question if they should do something that’s in their best interests.
It may sound cheesy, but it’s always best to do the right thing, no matter how hard it may be. Even if it’s a tough decision, the consequences have to be faced no matter what.
Doing the right thing is always better for the long-term prospects of any business. If you stick to doing what’s right, it’ll be much easier to overcome any type of situation, whether small or big.
Do the right thing. It will gratify some people and astonish the restMark Twain
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Business ethics is key for companies to succeed. Without proper ethics in place, companies can make bad decisions on every side.
It affects everyone, and it can lead to undesirable consequences. The reasons laid out are important to practicing good business ethics.
Regardless of this, practicing good ethics always leads to making the right decisions in business.
Your Turn: Do you believe ethics is the key to building good business practices?
I would like to get your thoughts on this topic. Do you think ethics is important to practice in business?
What’s a situation you think is considered unethical in doing business? Could it be telling a small lie to a customer?
Do you think it’s always best to do the right thing, no matter what the consequences maybe?
Does practicing good ethics help a company build a better reputation with the public?
Feel free to share your thoughts by leaving a comment below. I look forward to reading your thoughts, and I’ll gladly respond promptly.
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Eric is the owner and chief editor of notimekillers.com. He takes great pride in helping people manage their time and grow their businesses. Eric is a firm believer in financial and time freedom, as he believes in financial independence and taking ownership of your time. “Time is your most important asset. It can be your best friend or worst enemy. How you use your time can shape the future you desire to have.” In his leisure time, Eric loves to write and read whenever possible. He enjoys going for long walks outdoors while doing in-home workout videos every week. You can also connect with Eric via LinkedIn.