The aim of a business is to sell goods or services and earn a profit. However, the question is: how does a business achieve this goal? Does the business follow ethical practices? Generally, everyone believes that ethics are a necessary ingredient for every enterprise’s success. However, there is a need to understand ethics in business and the role of financial integrity in the success of a business. In this blog, we will understand what ethics is, especially with respect to business. We will also enlighten you on the key aspects of ethics in business.
What is Ethics?
Ethics is a philosophical term that deals with moral principles. In simple terms, it refers to principles that govern the behavior of a person in a certain situation. It actually guides in choosing the right or wrong course of action. However, sometimes there is subjectivity involved in what is referred to as ethical behavior. Furthermore, a legal course of action does not necessarily mean that it is also ethical. For instance, consuming alcohol may be legal in a country; however, it might be unethical to consume it at certain places in the same country.
Ethics in Business: Key Aspects
Ethics is closely related to the word integrity. The core of ethical behavior is honest and credible behavior. Ethics in business is not just fulfilling legal compliance; it’s about doing what is right when no one is observing. The world is now more socially conscious; therefore, ethical business practices are important to build trust and the long-term success of a business. Let’s discuss some key aspects of ethics in business.
Integrity, Fairness, and Transparency:
The first and foremost aspect of ethical business is integrity and credibility in all business dealings. Businesses that keep promises and deliver goods or services within the agreed timeline are ethical businesses. Such businesses tend to retain long-term business relations with their customers that ultimately enhance their financial success. Furthermore, businesses should not focus on their customers alone; they should conduct fair dealings with all their stakeholders. Stakeholders include, but are not limited to, employees, vendors, investors, and so on. For instance, a company should practice equal-opportunity hiring practices.
Ethical practices tend to encourage businesses to be transparent and open to their stakeholders. For instance, if stakeholders want to make a financial decision, they can have easy access to the relevant information. Even if there is not enough open information, there should be nothing that is being hidden from the stakeholders other than certain legal or confidential information.
Beyond Legal Compliance:
Businesses are usually concerned about fulfilling their legal duties. However, there are circumstances when you can “technically” avoid legal compliance with unethical business practices. For instance, a business may be allowed to cut trees in the neighborhood area; however, cutting trees will result in elevated pollution levels. This activity will be technically legal; however, it will not be suitable for people living in the surroundings. Also, it will impact the business’s reputation in the long term and may impact the business financially. Therefore, the key to ethical behavior is going beyond what is legal and taking an alternative course of action than cutting trees.
Corporate Social Responsibility (CSR):
According to UNIDO, CSR refers to the integration of social and environmental concerns into business operations and dealings with stakeholders. Businesses should not focus just on their profit motive; they should strive to contribute to society. Furthermore, enterprises should also track their environmental impact and take steps to reduce their carbon footprint. This is an ethical way of doing business. CSR and ethics are related as both speak about actions that go beyond profit-making and legal compliance.
There are various other aspects of ethical business practices, including but not limited to accountability and ethics from the top. Accountability refers to taking responsibility for actions and taking steps to correct something when something is going wrong. Businesses should take responsibility for their actions and take measures to correct their mistakes or rectify their environmental impacts. For instance, if a factory generates massive pollution, they should take measures to reduce their carbon emissions. Furthermore, they can also be involved in other practices, like planting trees, that reduce pollution in the city.
If we have a business leadership that makes ethical business decisions, this would result in overall ethical behavior in the organization. Thus, if ethical behavior is followed from the top, it prevails in the overall organization. These aspects are just for guidance; don’t forget to follow the soul, not just the rules.
In summary, ethics in business play a fundamental role in the long-term success of the business. It extends beyond legal compliance, incorporating integrity, fairness, transparency, corporate social responsibility, and so on. Ethical businesses not only meet their legal requirements but also build trust and reputation, thus raising long-term success. Ethical leadership serves as the foundation, shaping a culture of integrity and truthfulness throughout the organization. In today’s socially conscious world, ethical conduct is not just a choice but a necessity for any business aiming to thrive and endure.
Creative Zone Tax & Accounting
We believe in ethical business practices; therefore, we always recommend that our clients follow the same. If you are struggling with any of your business processes and need consultation, contact us for our in-house experts’ assistance. If you are unsure about anything, contact us today to get the best guidance.