Definition: Business ethics, connotes the form of applied ethics, which studies ethical principles, morals and problems that take place in the business environment. It is nothing but the integration of day to day morals and ethical norms to business and applies to all types of business.
In finer terms, it implies the good or bad, right or wrong behaviour, in pursuing business, determined on the basis of expected behaviour approved by the society. E.g. Charging reasonable prices from customers, just and fair treatment to workers, earning a legitimate profit, providing a good environment to employees, etc.
Salient Features of Business Ethics
- It is the ethical standards which regulate business persons in performing business activities.
- It is both science and art.
- It relies on theological principles like good behaviour, sincerity, welfare of society and so on.
- It is universally applicable.
- It is based on social customs existing in the environment.
- It is dynamic in nature and constantly test the norms and moral principles.
Business ethics is concerned with the attitude of the businessperson in conducting business, by inculcating morality in his business. It propagates welfare of society, increases profitability, improves productivity and foster business relationship.
Need for Business Ethics
- Stop business malpractices
- Safeguarding consumer’s rights
- Gain confidence of customers
- Survival and growth of business
- Creating goodwill
- Healthy competition
- Consumer satisfaction.
- Building strong relationship with customers and clients
These are the set of principles and practices; that determine acceptable behaviour in the business organisation. It guides the managers and other executives in taking everyday business decisions. It stresses on the impact of the business decision on the stakeholders, such as employees, consumers, government, society, investors, shareholders and so on.
Elements of Business Ethics
- Formal Code of Conduct: Those organisations which undertake to inculcate ethical conduct in the business organisation, establish and implement the code of conduct, for their employees and members. These codes are the statement of organisational values.
- Ethics committee: There are many organisations, which create the ethics committee, which is especially dedicated to maintaining ethics in the organisation. Such committees raise ethical concerns, develops and update the code of conduct, settle down ethical dilemmas, in the organisations.
- Ethical Communication: Another major component is the development of an effective ethical communication system, which has a great role to play in making the ethics programme successful. It tends to educate employees regarding the ethical standards and norms of the organisation.
- Ethics office: The next step, is the setting up an ethics office, to communicate and enact policies among various members of the organisation.
- Disciplinary system: A disciplinary system should be formed, so as to handle the ethical contravention quickly and severely.
- Ethics training programme: Another important aspect, is the ethics training programme, in which the employees of the organisation undergo training, and learn ethical norms of the company.
- Monitoring: An ethical programme is considered successful and fruitful only when an effective monitoring committee, is created which looks after various processes and controls deviations.
The life of the business greatly depends on the ethics established and followed by the businessman and unethical practices pose a threat to the survival and growth of the business. Being ethical in business creates a positive reputation, that opens various opportunities for profit. Further, the techniques adopted to pursue business goals should also be pure, i.e. lawful, because the objective of business cannot be attained if it employs unfair means.