Importance ofBusiness EthicsPresented By :Naveed Ahmed – M.Arslan – Hafiz Rohail
Introduction• Ethics concern an individuals moral judgment about right andwrong. Decisions taken within an organization may be made byindividuals or groups, but whoever makes them will be influenced bythe culture of the company. The decision to behave ethically is amoral one; employees must decide what they think is the rightcourse of action. This may involve rejecting the route that wouldlead to the biggest short-term profit.
IntroductionEthical behavior and corporate social responsibility can bringsignificant benefits to a business. For example, they may:• Attract customers to the firms products, thereby boosting sales andprofitsmake employees want to stay with the business, reduce laborturnover and therefore increase productivity• Attract more employees wanting to work for the business, reducerecruitment costs and enable the company to get the most talentedemployees• Attract investors and keep the companys share price high, therebyprotecting the business from takeover.Unethical behavior or a lack of corporate social responsibility, bycomparison, may damage a firms reputation and make it lessappealing to stakeholders. Profits could fall as a result.
Business Ethics• Business Ethics means conducting all aspects of business anddealing with all stakeholders in an ethical manner.
Foundations of Ethical BehaviorTreat others as you would betreated– Respect– Honesty– Trust
Nature of business ethicsBusiness ethics has a five part structure:1. The specification of moral judgment2. Moral judgment and the moral standard3. Justification of moral judgment4. Logical reasoning and moral judgment5. Moral judgment and moral responsibility
Organizational/Business EthicsWhy is it important ?• Ethics influence and contribute to:• Employee commitment.• Investor and customer loyalty and confidence.• Legal problems and penalties.• Customer satisfaction.• The ability to build relationships with stakeholders.• Cost control.• Performance, revenue, and profits.• Reputation and image.
Ethical Issues Relating to Business• Honesty—communication and behavior consistent with facts• Disclosure of information• Promises/commitments• Laws and professional standards• Representation of others like shareholders (applies to boardmembers)• Unfair competition• Refrain from bribes and excessive gifts (that sway judgment)• Avoid quid pro quo transaction• Comply with “anti-trust” laws (these relate to pricing, monopolisticpractices)
Ethical Issues Relating to Business• Just compensation• Respect intellectual property (product piracy)• Treat employees fairly• Respecting rights of others• Treat others with fairness and respect regardless of age, religion,ethnic group,• sex, economic status, etc., especially children, women, andsubordinates• Respect the community you operate in by paying fair share ofeconomic costs• you create• Respect others and future generations by treating the environmentwell
A Crisis in Business Ethics• Consumer trust of businesses is declining• No sector is exempt from ethical misconduct• Stakeholders determine what is ethical/unethical– Investors– Employees– Customers– Interest groups– Legal system– Community
Organizational and Global EthicalCultureEthical culture:Describes the component of corporate culture that captures thevalues and norms that an organization defines as appropriateconduct• Creates shared valuesGoal is to:• Minimize need for enforced compliance• Maximize utilization of principles/ ethical reasoning
Ethics Contributes to EmployeeCommitment• Comes from employees who believe their future is tied to theorganization’s• Are willing to make personal sacrifices for the organization– The more dedication on the part of the company, the greater theemployee dedication– Concerns include a safe work environment, competitive salariesand benefit packages, and fulfillment of contractual obligations
Ethics Contributes to Investor Loyalty• Companies perceived by their employees as having a high level ofhonesty and integrity are more profitable than companies with a lowlevel of honesty and integrity• Ethical climates in organizations provide platform for:– Efficiency– Productivity– Profitability
Ethics Contributes to CustomerSatisfaction• Consumers respond positively to socially concerned businesses– Being good can be extremely profitable• Customer satisfaction dictates business success• A strong organizational ethical climateplaces customers’ interests first• Research shows a strong relationship between ethical behavior andcustomer satisfaction
Concluding Remarks• An integrity approach to business can yield strengthenedcompetitiveness: it facilitates the delivery of quality products in anhonest, reliable way. This approach can enhance work life bymaking the workplace more fun and challenging. It can improverelationships with stakeholders and can instill a more positivemindset that fosters creativity and innovations among thestakeholders.• The purpose of ethics is to enhance our lives and our relationshipsboth inside and outside of the organization.