Importance of Business Ethics

Presented By : Naveed Ahmed M.Arslan Hafiz Rohail

Introduction
Ethics concern an individual's moral judgment about right and wrong. Decisions taken within an organization may be made by individuals or groups, but whoever makes them will be influenced by the culture of the company. The decision to behave ethically is a moral one; employees must decide what they think is the right course of action. This may involve rejecting the route that would lead to the biggest short-term profit.

Introduction

Ethical behavior and corporate social responsibility can bring significant benefits to a business. For example, they may: Attract customers to the firm's products, thereby boosting sales and profits make employees want to stay with the business, reduce labor turnover and therefore increase productivity Attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees Attract investors and keep the company's share price high, thereby protecting the business from takeover. Unethical behavior or a lack of corporate social responsibility, by comparison, may damage a firm's reputation and make it less appealing to stakeholders. Profits could fall as a result.

Business Ethics
Business Ethics means conducting all aspects of business and dealing with all stakeholders in an ethical manner.

Foundations of Ethical Behavior

Treat others as you would be treated Respect Honesty Trust

Nature of business ethics

Business ethics has a five part structure: 1. 2. 3. 4. 5. The specification of moral judgment Moral judgment and the moral standard Justification of moral judgment Logical reasoning and moral judgment Moral judgment and moral responsibility

Organizational/Business Ethics
Why 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

Honestycommunication and behavior consistent with facts Disclosure of information Promises/commitments Laws and professional standards Representation of others like shareholders (applies to board members) 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, monopolistic practices)

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, and subordinates Respect the community you operate in by paying fair share of economic costs you create Respect others and future generations by treating the environment well

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 Ethical Culture

Ethical culture: Describes the component of corporate culture that captures the values and norms that an organization defines as appropriate conduct Creates shared values Goal is to: Minimize need for enforced compliance Maximize utilization of principles/ ethical reasoning

Ethics Contributes to Employee Commitment

Comes from employees who believe their future is tied to the organizations Are willing to make personal sacrifices for the organization

The more dedication on the part of the company, the greater the employee dedication Concerns include a safe work environment, competitive salaries and benefit packages, and fulfillment of contractual obligations

Ethics Contributes to Investor Loyalty

Companies perceived by their employees as having a high level of honesty and integrity are more profitable than companies with a low level of honesty and integrity Ethical climates in organizations provide platform for: Efficiency Productivity Profitability

Ethics Contributes to Customer Satisfaction

Consumers respond positively to socially concerned businesses Being good can be extremely profitable Customer satisfaction dictates business success A strong organizational ethical climate places customers interests first Research shows a strong relationship between ethical behavior and customer satisfaction

Concluding Remarks
An integrity approach to business can yield strengthened competitiveness: it facilitates the delivery of quality products in an honest, reliable way. This approach can enhance work life by making the workplace more fun and challenging. It can improve relationships with stakeholders and can instill a more positive mindset that fosters creativity and innovations among the stakeholders. The purpose of ethics is to enhance our lives and our relationships both inside and outside of the organization.

Thank You