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What is business ethics and why is it important?


Business ethics are crucial for any company to have, but not every company knows why this is. Here are five reasons why businesses should practice good business ethics, even if it’s something they might not want to do at first glance.

1) Ethical Behavior Leads to Trust

Ethical behavior helps companies establish trust with their customers and stakeholders. Customers might be more willing to buy from a company if they feel like the company stands for something bigger than making money. Companies that provide exemplary customer service help improve their reputation and have higher retention rates because of this better treatment. Employees are more likely to stay with a company if they feel respected, safe, and encouraged to succeed in the workplace. 

Businesses need an established set of ethics if they want to create sustainable success over time. Each type of ethical business decision provides different benefits, so it's important to assess which route is best for your company and make sure you stick with it! Businesses don't always need to follow strict guidelines when deciding on ethical practices; they just need to do what makes sense for them and their company culture. It is still important, however, to remember the five REASONS why having clear guidelines can benefit a company: Respectability, Reliability, Reputation, Safety, and Encouragement. What kind of ethical decisions does your company make? Does your company have a code of conduct? Do you follow those standards? What about outside the work place-are there any actions you take that could affect how other people view your business? We all need to think about our actions before we take them, so let's keep these things in mind as we go through our day.

2) Ethical Behavior Leads to Improved Reputation

Business ethics are often a determining factor when it comes to a successful business. REASONS:

-Ensuring consistency of ethical behavior is one way of attracting and retaining customers. 

-A high level of ethical behavior will also ensure that suppliers and employees maintain good standing with your company as well. -Some people may not want to work for or purchase products from a company they believe to be unethical. TYPES: 

There are three main types of business ethics, corporate ethics, personal integrity, and community responsibility. They all have different components but are related in the sense that all three deal with how a person conducts him or herself in their professional and private life. Corporate ethics tend to focus on how an individual interacts with coworkers, management, clients, and competitors. Personal integrity focuses on honesty and truthfulness in dealing with co-workers and other professionals while community responsibility deals more with having a positive impact on the environment. One thing that unites these three types of business ethics is the importance placed on behaving ethically, treating others fairly, and being honest. Another commonality between them is that they are all important factors in creating successful companies. By treating everyone you interact with fairly and honestly, you are more likely to create trusting relationships and retain customers. By exhibiting high levels of ethical behavior within your company, you can better guarantee that employees and suppliers will continue to have a good relationship with you. Furthermore, acting ethically can help establish your company's reputation as trustworthy by showing potential customers what kind of product they can expect if they do decide to buy from you.

3) Ethical Behavior Creates Better Relationships

Re-evaluate your business practices and make a shift. Does it align with your personal values? What about the people in your company, or for that matter, those outside of your company? If you want to build a reputation that has integrity, then it starts with being ethical on every level. It's not about simply doing what is legally correct, but being honest and forthright with every decision you make. You can't create sustainable relationships if you are dishonest and lack integrity. Ethical Behavior Leads To Better Financial Performance: Integrity is one of the top qualities that investors look for when deciding which companies they will invest in. Investors will be more inclined to trust your organization if they see that there are strong moral principles at work. 

Cultivating an ethical culture goes hand-in-hand with creating better financial performance because good ethics leads to fewer legal problems which result in less spending on lawyers, insurance premiums, etc., and ultimately better profitability. Ethical Behavior Results In Increased Staff Morale: You might find yourself surprised by how much better employees feel when they know their employer takes pride in following ethical standards. Employees are happier when they know that their voice is heard and that they have access to resources such as flexible scheduling options. Employees who work for organizations with strong morals tend to stay longer, which also increases staff morale. They Feel Like They're Part Of Something Good: 

Ethics give employees a sense of purpose at work and connect them emotionally to the organization they belong to. When staff members understand why their company does things a certain way, it helps them take ownership of their own behavior and make better decisions throughout the day. They Help Improve The Quality Of Life Outside Of Work: Employees who feel like they belong in a healthy environment both inside and outside of work will perform better than those who don't enjoy these benefits from working somewhere with solid morals.

4) Lack of Trust Affects Decision Making

Corporations are required to establish trust with the public in order to thrive. It is especially important to maintain the trust of loyal consumers and those who might invest in the company's future. But when the most crucial components that make up an organization - like integrity, transparency, accountability, and honesty - are lacking or neglected, there will inevitably be a loss of confidence in their leadership. Consumers become increasingly unwilling to interact with companies as well as feel comfortable giving them more and more personal information for fear of it being used against them later on. In other words, ethics will go a long way in helping build your brand into one that is meaningful and respectable- not just another logo lost in today's marketplace. On the flip side, violating these norms can result in devastating consequences such as major lawsuits and large boycotts. If you want to avoid hurting your bottom line, then implementing ethical standards should be one of your top priorities. Without strong principles to guide you, the temptation to cut corners will often get the best of you. So rather than dealing with any potential fallout from missteps and mistakes down the road, consider getting ahead of things by taking proactive steps now. Just because unethical business practices may have been done before doesn't mean they have to continue happening now. You're entitled to greater control over how your company is run so don't let any time pass without thinking about what kind of ethical policy would work best for your situation! With this post, we wanted to share some tips and tricks that could help lead your team towards success while maintaining high moral standards.

5) Lead with Values, Not Intellect

Companies are driven by values, not intellect. They make decisions based on what they believe in as a company and as individuals. Creating ethical business practices can be difficult because it requires you to sometimes go against the social norm or what others think is right. But being ethical also has its benefits, such as increased employee morale and developing trust with your clients/customers. It’s important for companies to lead with their values, rather than follow other people’s views on ethics. If you are true to yourself and the beliefs of your company, then success will follow! One example is Southwest Airlines which strives to create an atmosphere where each individual feels valued, respected, and appreciated. It values honesty in all dealings, demonstrates respect for its customers through a commitment to safety, and doesn’t tolerate discrimination. The result? Over 44 years later, Southwest Airlines still operates at near breakeven margins but has grown revenue per passenger mile by more than 600% over that time period compared to other airlines whose margin growth was only 16%. As John Donahue, President and CEO of Southwest said We’ve been able to keep fares lower than our competitors because we fly less expensive aircraft, don’t charge baggage fees, and offer low-cost fares across our entire network. We take pride in delivering great value without compromise when it comes to quality service. There are so many different ways that businesses can achieve this goal; there isn't one specific way. Being a good person always makes you feel better about yourself even if nobody else knows!


Business ethics are an important part of running a company, not only in America but globally. They ensure that organizations operate with honesty and transparency. These practices create trust between the organization and its stakeholders. It also creates confidence in clients and customers who invest their time or money into the product or service offered by the organization. Finally, it establishes ethical leadership to guide employees to perform ethically in the workplace as well as outside of work hours because they know that their actions will have consequences.