1. Business Ethics
Assignment Two
2018

2. Kardan University
Page 1 of 4
Importance of Business ethics in an
organization
Businessethicscanbe denotedaswrittenorunwrittencodesof morals,values,andprinciples
That governsactionsanddecisions inacompany.In the businessworld,standardsare setfor
determininggoodandbadbehavioranddecision-making.Businessethicsisabroad topic,covering
everythingfromcorporate governancetocorporate social responsibility.
Businessethicsisasubjective term.However,itiseasytoidentifyunethical businesspracticesinan
organization,suchasemployingchildlabor,takingbribes,orillegallyusingcopyrightedmaterials.
Whenethical guidelinesare followed,trustisdevelopedbetweenthe employeesandmanagement,as
well asthe publicandthe corporation.Thus,businessethicsleadstoamore productive workplace.
Importance of Business Ethics
Everycompanyshouldhave theirownmoral principlesandguidelines.Followingbusinessethicshas
more benefitsthanyouthink.Itwill helpyoutokeepandattract employees,customers,andinvestors.
For example,considerthatyouare an “energydrink”manufacturingcompanyandyou’ve proclaimedon
the labelsandadvertisementsthatyoudon’taddanypreservativestothe drink,then youshouldadhere
to the claimsyou’ve made.If youdisobeyyourclaimsandsell the productbyaddingpreservatives,then
it isconsideredasunethical businesspractice.Itwill deteriorate yourbrandandeventually,youwilllose
trust fromthe customers.Italso damagesthe reputationandkeepawaythe stakeholders.Therefore,
followingbusinessethicsisveryimportant.
Reputationisone of the mostimportantassetsof a companyandit isalso one of the most difficulttasks
to rebuildonce itislost.You will startbuildingagoodreputationwithconsistentethical behavior.
Potential Investorsandshareholdersare likelytogetattractedtothe companieswhichadhere totheir
moral guidelinesandpromisesthey’ve made;thiskeepsthe company’sshare price high.
To retaina positive reputationandimage,businessesmustbe committedtooperatingonanethical
foundationasitrelatestorespectingthe surroundingenvironment,treatmentof employees,andgood
marketpracticesintermsof customertreatmentandprice.

3. Kardan University
Page 2 of 4
Employeesalsofeel comfortable andwantstostayin the businessforthe longtermwhenworkingwith
a companywhichhas strongbusinessethics.Thisincreasesthe productivityandreducesthe labor
turnover.Theyare alsoboundto followthe footstepsof the organization.Whenanemployeedoeshis
workwithintegrityandhonesty,andbyfollowingthe guidelines,itwilleventuallybenefitthe company.
The Role of Ethics in 21st Century
Organizations
Ethicshave become an organizational priority.Inthe 21st century,ethicsisneitheraluxurynoran
option.There isa growingimpatiencewithinsocietywithselfishandirresponsible actionsthat
impoverishsome,while enrichingthe crafty.
HewlettPackarddemonstrateditscommitmenttoethical integrityunderthe leadershipof CarlyFiorina.
The formerCEO of Hewlett-Packardsaidof hersix-yeartenure,“Some of the mostimportantchoicesI
evermade were firingpeople whoweren'tconductingthemselveswithintegrity”(Weil,2007).In
contrast,R. J. ReynoldsTobaccoCompanywascaught coveringupknowledgeaboutthe addictivenessof
nicotine.Toleratingbadbehaviortoimprove the bottomlineandjustifyingitas“not reallyillegal”
createsa climate thatultimatelybecomescorrosive.
In additiontosocial responsibility,there are othercompellingmotivationsfor21st centuryorganizations
to make ethical valuesapriority.
Ethics as a Priority
More than simplyalegal ormoral responsibility,ethicsneedto become anorganizational priority.
Organizational leadershave alotontheirmindsintoday’shighlycompetitiveworld.Theymustkeep
abreastof rapidtechnological advancements,competitor’sproductsandservices,the effectsof
globalization,andopportunitiesandthreatswithintheirownindustry,toname the mostobvious.
Leadersmustalsokeepa constanteye on the mission,vision,values,culture,strategyandgoalsof their
ownorganizations.Inthe midstof all of thiscomplexity,it’snoteasyto findroomonthe organizational
plate foranothermajor priority.However,tosucceedinthe 21st century,organizationswill have to
figure outhowto make ethicsa priority.
Prioritiesare those fewthingsthatare deemedmostimportant.Manythingsare important,some more
and some lessimportant,butonlyafewthingsare mostimportant.Ethical valuesneedtoachieve
recognitionasamongthe elite,mostimportantsuccessfactorsinmodernorganizations.
As an organizational priority,ethicswill notonlyaffectdecision-makingbutalso,andultimately,
institutional culture.Toachieve thisideal,there mustbe analignmentprocessthatintegratesbusiness
ethicswithmission,vision,values,strategiesandgoals.Ethical valuesare essentiallysocial innature,
therefore,thisalignmentprocesswill be concernedwithrelationshipsanddefiningrelational
expectations.The goal of an ethical organizational culture isthe greatergoodof all.Internal
relationshipsbetweenleadersandfollowers,aswell asexternal relationshipswithclients,customers,

4. Kardan University
Page 3 of 4
vendorsandthe communityare all prized.Asa result,people are treatedwell consistentlyandan
ethical culture emerges.
Values-Based Culture
In the 21st century,ethicsisneitheraluxury noran option.More than competence,experience,
intelligence anddrive,peopleatall levelsof anorganizationneedethical values.AccordingtoKidder
(2001), “The principle taskof thisdecade isthe creationandnurturingof a values-basedculture.”Due to
the extensiveamountof time people spendatwork,muchof that nurturingmusttake place inthe
businessenvironment.
RushworthM. Kidderisthe founderandpresidentof the InstituteforGlobal Ethics,anorganization
whose researchhasidentifiedfourkeyfactorsincreatinga values-basedculture.These factorsinclude:
 Shared core values
Accordingto Kidder(2001), there are five core valuesfoundinsome formineveryculture
worldwide.Theyare honesty,respect,responsibility,fairnessandcompassion.A values-based
culture will make these core valuesthe drivingforce indecision-making.
 Common language
Employeesneedalanguage of ethicsthatallowsthemtocommunicate readilyandcomfortably
aboutissuesthatare typicallysensitive anddifficulttodiscuss.Effective ethicstrainingprograms
provide the commonlanguage needed.
 Commitment at the top
Ethicstrainingismeaninglesswithouttop-level executiveswhowalkthe talk.Whenleaders
consistentlyrewardthosewhochoose todowhat isright,it helpstocreate an ethical culture
more than anythingelse could.
 Moral courage
Kidder(2001) describesmoral courage as“the qualityof mindandspiritthatenablesone toface
up to ethical dilemmasandmoral wrongdoingsfirmlyandconfidently,withoutflinchingor
retreating.”
Ethics,lifestyle andculture mustbecome sointerwoventhattheycannotbe separated.Together,they
constitute howpeople relate toone anotherinthe home,the workplace andeverypartof society.
Create Ethical Culture in Organization
Define company ethics
Everycompanyhas spokenandunspokenrulesabouthow toact withinacompany environment.Give
lucidexplanationsaboutwhatisokayandwhat isnot okay.Thisincludesbehaviortowardsother
employees,customers,andthe public.Sometimestheseguidelinesare differentfordifferent
companies.
Ensure that you have necessary tools

5. Kardan University
Page 4 of 4
It isthe dutyof the Humanresource departmenttoensure thatthe employeesare equippedwith
adequate toolswhich enablethemtobehave ethicallyinthe organization.
Strengthen the Behavior You Want
Strengtheningthe behaviorinanemployee isaneasytask.Offeringawardsandrecognitionisone of the
bestwaysto encourage the ethical behavioryouwantto reinforce inanemployee.Tocreate a strong
ethical culture inanorganization,there hastobe a constantcommunicationaboutethical valuesamong
the members.Youcan alsospecificallyexplainaboutthe behaviorsyoudonotwantto inculcate
Focus on building skills
Create workshopswhichimprovethe ethical culture inthe company.Itisthe dutyof the organizationto
buildanddevelopethical skillsamongthe membersratherthanjuststatingthe behaviorswhichyou
encourage andbehaviorswhichyoudonot.Thisshouldalsodevelopethical behaviorandproblem-
solvingskillsinanemployee.