Understanding morality and corporate ethics
Most often, we are all in a conscious or unconscious way, with an ethical or moral background. For most people, this background is cultivated during the early developmental stages of life. We often ‘inherit’ this moral framework from the point of views and beliefs of our parents, our religious dominations or schools, from friends and even the books we read that helped in our upbringing. These moral values do not just disappear as we start working or managing companies. Most often, this moral framework has a crucial work in controlling and determining the manner in which an organization is managed. Business ethics on the other hand, focuses on the application of a moral framework to the way an organization performs its business. An ethical perspective can define and shape the operation of a business-from marketing and sales policies to human resource policies. Ethical business can be divided into 2 parts; the normative and descriptive parts. The normative element of business ethics deals with trying to understand how the behavior displayed by you and your employees relates to social development and cultural affairs. For instance, if you tend to spend very little money, people start attributing you to being raised by “misers”. Understanding how your personal values and beliefs affect the choices you make as a sole proprietor, is the central piece of normative ethics. Descriptive business ethics on the other hand, is related to how much “good practices” you incorporate into your business policies and procedures. For instance, you clients or employees will respond positively if you adhere to “public holidays” and other religious traditions. This can be a plus to your company if decide to incorporate these into your policies making sure to respect the different values and beliefs of your customers and employees.
What you should understand before integrating business ethics
Before you embrace and adopt ethical values into your business, you must be able to respect and see the good in the view points of both your customers, employees as well as the general public. Before you think about incorporating any ethical framework into your business, you must ask yourself certain questions: Will this principle eventually help me to make more profit or to increase my bottom line? Will this principle help me connect better with my employees or customers? What do I stand to lose if I do not incorporate this principle? If your response to any of these questions is “no”, then you may have a good and tangible reason not to adopt the ethical principle. The most important element here is respect-you must understand that your employees and customers come from diverse cultural, social and economic backgrounds and so before you integrate any ethical principle you must try to balance it with the sense of respect you have towards your employees, customers and the general public.
Corporate social responsibility and corporate ethics applies in both group and individual capacities. It should be integrated into daily decisions and actions, especially those that have a direct effect on other people or the environment. In group capacity, which is relatively larger, a code of ethics and corporate social responsibility is utilized within the group as well as during interactions with an individual or another group.
Ethical businesses have designed a system of corporate social responsibility that is suited to their company environment. Maintaining corporate social responsibility within the company means that the employees and the environment are of equal value to the company’s economics. Maintaining corporate social responsibility within a company also ensures the integrity of society and the environment are safeguarded.
Usually, the ethical consequences associated with a particular action or decision is overlooked because of material benefits. This is commonly seen in companies that try to boycott environmental regulations. When such a case arises, government intervention usually follows. Unfortunately, most American companies do not practice corporate ethics. Out of U.S boundaries the enforcement of corporate social responsibility is difficult.
Ethics and corporate social responsibility
Social corporate responsibility is an ethical concept, which compels companies and individuals to fulfill their civic duty; the activities or actions of the company or individual must benefit the general public as well as the society. For instance, a mining company operating in a remote village can decide to construct roads and schools as well as provide jobs for the local indigenes. This ensures that there must be a balance between societal wellbeing and the environment and economic growth. Social corporate responsibility can only be accomplished if this balance is maintained. The theory of social responsibility is established on an ethical disposition, in which actions and decisions must first be ethically approved before proceeding. If the decision or action has adverse effects on the environment or society then it would be regarded as being as social irresponsibility.
The very essence of corporate ethics is moral judgments with respect to what is right and what is wrong. In the corporate world, companies have the responsibility to form and decide upon what ethical values controls decisions made by any person in the ethical business. It is indeed easier to demonstrate strong and decent moral values between individuals but it is easier to forget the impact a very large soulless corporation can have on the world. In fact, Business Ethics and Corporate Social Responsibility are all about assuming full responsibility of any corporate decision.
Moral values that are inherited from society create a difference between right and wrong. This ensures that social fairness is believed by most people to be in the “right”, but most often, this ‘fairness’ is absent. Every person shoulders the responsibility to act in manner that is not only profitable to the individual, but also to the society.
Nonetheless, there are several ethical principles and values that are essential for businesses to integrate. Your business can suffer if you fail to apply these principles. Some of these ethical principles include; an engagement to avoid fraud and misrepresentation in your activities, to managing finances in a responsible manner, to treat customers and employees with dignity and respect, and to give back to the community in which you are situated. By investing in school groups or community-service projects or local nonprofit organizations, small businesses can increase their brand recognition in the community and if done the right way, will bring in new clients to the business. You and the community benefit from each other- You build a good reputation in the community and you simultaneously market your products and services to them. Thus, embarking capitalizing on business ethics can be a productive venture for sole proprietors who are willing to take a moment to integrate ethical principles with patience and care.
Many factors play a part in the success of a company that is above the scope of financial statements alone. Management philosophy, organizational culture and ethics in business each have an effect on how well a business performs in the long run. Irrespective of the size, level of profitability of an organization or industry, business ethics are one of the most important elements of the company’s success in the long run.
Management and employee ethics
It is the responsibility of management to set the pace on the day-to-day operation of the company. When the current management philosophy is based on ethical behavior and practices, leaders within the organization can direct employees by example and guide them on making decisions which are egocentric and only beneficial to them, but also to embrace a more altruistic approach which benefits the entire organization. Constructing on a foundation of ethical behaviour can help create long lasting positive effects for a business, including the capacity to attract and retain highly skilled workers and building and maintaining a positive reputation within the community and society as a whole. When leaders uphold ethical values while running the business, stronger bonds are built between managers while enhancing stability in the company.
Employees will obviously follow the footsteps of managers who run the business in an ethical manner. With business ethics as a guiding principle, employees make better decisions in less time -this improves overall employee morale and increases productivity. When workers complete work in a manner that is based on integrity and honesty, the entire organization benefits. Employees who work for a company that requires a high level of business ethics in all aspects of operations are more likely to carry out their job duties at a higher standard and are also more prone to stay loyal to that organization.
The benefits of corporate social responsibility:
The benefits of corporate social responsibility goes far beyond employee morale and loyalty or the strength of the bond between a management team. Same as business initiatives, the ethical operation of a business is directly related to its gain in both the short and long run. The reputation of a business from other businesses, the surrounding community and individual investors is capital in assessing whether a company is a worthwhile investment. When a company's reputation is less than a certain threshold based on the view that it does not operate ethically, investors are less prone to support its operations or buy shares. Persistent ethical behavior brings increasingly positive public image, and there are few other factors as important to current shareholders and potential investors. To preserve a positive image, companies must be committed to operating on an ethical basis as it relates to respect to the surrounding environment, employee treatment and fair market practices in with respect to consumer treatment and price.
Customer engagement – It is worthless doing corporate social responsibility if no one knows about it. Walmart, for the past few years, has positioned itself as a leader on environmental endeavors. Walmart ran an ad campaign in 2008, designed to raise environmental awareness and the choices of products product consumers could make. Using corporate social responsibility can help you get involved with your customers in different ways. Since your message will principally be about something beneficial, it can usually be an easier way to reach out to your clients. This tool has often been used for business-to-business communication.
Working as an ethical business has many advantages the least of which is the capacity to attract and keep customer, investors and employees. Investors prefer to work with a company which has stated her morals and pledged to work in a responsible and ethical manner and also uses money in a way that aligns with their own moral standing.
Brand differentiation – Historically, brand differentiation was one of the key reasons companies embraced corporate social responsibility. Companies such as Timberland were able to locate their voice and integrate the company’s values into their business structure. Nonetheless, as corporate social responsibility to distinguish your brand is getting harder to do because it has become more common. For instance, the “Cola Wars” is among the longest running rivalries in business. Pepsi and Coke are constantly seeking to grab as much market share as they can from one another. Yet they are both using similar, though slightly different, approaches to corporate social responsibility. Both Coke and Pepsi are following strategies to utilize no water. Both companies also provide water bottles made from sustainable packaging. In the end, even though neither business is necessarily going to see strong differentiation advantages, diminishing returns on brand differentiation can be considered as a sign that corporate social responsibility is effective and is not just a fad.
A business which decides to work within its own ethical principles is also less at risk of being charged for irresponsible behavior, and less prone to find themselves infringing one of the multitude of government laws and legislations– for instance, laws concerning environmental practice or policies regulating payments to corrupt governments. The government can fine the whole company, and individual employees if the responsibility for an infraction falls on their shoulders.
One of the most important assets of a company is her reputation. Reputation is also very hard to rebuild in case it is lost. Keeping the promises it has made is capital to maintaining that reputation.