Like finance and marketing, ethics has become a vital business function. But why? In this blog, we shall explore the main reasons why business ethics is important for companies, as well as for budding business professionals.
What Is Business Ethics?
Law partially defines conduct, but “legal” and “ethical” are not necessarily identical. Corporations establish business ethics to promote integrity among their employees and gain trust from key stakeholders, such as investors and consumers. While corporate ethics programs have become common, the quality varies. According to the 2018 Global Business Ethics Survey (GBES), only one in four U.S. workers think their company has a “well-implemented” ethics program.
1. Business ethics is a necessary skill.
Almost every company now has a business ethics program. In part, that’s because technology and data communication have made it easier to identify and publicize ethical missteps. In one survey of accountants, for instance, 55 percent said they believe the importance of business ethics will continue to grow in the next three years. In addition to establishing formal programs, companies are creating ethical workplaces by hiring the right talent. “High integrity and honesty” is the second-most important skill for business leaders, according to a recent survey.
2. Business ethics drives employee behavior.
According to the 2018 Global Business Ethics Survey, employees are more likely to use ethical reasoning when their company clearly demonstrates why business ethics is important. Ninety-nine percent of U.S. employees who experience a strong ethics culture said they are prepared to handle ethical issues.
The first step in building this kind of ethical culture is to establish an ethics program. According to the U.S. Department of Commerce, a comprehensive ethics program should cover all of the business functions. That includes operations, human resources, and marketing, to name a few. The research company Gartner advises companies to integrate their ethics program with business operations.
Business professionals currently face some of the world’s most significant problems. Complex dilemmas like global climate change, safety, and security require critical thinking and ethical reasoning. That’s why we equip students with these skills. Through a cutting-edge, interactive curriculum, we prepare students to meet and advocate for the behavioral expectations of an ethical workplace. Our students investigate the moral, legal, and social factors of decision-making and cultivate an ethical framework for business decisions in one of four concentration areas. We emphasize ethics throughout our online MBA program, preparing students to promote an exceptional culture of ethics wherever they choose to work.
3. Business ethics benefit the bottom line.
Another reason why business ethics is important is that it can improve profitability. Honorees on this year’s list of the World’s Most Ethical Companies outperformed the Large Cap Index by 10.5 percent over three years. A well-implemented ethics program can also reduce losses. Twenty-two percent of cases examined in the 2018 Global Study on Occupational Fraud and Abuse cost the victim organization $1 million or more. Companies that practice questionable ethics can also experience a decrease in available prices and severed business partnerships, which can affect profitability. Additionally, business ethics is linked to customer loyalty. Over half of U.S. consumers said they no longer buy from companies they perceive as unethical.