The Importance of Ethics in Business
We hear the word ‘ethics’ thrown around casually in various conversations. We also read articles in the daily news about how a particular company was reprimanded because it did not follow ethical guidelines. To comprehend the importance of ethics in not only business but also our day to day life, we need to understand its meaning. The word ‘ethics’ is derived from the word ‘ethikos’ which is in turn derived from the word ‘ethos’ which means ‘custom’ or ‘character’.
The internet defines ethics or moral philosophy as a branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong conduct. Ethics seeks to resolve questions of human morality by defining concepts such as good and evil, right and wrong, virtue and vice, justice and crime. To put it in simple words, ethics is a code of conduct which governs society. It is the ideology which helps us determine what is wrong and what is right.
In business, the knowledge of ethics is very important. The biggest challenge of any company is bringing in new investors or retaining the previous ones. No investor wants to invest his capital into a company which is said to perform poorly, ethically. It is like a ticking time bomb. The adage ‘No publicity is bad publicity’ was proven incorrect during the Volkswagen swindle. Volkswagen had fiddled with the engines of the cars manufactured by them in such a way that they passed the nitrous oxide test that all the vehicles are required to pass before they can run on the roads. When the cars were tested again after some time, it was evident that they were releasing 40 times more nitrous oxide than they were supposed to. In the midst of this fiasco, Volkswagen lost a lot of investors and the price of their shares fell drastically.
Now, it is of pertinence to note that different companies have to follow different ethical guidelines. The question that arises is that ethics is a code of conduct and uniformity is one of its important characteristics, then how can one claim that different companies have to follow different ethical guidelines. The answer to this is rather simple, different companies are manufacturers of different product and hence have a different working pattern. For instance, a company that mainly deals with the manufacturing of energy will be keenly watched by the authorities with regard to their emissions, their carbon footprint, and their waste disposal systems. Whereas, a company like Google or Facebook that performs most of its functions on the internet will be monitored on how they protect the privacy of its users. Thus the rules of ethics will differ from company to company even if the foundation of these rules remains the same.
Studies have indicated that companies that are ethically sound usually have employees who are mentally healthy. Honesty and morality are human wants and people look to satisfy them. When they are involved in fishy business at work, they often face stress, anxiety and other mental health issues. Further, the credibility of companies that are ethically sound, is rather high. They are easily trusted by not only new employees but also stakeholders.
It is said that decisions in an organization are often driven by the values of that organization. The destiny of any organization is the sum total of all its good and bad decisions. Therefore, if your ethics are strong, there is a good chance that you will find success.
Writer at Digipundit
Mrunmayi Gaikwad, soon to be a wielder of the scales of justice, harbors a twin passion for law and for poetry. Writing is more than just a hobby for her – it is a release. Mrunmayi is an avid reader and hopes to have her own personal library someday. Her family and the city of Mumbai are two pillars of her life.