Definition of Business Ethics:
Business ethics is about knowing what is acceptable and unacceptable at the workplace. This can be about the product and service you offer, stock trading, your company’s stand on social issues, workplace issues and so on. Businesses try to abide by the ethics, not just because it keeps legal issues at bay, but also because it can boost their public image. It helps in inculcating trust amongst customers and investors.
Business ethics covers a range of topics, and companies usually have a basic guideline on which they tread, but the law has the biggest influence on how businesses abide by these ethics. There are laws on bribery, minimum wage, environmental regulations that guide companies and let them know how it should be handled.
Importance of Business Ethics:
- Business ethics ensure that companies act according to the law and are not violating it. It keeps a check on whether there are any crimes against employees, customers, investors and so on.
- It helps build trusting and lasting relationships with the consumers. Consumers always tend to fall back on the business they trust over its competitors.
- It can help you build an image in the market, particularly when you try to highlight your take on a social issue.
- It makes the business more attractive to investors and shareholders, since compliance to business ethics is testimony to the success of the business.
- It can help gain the confidence of your existing employees and future employees. It builds an attractive employer brand. People like to work with businesses who abide by their ethics. This can significantly reduce recruitment costs and improve employee retention.
Examples of Business Ethics
It is the responsibility of the business to be honest with their consumers. In that quest, any attempt that is shady or unethical is unacceptable.
Example 1: During the time of COVID-19, a lot of food supplements added the terms ‘Immunity booster’ and ‘COVID resistance’ as a part of their marketing campaigns. While in reality, their product might not do what it claims.
Example 2: Similarly, a famous cell phone provider had to recall their mobile phones as their phones exploded during charging, mainly because they had to prioritize the safety of their customers over the profit margins. Customers could swap their phone with a new safe model.
How to follow business ethics at your workplace?
- Incentive Bonuses: include signing bonuses, referrals, and retention bonus.
Signing bonuses are usually monetary in nature given to talented candidates for making them accept the offer. This is to lure and retain them to your company, especially when your competitors are pursuing them too.
Referral bonuses are given to employees for referring candidates, who are ultimately hired by the company. This can be awarded to employees after the hired person performs well in their assessment period and is made a permanent employee. This is more of a thank-you to employees for referring good candidates.
Retention bonuses are given as a form of gratitude to employees for their service. It is a way to tell them that their service is appreciated.
- Performance Bonuses: This is offered as a reward for their impressive performance. It can be offered to a particular team, department, or individuals. It can be offered in cash, stock options, holidays, awards, gift cards etc. Sometimes it is offered to employees who achieve certain goals, sales targets or longevity milestones.
- Bonus shares: Shareholders would also receive bonuses in the form of dividends from the company profits. This can be cash dividends or bonus shares to shareholders.
- Bonus in lieu of pay: Many times, companies replace raises with bonus. This has been a cause of employee unhappiness at work as employers tend to reduce their fixed cost by withholding bonus during recession periods.