Ethical business practices increase the value of an organization.
Business Ethics and Its Benefits
Ethical business practices increase the value of an organization. A business that applies ethical business practices ultimately does so to support its stakeholders. Businesses that act ethically gain and develop successful employees. These businesses also develop a robust reputation with the public and investors by acting ethically, which increases sales, partnerships, and invested funds in their businesses.
Ethical Decision Making Versus Compliance
Compliance is when an organization follows laws or regulations to alleviate punishment from the government. Compliance forces an organization to behave a certain way to ensure they are not punished. Ethical acts are those that the business is not obligated to do, but they do so for the greater good of its employees, stakeholders, and public. Businesses can freely choose whether to act ethically, as the government does not require them to.
Which is More Important for Organizational Success?
A business must comply with government regulations to ensure they are not punished, which could dramatically reduce their available funds and capabilities. However, stakeholders and investors are influenced by ethics. These are the people that will directly influence the organization’s capabilities, funds, and overall value. It is essential to apply ethics so that all stakeholders and the public have a positive image of the business, enhancing the business’s ability to grow.
Positive Outcome Example
An example of an organization that acts ethically by applying social responsibility towards its employees is Costco. Costco pays its employees higher than average wages within the retail industry. Costco can obtain and retain quality employees by offering higher wages, as the employees are satisfied with their wages and the organization supporting them. These superior, satisfied employees provide superior customer support and service to Costco customers, which increases customer numbers and revenue (Moore, 2020).
References
Moore, B. D. (2020, August 22). 10 Great Examples of Ethical Decision Making In Business. Retrieved December 16, 2020, from https://www.greatworklife.com/ethical-decision-making-in-business-examples/
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