Written by Arnav Mathur
Business ethics are social and moral practices encouraged and used by individual organizations that display the ideas, beliefs, and value system it upholds. A business may follow a wide range of ethical practices, from providing fair wages to the employees, maintaining safety standards in production, creating an inclusive and diverse work environment, maintaining good product quality, and their impact on the external environment. Trust is the currency of any business, and maintaining fair and ethical practices appreciates the value of that trust. Following ethical and socially responsible practices provides a lucrative offer to all the stakeholders to attach themselves to a sustainable business organization; no candidate would be interested in joining an organization that does not provide respect and value to their opinion. Business ethics hold more ground in an increasingly socially sensitive environment than ever.
Instead of looking at what happens if an organization follows ethical practices, we may change our perspective and understand what happens if they do not. Let us look at the example of a popular baby powder manufacturing organization, Johnson & Johnson. The lack of transparency to the concerned stakeholders regarding the cancer-causing asbestos in its products resulted in significant losses for the firm and its goodwill. Following better ethical practices avoids any possibilities of scandals and scams which an organization might have otherwise.
Now that it is clear why ethics are essential in an organization, some challenges an organization faces while inculcating ethical practices in its routine are the bureaucratic setups and a highly competitive business environment. The traditional practices an organization follows over time restrict individuals from changing and following more ethical and morally responsible practices. The current practices can continue only because things have always been like this. Also, the business environment is generally very competitive, and the sole motive of any organization is to maximize their profits; some may, as a result, find it reasonable to bribe so that the work is completed faster and at a rate adaptable to the changing external environment.
To become more ethical and socially responsible, organizations need to change their value and belief system, led by the organization's members. The organization functions as a moral institute where the employees, who spend most of their time working for the organization, develop their personality and character. There should be education imparted to the employees through a more practical and implementable learning mode, such as the real-life case-based method. The organizations also need to establish a stringent code of conduct that guides the employees on what behavior is expected from them and what values the organization upholds. Building an ethical and socially responsible business will go a long way in building a better business ecosystem and a more developed society.