Company Ethics
Introduction
A person’s moral judgment on the wrong or right is the concern of ethics. A group of people or individuals can make decisions for an organization through the influence of the company’s culture. The company’s employees decide the course of the action, whether it is right or wrong, for the decision to achieve morality. The employees might reject the resolution, which can lead to short-term profit. The ethics of a company depend on the leadership of the company. Therefore ethical leadership results in the success of the business. Ethical leadership can result in creating an ethical culture, motivation, and enforcement of policies and points of view. Also, it influences the posture of ethics.
Importance of Ethics
Ethical leadership is crucial since it impacts the corporate culture directly and can motivate employees to commit and satisfaction. Also, the association between the valuation of the stock market and the commitment of the employees becomes positive. Besides, ethical leadership results in the creation of competitive advantage of the company and fosters a good relationship with the stakeholders.
Ethical practices of a company can help boost the sales since the products of the organization attract the customers. Secondly, the company may save on the cost of recruitment and employment since more and very talented individuals would want to work in the company. Thirdly, ethical practices help increase the firm; the employees will be willing to work in the business, thus reducing labor costs. Finally, the business will have maximum protection because its ethical practices attract more investors, making it more competitive.
Considering the integrity-based approach, ethical practices in a company provide for accountability and responsibility. This follows that the firm’s leader is responsible for the company’s moral culture, and the employees are held accountable for it. The employees are implementers of the decisions of the company. Stakeholders such as the board, the human resource, and chief officers are involved in ethical compliance. They should lead by example. In the integrity approach, the employees are empowered. Therefore, questionable or new ethical practices can be traced easily. Since business is dynamic, the leaders use a combination of integrity and compliance to achieve the company’s success.
According to the Cadbury report, the success of the Cadbury Schweppes is based on good corporate governance, which was primarily backed up with positive ethical behavior. Their stakeholders enjoy the well-managed blende of the departmental and the program of social responsibility. Cadbury ensures that all the employees understand the code of conduct expected from them in the statement of “our business principles.” Cadbury got a ranking of the most admired organizations in society and its responsibility in the environment. In the sector of food and drinks, it ranked the second position with an investment in the community of 3 of its UK profits that were pretax.
Tracking the adherence of the supplier to strict standards is vital as a business ethic. Criteria such as the use of environmental questionnaires allow the supplier to provide information on the carrying out audits or having environmental policies. In the case of Cadbury Schweppes, due diligence was ensured in the supply and distribution chain, by requesting the suppliers to fill out a questionnaire before engaging them. This helps ensure that the suppliers are apt in their practice and tackle any problem that may arise. Similarly to ethical leadership, and moral leader administers ethics at every stage of operation. It is essential to acquire the collaboration of the employee since it is a resource that is very important. The questionnaires create participation in the cultures of the organizations.
Communication in an ethical company is transparent. Also, reporting is involved. Transparency provides a friendly environment for frequent discussions of ethics. Regular reviews enable the company to discover a problem and its cause, thus fixing it as soon as possible. Reporting is the responsibility of both the employee and the leader to report to one another. Reporting ensures monitoring of the happenings of the company. The firm makes discoveries about whether the organization is ethical, and the ethics of the culture is satisfied.
Social responsibility is an essential component of a successful business. Socially acceptable practices create competitive advantage of the business and provide ready information concerning the positive and negatives of the products of the farm. With responsible practices, a company can build consumer loyalty, quality, and value for self-image. Also, the socially responsible activities of an organization differentiate and promote the companies and their products.
Finally, company ethics is crucial since it achieves the creation of higher levels and problem-solving skills. It is ethical to allow the diversity of personnel and human resources in a company—the more diverse the workforce, the more ideas and incorporation of proper ethics.
Effect of unethical company practices
Ethical decisions affect sustainability. Irresponsible or unethical practices such as atmospheric and land pollution may affect the durability of humanity. Unsuccessfulness of a business becomes real when it practices wrong decisions that are a threat to the culture. For instance, water pollution has become eminent in developing countries, recording more than 80% of untreated sewage discharge. In the world, Two million of raw sewage and other pollutants are drained into the waters daily. In 70 countries globally, 140 million people have been affected by the pollution of natural arsenic in drinking water. Miscarriages have resulted from increased use of nitrates and nitrites in groundwater aquifers. Besides, 80% of illnesses in developing countries have been associated with wanting conditions of sanitation and water. Primary schools are the most affected because more than half of the primary schools in the world cannot access clean water. Also, malnutrition of children under the age of five years has been associated with poor sanitation due to water-borne diseases. About 315 000 children are lost yearly due to diarrhea caused by water pollution. Unsafe water is the highest killer compared to war and violence in the world. All this pollution is linked to companies practicing unethical and socially irresponsible virtues.
On the other hand, unethical business practices harm the company itself. An organization thrives when it manages to foster and sustain a trustworthy relationship with the customer. Customers trust companies that are ethical and transparent. A customer’s trust can easily be lost when its practice contradicts a customer’s belief. Despite companies wanting to gain many customers, very few companies can achieve the best ethical practices. Eventually, the unearthing of irresponsible behavior unleashes after some time, which adversely affects the company.
The inability to maintain a long-term relationship with customers is one of the effects the business suffers from. Besides, the organization is prone to vulnerability and litigations that are expensive. The customers highly depend on the firm’s representatives for accurate information despite accessing it on the internet. Thus the representatives may soil the name of the company to the worst. There is no way a company can hide from exposure to its unethical dealings.
Another effect is the drop in sales caused by the customers disregarding the products of the company and inciting other individuals against the outcomes. When a company begins recording loses, it means that it is in the brink. The prices of the shares drop, and the shareholders withdraw since nobody would want to invest in a less competitive business.
The effects of unethical practice are more noticeable in customer service. Since business representatives are the universal and direct contact of the customer, they receive a lot of pressure. Not only do they build rapport with the customers, but they also know the products. They have exceptional analytical, problem-solving, and communication skills that would help solve the problem. The company depends on the representatives to shield its image.
Businesses should adopt alternative sources of energy to ensure minimal air, water, and land pollution. Alternative sources include geothermal power, biofuels, nuclear powers, and solar powers, which will help manage the cost and pollution.
The EPA and the Environmental Legislation should ensure that the productivity and the economy of the communities are sustained despite the running of companies. The legislation provides for the participation of the management of health and environmental risks. Companies should undertake steps such as recycling, assessing the stakeholders, and analyzing risk to implement ecological responsibility.
Conclusion
Therefore a business needs to undertake a strategic sustainability audit before its operations. The company should be committed to the policy of strategic environment, employees, suppliers, and customers should be aware of the organization’s policies. The firm should compare its initiatives with those of other organizations. The company’s activities should be environmentally friendly and following the government’s laws and regulations relating to the environment. Otherwise, the unethical tendencies of the business is a threat to humanity and business itself.