Ethics are moral principles that guide how a business or an individual performs a particular activity. It is an essential business aspect since it determines individuals' actions and helps them differentiate between good and evil. Business ethics also help workers in a business to make better decisions (Trevino and Weaver, 2003). It is a significant facet of the human resource department since it is directly in charge of its individuals. If not handled well, ethical challenges can financially damage a company besides damaging its reputation (De Cremer and Tenbrunsel, 2012).
Problem
Organizational ethics are an essential facet adopted by businesses to evaluate their moral side. Despite most people thinking that business ethics is an integral part of any organization, many businesses focus on optimizing profits (Rock, 2003) by taking care of their marketing departments but not instilling ethics in their organization through the human resource management department. Lack of ethics in business has been able to significantly damage some of the leading global brands (Endenich and Trapp, 2020).
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In the 1990's, Nike was accused of creating sweatshops in developing countries by focusing on reducing the cost of production of their products by subjecting women to long working hours on little pay and using children at a cheaper price (Endenich and Trapp, 2020). The unethical practice's effect was a massive boycott of Nike's products and their sporting activities across the globe (Rock, 2003). The attendant consequences of Nike's actions are proof that ethics may necessarily not guarantee massive profits to an organization; however, lack of this can be catastrophic to a company and may lead to massive losses. Therefore, it is significant to understand the importance of business ethics, and this study will be critical in figuring out the impact ethics has on a business.
Purpose and Scope
This study aims to evaluate the impact of ethics in businesses while providing necessary solutions to limit the occurrences of unethical behavior in organizations. The paper will emphasize the factors that contribute to unethical behavior in businesses and their impact on the business, even as it looks at the probable remedies to limit the occurrence of such action that is harmful to a business's reputation. The paper has also provided brief background information on business ethics to assist readers of this paper in understanding the impact of ethics in organizations. I will, therefore, be explaining the role of ethics in organizations in this paper.
Assumptions
This paper provides solutions that are derived from several business assumptions. One is that unless businesses begin hiring reliable employees who have values in tandem with the business's culture, achieving ethical behavior will be challenging. The second assumption is that there is an increase in unethical behavior in the majority of the businesses. Research on the solutions provided in this report impacts positively towards upholding ethics in business. The last assumption is that there will be an implementation of the recommendations provided by this report.
Limitations
Particular specifications in this report leave a gap in the healthy development of it. First is that the report has been confined to data from journal articles over other sources, including interviewing and observation. The information used for this research paper's development is notably limited to 8 sources that limit the scope of professional scrutiny that can be utilized in developing ethics in organizations. The time frame for this report equally is a limitation on the full development of it. The paper is also limited to a maximum of 3,500 words. The restriction on the number of words limits the complete in-depth analysis of ethics in businesses.
Criteria
Critical understanding of ethics in business is essential in the sustainability of businesses and requires specific data in its study. This report incorporates the following aspects in the body of this paper:
Researched impacts of ethics on businesses
Factors that are contributing to a lack of ethics in organizations
Solutions to the lack of ethics in business
The study and inclusion of the three essential areas will be significant in understanding ethics in businesses. Further action on the recommendations made will be of importance in upholding ethics in businesses.
Background
Behaviors that include deception, corruption, and cheating are becoming common and help push a cynical goal towards business and ethics. Human resource departments are the control apparatus of any organization and are responsible for keeping the business on the right track (De George, 2011). However, as businesses continue to develop, they realize the significance of the employees they hire as the business.
Two reasons inform their choice to have workers as the focal point: first is because human resource jobs are the factory of ethical state of affairs (Weiss, 2014), because of their multiplicity of roles, making it very essential to look at situations when the individuals in the human resource department get involved in and collect insight to assist them to think about and improve their ability to handle ethical problems (Schwartz, 2017). Human resource management's ability to resolve ethical dilemmas in organizations is crucial for their organization's success (Johnson and Abramov, 2004). Secondly, human resource management needs to understand the conflicts they experience since they are integral in dealing with ethical issues.
Lack of Business Ethics: Impact on the Business
A growing concern continues to be on the rise due to businesses developing reputations for their lack of ethics. Profit-making seems to take precedence over ethics, a component that is making it overly complicated to appreciate the significance of ethics in business. Lack of ethics in an organization often leads to a pool of problems in organizations. Such problems include:
Damage to the Credibility of the Business
When an organization's unethical behavior becomes public knowledge, people will not trust the organization, and it is more likely to lose credibility (De Cremer and Tenbrunsel, 2012). It is possible often to navigate a public perception of lack of ethics; however, the business is likely to lose a sizeable client base. Restoring consumer confidence and the business image may take a lot of time, and the majority of customers dismayed by such unethical practices may opt-out to seek other services and products to cater to their needs.
Damage to the Relations of Employees
Human resource jobs are the factory of an ethical state of affairs. Whenever the head of an organization depicts unethical behavior, employees are likely to lose respect for them. When leaders of a company display unethical behavior, tensions are likely to arise in the workplace, and junior staff is expected to resent leaders who do not follow the business rules themselves (Weiss, 2014). When distrust among the employees grows, it dramatically affects productivity since most businesses depend on collaboration among the employees to tap on their various expertise.
Damage on the Performance of the Employees
The performance of employees is often affected negatively by a lack of ethics in a business. Most employees in organizations are more concerned with making profits without following the laid down business protocols and procedures and are therefore susceptible to making errors (Weiss, 2014). When employees feel that acting ethically may not get them ahead, they are likely to get de-motivated, and consequently, their performance decreases.
Lack of Business Ethics: Causes
Many factors contribute to a lack of ethics in businesses. The effect of unethical behavior is costly to an organization. Investigating the probable causes of a lack of ethics in a business is essential because of the devastating consequences on the organization. Analyzing the challenges will be critical in helping organizations adopt solutions to address unethical behavior.
Lack of a Code of Ethics in a Business
A code of ethics is a hands-on approach that establishes an organization’s values and sets limits that employees should adhere to. It seeks to address unethical behavior in businesses (De Cremer and Tenbrunsel, 2012). Without a code of ethics, employees have a higher chance of adopting unethical practices than doing what is right. Lack of a code of ethics may make them dishonest. Therefore, organizations need to have codes of ethics as it makes all staff accountable.
Setting a Bad Example by the Leadership
Personal character is the most fundamental facet in ethical leadership, and it begins with the administration of businesses. Employees would often emulate what the leadership in their organization practice. The employees' perception of their corporate heads' character strongly influences their behavior, too (De Cremer and Tenbrunsel, 2012). Thus, it is critical to identify such causes of unethical behavior and remedy them early to reduce the damage it may cause to the business in the long term.
Fear of Reprisal by Employees
Most organizations perpetuate a lack of ethics because employees fail to report unethical behavior to fear its consequences (Johnson and Abramov, 2004). Sometimes the results can substantially damage their career, so they would choose to let it happen under their watch. Finding an effective means of addressing this challenge will be essential in upholding ethics in organizations.
Influence of Peers
Most of the unethical behaviors in organizations happen because other individuals within the organization practice it, and they never get caught, then it must be right to do so? Peer influence makes most employees fall into the behavior of other employees to feel more acceptable among their peers in the organization (Johnson and Abramov, 2004). Thus, Implying the need to manage the systemic behavior extensively.
Recurrence of Unethical Behavior
Unethical misconduct in organizations often begins small in ways such as exaggerating financial imprest demands. Usually, the longer such misconduct goes without checking, the terrible it becomes (Trevino and Weaver, 2003). This behavior will further turn into outright embezzlement, and the individuals will justify their behavior by making it a habit.
Lack of Business Ethics: Solutions
Lack of ethics in a business environment is catastrophic to the success of any business. This calls for specific solutions to be developed to arrest this challenge. The researched solutions provided below will be critical in upholding ethics in organizations.
Hiring for Values
Values are very integral to any organization because they guide the actions of employees. It is critical component employees should look out for when hiring. Most organizations hire individuals basing on their qualifications and experience to handle the tasks and positions the organization wants to be filled. However, qualifications and experience may not be the only drivers of a successful business (Trevino and Weaver, 2003). Therefore, organizations ought to look further to individuals who have values that suit the business's culture. Focusing on profits alone undermines the ability of employees to affect the policies of organizations.
Developing a Code of Ethics
Creating a written code of ethics is essential in providing organizations with a summary of what type of behavior is acceptable to the company and which behavior is unacceptable. A code of ethics will give the consequences if an organization's employees violate the laid down code of ethics (De George, 2011). Code of ethics is wide-ranging, including barring employees from discussing the company's policies on media, corruption in the course of their work, among many systems the organization deems suitable for its culture.
Leading by Example
Corporate leaders are always the face of any corporate. Therefore, employees who work in the organization would look up to them for direction on how to conduct themselves. Having leaders who make organizational decisions based on ethics and monitoring the workers, they put into leadership roles will provide the organization with the right human resource to uphold the company values (Trevino and Weaver, 2003). Leading by example includes interceding when an employee or a company makes unethical decisions that violate the company's policy to retain the image and credibility of the business and its personnel.
Enforcing Accountability
Business founders and leaders ought to hold their employees accountable for unethical decisions and behavior they display (De Cremer and Tenbrunsel, 2012). This includes publishing the consequences of every unethical conduct in the business premises or related to the business. Actions should be taken in line with the laid down provisions in a code of ethics in the company.
Positive Reinforcements
Appreciating employees is very critical in upholding ethics in a business. When loyal employees feel their value in a company, they are more likely to invest more in maintaining ethics in their daily operations (De Cremer and Tenbrunsel, 2012). This involves acting ethically in every task presented to them. Businesses that appreciate the top performers in an organization in aspects such as discipline are likely to inspire ethical conduct in their place.
Creating Checks and Balances
Organizations should develop systems that provide checks and balances in the organization instead of putting similar duties in one employee's desk. Systems of checks and balances help minimize the gaps that an employee can exploit for unethical conduct (Endenich and Trapp, 2020). Developing audit criteria to create new policies suitable for addressing unique challenges is essential in upholding business ethics.
Welcoming Ethics Speakers
Inviting trainers on business ethics and its significance on businesses will help employees appreciate the advantages and consequences of ethics in any business (Schwartz, 2017). This is because they will use their expertise to create insight into the need to uphold business ethics.
As a critical facet of any organization, ethics can sustain or destroy a business and the business's human resources. The growing number of businesses globally that are becoming unsustainable due to a negative public image continues to soar. Business survival entails undertaking specific actions that limit unethical behavior in a business. Such steps will lead to the sustainable development of those businesses.
Recommendations
Most businesses' survival depends on the actions businesses undertake to minimize the lack of ethics among their employees. The following long-term and short-term recommendations can be taken into practice to respond to organizations' lack of ethics. Ta combination of these long-term and short-term recommendations will ensure that businesses protect their integrity.
Short-term Recommendations
Preliminary interventions can be made to help businesses appreciate the significance of upholding ethics in their work environment and the attendant consequences the lack of ethics poses to businesses. Inviting trainers on business ethics and its significance on businesses is a short-term plan that will help employees appreciate the advantages and consequences of ethics in any business. By training employees on the negatives of lack of ethics, they are more likely to avoid unethical acts. Appreciating employees is also fundamental in upholding ethics in a business. Appreciating the top performers in an organization in aspects such as discipline is likely to inspire ethical conduct in their business on a short-term basis.
Long-term Recommendations
Instilling a culture of ethics in organizations requires massive investment to protect the brand and sustainability of businesses. Businesses must invest in hiring employees who have a value component that is in tandem with the culture of their businesses. Values are a key driver that upholds the integrity of a business by acting on their policies. Additionally, businesses should create a written code of ethics to provide employees of organizations with a summary of what type of behavior is acceptable to the company and which behavior is unacceptable. Having a code of ethics is a long-term plan to ensure ethics are upheld in businesses.
References
De Cremer, D., & Tenbrunsel, A. E. (Eds.). (2012). Behavioral business ethics: Shaping an emerging field . Routledge.
De George, R. T. (2011). Business ethics . Pearson Education India.
Endenich, C., & Trapp, R. (2020). Ethical implications of management accounting and control: A systematic review of the Journal of Business Ethics contributions. Journal of Business Ethics , 163 (2), 309-328.
Johnson, K. W., & Abramov, I. Y. (2004). Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies. United States Department of Commerce, Washington, DC .
Rock, M. (2003). Public disclosure of the sweatshop practices of American multinational garment/shoe makers/retailers: Impacts on their stock prices. Competition and Change , 7 (1), 23-38.
Schwartz, M. S. (2017). Business ethics: An ethical decision-making approach . John Wiley & Sons.
Treviño, L. K., & Weaver, G. R. (2003). Managing ethics in business organizations: Social scientific perspective . Stanford University Press.
Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach . Berrett-Koehler Publishers.
