5 Benefits of a Workplace Code of Ethics and Business Conduct Policy
Business ethics means the code of conduct that actions of people engaged in business activity. Business ethics assumes that a company like Houston Executive Consulting is a corporate moral agency.
In Uganda, is a separate legal entity something that reflects the concept of corporate personhood. This explains why a debate still persists for the need to have corporations and individuals held ethically responsible for corporate actions.
Undoubtedly, codes of ethics and business conduct policies are intended to prevent companies from violating the law. Actions that violate the law are often and perhaps always unethical. Organizational policies on ethics are also intended to foster ethical decision making.
It is also to influence compliance with company values, beliefs and enforced patterns of conduct. For instance, economically businesses have ethical responsibility towards their stakeholders and investors.
More still, companies have an obligation to have socially conscious behavior in communities where they belong. Actions by the companies have to be ethically sound. Companies do not have the legal obligation to engage communities yet it is part of the things that make them ethical.
The law does not comprehensively fix standards of ethical behavior. For example, behaviors that clearly violate boundaries like misuse of company resources, abusive behaviors including bullying and harassment or selling defective products.
For a company to be ethical in its operations, it should make every effort to comply with all the laws in the country like those pertaining workplace health, safety, security and the environment. Some companies go beyond to develop and enforce anti-harassment and discriminatory policies.
The following are the benefits that ethical companies enjoy:
1- More Trust from Stakeholders
It is a good thing to have customers, employees, and investors perceive s business as an ethical entity.
2- Increased Profits
Studies indicate that ethical companies are likely to have better financial performance as compared to those engaged in bad business practices.
3- Better Reputation
This can be with employees, customers, investors and more.
4- Employee Loyalty
A study found that 82% of workers would rather make less money working for an ethical company than make more money at a company perceived to be engaged in unethical practices.
5- Higher Levels of Customer Satisfaction
Obviously, any customer is happy dealing with an ethical company than unethical one.
Ethics as a competitive advance produces higher profits and shareholder value, and lower costs and risks. Empirical studies have examined the correlative relation between corporate ethical systems and financial performance by:
- Building trust among partners (Sullivan et al., 2007), shareholders and customers (Schuler, 2006; McShane and von Glinow, 2005)
- Increase resource productivity, green innovation and lower environmental costs (Chen et al. 2006)
- Promoting themselves as brand of good working conditions (Neumann, 2014)
- Stabilizing share volatility and maximizing market value (Ethical Investment Research Service, UK Institute on Business Ethics)
- Mitigating the risk of financial statement fraud (Omar et al. 2015)
How Do Companies Develop Impressive Business Ethics?
- Some reward ethical behavior. Rewards and benefits shape the behavior of people in the workplace. Please behave well when they know that there’s a reward attached to it.
- Others create an ethical hotline that employees can call anonymously. They work hard to protect the individuals that report unethical behavior.
- They communicate ethical values. This is mostly done during induction and onboarding. Right from the word go, employees are aware of the acceptable workplace ethics and are guided through the code of ethics and business conduct policy.
- They punish unethical behavior. When employees learn that a given action is likely to take them to the sanctions committee, they’ll likely think twice before they can do it.
Apart from gaining a position of higher productivity and profits, ethical companies have as better chance to avoid damaging issues like law suits and negative media publicity. Therefore, ethical companies are more attractive to employees and investors alike.
The purpose of the Company’s Code of Business Conduct and Ethics should be to deter wrongdoing and to promote, honest and ethical conduct and to ensure to the greatest possible extent that the Company’s business is conducted in a consistently legal and ethical manner.