Examples of organizational ethics
An ethical organizational culture is one that looks after its employees regardless of their role within a company, maintains fair business practices, has fair hiring practices, and aligns its values with the way it does business. An ethical company also invests in corporate social responsibility that impacts its customers, stakeholders, and employees.
Common examples of organizational ethics include the following:
- Fair pay: Ethical organizations pair their employees fairly, avoiding the gender pay gap and ensuring individuals with the same responsibilities are paid similar amounts depending on their duties and experience.
- Fair hiring practices: An ethical organizational culture is one that doesn't discriminate based on age, race, gender, or religion when hiring employees. Instead, they promote diversity and inclusion that makes all employees feel valued.
- Transparency: An ethical business is transparent in its communication with employees and customers. For instance, employees may know the business's financial situation, and there's no confusion about policies.
- Encouraging team collaboration: An ethical organizational culture promotes team collaboration, allowing various employees to come together for the greater good.
- Focusing on employee well-being: Ethical businesses follow Maslow's pyramid principles, considering employees' basic physiological needs to support their work, such as a safe environment, equipment and tools, and a clean and comfortable workplace.
Why are organizational ethics important for business owners?
Organizational ethics keep business owners in compliance with laws and can help them avoid ethical dilemmas that can impact their business's overall health, ensuring that customers, employees, stakeholders, and partners all obey the law and know the difference between right and wrong.
Here are a few ways establishing an organizational code of ethics can improve your business:
Builds a strong reputation
Having a reputation as an ethical organization can help you build a strong reputation. In addition, transparency and a commitment to doing the right thing always resonate with customers, and aligning their values with your own can help you create more effective marketing campaigns.
Attracts talented employees
Becoming an ethical organization helps attract top-performing employees. The best workers want to work for the best companies, and your values are important to all candidates. Knowing an employer is fair and always tries to follow their moral compass ensures employees they'll be treated fairly.
Since organizational ethics can impact leadership styles, some employees may choose to work for you based on how management leads.
For instance, many employees don't want to work with bosses that use a transactional leadership approach, but they'll work for bosses who practice their morals in the workplace.
Enhances customer relationships
Your morals can enhance your communication plan. Organizational ethics can improve relationships with your customers because it makes them more willing to trust you.
For example, if you claim you produce the coffee with the highest caffeine content, you should be willing to back it up with clear science and data. Customers might wonder what the caffeine content is for personal reasons like potential health issues, and not being transparent can make you seem less trustworthy.
Gains a competitive advantage
Unfortunately, many companies are not ethical. They treat their employees badly, engage in unethical practices like violating labor laws, or aren't transparent with their customers. Being ethical makes your brand more trustworthy, giving you a competitive edge against businesses in the same market that may not be as ethical as you are.
Mitigates legal risks
Organizational ethics mitigate legal risks because they avoid them. If something is illegal, it's probably the wrong decision for a business.
For instance, violating the terms of a contract is illegal and can have consequences that directly impact your business, its customers, employees, and stakeholders. However, an ethical business won't knowingly violate a contract or engage in conflicts of interest that can cost the business.
Improves financial performance
Having a competitive advantage and improving employee satisfaction while building a good reputation can improve your business's financial performance by supporting long-term business goals.
An ethical business can attract customers with a unique marketing strategy that focuses on company values and ethical practices, and the more you align your business practices with consumer values, the easier it is to increase sales by forming more personal bonds with customers.
Elements of organizational ethics
While every ethical organization is different and focuses on its own values, they all have these core ethical values in common:
- Responsibility: Responsibility and accountability are crucial organizational ethics practices that encourage leaders and employees to have a strong moral obligation to the business, its customers, and the individuals who work there.
- Respect: Respect is one of the most important ethical principles that creates a healthy work environment. When everyone has respect, they see an individual's worth and contributions to the company. Additionally, respect can improve conflict resolution efforts by showing both individuals the business cares about them.
- Risk-taking: An ethical culture takes risks that allow them to showcase their business ethics and treat employees, customers, and stakeholders with respect, fairness, and integrity. Of course, these companies take a risk by focusing on ethical decision-making instead of profits, but this risk can yield higher profits and happier employees.
- Integrity: Organizational ethics focuses on the basic principles of integrity, which hold individuals accountable for their promises and work and ensures they treat everyone fairly.
- Fairness: Fairness ensures all your employees are treated equally and receive fair compensation. Treating employees fairly gives them the same level of respect as leaders and executives.
- Transparency: Transparency fosters trust among employees and customers that can help businesses succeed. An ethical culture is transparent with salaries, business practices, materials, and any other information employees or customers would want to know. When an employer is honest, customers and employees are more receptive to their messaging.