What is business ethics and code of ethics

Have you noticed that one of our most frequent topics of conversation is companies? Most of us work in or interact with companies, which is why we are so affected by their practices. To understand how a company should act and compare it with what it really does, we must know what business ethics is. 

What is business ethics?

The definition of business (or corporate) ethics can be expressed in many ways, but in this case, we found the concept of business ethics that Wikipedia shows us very accurately. According to Wikipedia, business ethics is a type of professional ethics that analyzes the ethical and moral principles that arise in the business world. It encompasses all aspects of corporate behavior, that is, the individual behaviors of individuals and the behaviors of organizations as a whole.

Main characteristics of business ethics

Corporate ethics deals with all kinds of rules that guide the action of companies. The establishment of some norms or others has to be justified. Said foundation is not imposed, but dialogues among all those affected by said norms. The dialogue must be impartial and without any type of obligation or pressure towards some options or others. Business ethics will also clarify for us the resolution of ethical conflicts in business strategies. So those corporate ethics are not left alone in theory, all these characteristics will be specified in a written code.

The code of business ethics

There is no standard that outlines the steps to follow in drafting a code of business ethics. Anyway, we give you under these lines a series of guidelines to observe in case you have to write one of these codes.

- The ethical values that the company assumes must appear, as well as the tasks, goals, and the role that the company must fulfill in society.

- The code must indicate four types of behavior: compulsory, optimal, desirable, and prohibited. The text must be clear enough so that the reader knows how to distinguish these behaviors.

- The system of penalties and how to apply them fairly will be established. The penalties must be proportional to the responsibility of the employee in the evaluated conduct. Likewise, the rewards for good behavior will be established.

- In line with the previous point, it will also establish how to evaluate behaviors, which will apply sanctions and how ethical dilemmas will be solved.

Nowadays, the approach of an ethical code in companies is increasingly important. Perhaps some companies still see it as something very theoretical, but they are changing their minds because they realize the advantages it has. We explain them below.

Benefits and importance of business ethics

Compliance with ethical standards has numerous benefits for companies, both internal and external.

- The application of an ethical code prevents situations of risk since conflicts are tried to be solved in the company itself, before becoming regulated by law.

- A company that takes its ethical standards seriously generates greater confidence in collaborators, shareholders, and customers since it will be considered more transparent.

- The ethical code grants uniformity to the performance of the company. Both its staff and its collaborators must respect the same principles.

Businesses are getting smarter and have realized that the best way to attract talent is to publicize ethical values ​​that are respectful of people. This makes more qualified people eager to work in such companies.

Differences between business ethics and social responsibility

The number of companies with a social responsibility plan is growing every day. In fact, the concept of social responsibility is better known than that of business ethics. The social responsibility is related to business ethics but does not confuse the two. As we have seen in the development of the article, the scope of corporate ethics lies within companies. However, the concept of social responsibility is broader. It refers to the impact on society of the activities of companies. A very clear example of corporate social responsibility is a commitment to the environment. Given all these considerations, we are going to study different examples of business ethics in companies that we all know.

Main components

There are innumerable reasons to implement a code of ethics in companies, but the most important thing is that it helps to carry out a job that the rest of the people involved in it and we can be proud of. The practical applications to meet the requirements of business ethics are diverse and have the common goal of achieving quality results that encompass the business in an appropriate profile.

The main components that accompany business ethics include increasing responsibility towards the environment, fighting discrimination in every way. (By sex, race, religion or physical condition, etc.) and the development of a commitment to culture. Polishing business ethics will help protect employees' rights, as well as respect their needs. The company will be more honest, will have a more globalized vision, and will have the capacity to make its environment healthy and safe. Adopting for this will convey continued transparency, reduce margins for corruption, and ensure integrity in all work and development processes.

We can say that we are acting ethically in our company when two circumstances are met. The first is that we have accepted and defined our criteria and values ​​for the way in which we act with respect to the different interest groups. The second is that we have defined ethical practices to adapt the business to the demands in this area. For this, it will be necessary to create a series of reports and documents that allow establishing corporate ethics so that it reaches everyone in the company. We can achieve this through documents that meet the corporate code of ethics, through communications sent from the communication department and through the creation of ethical training programs that allow employees to be educated. Introducing all members of the company in search of a more conscious profile will help the company achieve its objectives in less time.

For this process to achieve the most beneficial results, codes of ethics and conduct will have to be stipulated through the participation of the top managers of the business, as well as the managers of the human resources department. Achieving the best result will depend on the existence of a well-formed unity concept around the workforce and thinking about searching for the perfect approach that will help define the business both internally and externally. Boosting business ethics will yield positive results from the start and will enable businesses to go even further than they might have thought.

Author: Vicki Lezama