Literature Review on How Business Ethics Improve the Wellbeing of an Organization

The welfare of employees is a critical aspect of the business. There are ethics or codes of conduct that govern the behavior of people in any business organization. Ethics are significant as they mold the standing of the firm and further determine its success. This is by depicting the significance of adhering to the right code of conduct that also shapes the behavior of employees and other members of the organization. Various studies have been carried out concerning business ethics and how it influences the morale of workers and customer behavior. The paper will thus explore various studies that have been undertaken on business ethics including the reaction of clients and employees to several ethical issues that may be affecting their organization.

According to Su (2014), ethical behavior brings significant advantages to business. Organizations that have high ethical standards inaugurate long-lasting relationship with their customers. Marketing benefits have also been associated with ethical practices. Firms that depict ethical behaviors in their operations have an advantage over their competitors. Consumers usually invest in businesses in the form of shares. Additionally, they also want to establish long lasting relations in the business aspect of the company.

The image of an organization is vital and determines how it will perform in the market. Profitability of a business is likely to decline rapidly when situations of unethical behavior are discerned. Loss of confidence by an investor means that the firm will have to invest more to regain the trust of their investors, public, and shareholders among other parties. Besides, the profitability may also take long to go back to normal. It is thus evident that organizations that place the background for business ethics in all aspects of their operations usually remain profitable than those that carry out activities in an unethical way (Barry 2016). Crane & Matten 2016) also pointed out that legal and monetary inducements are associated with the ability of the business to depict ethical behavior. Regulatory bodies favor organizations that portray high ethical standards and education of their workers on ethical strategies by being given strong financial and legal incentives.

The moral philosophy utilized by an organization to conduct their activities can have an effect on their reputation and productivity. The ethics that leaders of an organization use to manage their employees can influence the loyalty and morale of these workers. The code of ethics employed by leaders also determines the procedures to use in discipline and the acceptable behavior of all employees in an organization. High ethical standards by leaders encourage workers to meet the same level as well (Uddin, Luva & Hossain (2012). As such, it boosts their confidence to undertake their duties in the business.

According to Ermongkonchai (2010), a business that has ethics to guide employees means that it is also apparent regarding what is expected. Additionally, managers who are transparent on their anticipation and demand the aspects of honesty, integrity, and loyalty also generate a work environment that in turn rejects unethical behavior. This results in various benefits. The result has been depicted to lead to happy employees who are more productive as compared to those that are dissatisfied with the management of the business. Moreover, happy employees are also less expected to be untrustworthy.

Studies by Parboteeah & Cullen (2013) have also shown that happy employees also spread the word about their business place. As such, they will positive feedback from the society that will boost the organization to greater heights of the environment. The aspect of sound ethics and its influence on the morale of workers can also be analyzed in another context. Having a positive and healthy business culture improves the morals of employees. The culture of the firm is developed through the ethical standards. Having workers with high morale increases employee retention and productivity (Barry 2016).

Recklessness is a conduct observed among organizations that act in a way that is not ethical. Unethical business practices being prevalent in an organization puts everyone in the business environment at risk. For instance, if a company acts in a reckless way and fails to adhere to the ethical guidelines of accounting, shareholders will find it hard to make conversant resolutions (Palmer 2015). On the other hand, investors may incur a loss if the actual financial position of the firm being unstable is revealed to the public. Additionally, employees will also not be in a position to come up with well-versed decisions on what lies in the future regarding them and the company that has become unstable. As such, their moral is adversely affected in that they will be working with uncertainty and this can further extend to whether they will receive their pay at the end of service delivery (Uddin, Luva & Hossain 2012).

According to Mathieu et al. (2014), business ethics influences the behavior of customers in various ways. Consumers have been observed to have a high level of association with organizations that portray ethical behavior in their operations. This is as a result of the right image that they have in the market hence attracting clients. The development of trust among customers also takes place when an organizations reputation depicts integrity. This is developed through coming up with internal ethical principles.

On the other hand, the consumer buying behavior is also influenced by an organizations ability to portray ethical practices in their operations. Consumers will be at ease purchasing goods or services from a form that they know have sourced their labor and materials in an ethical and responsible manner (Barry 2016).

Various reactions can arise from customers as a result of the business having low levels of business ethics in their operations. Studies have depicted that clients are likely to lose credibility with that organization. Some groups have been observed to survive public knowledge of the lack of ethical practice by initiating advertising campaigns in an aggressive manner. However, most of them have lost a customer base as a result of lack of ethical practices in their operations (Downe, Cowell & Morgan 2016). According to Uddin, Luva & Hossain (2012), legal issues have been taken against organizations as a result of poor ethical practice. Businesses are required to follow the rules and procedures that also define ethics. The welfare of customers may be in jeopardy as a result of the firm not following the set guidelines. As such, consumers have been forced to take legal actions against such organizations.

Low levels of business ethics may further result in clients not being accorded the required respect that they expect or even deserve. They will thus prefer to conduct activities with other organizations. Moreover, they may also spread the news about the severe nature of that organization hence hinder it from making significant sales in the market. As such, the business may end up terminating their operations or continue their existence with small profit margins (Su 2014).

Conducting business in an unethical manner result in significant costs and risks for a company. One of these is a damaged brand of the company and image. Unethical behavior portrayed by a firm is likely to be spread to the outside world by those who undergo the experience. Employees who are not given fair treatment will complain to others, and this may even be competitors of the business. As such, the reputation of the company is ruined, and this limits the number of clients. Limited customers depict that the organization will obtain minimal profits and thus decreased productivity (Mathieu et al. 2014). According to Palmer (2015), the well-being of the firm will further be affected by an increase in the turnover of employees. Most workers may find it hard to work in an environment that is not conducive. This may force the company to recruit other employees that may also be a challenge since people may not want to be associated with it as a result of the damaged reputation in the market. Moreover, they may end up hiring individuals who are not competent enough to fill the vacant positions.

According to Seppanen (2013), low levels of ethics affects the overall credibility of the business. It has been pointed out that employees may begin to share feelings of the public and as such resent working for a company that has low levels of ethics. All this leads to a decline in productivity, respect and even morale throughout the enterprise. In additional to these effects, dysfunctional behaviors will also be portrayed by the personnel. This is where they do not pay attention, suppress relevant information and even low expectations that they had for the organization in general. Moreover, they may also deliver low output and give false promises of improving. All this will result from the low morale that will have developed in the staff as a result of poor working conditions.

Job attendance among the employees is determined by the work environment that has been created in the organization or business. With low levels of ethics portrayed by the firm, workers are likely to depict habits of absenteeism. This will lower the ability of the firm to operate in an efficient way since some may be done in a hurry while others may fail to be handled (Ermongkonchai 2010). The overall performance of the business will thus decline as a result of low morale of the employees.

Ethics in a business can be improved by applying various approaches. According to Seppanen (2013), employees should first be trained concerning in line with the code of ethics of the organization. This will be relevant especially if they do not know the significance of the system and what it is as well. It will thus be necessary for the business to hold regular meetings concerning ethics and how ethical dilemmas should be handled if they occur among the staff. Employees will have a higher understanding of what is expected if they are given more training and provided with the necessary resources. Additionally, greater emphasis placed on being decent and acting in a right manner will also result in better comprehension among the workers.

Arruda & Rok (2016) depicted that the ability of an organization to notice an act of ethical behavior and reward it will also promote the aspect of ethical conduct. The organization should provide rewards for responsible, ethical behavior. Employees who go above and even beyond their personal interests to offer what is best for their clients should be considered as depicting ethical conduct. It will thus be necessary to reward them, and they should further be held as an example for others to endeavor and portray the same act.

Disciplinary actions for display of unethical behavior should be imposed as it will assist the personnel to comprehend the implications that arise from inappropriate behavior. This approach will thus boost the display of safe conducts by the employees.

Leadership by example is vital and has an impact on the way employees will also carry out their duties. Workers usually follow standards that have been set by the management or the human resource department. As such, an organization should ensure that they hold the human resource or managers in charge of...