Question

In what way can ethical business practices increase organizational competitiveness in their respective industries and help to further substantiate the notion that an ethical culture is good for business?

How does unethical leadership adversely affect the organization’s bottom line?

What impact can a leader’s position on ethics have on the culture of an organization?

Thanks for you help!

Answer 1

Answer-

Ethics are the moral principles that govern the behavior of individual and business organizations. Companies are increasingly becoming aware of being ethically conscious as ethical work practices are able to attract and retain customers for long run. It is the ethics that helps the organization in maintaining the positive image and competency against competitors. There are several ways by which ethical business practices increase organizational competitiveness in their respective industries and help to further substantiate the notion that an ethical culture is good for business. These advantages are:

1. Attracting more and more customers and thereby boosting sales and profitability.
2. It sustains the confidence in employees thus making employees stay and thereby limiting employee turnover rate and unnecessary overhead of recruitment and training cost.
3. It attracts more and more investors and keeps the prices of shares higher.

Although, ethical leadership and behavior has several advantages but conversely it can negatively impact the bottom line of the organization as it reduces the capacity of company to maximize its profits. For instance, a MNC moves its manufacturing facility to developing country so as to reduce cost. Practices acceptable in these countries are child labor, poor health and safety, poor working conditions, but an ethical company will not tolerate these and thereby ethics sometimes negatively impact the bottom line of the organization.

The position of the leader on ethics impacts the culture of the organization because his ethical behavior comprise of honesty, fairness, integrity and concern of others and in a particular situation if the leader engage in these behaviors it will definitely motivate others to behave ethically and thus, the leader will be able to establish the ethical culture across the organization.