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Business Ethics and Integrity as a Business Success Formula

Updated: Feb 24, 2022

Having integrity and ethics in business means your organization operates consistently in and honestly in line with a set of moral values and applicable regulations.

There are many perks in increasing awareness of organizational ethics and integrity among employees. These go beyond avoiding regulatory noncompliance and its penalties.

If you prioritise and improve ethics and integrity in your business, you can enjoy numerous competitive advantages, like

· enhance your reputation

· build trust with employees and stakeholders

· increase employee productivity

· foster customer loyalty and retention

· improve financial performance

What’s ethics and integrity in business?

Business ethics describe what’s right, wrong, and suitable behaviour in your organisation. It’s a set of principles that guide employee perceptions and attitudes. This might include relationships and actions in your company and relationships with clients and stakeholders.

Business ethics seeks to achieve a coherent and stable moral atmosphere. It starts at the top and leaks into middle-management and new hires.

Some ethical requirements for businesses, like environmental regulations, the minimum wage, and restrictions against collusion, are enshrined into law. This way, governments set out the minimum standards for business ethics.

But business ethics goes beyond complying with applicable laws. It isn’t about doing the right thing because it helps you look good or because you’re under scrutiny.

Senior management often face ethical dilemmas. Suppose a certain behaviour is acceptable under the law but not the right thing to do in the eyes of the stakeholders (e.g., customers, employees, suppliers, and public). In such cases, business ethics is about doing the right thing in morally challenging situations and even when no one is looking. It’s about doing good and doing well at the same time.

How can ethical lapses harm your business?

Upholding business integrity can be tricky. Technology, globalization, and the digital world have all increased the exposure of ethical missteps that have impacted different companies across the globe.

Take for example the nature of business ethics is in the energy production sector. Companies that produce non-renewable energy are under constant scrutiny about their environmental footprint.

This kind of examination doesn’t only come from governments and stakeholders. The majority of millennials and Generation Z members—the youngest generation of consumers and employees—consider a company’s values and mission before they make a purchase. They expect companies to have a strong commitment toward ethics at their core.

How can business ethics and integrity help your business thrive?

If you read the news, you certainly understand the damaging effects of failing to set the right tone at the highest levels of a business.

You’ll remember the stories of companies who found themselves under the global radar due to severe scandals and had to invest large sums of money in rectifying things. No company wants to risk such reputational or financial damages.

Companies' senior management is now getting their heads around the many good reasons for maintaining and promoting business ethics.

Building trust with stakeholders

There is a positive correlation between an organization’s ethical climate and activities and the company’s bottom-line results. The reputation of a business in society, other companies, and investors is critical in deciding whether a company is worth investing. Investors are less likely to buy stock or support the operations of a company that operates unethically and risks facing allegations of corporate misconduct.

Enhanced revenue growth and profitability

Maintaining business integrity also brings enhanced business results. Some companies assume ethical business practices only increase costs. However, studies reveal that business ethics add value for customers and improve financial performance.

High standards of business ethics can contribute to profitability by

  • reducing the cost of business transactions

  • building trusting relationships with stakeholders and community members

  • contributing to an internal environment of successful teamwork (more on this in the next section)

  • fostering customer loyalty and retention

Nowadays, consumers see themselves as catalysts for change. They care, for example, about environmental, social and governance (ESG) factors when making buying or decisions. Research shows that consumers are willing to pay more if they think their purchases will positively impact society.

Let’s look at an example. Patagonia Inc is a clothing brand every outdoors person is familiar with. They manufacture their products from sustainable or recycled materials. 1% of their growth goes to environmental organizations across the globe.

Patagonia has a loud, somehow counterintuitive, marketing strategy besides sustainable supply chain. In 2011, they even asked consumers to think twice before buying their products. And yet, the company saw its sales grow around 30% in 2012 and another 5% in 2013.

Creating a positive workplace

Robust organizational ethics foster positive, inclusive, and thriving working environments. Managers that genuinely believe that ethics and integrity contribute to business growth can walk the talk and become inspirational leaders in an organization.

When managers abide by the company's business ethics, they treat employees fairly and transparently. As a result, employees are more inclined to follow their lead and mimic the tone at the top. This, in turn, has various benefits.

Driving Employee Satisfaction & Retention

Upholding business ethics fosters respect and trust among colleagues, leading to more effective collaboration and communication. Employees make better decisions in less time with organizational ethics as a guiding principle.

Employees who work for a corporation that demands a high standard of ethics in business operations are more likely to be productive and efficient. They are also more inclined to stay loyal to the company. So, strong business ethics is positively linked with higher employee satisfaction and morale.

Nowadays, it’s becoming all the more difficult to draw a line between work and personal life. As a result, employees are increasingly expecting that their work generates some positive social impact. When employees complete work in a way that is based on honesty and integrity, the whole organization benefits and thrives.


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