Reasons Why Businesses Set Ethical Objectives

by Chris Joseph; Updated September 26, 2017

Ethics in business can be identified as the organization's willingness and ability to conduct its activities in a moral manner. Organizations committed to ethical behavior typically develop specific objectives in conjunction with a written code of ethics. Striving to achieve ethical behavior can provide a number of important benefits for the organization and its members.

Promoting Positive Culture

Ethical objectives can help a company promote a positive business culture. When workers strive to act in an ethical manner, they may be less likely to engage in engage in potentially harmful behavior such as bullying, sexual harassment and discrimination. The result is a healthier work environment where employees treat each other with respect and work together as part of a team. A positive culture can also create a more favorable reputation for the business among its vendors and customers.

Setting Boundaries

Establishing ethical objectives forces a company to clearly define boundaries between right and wrong. For instance, ethical objectives can help draw a line between acceptable and unacceptable accounting practices regarding the company's finances. The ethical guidelines can then reduce the risk of activities such as fraud or embezzlement. Objectives can also define inappropriate behavior regarding the methods salespeople use to attain new clients, such as the specific allowable dollar amount when offering a gift.

Reducing Misconduct

Setting ethical objectives can lower the rate of ethical misconduct within an organization. According to the 2009 National Business Ethics Survey (NBES) conducted by the Ethics Resource Center, the rate of misconduct in organizations with weak ethical cultures was 76 percent, compared to only 39 percent in organizations with strong ethical cultures. In addition, workers in strong ethical cultures who reported acts of misconduct faced retaliation only 4 percent of the time, compared to 24 percent in weak ethical environments.

Setting the Tone

The NBES also indicates that top management sets the organization's ethical tone. The act of setting ethical objectives requires an organization's leaders to be cognizant of ethical behavior, which can impact the manner in which they conduct their daily activities. As workers tend to take their cues from those above them in the pecking order, this attention to ethics and the process of leading by example can greatly influence the level of ethical behavior throughout the organization.