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Why Should You Care About Ethical Behavior at Your Company?

The Betts Team
June 19, 2021

Businesses are obligated to conduct themselves professionally at all times to best serve the interests of their employees and customers. When companies have a strong ethics policy, culture and moral standards, they are better positioned to navigate challenges, build trust, retain top talent and provide exceptional service. Ethical behavior is the differentiating factor for companies in a hypercompetitive world.

What is ethical behavior?

A simple ethical behaviour definition is ‘to do the right thing’. Encyclopedia Britannica defines ethics or moral philosophy as a discipline “concerned with what is morally good and bad and morally right and wrong”. Ethics is a term that is applicable to any theory or system of moral principles and values. The origin of the concept of ethics and morality may be as old as humanity itself. Virtually all societies and religions have myths and legends that explain the origin of ethics and morality.

Ethical behavior in the workplace

Ethical behavior in the workplace refers to the application of ethics and moral principles in real world situations. It is about behaving according to the established moral standards in the society. While ethical behaviour applies to work and individual relationships, the concept is also applicable to corporations as entities.

Ethics in the context of work is the set of moral standards and code that guide the behavior and interactions of employees, managers and leaders. While each individual employee needs to abide by these moral standards, the organization also is required to exemplify ethical conduct. Co-workers are required to adhere to ethical standards when interacting between each other and with clients to ensure the work environment is healthy.

Corporates and businesses are required to adopt ethical behavior towards employees, clients and other stakeholders. Honesty, integrity, transparency, punctuality and fair treatment towards employees and customers are considered to be desirable ethical behaviors at any workplace.

The importance of ethical behavior in business

Researchers at the University of Notre Dame conducted a study on the importance of ethical business behavior that was featured in the Journal of Applied Psychology. They examined the link between the adherence of businesses to ethical standards and the quality of service they offer. Not surprisingly, the researchers found that ethical business behavior was critical to success while unethical behavior negatively impacts a company’s future prospects.

Along with ethical behavior, the other key predictors of success were low unethical behavior and high-quality service. Given the hypercompetitive nature of the marketplace in the current times, customers have a plethora of options to choose from. While corporates focus on offering superior customer service to build brand reputation, their unethical conduct and consequently, the penalties, impact customer trust and financial returns.

When the leadership behaves in an ethical manner, it motivates employees to embrace moral standards in their day-to-day behaviors. Better decisions can be made in quicker time when employees are guided by business ethics. As a result, employee morale, engagement and productivity increase.

Ethical conduct examples

Ethical corporate behavior or ethics in business is a broad category that can be subjective based on the industry, sector or geographic location. Generally, ethical behavior in business relates to:


Unethical practices in the corporate world impact not only the corporation’s image and revenue, but often have a negative impact on the public. Volkswagen, for instance, used a software to cheat on emission standards while Wells Fargo agreed to pay $3 billion in settlement for opening millions of accounts without obtaining consent of consumers. The root of these can be traced to the corporate climate that allows unethical behavior to happen.

Integrity is not only the practice of refraining from fraud and manipulation but relates to creating and implementing a culture of ethics and integrity across the company. Each organization may define integrity and ethical standards differently. Ethisphere’s Ethics, an organization concerned with promoting ethical business practices and standards across the globe publishes the list of most ethical companies in the world each year. The five weighted categories used in ranking businesses include

  • governance (principles, oversight and risk management),
  • leadership and reputation (ethical track record, legal compliance, awards, examples of leadership)
  • ethics and compliance – written standards, program structure, resources, tone set by leadership, monitoring, auditing, training, communication and enforcement
  • Culture – Efforts made to establish a culture of ethics, frequency of evaluation of workplace culture and outcomes
  • Environmental and social impact – Sustainable practices, social responsibility, corporate philanthropy, community involvement, workplace wellbeing

While 135 companies featured in the list of most ethical businesses of 2020, one of the tech companies that made the list was IBM. According to IBM, its consistent commitment to integrity is the driving factor behind its employees continuing to make the right, informed decisions each day for all the stakeholders.

Adopting sustainable practices

In terms of using renewable sources of energy, sustainable materials, recycling of waste, decreasing carbon footprint and so on.

Diversity and inclusion

This includes developing a policy of hiring people from diverse backgrounds, gender, ethnicities, and nationalities as well as inclusivity. An ethical business is one that successfully creates a work environment where all employees are treated equally, respectfully and fairly with equal access to resources and opportunities.

Corporate social responsibility

Businesses, particularly related to the technology sector, are increasingly expected to assume a bigger role in tackling some of the world’s biggest problems. Global initiatives are focused on bringing philanthropic and tech sectors together, where tech leaders work to design tech solutions for charitable organizations. Many big tech companies are aligning their CSR with the SDGs (Sustainable Development Goals) of the UN. For instance,

Salesforce’s founder believes the company’s success is linked directly to its values and ethical behavior. It has set specific targets with respect to its SDGs of gender equality, clean and affordable energy, quality education, sustainable cities, decent work and climate action.

Finally, a business’s voluntary contributions and donations to local groups, charitable organizations and causes are also considered to be ethical practices.

Examples of ethical behavior in the workplace

A national survey of 14,500 in the U.S. revealed that the most common examples of unethical behavior encountered at workplace were rule violations, lying, unhealthy work environment, discrimination, safety concerns, stealing and bullying.

Ethical behavior examples at the workplace can include adhering to the company’s rules, taking responsibility, professionalism, effective communication, accountability, mutual respect and trust. A strong culture of ethics helps employees overcome multiple challenges and temptations they face every day right from lying to a client, taking credit for someone else’s work to manipulating data.