These are the set of principles and practices; that determine acceptable behavior in the business organization. It guides the managers and other executives in making everyday business decisions. It stresses on the impact of the business decision on the stakeholders, such as employees, consumers, government, society, investors, shareholders, and so on.
Principles of Business Ethics
The important rules or principles of business ethics are as follows:
- Avoid Exploitation of Consumers
- Avoid Profiteering
- Encourage Healthy Competition
- Ensure Accuracy
- Pay Taxes Regularly
- Get Accounts Audited
- Fair Treatment of Employees
- Keep Investors Informed
- Avoid Injustice and Discrimination
- No Bribe and Corruption
- Discourage Secret Agreement
- Keep Service Before Profit
- Practice Fair Business
- Avoid Monopoly
- Fulfill Customers Expectations
- Respect Consumers Rights
- Accept Social Responsibilities
- Satisfy Consumers Wants
- Service Motive
- Protect Group Interests
- Optimum Utilization of Resources
- Intentions of Business
- Follow Woodrow Wilson’s rules
Avoid Exploitation of Consumers
Don’t cheat and exploit consumers by using bad business practices such as artificial price rises and adulteration.
Don’t indulge in unscrupulous activities like hoarding, black-marketing, sale and use of banned or harmful goods, etc., for the sake of greed to earn exorbitant profits.
Encourage Healthy Competition
Don’t destroy a healthy competitive atmosphere in the market which offers certain benefits to the consumers. Do not engage in a cut-throat competition. Avoid making attempts to malign and spoil the image of competitors by unfair means.
Always check and verify the accuracy in weighing, packaging, and quality while supplying goods to the consumers.
Pay Taxes Regularly
Pay taxes and other charges or duties to the government honestly and regularly. Avoid bribing government officials and lobbying for special favors.
Get Accounts Audited
Maintain accurate business records, and accounts and make them available to all authorized persons and authorities.
Fair Treatment of Employees
Pay fair wages or salaries, provide facilities and incentives, and give humane treatment to employees.
Keep Investors Informed
Supply reliable information to shareholders and investors about the financial position and important decisions of the company.
Avoid Injustice and Discrimination
Avoid injustice and partiality to employees in transfers and promotions. Avoid discrimination among them based on gender, race, religion, language, nationality, etc.
No Bribe and Corruption
Don’t give expensive gifts, secret commissions, kickbacks, or payoffs to politicians, bureaucrats, government officials, and suppliers. Say no to bribes and avoid corruption.
Discourage Secret Agreement
Do not make a secret agreement with other businessmen to control production, distribution, pricing, or any other activity, which is harmful to the consumers.
Keep Service Before Profit
Accept the principle of “service first and profit next.” The customer or consumer is the most important part of any business. All business activities are done to meet his needs and to increase his satisfaction and welfare.
Practice Fair Business
Make your business fair, humane, efficient, and dynamic. Give the benefits of these qualities to the consumers.
Avoid forming private monopolies and concentration of economic power. Monopolies are bad for consumers.
Fulfill Customers Expectations
Adjust your business activities as per the demands, needs, and expectations of the customers.
Respect Consumers Rights
Give full respect and honor to the basic rights of the consumers.
Accept Social Responsibilities
Honor responsibilities towards different social groups.
Satisfy Consumers Wants
Find out and satisfy the wants of the consumers. Use the available resources to produce good quality goods and services. Supply these goods and services regularly to the consumers. Charge reasonable prices for the goods and services.
Give proper after-sales services. Do not produce goods and services, which are harmful to the health and life of the consumers. Remember, the main objective of the business is to satisfy the consumer’s wants.
Give more importance to service and consumer satisfaction and less importance to profit maximization. Make profits by providing services to the consumers. Do not make profits by exploiting the consumers.
Protect Group Interests
Protect the interest of the group i.e. give employees better wages and good working conditions, give shareholders a better rate of dividend, give consumers good quality goods and services at low prices, etc.
Optimum Utilization of Resources
Ensure better and optimum utilization of natural and human resources and minimize wastage of these resources. Use the resources to remove poverty and to increase the standard of living of people.
Intentions of Business
Use pure, legal, and sacred means to do business. Do not use illegal, unscrupulous, and evil means to do business.
Follow Woodrow Wilson’s rules
According to the late American President Sir Thomas Woodrow Wilson, there are four important principles of business ethics. These four rules are as follows:
Rule of Publicity: According to this principle, the business must tell the people what it is going to do. It must not create doubts, misunderstandings, suspicions, secrets, etc.
Rule of Equivalent Price: According to this principle, the customer must be given proper value for their money. So the business must not sell below-standard, outdated, and inferior (poor) goods for high prices.
Rule of Conscience in Business: If the business is conducted properly, then it is beneficial to society. Otherwise, it is harmful to the society. Therefore, the businessman must have a conscience, i.e. a moral sense of judging what is right and what is wrong. He must be very careful while making business decisions because these decisions affect the entire society.
- Rule of Spirit of Service: The business must give importance to the service motive. That is, priority must be given to render service to human beings over profit.
FAQs About the Principles of Business Ethics
What are the principles of business ethics?
The following are the principles of business ethics:
1. Avoid Exploitation of Consumers
2. Avoid Profiteering
3. Encourage Healthy Competition
4. Ensure Accuracy
5. Pay Taxes Regularly
6. Get Accounts Audited
7. Fair Treatment of Employees
8. Keep Investors Informed
9. Avoid Injustice and Discrimination
10. No Bribery and Corruption.