Introduction
In every business organization, there are laws designed to be followed by the organization’s employees. Some rules are taken into consideration by the law enforcers, who are the organizational stakeholders. Without anyone in charge of the law and ensuring that everybody adheres to the stipulated rules, it would be hard for an organization to make profits. Following the laws and regulations of a business by the stakeholders in their daily operation is not enough to conclude that its success is guaranteed. This paper will analyze the importance of laws and ethics and their difference in a business organization. Maximization of the wealth and ethics of stakeholders will also be discussed. This will help in effective management of the business and solve the problems faced by the business stakeholders due to good relations between the employers and employees.
Ethics refers to the moral code of conduct amongst workers. It is of great importance to have ethical adherence to the organization’s culture put in place for the easy running of the business. There are always set principles and standards that organizational stakeholders must follow, which act as a guide from which all employees’ needs and relationships are taken care of. In most cases, these set laws are a compulsory form of policy that must be respected. Still, in other cases, ethics are ignored, leading to poor interpersonal relationships amongst the organization’s workers. Therefore, there is a critical need to follow the rules and regulations of an organization and the ethical rules and standards set aside by the organization. They are vital in assigning duties and ensuring that there is always unity in how the activities are conducted.
The Need for Business Ethics in a Business Organization
There is an essential need in every business to maintain the organization’s business ethics and standard to ensure a smooth running of the organizational activities. The norm of always doing the right or the wrong thing is ever guided by the ethical considerations taken by that organization in ensuring that every action on the premises is conducted with a lot of reflections on the wellbeing of the employees. It has been of great importance to have a guiding principle on how every employee relates to each other. To operate effectively, there is a need for unity amongst the employees, guided by the set principles and standards. The law of an organization alone cannot afford to take care of the organizational needs without the help of the ethics that determines the general welfare of the employees in every organization.
The immediate government uses various governmental tools and acts to manage daily activities to regulate the businesses and alleviate corruption. The codes of ethics are necessary for every company to ensure that the existence of fairness and justice is always there (Halbert & Ingulli, 2020). The US federal law emphasizes responsibility, transparency, and auditing accountability in business. This has far resulted in the focus shift to the desire for every government to be responsible for every business activity in its way of operation and how businesses are being run to ensure fairness and equality because of the corrupt nature of the business merchants.
On the other hand, unethical behavior may affect the success of a business. The main problem associated with a lack of ethics is the loss of respect of employees to the employer due to tension that arises when they realize that their needs are not considered. This may lead to the organization’s poor running, hence experiencing loss instead of profit. Damage to a company’s credibility can happen, losing a crucial customer base. Restoring the image and consumer confidence may not be achieved, reducing the ability to maximize profit.
Maximizing Stakeholder Wealth and Ethics
The right thing for a business is to maximize stakeholder wealth by following the laws, obeying what is legally correct. There is a need to consider all the ethics as the primary aim of the business is to do what is right. Doing what is right is determined mainly by the fact that one will always want to follow all the ethics according to the purpose of organizational existence. Putting codes of ethics shall be essential in practice because everybody will follow the law and ethically correct and legally proper.
The Difference Between What Is Ethical and Legal
What is legal is considered what the government believes is allowed and put in place as a given license. This refers to legal responsibilities and obligations assumed by the government to have the right to be conducted. That is why other business entities claim to conduct business legally, which is different from ethical. What is ethical refers to what pertains to or deals with morals or the principles of morality, which can be seen as something related to what is right or wrong. One can be legally wrong and ethically right or legal right and morally wrong.
Conclusion
When one is confronted with a moral situation where they need to weigh or choose between options, he is considered to settle on what is moral and that which advantages them. Morals require an individual to make moves dependent on reasonableness and fairness. While laws carry punishments for violations, ethics do not, and essentially laws enforce the behaviors expected to be followed while ethics suggests which ought to be followed. Therefore, one needs to know the importance of following the rules and ethics in any business organization.
Reference
Halbert, T., & Ingulli, E. (2020). Law and Ethics in the Business Environment, 175(5), 412-522. Cengage Learning.