Business ethics, similarly to personal ethics, can be thought of as a code the governs the activities of the organization and its members.

What is a Business Code of Ethics?

A code of ethics or ethical code refers to a set of guidelines, standards, and principles that a company adopts and that must be adhered to by its workers.

Business codes of ethics are often determined by the trade unions, non-government associations, civil societies, not-for-profit organizations, industry, professional bodies and businesses.

There are many different types of ethical code relevant to a business.

What is a Compliance-Based Code of Ethics?

There are certain codes of ethics that businesses must adhere to as stipulated by the governing or oversight bodies.

For instance, guidelines guiding how companies hire their employees, employee compensation, safety and health standards, among others are compliance-based code of ethics.

Failure to comply by these ethical codes attract penalties.

What are the Consequences for Violating a Code of Ethics?

Violations of voluntary codes of ethics are dealt with by the company creating and implementing the ethical standards.

With compliance-based codes of ethics, the regulatory bodies for many industries have clear penalties and consequences for violation of compliance-based codes of ethics.

What are Value-Based Code of Ethics

Ethical codes voluntarily created by a company are thought to represent, align with, and further the values of the company. The core values of a company often include elements, such as professionalism, honesty, integrity, unbiased approach and many others are contained in the codes of ethics.

Code of Ethics Among Professionals

Professionals such as accountants, lawyers, financial advisers, estate managers, broker dealers and others have codes of ethics that guide the way they conduct business with their client or function at their workplaces.

What are the benefits to business in pursuing ethical business practices?

Ethical business practices benefit the consumer, society at large, and the business.

The consumer is treated in a manner or receives value that is consistent with ethical practices.

Total economic activity is increased as societies confidence in undertaking transactions increases.

The business benefits from a positive brand image, customer loyalty, and increased business activity.

One thing to remember about business ethics is that profits and business ethics are not contradictory.

What are the obstacles to ethical business practice?

There are obstacles to ethical corporate behavior that deserve serious consideration.

The emphasis on profit, “the bottom line,” can promote unethical behavior within a large business organization, especially when senior executives order line managers to produce profit or else.

Another obstacle is the willingness of individuals to act unethically in a large group when they would never do so alone.

Ethical business practice is frustrated by modern business corporations that gives managers access and control over resources owned ultimately by the shareholders.

Example, Tyco, Lehman Brothers bank failure, Enron, HealthSouth