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Ethics and Business Management: 5 Reasons Why Ethics Are Essential to Successful Leaders

Published Date: 03-04-2021

Ethics and Business Management: 5 Reasons Why Ethics Are Essential to Successful Leaders

One of the main advantages of earning an MBA is that students learn the qualities needed to become successful business leaders. They also come to understand that the best leaders build their business management on a foundation of strong ethics.

Ethics are a facet of business management all MBA students must understand and implement if they aspire to become the type of person others will follow. To inspire and guide an organization, leaders need to adhere to unwavering ethical standards. 

In a recent article on business ethics, Indeed.com defined business ethics as “a set of moral guidelines that influence how a company serves its customers and treats its employees.”  They noted that every industry and individual business develops its own ethical conduct that impacts internal procedures and systems. They also impact how the outside world, including current and potential customers, view a business.

Why Leaders Need Strong Business Management Ethics

Conducting business in an ethical manner requires adherence to a variety of important principles. They include issues such as transparency, integrity, trustworthiness, compassion, respect, lawfulness, responsibility and accountability. All these terms apply to the best leaders.

In addition to knowing how to practice ethical leadership, business management students also should know why ethics are so critical for business leaders. The following five reasons rank among the most important ways ethical leadership builds a better business.

1. Keeping Employee Morale High

Nothing gets accomplished in business without participation by motivated, talented employees. Such employees work best with ethical leaders who promote transparency, equality and diversity among their staff. Leaders build trust with employees by treating all employees with respect and behaving in a way they wish employees to emulate. In turn, inspired employees will give their best to achieve company goals.

2. Building Customer Loyalty

Every year, news reports are filled with examples of companies losing business because they behaved in an unethical manner. In today’s consumer economy, judgement of a company’s morals and ethics can make or break a brand’s identity. Leaders must take a lead role in establishing a company’s ethics and building strong loyalty from customers.

3. Hiring Better People

Not every employee is a good fit with every company. Ethical leaders establish a culture that attracts employees with values that align with those of the organization. When a leader assesses potential employees by this metric rather than years of experience, it leads to hiring people from many different backgrounds who share a common bond. That brings many different perspectives together to solve challenges.

4. Less Need to Micromanage

According to the Harvard Business Review, ““micromanagement” is a dirty word in today’s workplaces.” A trust-based company culture allows people to work with more freedom and with the confidence of knowing that leadership will treat them fairly. The flipside of this? A workplace with a negative atmosphere where leaders are viewed as having questionable ethics and decision-making skills. A positive workplace led by ethical leaders makes employees feel valued, leading to a much more creative and innovative workplace (oh, and less employee burnout and turnover).

5. Attracting Investors, Vendors

With motivated, happy employees and loyal customers, a company that is looking to grow will have no problem attracting financial backers. This also applies to attracting better vendors and business partners. By establishing and maintaining a high level of ethical conduct, a business becomes an attractive choice not only for customers and employees, but for other businesses.

Creating a strong set of ethics is a key component to business success. Carroll University emphasizes ethics in its MBA program because everything else flows from a strong ethical foundation. For future business leaders, it’s an approach that can lead them to achieving goals in both business and life.

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