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Importance of Ethics.

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Meaning & Definition

An action or type of behaviour can be defined as misconduct if it is prejudicial to the interests of the employer and other employees, inconsistent with the norms set for discharging duties, unsafe or unfaithful to such a degree that it becomes incompatible to continue employer – employee relationships.

Categories of Misconduct

Disciplinary acts of misconduct can be categorized on the basis of the severity of the consequences.

(i) Minor Contravention– results in few serious consequences. Example – negligence, minor disobedience to rules, carelessness.

(ii) Major Contravention – Partially hinders the working of the organization. Example – lying, cheating, stealing

(iii) Intolerable Offences – are of unlawful and severe nature which endanger employment relationship. Example – threat to use weapon, use of drugs on the job, smoking near inflammables.

Misconduct Stated In Model Standing Orders

Here is an illustrative list of acts constituting misconduct under Model Standing Orders Act , 1946.

(i) Wilful insubordination or disobedience of any lawful and reasonable order , rule or regulation.

(ii) Refusal to work on a job or a machine which has been assigned to him.

(iii) Refusal to accept or reply to a charge sheet within the prescribed period of time.

(iv) Theft , fraud , or dishonesty in connection with the property of the company.

(v) Theft of another employee’s property inside the industrial area or company premises.

(vi) Causing willful damage to , or loss of , the employer’s goods or property.

(vii) Causing damage to a product in process or to any property.

(viii) Interference with , safety devices.

(ix) Non-observance of safety precautions and rules.

(x) Taking or giving a bribe or any illegal gratification.

(xii) Acceptance of gifts from subordinates.

(xiii) Habitual late coming.

(xiv) Absence from duty without leave.

(xv) Overstay when on leave without prior authorized permission.

(xvi) Entering or leaving , or attempting to enter or leave , the work premises except through authorized entrance and exits.

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Have you ever given a thought as to why societies function? Why is it that since ages, human beings are able to live with each other peacefully? Yes, there have been certain incidences such as crimes and wars which do disturb the delicate fabric of the society once in a while, but still, on a whole, people have coexisted and survived for so many years. The main reason why humanity has survived for so long is due to certain rules, values, mores and ethics, which all of us abide by. Just imagine, what would happen if suddenly we were left without any sense of morality or values. In such a scenario, no doubt, chaos will prevail everywhere. Thus, ethics and values are the very foundations on which this society is standing.

Same is the case in business. Organizations which follow certain business ethics have better chances of survival, compared to the ones whose only goal is to make profits, even if they have to compromise on a lot of things for that. So what is the importance of business ethics? How does it benefit the business?

Profit Maximization

The importance of ethics in business can be understood by the fact that ethical businesses tend to make much more profits than the others. The reason for this is that customers of businesses which follow ethics are loyal and satisfied with the services and product offerings of such businesses. Let us take an example. Suppose, there is an organization named XYZ which manufactures cosmetics. XYZ greatly believes in the importance of business ethics. When XYZ advertises its cosmetics in the market, being an ethical organization, it will be very truthful and honest in its communication with the probable customers. It will tell correctly about the kind of ingredients it has used while manufacturing the cosmetics. It will not lie or exaggerate about the benefits or uses of its products either. So the customers, who buy its cosmetics, know precisely what they are buying and how useful that product is going to be for them. This way, the product will meet their expectations and thus, satisfy the customers. When customers are satisfied, they will become loyal to the company and come back again for re-purchasing. This will surely increase the profits of the organization. Thus, the importance of business ethics is that it creates loyalty in customers and maximizes the profits.

Efficient Utilization of Business Resources

In an organization, people working at the junior levels often emulate the ones working at the top. The same applies with ethics too. If the management or seniors of an organization follow ethical business practices, i.e, they do not bribe to get their way or they do not cheat the customers, investors, suppliers, etc., the employees will follow suit. The employees too will refrain from using the office property or resources for personal benefits. This will result in better and efficient utilization of the business resources.

Creates Goodwill in the Market

An organization, which is well known for its ethical practices, creates goodwill for itself in the market. Investors or venture capitalists are more willing to put their money in the businesses which they can trust. Shareholders too, remain satisfied with the practices of ethical businesses. Thus, the importance of business ethics in creating goodwill and building long term relationships, cannot be denied. Also, an ethical business puts greater value on its employees and thus, employees remain loyal to such an organization too.

The chief goal of any organization is to maximize its profits. The importance of business ethics can be understood from the fact that it helps the businesses in achieving its goal of profit making by creating goodwill for the business in the market, increasing its loyalty among the customers, by aiding in employee retention and by maximum utilization of its resources.

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