HomeOpinion & AnalysisEffects of ethics in businesses

Effects of ethics in businesses

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DURING the past few weeks, the media has been abuzz concerning the salaries of executives in some parastatals and State enterprises.

ethics

There is an outcry from civil society about the unethical nature of this state of affairs amidst calls for justice.

The salary gaps between the chief executives and general workers is “astronomical “to say the least.

Some workers are said to have gone for months without pay while the bosses enjoy their perks oblivious to the plight of their workers.

What does this say about the moral fibre and ethics in our organisations? It is no secret that there are many unethical practices going on in our organisations. The issue of salaries is just the tip of the iceberg.

The truth of the matter is that the world of business has developed a reputation for its lack of ethics.

In an economy where getting ahead and making money appear to take precedence over ethical decision-making, it can seem difficult to understand the importance of ethical behaviour in business.

A lack of ethics leads to a wealth of problems for a business. We will look at some of the problems in this article.

Effects of a lack of ethics on a business environment:
Unethical practices may damage a firm’s reputation and credibility, subsequently making it less appealing to stakeholders. Profits could fall as a result.

Businesses that fail to follow statutory guidelines often face large fines and other penalties. Additionally, executives at companies that break laws and engage in unethical behaviour could find themselves facing criminal charges.

A lack of ethics has a negative effect on employee performance and morale. In some cases, employees are so concerned with getting ahead and making money that they ignore procedures and protocol.

When a manager or head of a business exhibits a lack of ethical behaviour, he faces losing the respect of his employees.

It is difficult to have a successful business without well-respected leaders.

The introduction of new regulations that apply to all companies could result from unethical practices.

The pending finalisation of a comprehensive salary structure crafted by the Cabinet Committee on State Enterprises and Parastatals Development bears testimony to this.

Last week the papers stated that the government slashed salaries and perks for parastatals and local authority bosses to $6 000 per month. This may seem like a positive move, but it may have negative repercussions.

Unethical behaviour may be easy and seem to offer benefits in the short run. A long-term view on the other hand would suggest that unethical behaviour eventually costs the company in lost profits, customers, investors and credibility.

Corporate consequences are severe, however, personal consequences can be much worse.

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