Ethics is around us in majority of things we do daily either personally or professionally. To improve my ethics through reputation, trust and commitment, certain policies needed to be followed to ensure I do not engage in unethical behaviours such as help fulfil the responsibility to my clients and employers, understand and comply with all applicable laws and regulations
Fulfil the responsibility to my clients and employers
Fulfilment of my duty to customers by being honest and integrity. As a moral individual, acting in unethical way would cause me experience fear that would affect my daily life as it can force me to engage in illegal activity, therefore, being honest will eliminate the issue. Moreover, being loyal to my customers and clients allows me to behave on their benefit instead of my own selfishness.
Understand and comply with all applicable laws and regulations
Understanding and adopting ethics in the work environment is crucial in making a suitable financial decision by knowing the risk and return trade-off and decide based on that policy, thus, will show my loyalty to my clients and bosses. In addition, organisations engage in majority of activities that has non- public information. As an individual who behave according to ethics, I will keep the information secured and not act own my own benefit.
In our case study of ‘Ethics in Finance’, few reasons were exploited on how ethics can help an organisation perform better which creates more value for their shareholders in a long term. However, not only ethics can help adding value but also eliminating value destroyer (Sinkey 2002).
I. Company culture
Ethics can build an organisation that most of his workers comply with all the rules such as not sharing private information with outsiders and separate work with their personal life. Business atmosphere should inspire workers to treat themselves ethically in their social climate. Th probability of agent problem happening is low when there is a good company culture as agent cost reduction will optimise long term shareholders capital by removing value destroyers.
II. Trust rewards
Through ethical behaviour, a business may develop a positive image that will help a corporation in a number of ways such as recruiting new clients, maintaining existing customers satisfaction and developing a strong partnership with the government.
III. Sustainability development
Since the introduction of new rules and legislations regarding penalties if a corporation activity has effect on the climate, culture or the surroundings, majority of companies has started fearing on breakings the policies as the cost being too high. As a consequence, if a corporation does well in the production of profitability, it may have a lower future capital killer and may increase shareholder equity in the long run.
Basic morals and standards that govern the actions of an individual and institutions in the society are referred to as Ethics (Mason, 2006). Lynch (2002) explains that ethics values allows individual and companies to easily differentiate between right and wrong and ultimately, to make educated and fair decisions. In the case study given of Ethics in Finance, Bruner exploits reasons on why ethics plays important role in both business and individual when in it comes to finance.
First, ethics allows a company to build a positive image to the society and individuals who they provide services (Bruner, 2006). An organization that has not engaged in illegal activities draws more attention to consumers and creditors. A workplace where matches with the consumer ethics, can be a dream spot for those who follows the same ethics. Second, Bruner (2006) explains in the case study that trusting relationships can be encouraged and build through principles of ethics. In the market, buyers are most willing to buy goods from suppliers and distributors who they feel they have adhered to certain moral standards and generate items of the highest standard. Furthermore, institutions that follow ethics and obide with laws and regulations attract more investors to invest their business as there is less risk than a business engaged in illegal activities.
Third, Bruner (2006) argues that ethics leads to creating and promoting good members and communities in the enterprise and community (Bruner, 2006). Maximum potential in business can be achieved by good management and managers, as they are effective in rapidly addressing challenges and formulating plans. Ethics aims to unite staff in a single company with common beliefs and thus not only encourages confidence, but also commitment. Hence, a team that practise good ethics builds a bond that allows them to offer their best by being efficient and effective in their work. Lastly, introduction of ethical values in an organisation tends to foster sustainability (Bruner, 2006). An institute with ethical values establishes an environment around workplace that are passed from a generation to another generation. Therefore, ethics plays an important role from helping organizations not engaging in unethical and illegal activities.
One of the largest telecommunication service providers in USA, WorldCom was in the news for one of the largest corporate frauds in the twenty first century. Its CEO, Mr. Bernard Ebbs was accused of making false claims in the profit loss statement in the range of 11 Billion USD. Fraud generally results in loss of funds and the organization getting a bad name in the corporate sphere. Fraud occurring in WorldCom was against many of the ethical codes mentioned in General Electric’s code of conduct. The code of conduct asks for transparency, accountability and trust among the different branches of the organization. The major lesson from the WorldCom incident comes in the form of absence of a code of conduct for the organization that would have barred and prevented unethical practices.
Reversal of excess interest rates up to 34% on business overdrafts charged to thousands of customers of Commonwealth Bank was heard by the Hayne royal commission. The gravity of the issue of overcharging was also toned down and went unreported until more than two and half years. The bank was responsible for incorrectly charging up to 34% of interest rate and once the problem was identified, the bank took more than three years to refund the incorrectly charged amount (Frost, 2018). The bank lacked transparency, accountability, trust and honesty which resulted in a bad will for the bank and customers not inherently relying on the bank.