Ethics are the principles and values an individual uses to govern his daily activities and decision making. The ethical philosophy an organization displays in conducting business has effect on the productivity as well as the reputation of that business. In an organization, a code of ethics is a set of principles that guide the organization in its programs, policies and decisions for the business. The ethics that organization leaders use to manage employees do have an effect on the morale and loyalty of workers. It is the code of ethics leaders abide by that determines discipline procedures and generally acceptable behaviors for all workers in that organization. There is a retroactive effect when leaders possess high ethical standards as it encourages workers in the organization to meet that same level. In the financial market and within communities, ethical leadership enhances the company’s reputation. A way to improve the company’s business is to portray a solid reputation for ethics and integrity in the community. A major reason as to why ethical behavior among employees is important within an organization is to ensure workers complete their work with integrity and all honesty. Those employees who practices ethics to guide their behavior adhere to policies and rules while working towards meeting the goals of the organization. Quality in employees work is dependent on their ethical behavior. This can enhance the company’s reputation for quality products and service.
A healthy and positive corporate culture improves the morale among workers in the organization, which may increase productivity and employee retention; this, in turn, has financial benefits for the organization. When there is higher levels of productivity in the company, its efficiency heightens too. Also increasing employee retention reduces the company cost of replacing employees. An example is