What is Ethical Behavior? (Explanation) - CFAJournal (2022)

Entities, whether individuals, organizations or businesses, make decisions every day. Usually, the premise of these decisions is straightforward. Mostly, these entities base those decisions on underlying information. This information makes the process straightforward and enables the decision-maker to reach a conclusion. In some instances, the premise of a decision may not be as simple.

Sometimes, entities may face decisions that challenge moral principles. Usually, these decisions require them to evaluate the good and the bad. In most cases, the differences between the available options may not be as apparent. Therefore, the decisions made based on those differences can be highly crucial. The higher the level at which this decision-making process occurs, the more risks it will involve.

In modern business environments, the criticality of these decisions has become significantly higher. Consequently, these decisions must consider all the moral dilemmas and challenges. This process falls under ethical behaviour that most entities must ensure to follow. Therefore, it is crucial to understand it and how it works.

What is Ethical Behavior?

The definition of ethical behaviour is not straightforward. In essence, it involves using integrity, fairness and equity in decisions. Similarly, it may also cover the relationship between several entities. Ethical behaviour respects the dignity, diversity and rights of all entities. However, this behaviour may differ from one situation to another. While most entities will have the same principles for ethical behaviour, some may not agree with them.

Ethical behaviour involves the application of moral principles in a moral situation. When entities behave ethically, they must follow the moral standards set by society. Sometimes, these standards relate to a governing body or other sources. Regardless, ethical behaviour involves using moral standards to deal with dilemmatic situations.

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Ethical behaviour applies to both individual and professional relationships. For the latter, it has become much more prevalent due to the changes in the perception of modern businesses. The concept also applies to companies and organizations. Regardless of whom this behaviour relates to, ethical behaviour is vital in most cases.

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Ethical behaviour is crucial for the world to survive as a society. Similarly, it helps entities and those involved with them function properly. In some cases, it can introduce entities to several challenges and costs. However, it can also be highly beneficial. In the absence of ethical behaviour, entities and societies may incur significant losses. While not behaving ethically can benefit selective entities, it causes a loss to society.

Overall, ethical behaviour involves using moral principles and values in individual and work relationships. The scenarios when this behaviour is necessary arise regularly. Therefore, entities must behave ethically when they must. By doing so, they can ensure they benefit society as a whole. In business environments, ethical behaviour applies to everyone, including employees, management, etc.

Why is Ethical Behavior important?

Ethical behaviour can have several beneficial impacts on society. In modern business environments, behaving ethically can also provide profits. When applying moral principles to business situations, entities can get significant benefits. Although it may involve some costs, ethical behaviour can be highly critical. Some of these points that elaborate on that importance for businesses include the following.

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Enhances reputation

When companies and businesses behave ethically, they build a reputation for themselves. For already established entities, ethical behaviour can enhance their status with customers. Similarly, it can create a positive image in the marketplace, leading to more customers. On the other hand, companies can also lose business if they behave unethically. The use of ethical behaviour in business relates to the reputation of those entities.

Creates customer loyalty

In the modern world, most customers prefer companies that behave ethically. Therefore, ethical behaviour enhances the loyalty that customers have to a company. In essence, companies attract and retain customers with ethical behaviour. However, if they choose not to use moral principles in professional relationships, they can lose their customers.

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Creates a positive work environment

As mentioned above, ethical behaviour applies to all levels within a company. When the management and employees of a company behave ethically, it creates a positive work environment. Furthermore, it enhances their professional relationships and promotes a trusting environment. Therefore, the company can grow more due to this positive environment. In contrast, the absence of ethical behaviour can adversely impact the environment.

Retains employees

When ethical behaviour creates a positive work environment, employees are more likely to remain with a company. Similarly, due to the trusting relationship with the company, they will have higher job satisfaction. Therefore, ethical behaviour can enable companies to retain employees. In most cases, it can lower costs related to hiring expenses.

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Avoids legal problems

One of the most significant reasons ethical behaviour is crucial is that it avoids legal problems. When companies behave ethically, they don’t cut corners to achieve profits. It also means they are more likely to follow regulations and laws that promote social responsibility. Therefore, ethical behaviour can help avoid legal problems associated with not complying with those rules.

What are the components of Ethical Behavior?

The components of ethical behaviour may differ from one company to another based on their needs. Every company decides on what these components should be. Sometimes, they may also use a code of ethics to guide them when developing an ethical behaviour strategy. Regardless of that, some of the primary components of ethical behaviour include the following.


Transparency is one of the most crucial parts of any company or business. When companies are transparent, they are more likely to behave ethically. Usually, this process involves representing facts accurately and not hiding them. Similarly, it involves clear communications and openness in general. Through transparency, companies can also promote ethical behaviour internally.

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Integrity is a fundamental part of ethical behaviour. Usually, it involves standing by moral principles regardless of the outcome. Therefore, even if companies suffer losses, they must abide by what they believe is ethically correct. This idea falls under integrity, which is also a crucial component of the code of ethics. Integrity also includes fairness and equality in various relationships.

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Accountability relates to companies accepting their roles in society and taking responsibility. When companies behave ethically, they are also like to acknowledge duty. Due to this, they are more likely to admit to any errors or mistakes they commit. Similarly, it also involves accepting the consequences of their decisions.


Ethical behaviour requires companies to respect the rights, privacy, and dignity of others. These may include internal and external stakeholders. It also relates to the social responsibility that companies have towards others. Respect also applies to professional relationships since companies may come across private information from other parties.


Loyalty includes all relationships that a company has with its stakeholders. Through it, companies can make decisions that benefit all those relationships. Therefore, ethical behaviour can positively impact all stakeholders. When behaving ethically, companies consider the needs and requirements of all their stakeholders. Based on that assessment, they make decisions that benefit all parties involved.


Ethical behaviour involves the use of moral principles in individual and professional relationships. However, it is not straightforward in most situations. For companies and businesses, it is of notable concern. When companies don’t behave ethically, they can face significant losses. Ethical behaviour has several components that contribute to its importance.


What is the meaning of ethical behavior? ›

Ethical behaviour is characterized by honesty, fairness and equity in interpersonal, professional and academic relationships and in research and scholarly activities. Ethical behaviour respects the dignity, diversity and rights of individuals and groups of people.

What is ethical behavior and why is it important? ›

A person who demonstrates ethical behavior has evidence of a strong moral code and a consistent set of values. Ethics can be rooted in belief or the pursuit of making the world better. Those who exemplify ethical behavior do the right thing regardless of whether they get credit for it.

What is ethics in your own words? ›

First, ethics refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues.

What are ethical behaviors and what are some examples of them? ›

Examples of ethical behaviors in the workplace includes; obeying the company's rules, effective communication, taking responsibility, accountability, professionalism, trust and mutual respect for your colleagues at work. These examples of ethical behaviors ensures maximum productivity output at work.

What is ethical behavior in research? ›

What are ethical considerations in research? Ethical considerations in research are a set of principles that guide your research designs and practices. These principles include voluntary participation, informed consent, anonymity, confidentiality, potential for harm, and results communication.

What is ethical behavior education? ›

Ethical conduct requires that everyone in the classroom practice respect and well being as a central motivation for learning. As their teacher, you are the orchestrator. Respect and compassion mean that you cannot disregard bad actions. They must be addressed without impeding the course of learning.

Why is ethical behavior important in society? ›

Ethics make a society peaceful, harmonious and a better place to live by guiding the behavior of people. Ethics act as a self-governing system to keep human self-interest and the good of society at equilibrium because the eyes of the law are not always available.

Who is responsible for ethical behavior? ›

Ethical behavior is easier for an individual than it is for a company. Companies have many individuals with differing opinions, values, and ideals. So, who's job is it to ensure a company is ethical? The answer is—everyone.

Why ethical behavior is important in the workplace? ›

Employees who are ethically positive, honest, hardworking, and driven by principles of fairness and decency in the workplace, increases the overall morale and enhances the performance of an organization. A company that has established behavioral policies can improve its reputation and help ensure its long-term success.

What is ethics in your own understanding essay? ›

Essay on Ethics – Ethics refers to the concepts of right and wrong conduct. Furthermore, ethics is basically a branch of philosophy dealing with the issue of morality. Moreover, ethics consist of the rules of behavior. It certainly defines how a person should behave in specific situations.

What is a sentence for ethics? ›

2 She resigned over an issue of personal ethics. 3 He began to question the ethics of his position. 4 The ethics committee may take a decision to admonish him or to censure him. 5 Buddhist ethics are simple but its practices are very complex to a western mind.

Can you explain your views on ethics? ›

Ethics defines the best option as the one which best achieves what is good, right and consistent with the nature of the things in question. At The Ethics Centre, we refer to these as 'values', 'principles' and 'purpose'. Values tell us what's good – they're the things we strive for, desire and seek to protect.

What are the sources of ethical behaviour? ›

Primarily ethics in business is affected by three sources - culture, religion and laws of the state. It is for this reason we do not have uniform or completely similar standards across the globe.

What is ethical behavior relationship? ›

Ethical relationships are built upon mutual respect and mutual caring. Ethical relationships require truth telling and honesty. Ethical relationships do not take advantage of the other for selfish political, economic, or sexual gain.

What is ethical behaviour in the workplace? ›


Some common workplace ethics include trustworthiness, accountability, respect, transparency, and integrity. Trustworthiness. Companies rely on trust within their organization as well as between their clients in order to foster dependable relationships.

What are the benefits of ethical behavior? ›

The perception of ethical behavior can increase employee performance, job satisfaction, organizational commitment, trust and organizational citizenship behaviors. Organizational citizenship behaviors include altruism, conscientiousness, civic virtue, sportsmanship and courtesy.

What is the importance of ethics as a student? ›

Ethics plays a very important role in Education. Ethics are interpreted as the discipline of dealing with good and bad with commitment and moral duty. Ethics are well-established levels that make the measures right and wrong.

Why is it important to be ethical in your studies? ›

There are several reasons why it is important to adhere to ethical norms in research. First, norms promote the aims of research, such as knowledge, truth, and avoidance of error. For example, prohibitions against fabricating, falsifying, or misrepresenting research data promote the truth and minimize error.

How do you apply ethics in life? ›

We ought to treat others with kindness, compassion, respect, and so on. In other words, an ethical person practices applying virtues, our character traits, in making everyday decisions. Virtues are the positive traits of character that inform our ethical being. Integrity is the bedrock of virtue.

What are some good examples of ethics in school? ›

Hinman points to the importance of teachers respecting students. Don't treat a child with disrespect or disdain. Don't crush a child's spirit.
Ethics in the Classroom: What You Need to Know
  • Do no harm.
  • Make things better.
  • Respect others.
  • Be fair.
  • Be loving.
18 Dec 2017

Why is ethics important in assessment? ›

Working with agreed ethical principles and practice also helps ensure that good decision-making goes beyond discussions on methodology, logistics and professional standards, and shows that consequences of choices made over the course of the evaluation are seriously taken into consideration.

Why ethics and values are important? ›

Ethics & values make an individual aware that their choices have consequences, both for themselves and others. Thus, ethics & values build credibility, Leadership skills, improves decision making, and provides long term gains. Ethics and values help in satisfying basic human needs.

Why ethics is more important than values? ›

Ethics are consistent, whereas values are different for different persons, i.e. what is important for one person, may not be important for another person. Values tell us what we want to do or achieve in our life, whereas ethics helps us in deciding what is morally correct or incorrect, in the given situation.

Why is ethics important in communication? ›

Your actions are just as important as what you say or write. Honest communication not only builds trust, it also helps you and others identify and work on any fissures that may arise in the intersection between authority, power, and teamwork. Without honesty, communication fails at its core purpose.

How can you maintain ethical behavior in your field of work? ›

Promoting Workplace Ethics
  1. Be a Role Model and Be Visible. Employees look at top managers to understand what behavior is acceptable. ...
  2. Communicate Ethical Expectations. ...
  3. Offer Ethics Training. ...
  4. Visibly Reward Ethical Acts and Punish Unethical Ones. ...
  5. Provide Protective Mechanisms.
4 Apr 2017

How can employees improve ethical behaviour? ›

Five steps to improve ethical performance
  1. Develop a code, and make ethical performance a strategic priority. ...
  2. Set the tone from the top. ...
  3. Engage, communicate and train your staff. ...
  4. Provide support routes for staff. ...
  5. Measure effectiveness of your ethics programme.
2 Nov 2014

What are examples of ethical values? ›

Recommended Core Ethical Values
  • Integrity, including. Exercising good judgment in professional practice; and. ...
  • Honesty, including. Truthfulness; ...
  • Fidelity, including. Faithfulness to clients; ...
  • Charity, including. Kindness; ...
  • Responsibility, including. Reliability/dependability; ...
  • Self-Discipline, including.

What is the most important ethics in the workplace? ›


One of the most important workplace ethics is integrity.

Why is ethics important in the workplace essay? ›

Workplace ethics ensures positive ambience at the workplace. Workplace ethics leads to happy and satisfied employees who enjoy coming to work rather than treating it as a mere source of burden. Employees also develop a feeling of loyalty and attachment towards the organization.

What is your reflection in ethics? ›

College Understanding: Ethical reflection is the thoughtful evaluation of ethical questions and the development of a critical awareness regarding the values that inform the choices all people, including oneself, make when confronting such questions.

What is the conclusion of ethics? ›

When taking a position on a moral issue or in attempting to reach a conclusion as to what is morally correct the reasoning and responsible person would give reasons for what they hold to be morally correct and and make arguments for the claims they would make .

What do you learn in Introduction to ethics? ›

This course introduces theories about the nature and foundations of moral judgments and applications to contemporary moral issues. Emphasis is placed on moral theories such as consequentialism, deontology, and virtue ethics.

What is difference between ethics and moral? ›

A lot of people think of them as being the same thing. While they're closely related concepts, morals refer mainly to guiding principles, and ethics refer to specific rules and actions, or behaviors.

What are principles of ethics? ›

The Fundamental Principles of Ethics. Beneficence, nonmaleficence, autonomy, and justice constitute the 4 principles of ethics.

How did ethics begin? ›

Ethical philosophy began in the fifth century BCE, with the appearance of Socrates, a secular prophet whose self-appointed mission was to awaken his fellow men to the need for rational criticism of their beliefs and practices.

How can ethical problems be resolved? ›

A 10-Step Process for Resolving Ethical Issues
  1. Identify the problem as you see it.
  2. Get the story straight—gather relevant data. ...
  3. Ask yourself if the problem is a regulatory issue or a process issue related to regulatory requirements.
  4. Compare the issue to a specific rule in ASHA's Code of Ethics.

Which statement best describe ethics in business? ›

Which of the following statements best describes ethics? Ethics is about values and principles.

Are values and ethics important for healthy relationships? ›

Values, traditions and healthy relationships can strengthen a family bond. These building blocks provide strong moral and ethical principles for the entire family while also helping to better each individual member within the family.

How does ethics affect relationship management? ›

A company policy that encourages positive relationships with customers can help position your company as a trusted one. While unethical behavior, such as making false claims, may gain you immediate customers, this same behavior will lose those customers for you in the long run.

What is ethical behaviour management? ›

Ethical management is the practice of being honest and virtuous in a role as a manager. Management training will help you with this and there are several responsibilities and obligations of an ethical manager, including setting a good example, holding everyone to the same standard, and making expectations clear.

What is the meaning of unethical behavior? ›

Definition of unethical

: not conforming to a high moral standard : morally wrong : not ethical illegal and unethical business practices immoral and unethical behavior.

What is ethical behaviour in business? ›

What is ethical behaviour in business? Ethical behaviour refers to the moral principles, rules and attitudes that organisations demonstrate in their conduct and dealings. Ethical behaviours are necessary for maintaining employee safety, adherence to law and regulation, and protection of the environment.

What affects ethical behavior? ›

Factors influencing ethical behaviour? School/ Education Desire to preserve/ enhance status Loyalty to Family/ Friends/ Company Company Ethos Professional Ethics … Cultural/ societal values Media influences/ coverage Legal constraints (Government) Enforcement (Legal/ Professional/ Religious) … …

Why is ethical behavior in the workplace important? ›

Employees who are ethically positive, honest, hardworking, and driven by principles of fairness and decency in the workplace, increases the overall morale and enhances the performance of an organization. A company that has established behavioral policies can improve its reputation and help ensure its long-term success.

What causes unethical behavior? ›

Results show that exposure to in-group members who misbehave or to others who benefit from unethical actions, greed, egocentrism, self-justification, exposure to incremental dishonesty, loss aversion, challenging performance goals, or time pressure increase unethical behavior.

What is unethical behavior at work? ›

Unethical workplace behavior is any action at work that goes against the prevailing moral norms of a community.

What is another term for unethical behavior? ›

adj.dishonest, immoral.

Who is responsible for ethical behavior? ›

Ethical behavior is easier for an individual than it is for a company. Companies have many individuals with differing opinions, values, and ideals. So, who's job is it to ensure a company is ethical? The answer is—everyone.

What is the importance of ethics as a student? ›

Ethics plays a very important role in Education. Ethics are interpreted as the discipline of dealing with good and bad with commitment and moral duty. Ethics are well-established levels that make the measures right and wrong.

Are ethics important? ›

In addition ethics is important because of the following: Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human needs. Every employee desires to be such himself and to work for an organization that is fair and ethical in its practices.

What is the most important ethical behavior? ›


One of the most important workplace ethics is integrity.

How can ethical behavior be encouraged? ›

Ethical behavior should be included in performance reviews and managers can encourage it by showing gratitude when they see it. If managers want their staff to behave ethically then they must understand that it starts with them. Employees generally follow the examples set forth for them by management.

What are good ethics? ›

A work ethic is a set of moral principles an employee uses in his or her job and it encompasses many of these traits: reliability/dependability, dedication, productivity, cooperation, character, integrity, sense of responsibility, emphasis on quality, discipline, teamwork, professionalism, respectfulness, determination ...

What is ethical and professional behavior? ›

Ethical behavior is good for business and involves demonstrating respect for key moral principles that include honesty, fairness, equality, dignity, diversity and individual rights. The full definition of “professionalism” is the conduct, aims or qualities that characterize or mark a profession or professional person.


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