What are Ethical Standards?

Malcolm Tatum

Ethical standards are codes of conduct that are adopted as a means of inspiring trust and a mutual sense of respect between two parties. In terms of ethical standards in a business setting, companies will adopt ethical codes that exhibit traits such as fairness, kindness and general good behavior that is in compliance with laws as well as the expectations of its targeted clientele. The scope of the application of these standards begins with the structuring of the policies and procedures of the business, continues through the sales effort, and culminates with order fulfillment and what is known as ethical standards accounting.

Honesty and integrity in business dealings are common and important ethical standards.
Honesty and integrity in business dealings are common and important ethical standards.

The development of an ethical code for any business usually begins with an understanding of current laws and regulations that govern trade in the jurisdictions where the business operates. Within the scope of those regulations, business owners usually go one step further and attempt to incorporate elements that help to create and nurture ongoing relationships with suppliers as well as customers. While the exact structure of those ethical standards may vary depending on various factors, they usually will include a high degree of honesty in business dealings, providing accurate and complete information to customers, and generally honoring every type of commitment made by the business without fail.

It is not unusual for ethical standards to be stated in terms that are somewhat broad. This is because the actual implementation of those broad standards may change over time. Changes may occur in response to shifts in laws and regulations that affect the business operation, making it necessary to implement policies and procedures that the company previously was committed to not including in its client or vendor relationships. While the broader idea of the ethical standards, such as to be honest in all dealings and always treat customers with respect may not change, the business may no longer be in a position to exhibit those standards in exactly the same way.

One aspect of ethical standards that does tend to remain the same is the accounting process. Companies that choose to employ what are known as ethical standards accounting normally utilize record keeping policies and procedures that are compliant with generally accepted accounting principals, and allow for a high level of transparency in the way those records are made available to authorized parties. Here, there is no attempt to cook the books or massage data so that the most favorable perception of the company’s finances are produced, even when it would be possible to do so using methods that are within the limits of the law. This overall approach of full disclosure, coupled with a strong customer ethic and a dedication to honesty and integrity can often help a business to stand out from other companies, and attract a great deal of attention from both consumers and potential investors.

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