The Importance of Values & Ethics in Business Leadership

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22 July 2013 - 8:34am -- charles

All relationships, interactions, and activities in life, whether between private persons, corporate entities, or both, must be guided by some principles and standards. These principles and standards will be founded on a key set of values that guide the decisions of the parties involved.

Managers and executives hold the primary responsibility in setting and maintaining standards within organizations and here are some key areas where this applies and becomes relevant:

  1. Organizational Values - In addition to setting the vision, plans, and goals of the organization, management is responsible for establishing values and a code of ethics by which workers and management conduct themselves. The value system helps to create the identity of the organization, providing members with a term of reference on how they are to behave and interact with one another, customers, and the general public.
  2. Legal Responsibility – All organizations are subject to the law of the land. These laws affect how businesses operate so as to protect the interests of all stakeholders including the general population, employees, customers, and shareholders. Observing the law affects how we plan and make decisions. It is important for management to be aware of the laws affecting its operations and to implement policies that guide work activities that observe the law in all areas, including the disclosure of information and precautions to protect people and the environment.
  3. Responsibility to Staff – A significant asset of any organization are the people who work there; as such, these employees should not be exploited or mistreated. The results of the organization are achieved with the cooperation and efforts of staff, and management should ensure that they are treated well and benefit from the growth and results that they enable as equitable stakeholders in the work process.
  4. Responsibility to Customers – Businesses have a duty to be honest in their dealings with consumers, including truthful representations on product capabilities and service reliability. When this happens consumers can trust the brand and the organization prospers as customers return for future purchases.
  5. Social Responsibility – Whilst the public value the services and products that an organization provides there is also an expectation for that company to provide value to society as a whole, over and above that of the services it specifically provides to its customers. Such value to society may be provided in the form of support to important causes and charities. The sharing of wealth with the society that helped to create it helps to enhance the moral standing of that business, boosting staff pride and morale to be associated with the company.


The devastating effects of the absence or misapplication of values is clearly evidenced in the global financial crisis of 2008/2009. Such failures led to loss of jobs, loss of confidence and mistrust in businesses, which all have negative impacts on the economy. In contrast, businesses flourish when good values are in place and permeate every area of the businesses activities. I urge you to review the values and code of ethics that are in place at your business. How can you better honour them and how can they be improved upon?