Professional in Human Resources (PHR) Practice Exam

In a business context, ethics refers to a system of moral principles that guide the conduct of individuals and the organization as a whole. This involves determining what is right or wrong in various scenarios that a business may encounter, including interactions with employees, customers, stakeholders, and the broader community. Ethics provides a framework for decision-making and behavior, emphasizing values such as fairness, integrity, and respect. Striving to adhere to ethical standards can enhance a company’s reputation and contribute to long-term success by fostering trust and loyalty among stakeholders.

The other options don't capture the essence of ethics. While increasing profitability, evaluating employee performance, and fulfilling legal obligations are important aspects of business, they do not specifically define ethics. Instead, these aspects may be influenced by or operate alongside ethical guidelines but do not encompass the moral principles that fundamentally shape business conduct.