Ethics For Business – Every day, managers and business owners make business decisions based on what they believe is right and wrong. Through their actions, they demonstrate to their employees what is and is not acceptable behavior and shape the ethical standards of the organization. As you will see in this chapter, personal and professional ethics are important cornerstones of an organization and shape its ultimate contribution to society in the form of corporate social responsibility. First, let’s consider how individual business ethics are formed.
Ethics is a set of moral standards for deciding whether something is right or wrong. The first step in understanding business ethics is learning to recognize an ethical problem. A moral dilemma is a situation where one must choose between a set of actions that may be moral or immoral. For example, Martin Shkreli, the former CEO of Turing Pharmaceuticals, raised the price of a drug used for newborns and HIV patients by more than 5,000 percent, calling the price increase a “great business decision.” He defended it by declaring. But consider the actions of the stranded, hungry people in New Orleans who lost everything in the wake of Hurricane Katrina. They ransacked flooded shops, taking away free food and bottled water. Was it unethical behavior? Or how about a small Texas plastics manufacturer that employs over 100 people and specializes in the Latin American market? The president was worried because he knew the firm would be bankrupt by the end of the year if it didn’t get more contracts. He knew that he was losing business because of his refusal to pay the bribe. Bribery was part of the culture in its major markets. Closing the firm will put many people out of work. Should he start paying bribes to stay in business? Would it be unethical? Let’s look at the next section for some guidance on how to recognize unethical situations.
Ethics For Business
Researchers at Brigham Young University tell us that all unethical business activities will fall into one of the following categories:
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After recognizing that a situation is unethical, the next question is what do you do? A person’s actions are partly based on his moral philosophy. The environment in which we live and work also plays a role in our behavior.
Another factor affecting individual business ethics is fairness, or what is fair according to society’s prevailing standards. We all expect life to be reasonably fair. You expect that your tests will be fair, that your grading will be fair, and that your wages will be fair based on the type of work you do.
Today we take justice to mean the fair distribution of the burdens and rewards that society has to offer. The distribution process varies from society to society. Those living in a democratic society believe in the doctrine of “equal pay for equal work”, in which individuals are rewarded based on the free market value of their services. Because the market places different values on different occupations, rewards such as wages are not necessarily equal. Nevertheless, many consider the rewards to be fair. A politician who argued that a supermarket clerk should be paid the same as a doctor, for example, would not get many votes from Canadians. At the other extreme, communist theorists have argued that justice would be achieved through a society in which burdens and rewards are distributed among individuals according to their abilities and their needs, respectively.
People choose right and wrong based on their personal code of conduct. They are also influenced by the moral environment created by their employers. Consider the following headings:
Business Ethics Definition, Importance And Conceptual Framework
As these true stories illustrate, poor business ethics can create a very negative image for a company, be costly to the firm and/or the executives involved, and result in bankruptcy and prison terms for the perpetrators. It may be time. Organizations can reduce the likelihood of these types of liability claims by example, through various informal and formal programs, and by educating their employees about ethical standards.
Employees often follow the examples set by their managers. Leaders and managers establish patterns of behavior that determine what is acceptable and what is not in the organization. When Ben Cohen was president of Ben & Jerry’s Ice Cream, he implemented a policy that no one could earn seven times more than the lowest paid worker. He wanted all employees to feel that they were equal. At the time he resigned, the company had $140 million in sales, and the lowest-paid worker earned $19,000 a year. Ben Cohen’s salary was $133,000, based on the “sevenfold” rule. A typical top executive at a $140 million company would have earned 10 times Cohen’s salary. Ben Cohen’s actions helped shape the moral values of Ben & Jerry’s.
In addition to providing a system for resolving ethical dilemmas, organizations also provide formal training to raise awareness of questionable business activities and practice appropriate responses. Many companies have some type of ethics training program. Those that are most effective, such as those created by Levi Strauss, American Express, and the Campbell Soap Company, begin with techniques for solving ethical dilemmas as discussed earlier. Next, employees are presented with a series of situations and asked to come up with the “best” ethical solution. According to a recent survey by the Ethics Resource Center, more than 80 percent of U.S. companies provide some form of ethics training for employees, which can include online activities, videos, and even games.
Most large companies and thousands of smaller companies have created, printed, and distributed codes of ethics. In general, a code of ethics provides employees with knowledge of what their firm expects in terms of responsibilities and behavior toward fellow employees, customers, and suppliers. Some codes of ethics offer a long and detailed set of guidelines for employees. Others are not really codes but abstract statements of goals, policies, and priorities. Some companies have their own codes created and posted on office walls, included as a key component of employee handbooks, and/or posted on their corporate websites.
A Long Look At Business Ethics
Do codes of ethics make employees behave more ethically? Some believe they do. Others believe they are little more than public relations ploys. If senior management adheres to the code of conduct and regularly emphasizes the code of conduct to employees, it will have a positive effect on behavior.
A whistleblower is a person who discloses any information that reveals illegal, unethical or improper activities within an organization that is either private or public. Many whistleblowers have said they were motivated to take action and end unethical practices after witnessing injustice in their businesses or organizations. Social and organizational pressures are driving forces as well as ethics. A 2012 study found that people are more likely to blow the whistle when they know about wrongdoing, because they fear the consequences of otherwise remaining silent.
The motivation for blowing the whistle is not always good, and the outcome is not always positive. There are cases involving employees who blew the whistle in retaliation against their employer or supervisor, for example. While it is possible to view the whistleblower as a “hero” for his courage and truth-telling, it is also possible to view him as a traitor or a tattletale—just among the many disgruntled employees. As one who is just trying to get by for a perceived but imagined injustice. One of the barriers to whistleblowing is the belief—pervasive in the professional world—that individuals are bound by confidentiality in their line of work. Accordingly, whistleblowing becomes a moral choice that pits the employee’s loyalty to the employer against the employee’s obligation to serve the public interest. As a result, in Canada, whistleblower protection laws and regulations have been enacted to guarantee freedom of expression for workers and contractors in certain circumstances. Whistleblowers have the right to file complaints that they believe provide reasonable evidence of a violation of a law, rule or regulation. gross misconduct; gross waste of funds; abuse of power; or a substantial and specific threat to public health or safety.
In many situations, there may not be a simple right or wrong answer. Yet there are many questions you can ask yourself, and some self-tests you can do, to help you make the right ethical decision. First, ask yourself, “Are there any legal restrictions or violations that will result from the action?” If so, take a different approach. If not, ask yourself, “Does this violate my company’s code of conduct?” If so, find a different path to follow again. Third, ask, “Does this meet the guiding principles of my own moral philosophy?” If the answer is “yes,” your decision must still pass two important tests.
Corporate Social Responsibility And Business Ethics
You should now ask, “How does this make me feel?” This enables you to test your comfort level with a particular decision. Many people find that, after reaching a decision on a problem, they still experience discomfort which can manifest itself in sleeplessness or lack of appetite. Those feelings of conscience can act as one.
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