What are ethics and ethical standards? Ethics is synonymous with morality, honesty and integrity. Ethics means the basic concepts and fundamental principles of human conduct which guide a person’s behaviour. We all have some idea of right and wrong and the ‘rightness’ of any particular decision, so how does this apply to the business world and how do we establish a uniform set of rules to be followed? The truth is we can’t; the discussion of business ethics is a subjective one, for everyone brings different concepts of ethical behavior to the table. One’s moral standards are shaped by many different things, from home environment to religious background to cultural traditions, and this variation in attitude/belief/personality subsequently creates just as much variation in the daily decisions taken by the business world.
Ethical decision making is the process of assessing the moral implications of a course of action. All decisions have an ethical or moral dimension for a simple reason – they have an effect on others (employees, competitors, customers, the public, the environment etc). Managers and leaders need to be aware of their own ethical and moral beliefs so they can draw on them when they face difficult decisions.
Most ethical decisions exist in a gray area where there is no clear-cut or obvious decision and therefore requires judgment and interpretation; the application of a set of values to a set of perceptions, and estimates of the consequences of an action. Sometimes ethical decisions involve choosing not between good and bad, but between good and better or between bad and worse.
Making ethical decisions also involves choice about who should be involved in the process and how the decision should be made. For example, if a decision will have a significant impact on the local community, leaders may feel obligated to invite a representative of the community to participate in discussions. Similarly, decisions with a significant ethical dimension may benefit from being made by consensus rather than by one individual so as to demonstrate that the choice is consistent with an organisation’s espoused values.
Regardless of the particular industry or size of the business in which you work, and irrespective of your function – whether as a business owner, employee or the head of a multinational corporation – you will inevitably encounter numerous situations where ethical standards and practices come into play. Such decisions can become a dilemma as they not only impact the decision makers themselves and their company but countless others, and it is this balancing act which can cause difficulty.
What should one do when faced with the competing interests of profitability versus morality? Many people choose the course of legality – relying on the law to guide their decision – however the legality of a course of action can be entirely unrelated to its ‘rightness’ in a given situation. Many companies set up operations in overseas markets to take advantage of lenient laws regarding labour and environmental safety, such as we have seen happen in countries in the Far East and South East Asia. This has changed in China over the past few decades. Sure, these companies end up making more money but at the expense of other human beings and the environment and in the end it is the human race which ultimately suffers the repercussions.
Society tends to place great emphasis on success which, while in and of itself is not a bad thing, can sometimes result in individuals or groups of people being faced with a situation whereby advancement (be it position, financial stature or influence) can only be gained by causing hurt or detriment to another person or group of people.
Entrepreneurs and small business owners wield great influence in determining the ethical philosophies of their business enterprises. Employees often follow by example, so it is incumbent on the manager/owner to create a work environment which embraces high moral standards and to ensure that these standards are maintained and followed.
Business experts outline several routes which owners and managers can take to guide their company down the path of ethical business behaviour. Establishing a mission statement(s) of organisational values provides employees, and the company as a whole, with a specific framework of expected behaviour. Consistent reinforcement of these statements provides shareholders, stakeholders,employees, customers, colleagues, business associates and the community at large with a portrait of the company’s principles; why it exists, what it believes and how its various functions synchronise with its mission statement(s).
Business owners and managers should review standard operating procedures within the company to ensure that they are not structured in a way which may encourage unethical behaviour and active reviews of strategic plans and objectives can also be undertaken to make certain that they are not in conflict with the company’s basic ethical standards.
Finally, and most importantly, business owners and managers must lead by example. If a business owner treats employees, customers, and competitors in a fair and honest manner – and suitably penalises those who deserve to be – he or she is far more likely to succeed in establishing an ethical work force.
Many propose that ethical companies have an advantage over their competitors. Owners of Ben & Jerry’s Ice Cream, Ben Cohen and Jerry Greenfield, are quoted as saying “consumers are used to buying products despite how they feel about the companies that sell them. But a company driven by values earns the kind of customer loyalty most corporations only dream of – because it appeals to its customers on the basis of more than a product … They like how doing business with [a values-led company] makes them feel.”
