BUSINESS ETHICS

What is Business Ethics?

The concept has come to mean various things to various people, but generally it's coming to know what it right or wrong in the workplace and doing what's right -- this is in regard to effects of products/services and in relationships with stakeholders. Wallace and Pekel explain that attention to business ethics is critical during times of fundamental change -- times much like those faced now by businesses, both nonprofit or for-profit. In times of fundamental change, values that were previously taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should act. Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass. However, attention to business ethics provides numerous other benefits, as well (these benefits are listed later in this document).
Note that many people react that business ethics, with its continuing attention to "doing the right thing," only asserts the obvious ("be good," "don't lie," etc.), and so these people don't take business ethics seriously. For many of us, these principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine. Anyway, there are many other benefits of managing ethics in the workplace. These benefits are explained later in this document.

Assessing and Cultivating Ethical Culture

Culture is comprised of the values, norms, folkways and behaviors of an organization. Ethics is about moral values, or values regarding right and wrong. Therefore, cultural assessments can be extremely valuable when assessing the moral values in an organization.

Ethics Training

The ethics program is essentially useless unless all staff members are trained about what it is, how it works and their roles in it. The nature of the system may invite suspicion if not handled openly and honestly. In addition, no matter how fair and up-to-date is a set of policies, the legal system will often interpret employee behavior (rather than written policies) as de facto policy. Therefore, all staff must be aware of and act in full accordance with policies and procedures (this is true, whether policies and procedures are for ethics programs or personnel management). This full accordance requires training about policies and procedures.

Social Responsibility and Managerial Ethics

What Is Social Responsibility?

•The Classical View

–Maximize profits for the benefit of the stockholders–Doing “social good” unjustifiably increases costs.

What Is Social Responsibility?(cont’d)

•The Socio-economic View

–Management should also protect and improve society’s welfare–Corporations are responsible not only to stockholders–Firms have a moral responsibility to larger society “to do the right thing”

Arguments For andAgainst Social Responsibility

•

For

–Public expectations–Long-run profits–Ethical obligation–Public image–Better environment–Discouragement of furthergovernmental regulation–Balance of responsibility andpower–Stockholder interests–Possession of resources–Superiority of prevention over cure

Values-based Management

•Values-based Management

–Managers establish and uphold an organization’s sharedvalues

•Purposes of Shared Values

–Guiding managerial decisions–Shaping employee behaviour–Influencing the direction of marketing efforts–Building team spirit

•The Bottom Line on Shared Corporate Values

–An organization’s values are reflected in the decisions andactions of its employees

Stated Values of Organizations

Percentage of Customer satisfaction 77%Ethics/integrity 76%Accountability 61%Respect for others 59%Open communication 51%Profitability 49%Teamwork 47%Innovation/change 47%Continuous learning 43%Positive work environment 42%Diversity 41%Community service 38%Trust 37%Social responsibility 33%Security/safety 33%Empowerment 32%Employee job satisfaction 31%Have fun 24%.

Managerial Ethics

•Ethics Defined

–The rules and principles that define right andwrong conduct

•Four Views of Ethics

–Utilitarian view–Rights view–Theory of justice view–Integrative social contracts theory

Managerial Ethics (cont’d)

•Utilitarian View

–Greatest good is provided for the greatestnumber

•Encourages efficiency and productivity and isconsistent with the goal of profit maximization

•Rights View

–Respecting and protecting individual libertiesand privileges

•Seeks to protect individual rights of conscience, freespeech, life and safety, and due process

Examining Ethics

 

Ethical Leadership

•Managers must provide a

good role model

by:

–Being ethical and honest at all times–Telling the truth–Admitting failure and not trying to cover it up–Communicating shared ethical values to employeesthrough symbols, stories, and slogans–Rewarding employees who behave ethically andpunishing those who do not–Protecting employees (

whistleblowers

) who bring to lightunethical behaviours or raise ethical issues

 

The Value of Ethics Training

•Training can make a difference in ethicalbehaviors•Training increases employee awareness of ethical issues in business decisions•Training clarifies and reinforces the standardsof conduct•Employees are more confident of support whentaking unpopular but ethically correct stances