« Business ethics » integrates the fundamental elements of ethical philosophy into business activities, institutions and organizations. Business ethics focuses on the study of moral norms – of right and wrong – and how these standards are applied (or not) to the production, distribution, and use of goods and services. These standards apply both to individuals within an organization and to the organization as a complete entity. A company can also be held liable by the public for its actions. With many ways to communicate with businesses – email, online reviews, social media – consumers can easily communicate their support or disapproval of a company`s actions. This responsibility encourages companies to act effectively and ethically. Business ethics and business law are linked in that a company`s ethical behavior is often enforceable by legal means. This relationship is not limited to the United States; International organizations such as the World Trade Organization (WTO) and the United Nations (UN) legally apply ethical behavior in various countries. These are external stakeholders demanding ethical behaviour from companies and their managers. There are strict laws to punish those who do not respect the rules of society. It is the responsibility of managers at all levels of an organization to implement, respect and enforce illegal behaviour. Ethical dilemmas are so common because they are often situations involving decisions that could benefit the manager or his organization. The problem is that this decision can be not only unethical, but also illegal.
Despite its vague nature, managers are responsible for ethical behaviour even in these situations. Developing an ethical decision-making framework can reduce the likelihood of ethical dilemmas that lead to ignoring ethical obligations. The Institute for Business Ethics proposes to use a seven-step decision-making framework originally developed by Linda K. Trevino and Katherine A. Nelson in 2007. These steps begin with gathering the facts, defining the ethical issue(s), and identifying the parties involved, consequences, and ethical obligations. From there, you should fully consider your personal character and integrity, get creative with possible actions, and always « check your instincts. » Consumers are increasingly aware of how businesses work. When organizations operate with a solid moral foundation, they build trust and gain credibility with customers and employees. A good reputation builds a loyal customer base. Legal and ethical success is a more sustainable and stable approach to long-term success. Almost all major companies have similar ethical principles or codes of conduct.
Although small businesses are less likely to formalize such codes, ethical advice from business leaders expressed in corporate culture can be just as effective in managing employee behavior. Many professional associations publish detailed ethical guidelines for their members. For example, doctors vow to obey the Hippocratic Oath and follow guidelines created by state and national medical groups. The American Medical Association provides a detailed nine-point code of ethics for which it holds its members accountable. Lawyers, financial advisors, accountants, and many other professions have similar guidelines for ethical behavior. In fact, fear of retaliation is one of the main reasons given by employees for not reporting unethical behavior in the workplace. ECI says companies should work to improve their corporate culture by reinforcing the idea that reporting alleged misconduct is beneficial to the company and recognizing and rewarding the employee`s courage to report. The most basic level of ethical business practices is compliance with all laws pertaining to your business.
Whether it`s international trade regulations, state tax laws, or local building regulations, companies need to ensure that all practices comply with these guidelines. Often, legal regulations can serve as a starting point for an organization`s code of ethics. Starting at the macro level, companies can use these industry regulations as a guide to develop more specific policies and procedures. Although philosophers have written many books on ethics, the subject boils down to doing what is right. Of course, in business, as in life, it`s not always easy to decide what`s right, especially when competing priorities are at work. Your company`s ethical standards as well as your personal code of ethics can guide you in your decisions. In the absence of established institutional regulations that act as standards of ethical practice, it can be difficult for business leaders to develop rules that protect society without going against the traditional concept of the « hidden hand » in long-standing corporate philosophy. Essentially, it may depend on whether acting for the common good can also bring a positive return on investment.
