Business ethics set the standard for how your business is conducted. They define the value
system of how your operate in the marketplace and within your business. With legal
scandals concerning insider trading and employee theft making the news, it is no wonder
that businesses are increasingly giving attention to the ethical basis of their business and
how to lead in an ethical way.
While the examples above seem to be clear cut breaches of ethics, many ethical dilemmas
that not so clear cut are faced on a daily basis in business. In fact, there may not even be a
quot;rightquot; or quot;wrongquot; answer to the dilemma, but how you deal with it will say much about
you and your business. These decisions are often referred to as being in the quot;grayquot; area.
They are not black-or-white, but could be argued appropriately either way.
Here is an example. Jane has been operating a consulting business for about a year and has
been doing very well. About a month ago, she decided she needed to hire someone to help
her. After interviewing several candidates, she decided to hire the best one of the group,
Sara. She called Sara on Monday to tell her she had gotten the job. They both agreed that
she would start the following Monday and that Sara could come in and fill out all of the
hiring paperwork at that time.
On Tuesday, of the same week, a friend of Jane's called her to say that she had found the
perfect person for Jane. Jane explained that she had already hired someone, but the friend
insisted. quot;Just meet Kim. Who knows, maybe you might want to hire her in the future!quot;
Rather reluctantly, Jane consented. quot;All right, if she can come in tomorrow, I'll meet with
her, but that's all.quot; quot;Oh, I'm so glad. I just know you're going to like her!quot; Jane's friend
And Jane did like her. She like her a lot. Jane had met with Kim on Wednesday morning.
She was everything that Jane had been looking for and more. In terms of experience, Kim
far surpassed any of the candidates Jane had previously interviewed, including Sara. On top
of that, she was willing to bring in clients of her own which would only increase business.
All in all, Jane knew this was a win-win situation. But what about Sara? She had already
given her word to Sara that she could start work on Monday.
And yet she only had the resources to hire one person at this point. Clearly, the best
business decision was to hire Kim. But what about the ethical decision? If her business did
poorly or Sara couldn't provide enough support, the business would suffer. As a result, her
family would suffer. Money was already tight, what with two boys in college. And yet she
knew Sara also had a family she was supporting. Plus, she had been so enthusiastic about
starting to work.
Obviously, Jane had a problem - an ethical problem. Should she hire Sara (whom she'd
already given her word) or Kim (who was obviously the best person for the job)? Questions
like these touch on our deepest values. Dependin on who you would ask, you would get
strong arguments for both decisions. This is what we mean when we talk about quot;grayquot; area.
So what is the answer?
According to Kenneth Blanchard and Norman Vincent Peale, authors of The Power of
Ethical Management, there are three questions you should ask yourself whenever you are
faced with an ethical dilemma.
Is it legal?
In other words, will you be violating any criminal laws, civil laws or company
policies by engaging in this activity?
Is it balanced?
Is it fair to all parties concerned both in the short-term as well as the long-term? Is
this a win-win situation for those directly as well as ind irectly involved?
Is it right?
Most of us know the difference between right and wrong, but when push comes to
shove, how does this decision make you feel about yourself? Are you proud of
yourself for making this decision? Would you like others to know you made the
decision you did?
Most of the time, when dealing with quot;gray decisionsquot;, just one of these questions is not
enough. But by taking the time to reflect on all three, you will often times find that the
answer becomes very clear.
Many businesses are developing an Ethics Policy to clearly state what employees and
customers should expect. This not only defines for your employees what you cons ider to be
inappropriate actions, but also sends a clear message about who you are and what is
important to you. A number of the resources listed below in the quot;Relatedquot; section provide
further information about training in ethics, setting up ethics policies, and ethical dilemmas
faced by others and how they handled them.
Research indicates that the integrity demonstrated by your business can have a positive
effect on your bottom line. The challenge is to not only believe and voice your ethical
principles, but to also practice them in all your business transactions. When the world
knows that your business can be trusted to act ethically, you will see the results in lower
employee turnover and better customer relations - both well-documented as being critical
to business survival. The old adage that quot;what you sow, you will reapquot; also supports this
premise. Sow the seeds of ethical values in your business and you will see it return in value
to your business.
business ethics - introduction
What is business ethics?
Business Ethics is a relatively new, but increasingly important, part of Business Studies.
The question, or problem, is this:
A business is expected to achieve its objectives, usually to make a decent profit for the
owners/shareholders. In doing so, it may need to overlook the wishes of others.
For example, it could lie about the benefits of its products in order to get more revenue. It
could skip important safety checks to save costs. What should the business do?
To some extent, this is an area already covered by Business Law. When society largely
agrees, a law can be passed to stop behaviour the society disapproves of. For example,
discrimination against women is illegal (it wasn’t always so).
What Business Ethics Covers
Business Ethics looks at areas that are too new, or too controversial, for society to agree on.
For example, the medical business is increasingly controversial. The pharmaceutical
businesses concentrate their (veryexpensive) research on illnesses that afflict rich people,
because rich people (or the government of a rich country) can afford to buy these new
treatments when they are launched on the market. This means too little research is done
into illnesses (like malaria) that primarily affect poor people and poor governments. Is this
So, we can have profit-maximising businesses that don’t worry too much about who gets in
their way; or we can have ethical businesses that are very careful with people get in their
way, but which don’t make very much profit. This is the contrast, the trade-off that we are
Or is it? Increasingly, there is thought about a middle way. Consumers in developed
countries are increasingly aware of ethical issues, and some are prepared to pay for it.
For example, BodyShop was one of the first businesses to build on this trend, and made
their market niche largely out of the fact that their products are kinder to the world than are
competing products. Why buy from BodyShop? Because their products aren’t tested on
animals. So, the ethical nature of the product becomes part of the unique selling point
(quot;USPquot;) of the product and central to the Marketing of that product. In other words, there is
no conflict between ethics and profit, because an ethical stance is part of the profit-making
Since then, many businesses in all sorts of markets have followed this line. Washing
powders, for example. BP is trying to portray the oil business as environmentally friendly.
Other businesses have been pushed in this direction by adverse publicity. Triumph, a Swiss
makers of bras, was forced to abandon an investment in Myanmar (Burma ) because of
widespread opposition to a dictatorial and unpleasant government. And Nike (and others)
have been widely criticised for using cheap labour in developing countries, which is what
you would expect from a profit-maximising business.
One difficult question is ‘what sort of things count as ethical question?’ There is no
agreement on this, hence the difficulty. Take the example above. Some people might say
well-done to Nike for creating jobs in a very poor part of the world where jobs are
desperately needed. But other people have said that it is unethical to exploit very poor
people, and to make them work in poor conditions for low wages, especially when the
business could afford to pay them more.