1. Running Head: ETHICS: BEST PRACTICES IN THE WORKPLACE 1
Ethics: Best Practices in the Workplace
Kali A. Morrison
HRDV 2301-D02 – Foundations in Integrative Studies
Texas Tech University

2. ETHICS: BEST PRACTICES IN THE WORKPLACE
Abstract
The Josephson Institute of Ethics, a nonprofit organization that’s mission is to “improve
the ethical quality of society by changing personal and organization decision making behavior”
(josephsoninstitute.org/about) has come up with twelve principles for business executives that
when exhibited shows ethics. These twelve principals are: honesty, integrity, promise-keeping
and trustworthiness, loyalty, fairness, concern for other, respect for others, law abiding,
commitment to excellence, leadership, reputation and morale, and accountability (Josephson,
2010). Because ethics encompasses every aspect of an organization these twelve traits can be
applied to an organization as well as its executives. They also provide guidance when looking for
best practices in business ethics. Business ethics is a complicated matter to discuss. It
encompasses all areas of an organization from the most senior management to the lowest ranking
employee. By examining ethics and what is means to an organization it is possible to create a
business culture that embraces ethical behavior and in turn helps an organization’s bottom line.

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Publicized corporate scandal has led to public pressure for improved business ethics and
corporate responsibility (Ferrell, Fraedrich, & Ferrell, 2015, p. 3). But what are business ethics?
This question allows a discussion on how a business creates a culture that behaves in an ethical
manner. The first step is to define what ethics are. Ethics are the principals, values, and norms
that guide behavior. Ethics are the behavior or decisions made within a group’s values (Ferrell,
Fraedrich, & Ferrell, 2015, p. 5). Using this as a definition it then becomes possible to look at
organizations and determine if they exhibit ethical behavior.
The culture of an organization determines if its employees will behave ethically. This
culture determines what is right and wrong for a particular organization. It is an organization’s
responsibility to create an ethical culture – which is the “acceptable behavior as defined by the
company and industry…it is the component of corporate culture that captures the values and
norms an organization defines and is compared to by its industry as appropriate conduct.”
(Ferrell, Fraedrich, & Ferrell, 2015, p. 15)
More and more often companies are being held accountable and liable for ethical
behavior (Lepak & Gowan, 2016, p. 18). Formal policies are being implemented and enforced to
limit this accountability and liability. By having these formal polices companies hope to convey
to their consume base that they are concerned with their impact. Even with formal polices it is
ultimately the employees who define the ethical nature of an organization (Lepak & Gowan,
2016, p. 53).
Because it is the employees who define the ethics of an organization it is vital that
companies move beyond their formal policies and make sure that employees are able to exhibit
ethical behavior in all circumstances. By creating an ethical culture employers can increase the

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both customer and employee loyalty. An ethical culture decreases ambiguity by providing
established policies and procedures (Stanwick & Stanwick, 2014, p. 123)
IKEA
IKEA is the currently the world’s largest retailer selling assemble yourself furniture that
is known for being well designed and affordable. IKEA goes beyond just selling furniture, it has
a corporate culture that tries to seeks to create a better life for all those that it comes into contact
with, including its stakeholders, customers, employees, suppliers, and communities. As an
organization they have come up with ten core values that all employees are expected to embrace.
They include leadership by example, constant desire for renewal, togetherness and enthusiasm,
cost-consciousness, striving to meet realty, humbleness and will power, daring to be different,
accept and delegate responsibility, simplicity, and constantly being on the way (IKEA Address).
Not only does IKEA keep these as values, they have also pledged a commitment to the
environment.
In order to keep their values, IKEA has instituted mandatory training for all employees
that reviews not only their code of conduct, but the policies they have to guide ethical behavior.
They look for employees who will embody these ideals and be a physical manifestation of the
values of the company. These standards also reach beyond their employees to their suppliers as
well. These standards include not using child labor, having a person who is responsible to make
sure that the supplier is complying with the standards set by IKEA, and that if they have any
subcontractors they too will comply with the required standards (IKEA Address). Suppliers are
also required to source from sustainable resources and IKEA limits the types of materials that

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they can use to those that are not considered endangered by them. Those suppliers who chose not
to live up to IKEA’s standards risk being dropped as suppliers.
Like many corporations, IKEA has had its share of ethical scandal. But one aspect that
set it apart from other companies that faced similar ethical dilemmas is that they publicly
acknowledged their short coming and update their corporate values to hopefully keep such
incidents, specifically of human rights violations, spying on employees, and product quality, to
not occur in the future.
Because of their strong commitment to philanthropy, innovation, and sustainability,
IKEA, even with its limited recent ethical issues can easily be seen as an example for other
companies on how to handle ethical issues and how that operating a company with a strong
ethical culture can be profitable.
REI – Recreational Equipment Incorporated
REI is an outdoor apparel and equipment store that also offers a cooperative. Because it is
a cooperative, members are able to receive discounts relative to the amount of their purchases.
By being a cooperative, REI keeps a focus on its most loyal customers and has created a culture
that emphasizes superior goods and services (Responsible Retail Cooperative). It was founded as
a cooperative and that legacy continues today with members receiving at least ten percent off of
their purchases. They stand behind the products that they sell and also offer their own brand that
routinely wins awards and is only available in their stores.
REI has made it a point to be a company that values social responsibility. In some
markets they offer programs to educate their customers in differing outdoor programs ranging
from hiking to photography.

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From the top down REI is a company that is focused on its customers. Their board of
directs is predominately elected by its cooperative members. And the board encourages direct
contact from customers. REI has a quest to satisfy customers (Responsible Retail Cooperative).
They attempt to attract and retain employees who are passionate about the outdoors and want to
share that passion with customers.
REI works to provide a culture of trust, inclusion, and social responsibility. To do this
they have set standards for not only themselves but also their vendors. They have created a
stewardship report that highlights what progress they have made and where they have
experienced challenges. They do this to create an atmosphere of transparency (Responsible
Retail Cooperative).
REI is committed to their employees, the environment, and stakeholders. They do this by
offering a completive benefits package and unique perks to their employees, creating areas of
concern for environmental suitability, and by encouraging all that they come into contact with to
take a part in outdoor stewardship (Responsible Retail Cooperative).
Even with all their proactive ethical approaches, REI has had its own issues including
factory conditions to attracting a more diverse workforce. But they actively work to combat these
challenges and by doing so they are able to remain a successful business. By being proactive
about potential ethical issues REI is able to demonstrate that it is possible to have an ethics
focused business model and remain profitable.
These two companies exhibit best practices when it comes to ethics because they show a
commitment to not only their shareholder, but also to the communities that the serve. They
exhibit the Josephson Institute’s twelve ethical principles, not only by their top executives and

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the public relations firms that they hire, but their employees embody these principles and share
them with the communities that they serve. When faced with ambiguous situations they chose to
share their values and in turn they are able to reap a financial benefit (Ferrell, Fraedrich, &
Ferrell, 2015, p. 15).
Business ethics is a complicated area. It involves leadership actively exhibiting the traits
that they wish to see in their employees and those employees actively mirroring what they see
from executives (Stanwick & Stanwick, 2014, p. 80). When organizations actively chose to have
an ethical culture there is a decrease in the need for enforcement of rules and an environment of
shared values and support for ethical decision making is created (Ferrell, Fraedrich, & Ferrell,
2015, p.15).

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References
About Josephson Institute, (n.d.). Retreived from josephsoninstitute.org/about
Ferrell, O.C., Fraedrick, J., & Ferrell, L. (2015) Business ethics ethical decision making and
cases (10th ed.). Stamford, CT: Cengage Learning.
IKEA address ethical and social responsibility challenges. (n.d.) Retreived from
https://danielsethics.mgt.unm.edu/pdf/ikea.pdf
Josephson, M. (2010). 12 ethical principles for business executives. Retrieved from
http://business.josephsoninstitute.org/blog/2010/12/17/12-ethical-principles-for-
business-executives/
Lepak, D., & Gowan, M. (2016). Human Resource Management (2nd ed.). Chicago, IL: Chicago
Business Press.
Recreational Equipment Incorporated (REI): A Responsible Retail Cooperative. (n.d.) Retreived
from https://danielsethics.mgt.unm.edu/pdf/rei-case.pdf
Stanwick, P., & Stanwick, S. (2014) Understanding business ethics (2nd ed.). Thousand Oaks,
CA: SAGE Publications, Inc.