The document discusses ethical business practices in North America. It notes that while organizations are realizing the benefits of ethical practices, unethical behavior by individuals still occurs. Consumers now expect ethical conduct and have ways to learn about and react to lapses. Implementing corporate social responsibility policies can help build trust and improve public image. However, issues like disproportionate executive pay still present ethical challenges. Overall, societal pressures and recognition of long-term benefits are encouraging more organizations to balance profitability with ethics.

1. ETHICAL BUSINESS PRACTICES
IN NORTH AMERICA
ShannonPickering

2. Shannon Pickering
The current state of business ethics in North America are such that organizations are
beginning to realize the advantages of ethical business practices, and implementing them at an
organizational level. Although there are many instances where compromises need to be made
between profitability and other ethical issues, ethical practices are generally beneficial to
organizations. However, unethical business practices remain, especially regarding individuals
within an organization acting in self-interest.
Organizations face increased scrutiny from sophisticated and informed consumers.
Consumers have high expectations regarding the ethical conduct of organizations, and a highly
competitive business environment gives customers the opportunity to switch products if unhappy
for any reason. Changes in technology provide ease in access to information, as well as increase
the speed at which it is disseminated. These factors increase the likelihood of consumers finding
out, and reacting to, unethical conduct, oftentimes in the public domain of social media.
Furthermore, reports unethical business practices have eroded consumer trust in business ethics,
creating a need for businesses to re-build and maintain stakeholder trust.
In this business environment, it is in the best interest of an organization to engage in
ethical behaviour. These external forces create not only a place for ethics in the North American
business environment, but also a potential need for ethical behaviour for survival and continued
profitability. An increasing number of organizations are realizing the benefits of ethical
behaviour, and implementing corporate social responsibility policies to reflect this newfound
interest. These policies advocate business practices which consider the implications of business
activities on the environment, employees, consumers and communities. Additionally, these
policies have a pivotal role in terms of establishing a positive rapport with customers, and
enhancing corporate image. Nike, for example, faced intense scrutiny over its labour policies in

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developing nations, including the use of sweatshops and child labour in the late 1990’s and early
2000’s. Since then it has successfully implemented a corporate social responsibility policy and is
now considered a leader in ethical business practices.
Ethical business conduct has additional benefits internally, as an unethical business
environment is likely to have negative repercussions on employee morale. Employees may be
placed in situations where demands are placed on them to compromise their personal ethical
codes. Furthermore, employees may be exposed to harassment or bullying if unethical behaviour
is accepted within a corporate culture. This form of corporate climate may place excessive stress
on employees, impairing their productivity and decision making abilities. Realization of the
adverse repercussions of a negative corporate environment led to an increased emphasis on
employee health and well-being, with proactive employers taking steps to incorporate employee
wellness into their business strategies. Canada’s Top 100 Employers for 2015 include Cameco
Corp, which actively encourages the maintenance of work-life balance; Canadian National
Railway, which offers amenities such a quiet room for meditation or religious observance, fitness
facility and a cafeteria featuring healthy and special diet menus; and BASF Canada, which is
currently introducing a company-wide diversity strategy and a diversity awareness program
(Jermyn, 2014). Organizations promoting a healthy workplace environment are likely to benefit
from improved productivity, and decreased costs associated with employee illness and
absenteeism.
Although organizations are making strides in engaging in ethical conduct, certain ethical
issues remain prevalent. The foundation of ethical conduct in an organization is a corporate
culture that promotes ethical behaviour. Top-down support of an ethical practices is important to
reinforce the development of an ethical culture in an organization, ensuring that both the

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organization as a whole and the individuals within the organization behave ethically. To create
this culture, top management needs to accept a leadership role in promoting ethical business
practices. However, in many situations, this support may be lacking, creating an environment
where many still act based on self-interest.
Executive salaries are an example of an area prone to ethical lapses in North American
businesses. Executive compensation is often disproportionately higher than standard wages, and
justified by board members responsible for determining it as appropriate due to the integral
nature of executive positions to an organization. However, empirical evidence suggests that
executives receive vast amounts of compensation, regardless of performance. Recently, the
former Target CEO Gregg Steinhafel received a departure package worth $61 million, despite
Target’s botched entry, and ultimate failure in Canada (CBC, 2015). Furthermore, salaries tied to
incentives may encourage people to act with little to consideration to the long-term effects or
ethical implications of their actions. Those responsible for determining their salaries need to
closely examine the ethical implications of disproportionately large executive salaries, especially
in terms of its promotion of income inequality, and its fairness in comparison to the wages of
other employees.
Although the executive buy-in to changes corporate salary structure may be difficult to
ascertain, it is an important issue to address in terms of re-establishing trust with organizational
stakeholders. Public trust in organizations has largely been eroded, especially after the 2008
financial crisis, which resulted from unethical business practices. The public is particularly
distrustful of businesses leaders. A survey by public relations firm Edelman revealed that people
trusted organizations more than business leaders. While 50% of respondents trusted business to
behave ethically, only 18% trusted business leaders to do the right thing. Furthermore, fewer

5. Shannon Pickering
than one in five people trust business leaders to tell the truth when confronted with a difficult
issue (Adams, 2013).
The juxtaposition of an increased interest in ethics on an organizational level and the
continued unethical behaviour of high-level individuals within organizations suggests that ethical
conduct is engaged in to the extent to which it is profitable. Although this attitude may appear to
be troublesome, it is important to recognize that remaining profitable is an important part of the
ethical fabric of an organization. Numerous stakeholders are affected by the ability of an
organization to remain profitable, including employees, shareholders and communities.
Furthermore, economies depend on profitable businesses to grow and remain healthy, meaning
that organizational profitability has broad societal implications. Improving the state of business
ethics in North America is highly reliant on organizational ability to balance profitability with
other ethical issues, and the creation of corporate cultures which encourage staff to act in the best
interest of the organization and its stakeholders.
North American organizations currently operate in a complex ethical environment.
However, societal pressures and the realization of the enhanced profitability ethical conduct may
offer is encouraging organizations to engage in ethical behaviour. Although profitability is still
fundamental, it is becoming integrated with ethical conduct . While North American
organizations continue to have ethical issues to address, it appears that many are beginning to
realize that the long-term benefits of ethical conduct outweigh the benefits of prioritizing short-
term profitability.

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Works Cited
Adams,S.(2013, 22 January). NewStudy:Trustin Both Businessand CorporateLeadersPlummets.
RetrievedfromForbes:http://www.forbes.com/sites/susanadams/2013/01/22/new-study-
trust-in-both-business-and-corporate-leaders-plummets/
CBC. (2015, January22). Target's packageforex-CEOmatchespackageforall17,600 Canadian Workers.
RetrievedfromCBCNews:http://www.cbc.ca/news/business/target-s-package-for-ex-ceo-
matches-package-for-all-17-600-canadian-workers-1.2927893
Jermyn,D.(2014, November4). Canada’sTop 100 Employersmaketheir workplacesexceptional.
RetrievedfromThe Globe andMail: http://www.theglobeandmail.com/report-on-
business/careers/top-employers/canadas-top-100-employers-make-their-workplaces-
exceptional/article21427767/