A set of moral values or a personal code of ethics can serve as the guide for judging between right and wrong in your daily life. Business ethics are similar in principle to personal ethics, but have much broader consequences. From the worker on the sales floor to the business executive in the corner office, decisions made on the job are typically judged by a much larger number of people than personal decisions. Thus, the fate of an employee, and perhaps the organization's fate, could rise or fall according to the perceived integrity of decisions made in the workplace.1 In other words, company morals can have a big impact on a business's success.
For example, by engaging in unfair or questionable business practices purely for the sake of profit, an overly ambitious business executive with little regard for business ethics is courting disaster. Although the bottom line may improve in the short-term, the long-term fallout from organizational and possibly public disapproval may prove fatal to the executive's reputation and the organization's sustainable success. As American investor and business magnate Warren Buffet advises, "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”2 Read through this blog to explore what principles should guide company morals, learn from real-world ethical business practice examples and find out how strong leaders can combine basic business principles with business ethics to mold an organization into one that does good while generating good outcomes.
What is ethical behavior?
Ethical behavior can't necessarily be defined by one set of actions or moral values. As defined by the Encyclopedia Britannica, ethics, is the discipline concerned with what is morally good and bad and morally right and wrong. "[Ethics is] not a matter of factual knowledge in the way that the sciences and other branches of inquiry are. Rather, it has to do with determining the nature of normative theories and applying these sets of principles to practical moral problems."9
There are some ethics, or moral principles, that are generally agreed upon such as that it's wrong to kill another person, returning a lost wallet is good, littering is bad, and so on. However, personally, and in business, you're likely to come across situations in which the good or bad choice isn't so obvious.
When it comes to business, ethical behavior can be determined by basic business principles, certain company morals and codes of conduct specific to certain industries. Basic business principles say that you should create a quality product and pay fair wages to your employees. The corresponding business ethics examples could be that you shouldn't falsely advertise your product and you shouldn't pay one race or gender more than another. Company morals might further dictate that the business doesn't advertise with networks that hold certain political views or that the firm's executive salaries are made public. Another type of ethical business practice example is a code of ethics, which are often specific to different professions. For example, financial advisors have something called "fiduciary duty" which is a legal requirement to act within the best interests of their clients.10
The path to sustainable success
Ambition, competitiveness and market-savvy are important characteristics for success, but must be guided by a strong inner core of ethical principles.1 To achieve lasting, sustainable success, organizations need all of their personnel to make ethically sound decisions regarding job performance and personal behavior. This is especially difficult when the stakes are high and no one else is watching.3
To help establish company expectations, an executive with an inherent appreciation for ethical values can help promote a benevolent environment in which ethical behavior is encouraged and nurtured. In fact, business leaders committed to personal and organizational excellence are often called upon to define a company-specific set of ethical business practices to help employees understand the principles by which they will be judged. Once developed and implemented, this set of principles offers a path to lasting, sustainable success.4,5
Below, the 12 ethical principles in business are presented to help provide strong guidance for ethical business practices.4 Included with these principles are details that focus on the ways in which each principle can be demonstrated by both businesses as a whole and by individual employees.
The 12 ethical principles for business executives
All personnel must be committed to telling the truth in all forms of communication and in all actions. This includes never purposely telling partial truths, selectively omitting information, making misrepresentations or overstatements. Honesty also means reliably sharing both good and bad news with equal candor.
All dealings and relationships must be founded on a conscious commitment to fairness, treating others as you would like to be treated. Fairness requires treating all individuals equally and courteously, never exercising power arbitrarily and never exploiting weaknesses or mistakes for personal or corporate benefit.
Demonstrated by a conscious effort to set a positive example of ethical behavior, leadership is a commitment to excellence through ethical decision-making. Businesses and business executives maintain their leads by constantly improving operational efficiency, worker satisfaction and customer approval.
Organizations and personnel demonstrate integrity through a consistency between actions and words that inspires trust and credibility. Integrity also means keeping promises, honoring commitments, meeting deadlines and refusing to participate in unscrupulous activities or business dealings.
Fostering a business environment of empathy and compassion requires a commitment to being kind and caring toward all personnel, business partners and customers. Business goals must be benevolent, ensured by spending enough time to understand the needs and sensitivities of others, including the local community.
Respect is demonstrated by a full commitment to the human rights, dignity, autonomy, interests and privacy of all personnel. It means recognizing that everyone deserves equal respect and support for sharing ideas and opinions, without fear of any penalty or form of discrimination.
Employees exhibit responsibility by taking full ownership of their jobs, striving to be conscious of the emotional, financial and business consequences of their actions. Taking their responsibilities seriously also demonstrates employee maturity and ability to do a job without needing strict supervision.
Loyalty is proven by never disclosing information learned in confidence and by remaining faithful to coworkers, clients, business partners and suppliers. Loyal employees avoid conflicts of interest, help build and protect the good reputation of their company and help boost the morale of their coworkers.
Organizations must fully comply with all applicable laws and codes from local, state and federal agencies. Law-abiding businesses and personnel also adhere to industry and trade regulations, marketplace standards and any additional mandatory organizational policies, practices and procedures.
Accountability requires a total commitment to the ethical quality of all decisions, actions and relationships. High expectations for ethical behavior drive business practices when an organization and its personnel are held accountable to fellow employees, consumers, the local community and the wider public in general.
Committing to transparency requires making business information and policies available to appropriate groups, such as financial investors, personnel and consumers. It includes, for example, sharing criteria for price hikes, wages, hiring, granting promotions, addressing workplace infringements and firing employees.
12. ENVIRONMENTAL CONSCIOUSNESS
Organizations and personnel demonstrate a commitment to the environment by helping mitigate the effects of global climate change. Beneficial actions include reducing the negative environmental impact of doing business by improving energy efficiency to help lower carbon emissions, reducing water usage and reducing waste.
Ethical business practice examples
When you consider the 12 ethical principles for business, you might imagine that it can be hard to stick to the company morals while also seeing through basic business principles. But it is possible and can have waves of positive outcomes. Here are some real-world business ethics examples:
- Since 1970, Chick-fil-A has helped over 80,000 employees fund academics through a total investment of $136 million in scholarships.6
- Among other animal welfare and corporate responsibility projects, McDonalds is on course to use only cage-free eggs throughout their franchises worldwide.7
- In 2018 Nike made its company morals clear when it stood by Colin Kapernick as a brand ambassador when the former 49ers quarterback claimed NFL teams weren't hiring him for standing with the political movement Black Lives Matter. Nike didn't only make a political stance but also increased its brand reputation among the public. Critically, the move also likely helped its stock price remain higher than competitors.8
Learn to Promote Sustainable Business Success
Organizations are more focused than ever on recruiting and retaining personnel committed to moral integrity and ethical business practices.3
If you are interested in becoming a confident leader with a strong inner core of ethical principles, ready to face any business challenge, consider an affordable online MBA from the Marquette University Graduate School of Management.
With no on-campus or in-person requirements, the 100% online MBA from Marquette University offers you the leading-edge skill set needed to develop and implement ethical business principles that can immediately guide you and your organization to lasting success.
- Retrieved on 17 March 2021, from standardizations.org/bulletin/?p=133
- Retrieved on 18 March 2021, from inc.com/marcel-schwantes/warren-buffett-explains-how-1-mistake-could-ruin-your-reputation.html
- Retrieved on 18 March 2021, from recruiter.com/i/how-to-recruit-and-retain-ethical-employees/
- Retrieved on 17 March 2021, from indeed.com/career-advice/career-development/ethical-principles-in-business
- Retrieved on 17 March 2021, from marketbusinessnews.com/financial-glossary/ethics-definition-meaning/
- Retrieved on November 1, 2022, from chick-fil-a.com/about/giving-back
- Retrieved on November 1, 2022, from corporate.mcdonalds.com/corpmcd/our-purpose-and-impact/food-quality-and-sourcing/animal-health-and-welfare.html
- Retrieved on November 1, 2022, from marketplace.org/2020/06/25/nike-colin-kaepernick-brand-advertising-racial-justice/
- Retrieved on November 1, 2022, from britannica.com/topic/ethics-philosophy
- Retrieved on November 1, 2022, frominvestopedia.com/terms/c/code-of-ethics.asp