Join Bob McGannon for an in-depth discussion in this video Understanding the purpose and intent of business ethics, part of Business Ethics.
- The ethical performances of businesses are getting more focused than ever. Over and over we see reports about businesses using suppliers that exploit employees overseas, or are accused of price fixing, or delivering products of questionable quality. It's important that we take business ethics seriously, making it part of our everyday approach to work. With that in mind, let's discuss three things, the definition for business ethics, the purpose of business ethics, and why business ethics frameworks, also called a code of ethics, are wise for you and your business.
So what are ethics? A good definition of ethics are a set of moral standards that are relied upon to reach conclusions and make decisions. There are two primary elements to ethics. The first is well-founded standards of right and wrong, that describe what people ought to do. These are usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics refers to standards that impose reasonable obligations to avoid crimes.
Universally, ethical standards are supported by consistent and well-founded reason. For example, it's appropriate to let a potential job candidate know he's being considered, but it's wrong to infer that he has a chance if you truly will not hire him, regardless of the circumstances. Balance in sharing both good and bad news is the most ethical way to operate. The second element of ethics refers to the study and development of your own personal standards.
Your own feelings and viewpoints on laws and social norms can vary from what is ethical in your current environment, so it's necessary to constantly examine your own standards to ensure that they're reasonable. For example, people in the US are, in most cases, used to buying something for a set price, and that set price is the same for everyone. In other countries, bartering and bargaining are the norm for any purchase. You could walk away paying more than someone else did five minutes ago.
You need to reconcile those differences in your mind if you visit or live in a country where bargaining is a standard part of a purchase transaction. So let's talk about the purpose of business ethics. The purpose of business ethics is to enable you to make responsible decisions. Maintaining highly ethical behavior when running a business can provide benefits to all your stakeholders. In today's competitive technological and global business world, lack of conscience and character can be a recipe for economic and personal failure.
As former US President Theodore Roosevelt said, to educate the mind without the morals is to educate a menace to society. Ethics are also important because they're the basis upon which you can manage a sustainable business. Serious consequences can result from decisions made with a lack of ethics, such as time in jail for fraudulent behavior. Even when it may be difficult to directly quantify a tie from ethics to profit levels, you can certainly tie potential penalties to an impact on your bottom line.
Ethical behavior is simply good risk mitigation, at least, and in many cases, is also a way to boost profits through being viewed positively in your community. Lastly, it's wise to create business ethics frameworks to support ethical business behavior. For example, I will be honest in all my communications and actions. I will maintain personal integrity in my personal and business dealings.
I will not knowingly mislead or make false claims. I will pursue excellence in all things. It's important that you behave ethically in both your personal and business life, because doing so has a significant impact on your success. In the remainder of this course, I'll share approaches and frameworks to help you make ethical decisions. These approaches can help you avoid the bad outcomes that can effect your business and your family, and help you reap the benefits of embracing ethical behavior.
Bob also discusses ethics in relationship to specific business scenarios: working with suppliers and vendors, organizational decision making, and doing business internationally. He addresses how to handle business ethics violations and provides a checklist of items for staff to evaluate if something is ethical.
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- Understanding the purpose and intent of business ethics
- Practicing business ethics
- Working with suppliers
- Reporting ethical problems
- Messaging staff
- Leading by example
- Creating escalation procedures for ethical issues
- Handling a crisis