Ethical guidelines in business

Introduction

Ethics is one of the buzz words in the air these days. The dictionary meaning of ethics is a system of moral principles. It is the branch of philosophy dealing with values relating to human conduct with respect to the the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions. The field of ethics involves systematizing, defending and recommending concepts of right and wrong behaviour.

Ethics in business are most talked about in recent times. Business ethics are nothing but the do’s and don’ts followed by the practitioners in the business. It could be referred as a set of principles a business man ought to follow. “There should be business ethics" means that the business should be conducted according to certain self recognized moral standards. Few unethical elements in the present day business can be described in simple words as cheating, stealing, lying, bribing, corrupting etc.

Business ethics is the behaviour that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer.

Good business ethics should be a part of every business. There are many factors to consider. When a company does business with another that is considered unethical, does this make the first company unethical by association? Some people would say yes, the first business has a responsibility and it is now a link in the chain of unethical businesses.

Individuals have their own perspective and the concept has come to mean various things to various people. It is generally being recognised as what is right or wrong in the workplace and doing what's right -- this is in regard to effects of products/services and in relationships with stakeholders. Attention to business ethics is critical during times of fundamental change -- times much like those faced now by businesses, both non-profit and for-profit. In times of fundamental change, values that were previously taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should act. Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass.

Many people react that business ethics, with its continuing attention to "doing the right thing," only asserts the obvious ("be good," "don't lie," etc.), and so such people don't take business ethics seriously. For many of us, these principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine.

There are two broad areas of Business Ethics – Managerial Mischief and Moral Mazes. Managerial mischief includes illegal, unethical or questionable practices of individual managers or organizations, as well as the causes of such behaviours and remedies to eradicate them. Managerial Mischief has led many to believe that business ethics is merely a matter of preaching the basics of what is right and wrong. More often, though, business ethics is a matter of dealing with dilemmas that have no clear indication of what is right or wrong.  The other broad area of business ethics is "moral mazes of management" and includes the numerous ethical problems that managers must deal with on a daily basis, such as potential conflicts of interest, wrongful use of resources, mismanagement of contracts and agreements, etc. 

Ethical Dilemma

Before we delve further into the importance of business ethics, let us discuss the concept of ethical dilemma in personal life as well as in business.

Ethical dilemma is a complex situation that often involves an apparent mental conflict between moral imperatives, in which to obey one would result in transgressing another. An ethical dilemma is a predicament where a person must decide between two viable solutions that seem to have similar ethical value.

General examples for ethical dilemma

There are many examples of ethical dilemmas; for instance, a most common dilemma is abortion. A woman who has been raped but found out that she is now pregnant from the rapist can choose whether to abort or to keep the foetus. The question is "whether the foetus has rights and, if so, how they are to be balanced against the right of the mother." A further confounding factor is that pregnancy may threaten the life of the mother, thus implicating the mother's right to life, rather than her rights of bodily integrity and personal choice.

Another most commonly cited ethical conflict is between an imperative or injunction not to steal and one to care for a family that you cannot afford to feed without stolen money. Debates on this often revolve around the availability of alternate means of income or support, e.g. charity, etc. The debate is in its starkest form when framed as stealing food. Under an ethical system in which stealing is always wrong and letting one's family die from starvation is always wrong, a person in such a situation would be forced to commit one wrong to avoid committing another, and be in constant conflict with those whose view of the acts varied.

Ethical dilemmas are quite commonly encountered by social workers during their interactions with clients, agency policies, procedures, colleagues, administrators, and organizational systems. An ethical dilemma can occur when a social worker has to take a moral course of action depending upon two different moral philosophies that conflict with each other. In another situation, a decision has to be made from the available choices without even knowing in advance the outcome of the decision. The result can either be beneficial or harmful. In the third instance, a social worker has to make a choice that might be best only for a certain section of individuals involved in the conflict and is harmful for the other party. 

Another most common ethical dilemma is in use of animals for eating, product testing and other domestic and commercial purposes. The argument on one end is about the food chain balance, superiority of humans and so on while the other side of the debate talks about the life of the animal in question.

Personal examples of ethical dilemma

More often than not, every individual faces such dilemmas in their life – either personal life or professional life. I would like to quote a few such dilemmas that I have faced in my work life.

This is one example which most of us would have faced in our offices. Once, one of my co-workers was copying company software at work and taking it home. This was strictly against the company policy. However, I also needed the same software for my personal use and was having problems saving the money to buy it. The conflict was over that fact that should I like other co workers easily copy the software myself without mentioning a word or talk to my manager asking for permission or insist on IT representative guidance.

Another example was of the time when my work team was discussing about the timelines as to when to release the new version of the software product. Everyone including my boss seemed to agree that the software be released to customers within the month. However, I had concerns because a recent report from the research and development team pointed to potential bugs in the software. I knew that my boss did not like public disagreements. I was stuck in the dilemma whether to voice my concerns with the software and explain why I believed the bug issues need to be addressed or to keep my concerns to myself.

Citing another common example - a number of my family and friends lived far away and the best way to reach them was via the telephone. Long distance calling was expensive and many of my colleagues used the company long distance service for extensive personal communications. I was aware that long distance calling has an expense for the company. The conflict here was whether like my other colleagues I too used the company phone or purchase my own calling card since it was my personal affair.

 

Another example which is easier to relate is the use of office supplies for personal use at home. I required some supplies for my personal use at home and could get them for free from my office getting it issued as official use. I knew that the cost of those supplies would go unnoticed on the budget. However, I was confused about the fact as to whether to take them straightaway unnoticed or seek manager’s permission or forget about it since it would mean cheating the company.

I shall describe one more example where I was caught in a situation of moral conflict, where I had to choose between two seemingly right alternatives. While quitting my job to join higher studies, I was asked by my colleagues to get fired as the policy said that 5% of people had to be fired. This would reduce chance of one of them getting fired. I was in dilemma as all the good work I had done would not be recognised if I was fired. After thinking over a lot, I decided to work overtime and help my colleagues finish their work on time. Their work was impeccable, so none of them got fired and I too was recognised for my work in the farewell meet.

These are some of the instances from my life which I believe most of the people face in their lives too. These are trivial examples but essentially a manger faces complex ethical problems in business on day to day basis.

Importance of business ethics

It is a very challenging business environment out there. Darwin’s theory of natural selection in terms of ‘survival of the fittest’ is universal. In order to survive in such competitive market conditions, managers need to make tough decisions. These decisions border on many ethical issues. Hence, the importance of ethics in business is ever increasing.

One might wonder why highly educated, successful, and business savvy corporate professionals at Satyam, Enron, Tyco, WorldCom etc got themselves into such a big mess. The answer lies in a profound lack of ethics.

Discussion on ethics in business is necessary because business can become unethical, and as cited, there are plenty of evidences today on unethical corporate practices. Firms and corporations operate in the social and natural environment. By virtue of existing in the social and natural environment, business is duty bound to be accountable to the natural and social environment in which it survives. Irrespective of the demands and pressures upon it, business by virtue of its existence is bound to be ethical, for at least two reasons: one, because whatever the business does affects its stakeholders and two, because every juncture of action has trajectories of ethical as well as unethical paths wherein the existence of the business is justified by ethical alternatives it responsibly chooses. 

Running a business ethically is good for business. However, "business ethics" if properly interpreted means the standards of conduct of individual business people, not necessarily the standards of business as a whole.

Business leaders are expected to run their business as profitably as they can. A successful and profitable business in itself can be a tremendous contributor toward the common good of society. But if business leaders or department managers spend their time worrying about “doing good" for society, they will divert attention from their real objective which is profitability and running an efficient and effective organization.

However, applying ethics is business is important. Since, the complex decisions made by corporate border on ethical issues, it essential for a manager to define and outline the ethics for self and team to be practiced in the organisation.

Ethics Management

An efficient ethics management system should be in place which would help in managing ethics in workplace. Ethics programs convey corporate values, often using codes and policies to guide decisions and behaviour, and can include extensive training and evaluating, depending on the organization. They provide guidance in ethical dilemmas.

Some of the guidelines which I as a business manager would frame for ethics management would be as under –

Understand the core value system of the company and abide by it

Every organization has its own core value system on which it lays its foundation. As an employee, our actions should be in line with the company’s value system.

Avoid occurrence of ethical dilemma in first place

Develop a code of ethics and code of conduct for the team and company and abide by them.

Review the need of any new values in adherence with updated laws and regulations

This ensures that the value system is updated and incorporates recent changes and the team and organisation does not break any laws and regulations.

Prioritise the top ethical values in the organisation

Identify different values based on parameters like values addressing current issues, based on strategic planning etc and prioritise them and try to practice them.

Ethics decisions in groups seeking involvement of all

This shall produce good quality decisions as it shall include diverse interests and perspectives, and hence increase the credibility and acceptance of the decision process. Also, it is vital that the employees feel a sense of participation and ownership in the program if they are to adhere to its ethical values. Therefore, employees should be included in developing and operating such ethical conducts. 

Do not destroy or distort competition

Healthy competition is essential for growth and success of all. It would be unethical to play with by trying to distort it. Competitor’s image should not be tarnished by unfair practices. Competition should be taken in healthy spirit always.

Do not deceive stakeholders and shareholders

Transparency should be maintained in business records such that trust is maintained between the stakeholders and the company. Customers should not be deceived by selling sub standard products and providing false information.

Hoarding and black marketing should be avoided.

Recognise ethical issues and think through consequences of alternative resolutions

For this, it is required to have confidence to probe different opinions and point of views and also a tough minded fairness.

Bigger unit to get precedence over smaller unit

Concern for others must take precedence over concern for self. Long term interest should get precedence over short term interest. Hence, the order of importance in increasing order becomes self, other individuals, family, community, society, national, world and universe. Hence, in case of a conflict between an individual’s interest and interest of the bigger system, the latter should prevail. As a member of the system, one does not and cannot have the freedom to function as per own likes.

Religious beliefs

Satisfying religious beliefs are important as they form the basis of many values.

Ethics Management to be treated as a management practice

Ethics Management should be considered as a fully fledged process oriented management practice which shall produce deliverables like codes of conduct and ethics, procedures etc via an ongoing process of reflection, brainstorming and dialogue.

Ethics management Team should be established at board level treating it as an integral part of the organisation.

Ethical Audit

Regular ethical audits should be conducted in the company to check that ethical principles are being pursued. It should also check the extent to which actions are consistent with the organisation’s stated ethical intentions and should establish action plans if they are not.

Conclusion

Ethics are important not only in business but in all aspects of life because it is an essential part of the foundation on which of a civilized society is build. A business or society that lacks ethical principles is bound to fail sooner or later. Business system as a subsystem to the social system should promote ethics for improving health and wealth of the society consistently.