Business ethics studies appropriate business policies and practices regarding potentially contentious topics such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility, fiduciary responsibilities, and many others. The law frequently guides business ethics, but business ethics can also provide a basic guideline that businesses can follow to gain public approval.
Business ethics refers to implementing appropriate business policies and practices about potentially contentious issues.
A discussion of ethics may include corporate governance, insider trading, bribery, discrimination, social responsibility, and fiduciary responsibilities.
Typically, the law sets the tone for business ethics, providing a basic guideline businesses can follow to gain public approval.
Business Ethics Knowledge of Business Ethics
Business ethics ensures a basic level of trust between consumers and various market participants and businesses. A portfolio manager, for example, must treat the portfolios of family members and small individual investors with the same care that they do the portfolios of wealthy clients. These types of practices ensure that the public is treated fairly.
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Business ethics emerged in the 1960s as corporations became more aware of a growing consumer-based society concerned with the environment, social causes, and corporate responsibility. The increased emphasis on “social issues” was a defining feature of the decade.
The concept of business ethics has evolved since then. Business ethics is more than just a moral code of right and wrong; it attempts to reconcile what businesses must do legally with maintaining a competitive advantage over other businesses. Firms demonstrate business ethics in a variety of ways.
Business ethics ensures a certain level of trust between consumers and corporations, as well as fair and equal treatment of the public.
Business Ethics Principles
It is critical to comprehend the underlying principles that motivate desired ethical behavior and how a lack of these moral principles contributes to the failure of many otherwise intelligent, talented people and the businesses they represent.
In general, there are 12 business ethics principles:
Leadership: The deliberate effort to adopt, integrate, and emulate the other 11 principles in all aspects of professional and personal life.
Accountability entails holding yourself and others accountable for your actions—commitment to following ethical practices and ensuring that others do the same.
Integrity encompasses other principles such as honesty, trustworthiness, and dependability. Someone with integrity does the right thing consistently and strives to hold themselves to a higher standard.
Respect for others: Respecting others is a critical component in fostering ethical behavior and environments in the workplace. Everyone is entitled to respect, privacy, equality, opportunity, compassion, and empathy.
Honesty: Being truthful in all situations is essential for creating an ethical environment. Partial truths, omissions, and under or overstating do not aid a company’s performance. Bad news should be communicated and received the same way as good news to develop solutions.
Respect for the rule of law: Ethical leadership should include enforcing all local, state, and federal laws. Leaders should err on legality rather than exploit a gap if there is a legal grey area.
Promote ownership within an organization by allowing employees to be accountable for their work as well as being accountable for yours.
Transparency: Stakeholders are interested in a business, such as shareholders, employees, the community in which a company operates, and employees’ family members. Companies should ensure that information about their financials, price changes, hiring and firing practices, wages and salaries, and promotions are available to those interested in the business’s success without divulging trade secrets. Compassion: Employees, the community surrounding a business, business partners, and customers should all be treated with concern for their well-being.
Fairness: Everyone should have equal access to opportunities and be treated equally. It is unfair if a practice or behavior makes you uncomfortable or prioritizes personal or corporate gain over equality, common courtesy, and respect.
Loyalty: Leaders should be trustworthy and committed to their employees and the company. Motivating employees and management to be loyal ensures they are committed to best practices.
Environmental concern: In a world where resources are scarce, ecosystems have been harmed by past practices, and the climate is changing, it is critical to be aware of and concerned about a company’s environmental impact. All employees should be encouraged to find and report solutions to practices that can exacerbate already-existing damage.
What Is the Importance of Business Ethics?
There are several reasons why business ethics is critical for modern business success. Most importantly, defined ethics programs create a code of conduct that guides employee behavior, from executives to middle management to the newest and youngest employees. When all employees make ethical decisions, the company develops a reputation for integrity. Its reputation grows, and it begins to reap the benefits of being a moral establishment:
Brand recognition and expansion
Increased bargaining power Increased trust in products and services
Customer retention and expansion
Attracts talent and investors
All of these factors have an impact on a company’s revenue. Those who fail to set and enforce ethical standards will end up alongside Enron, Arthur Andersen, Wells Fargo, Lehman Brothers, Bernie Maddoff, and many others.
Business Ethics Types
There are many different business ethics theories, but what distinguishes a company are its corporate social responsibility practices, transparency and trustworthiness, fairness, and technological practices.
Corporate Social Responsibility (CSR) is a term used to describe the
CSR is the concept of meeting the needs of stakeholders while accounting for the impact that meeting those needs has on employees, the environment, society, and the community in which the business operates. Finances and profits are essential, but they should come second to the welfare of society, customers, and employees—because studies have shown that corporate governance and ethical practices improve financial performance.
Businesses must hold themselves accountable for their environmental, philanthropic, ethical, and economic impacts.
Transparency and dependability
Businesses must ensure that their financial performance is reported transparently. This applies not only to required financial reports but to all reports in general. Many corporations, for example, issue annual reports to their shareholders.
Most of these reports detail the reports submitted to regulators, how and why decisions were made, whether or not goals were met, and factors that influenced performance. CEOs summarize the company’s annual performance and provide outlooks.
Press releases are another way for businesses to be transparent. Events important to investors and customers should be publicized, good or bad.
Ethics and Technological Practices
The increasing use of technology in all business operations necessitates a company’s need to ensure that the technology and information it collects are used ethically. Furthermore, it should ensure that the technology is as secure as possible, especially since many businesses store customer information and collect data that those with nefarious intentions can exploit.
A workplace should be welcoming, diverse, and equitable to all employees, regardless of race, religion, beliefs, age, or gender identity. A fair work environment allows everyone to grow, be promoted, and achieve success uniquely.
How to Put Good Business Ethics into Practice
It takes time and effort to foster an environment of ethical behavior and decision-making, and it always begins at the top. Most businesses must develop a code of conduct/ethics, guiding principles, reporting procedures, and training programs to enforce ethical behavior.
Continuous communication with employees becomes critical once a behavior is defined and programs are implemented. Leaders should constantly encourage employees to report suspicious behavior and provide assurances that whistle-blowers will not face retaliation.
A pipeline for anonymous reporting can assist businesses in identifying questionable practices and reassuring employees that there will be no repercussions for reporting an issue.
Unethical Behavior Monitoring and Reporting
Businesses frequently rely on managers and employees to report any incidents they witness or experience when preventing unethical behavior and repairing its negative consequences. However, cultural barriers (such as fear of retaliation for reporting misconduct) can prevent this from happening.
The Global Business Ethics Survey of 2021, published by the Ethics & Compliance Initiative (ECI), polled over 14,000 employees in ten countries about various types of workplace misconduct. 49% of the employees polled said they had witnessed misconduct, and 22% said they had witnessed abusive behavior. 86% of employees reported any misconduct they witnessed. When asked if they had faced retaliation due to their reporting, 79% said they had.
Indeed, one of the primary reasons employees do not report unethical behavior in the workplace is fear of retaliation. According to ECI, businesses should work to improve their corporate culture by reinforcing the idea that reporting suspected misconduct benefits the company. They should also recognize and reward the employee’s bravery in making the report.
Questions and Answers
What Exactly Is Business Ethics?
Business ethics concerns ethical quandaries or contentious issues that a company faces. Business ethics is frequently associated with a set of practices and procedures that aid in developing consumer trust. Some business ethics, such as minimum wages, insider trading restrictions, and environmental regulations, are enshrined in law. On the other hand, management behavior can influence business ethics, with far-reaching consequences throughout the organization.
What Is Business Ethics and What Is an Example?
Business ethics guides executives, managers, and employees in their daily decision-making. Consider a company that has decided to dump chemical waste that it cannot afford to properly dispose of on a vacant lot it has purchased in the neighborhood. This action has legal, environmental, and social ramifications that can irreparably harm a company.
Go to https://www.bioethics.nih.gov/education/pdf/FNIH_BioethicsBrochure_WEB.PDF and read the publication “Research Ethics: How to Treat People who Participate in Research”. Post 5 meaningful points that apply to your mini-EBP proposal.
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