Definition and nature of business ethics

definition of business ethics according to different authors and definition of business ethics business dictionary
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Published Date:05-07-2017
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The Definition of Business Ethics BY LYNN FOUNTAIN, CPA, CGMA, FOUNTAIN GRC LLC thics has its place in nearly all professional disciplines. The medical profession, legal profession, accounting profession and countless others maintain individual codes of conduct that guide the manner in which those pro- fessionals should behave. Ethics, according to Wikipedia, also is known as “moral philosophy.” It addresses con- Ecepts of morality such as good and evil, right and wrong, virtue and vice, justice and crime. In some respects, it relates to the poem by Robert Fulghum “All I ever really needed to know, I learned in Kindergarten”. Wouldn’t the business world be an easier place if we all lived by those simple rules? © Copyright 2012 Lynn Fountain, used with permission. “These are the things I learned: Share everything. organization to display similar behavior. Just as we each Play fair. Don’t hit people. Put things back where you found learned in Kindergarten to be personally responsible (put them. Clean up your own mess. Don’t take things that aren’t things back where you found them; clean up your own yours. Say you’re sorry when you hurt somebody. Wash your mess), each employee from top to bottom must be com- hands before you eat. Flush. Warm cookies and cold milk mitted to ethical behavior for a company to be successfully are good for you. Live a balanced life. Learn some and think moral. Think about what your first real ethical dilemma was. some and draw and paint and sing and dance and play and It probably occurred way before you entered into the busi- work some every day.” ness world. It may have happened when you were faced with But, the business world is much more complicated some decision as a child or later into your teenage years. than our sandbox days. The concept of business ethics, al - Often, those experiences and how they evolved impacted though not all that different from kindergarten rules, can your overall sense of ethical responsibility. For some, ethics be difficult to instill in business practices. The concept in a is an unquestionable choice while others may find that cer - vacuum may seem obvious, but in application, the concept tain elements can be rationalized. Standardizing every em- can become blurred. ployee’s understanding can be accomplished with a written, The development of voluntary, written codes of well-communicated and well-trained code of ethics that is conduct has been a practice for many years. For example, made an integral part of the organization. And, as we have the American Medical Association established its first code learned from past examples, the code must be more than a of conduct in 1847. The concept of “business ethics” didn’t written document; it must be practiced and evident in the become common in the U.S. until the early 1970s. The idea behavior of the organization. of a socially-responsible company or one that is motivated to behave morally or ethically arose following public out- Tone at the top is essential rage over various business scandals. Scandals led to increased (Kindergarten translation: Play fair.) regulatory scrutiny which led to companies developing their Many writers will claim that ethical behavior and own business ethics policies. Outsiders have questioned the conduct must start with tone at the top. Although I agree it motivation of the trend for businesses to put in writing a is a critical attribute, we must accept that not all individuals “Business Ethics Policy.” In spite of increased regulatory at- will have the same morality and opinion as ours. In other tention and companies’ self-promotion of ethical conduct, words, it is important to “clean up your own mess”. Simply 10 years after the Enron scandal incidents of questionable addressing “tone” will not ensure the organization appropri- business conduct continue. The action of the financial indus - ately acts when faced with an ethical dilemma. If there is any try that came to light in the fall of 2008 and nearly brought question as to which path is the most appropriate to take, down the national economy is a case in point. “What went individuals can find it easier to rationalize alternatives that wrong?” or “What isn’t clear?” You might wonder if not ev- may not be fully in line with the company’s overall code. eryone learned the same things in kindergarten. (Or maybe This is exactly why organizations must not only rely on what we played in different sandboxes). they deem as “tone at the top” but ensure that that “tone” is The term “ETHICS” can be dissected into compo - actually exemplified in day to day practices. Tone at the top nents in order to evaluate which aspects are working in your must be communicated frequently, openly, honestly and put organization and where there is room for improvement. into practice by every individual within the organization. Individuals will follow their leaders and learn from their ac- EVERYONE IS RESPONSIBLE tions. These actions should be undeniable if questioned. TONE AT THE TOP IS ESSENTIAL HONESTY IS STILL THE BEST POLICY INTEGRITY CAN BE A MEASURE OF ETHICS Honesty is still the best policy CORPORATE RESPONSIBILITY & COMMUNICATION MUST BE PREVALENT (Kindergarten translation: Don’t take things that aren’t yours. SILENCE IS NOT ACCEPTABLE Say you’re sorry when you hurt somebody.) All too often, ethics and corporate responsibility Everyone is responsible don’t necessarily equate to honesty in the workplace. As (Kindergarten translation: Put things back where you found Agent Gibbs says on the popular NCIS TV show “Never say them, Clean up your own mess.) you are sorry. It is a sign of weakness”. Unfortunately, this All too often, when the word ethics is brought into is a sentiment that sometimes spills over into the business a conversation, individuals tend to promulgate that its pri- world. Honesty may mean admission of either wrongdoing, mary responsibility lies with the leaders of the organization. poor judgment or even an honest mistake. Employees are Although it is true that ethical behavior must be demon- conditioned to act with caution when discussing things in strated at the top, it is an imperative for everyone in the © Copyright 2012 Lynn Fountain, used with permission.the workplace that could have negative implications, may sponsibility goes far beyond environmental initiatives, com- infer some process is not being executed efficiently or an munity support and being a good neighbor. It extends past action that may involve leaders. No one wants to be associ- “warm cookies and milk” for co-workers birthdays. Corpo- ated with pointing to areas where work is not being done as rate responsibility is owned by each and every employee. efficiently or effectively as possible. This can become quite Whether it is a dedication to recycling efforts, contributing a dilemma when your job involves evaluation of process to community causes, or providing appropriate feedback to improvement or quality assurance. You are put in the spot your staff and supervisors on how to make the business bet - of calling out those gaps that may have existed for a long ter, this is the true intent of corporate responsibility. Orga- time. Organizations must ensure that all professionals feel nizations must learn to embrace the concept that individuals that when they identify a potential issue, they can openly who work in the organization have day to day observations discuss the situation with the appropriate management. This that can improve operations and business processes. The in - doesn’t mean that everyone’s word or opinion is taken at face ability to encourage that feedback from employees and to value, but when employees don’t feel they can freely express find an outlet to use these creative ideas, itself is a failure of these thoughts and ideas, the culture may be sending the corporate responsibility. wrong message. In addition, have you ever heard the saying “Just because it’s legal, doesn’t mean it’s ethical”? Ethics deals Silence is not acceptable with morality issues and most people’s level of morality may (Kindergarten translation: Learn something, think, draw, reach different tolerances. So when you are personally faced paint, sing, dance, work, and play some everyday.) with an ethical dilemma, you must ask yourself whether you Silence can often occur due to the fear of retribu- are looking at the situation as honestly and transparently as tion. The only way to advance the elimination of business you can. If questions still arise, it is your obligation to raise scandals that have pervaded our everyday life is to erase the those questions to individuals in positions of responsibility. concern that silence is golden. Many employees see things The legality of the issue may not be the right answer when in their day to day job that they may question, yet they turn looking at the morale side of the issue. That is when you the other eye due to fear of retribution. Ensure your em- must enlist the assistance of others to help ensure the orga- ployees know the appropriate outlet for surfacing concerns nizations needs are being appropriately met. or questions. Do you have an independent hotline? If so, how many calls does your whistleblower hotline receive? Do those numbers appear to be realistic given your employee Integrity can be measured by ethics base and business? How well is your hotline publicized? (Kindergarten translation: Live a balanced life.) What comprises the issues reported to the hotline? Do ven- If someone had you name the top 3 people in his- dors know about your hotline and understand that they can tory that you felt displayed unquestionable integrity, would register a compliant? How is your hotline managed? And, those same individuals measure high on the ethics scale? out of curiosity, have you ever attempted to call the hotline Most likely they would. Integrity is adherence to a moral yourself? You may be surprised the level of questions/com- code, reflected in honesty and harmony in what one thinks, ments you do or don’t receive. says and does. As such, those who we regard with high in- tegrity normally possess a strong set of morale ethics. From Ethics and Corporate Responsibility will continue to be hot a corporate viewpoint, are the members of your leadership topics in Corporate America for years to come. As the econ- team individuals whom the employee population will view omy continues to struggle, or rebound, the ethical behavior as having strong integrity and morale ethics? These are the of those within business will dramatically impact the success people employees will look to emulate. This is the mirror of that recovery. It is no longer acceptable to be the Enron’s into your future organization. of the world where a best practice “code of conduct” sits on a shelf but is not embraced or actually displayed in practice. Organizations must focus on all aspects of their Ethics pro- Corporate responsibility and communica- gram. You must look further than the policy itself. Know tions how the policy is practiced, enforced, updated and how (Kindergarten translation: Warm cookies and milk are good for compliance is measured and reported? Those are the true you..) signs of a policy in action. Since the early 1960’s when business ethics came in vogue, the topic of corporate responsibility, ethical behavior and compliance have been on the radar for the SEC and other federal and state regulatory agencies. Yet corporate re- © Copyright 2012 Lynn Fountain, used with permission.