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Unit 5. Ethics

The document discusses business ethics, including its principles such as leadership, accountability, integrity, respect, honesty, and environmental concern. It explains why business ethics are important for success, establishing reputation and trust. It also describes different types of business ethics like corporate social responsibility, transparency, technological practices, and fairness.

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halam29051997
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76 views

Unit 5. Ethics

The document discusses business ethics, including its principles such as leadership, accountability, integrity, respect, honesty, and environmental concern. It explains why business ethics are important for success, establishing reputation and trust. It also describes different types of business ethics like corporate social responsibility, transparency, technological practices, and fairness.

Uploaded by

halam29051997
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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UNIT 9.

BUSINESS ETHICS
What is Business Ethics?
Business ethics studies appropriate business policies and practices regarding
potentially controversial subjects, including corporate governance, insider trading,
bribery, discrimination, corporate social responsibility, fiduciary responsibilities,
and much more. The law often guides business ethics, but at other times business
ethics provide a basic guideline that businesses can follow to gain public approval.

Principles of Business Ethics


It's essential to understand the underlying principles that drive desired ethical
behavior and how a lack of these moral principles contributes to the downfall of
many otherwise intelligent, talented people and the businesses they represent.

There are generally 12 business ethics principles:

• Leadership: The conscious effort to adopt, integrate, and emulate the other
11 principles to guide decisions and behavior in all aspects of professional
and personal life.
• Accountability: Holding yourself and others responsible for their actions.
Commitment to following ethical practices and ensuring others follow ethics
guidelines.
• Integrity: Incorporates other principles—honesty, trustworthiness, and
reliability. Someone with integrity consistently does the right thing and
strives to hold themselves to a higher standard.
• Respect for others: To foster ethical behavior and environments in the
workplace, respecting others is a critical component. Everyone deserves
dignity, privacy, equality, opportunity, compassion, and empathy.
• Honesty: Truth in all matters is key to fostering an ethical climate. Partial
truths, omissions, and under or overstating don't help a business improve its
performance. Bad news should be communicated and received in the same
manner as good news so that solutions can be developed.
• Respect for laws: Ethical leadership should include enforcing all local, state,
and federal laws. If there is a legal grey area, leaders should err on the side
of legality rather than exploiting a gap.
• Responsibility: Promote ownership within an organization, allow employees
to be responsible for their work, and be accountable for yours.
• Transparency: Stakeholders are people with an interest in a business, such
as shareholders, employees, the community a firm operates in, and the family
members of the employees. Without divulging trade secrets, companies
should ensure 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.
• 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 the same opportunities and be treated the
same. If a practice or behavior would make you feel uncomfortable or place
personal or corporate benefit in front of equality, common courtesy, and
respect, it is likely not fair.
• Loyalty: Leadership should demonstrate confidentially and commitment to
their employees and the company. Inspiring loyalty in employees and
management ensures that they are committed to best practices.
• Environmental concern: In a world where resources are limited, ecosystems
have been damaged by past practices, and the climate is changing, it is of
utmost importance to be aware of and concerned about the environmental
impacts a business has. All employees should be encouraged to discover and
report solutions for practices that can add to damages already done.

Why Is Business Ethics Important?


There are several reasons business ethics are essential for success in modern
business. Most importantly, defined ethics programs establish a code of conduct
that drives employee behavior—from executives to middle management to the
newest and youngest employees. When all employees make ethical decisions, the
company establishes a reputation for ethical behavior. Its reputation grows, and it
begins to experience the benefits a moral establishment reaps:

• Brand recognition and growth


• Increased ability to negotiate
• Increased trust in products and services
• Customer retention and growth
• Attracts talent
• Attracts investors

When combined, all these factors affect a business' revenues. Those that fail set
ethical standards and enforce them are doomed to eventually find themselves
alongside Enron, Arthur Andersen, Wells Fargo, Lehman Brothers, Bernie
Maddoff, and many others.

Types of Business Ethics


There are several theories regarding business ethics, and many different types can
be found, but what makes a business stand out are its corporate social
responsibility practices, transparency and trustworthiness, fairness, and
technological practices.

Corporate Social Responsibility


Corporate social responsibility (CSR) is the concept of meeting the needs of
stakeholders while accounting for the impact meeting those needs has on
employees, the environment, society, and the community in which the business
operates. Of course, finances and profits are important, but they should be
secondary to the welfare of society, customers, and employees—because studies
have concluded that corporate governance and ethical practices increase financial
performance.

Businesses should hold themselves accountable and responsible for their


environmental, philanthropic, ethical, and economic impacts.
Transparency and Trustworthiness
It's essential for companies to ensure they are reporting their financial
performance in a way that is transparent. This not only applies to required financial
reports but all reports in general. For example, many corporations publish annual
reports to their shareholders.

Most of these reports outline not only the submitted reports to regulators, but how
and why decisions were made, if goals were met, and factors that influenced
performance. CEOs write summaries of the company's annual performance and give
their outlooks.

Press releases are another way companies can be transparent. Events important to
investors and customers should be published, regardless of whether it is good or bad
news.

Technological Practices and Ethics


The growing use of technology of all forms in business operations inherently comes
with a need for a business to ensure the technology and information it gathers is
being used ethically. Additionally, it should ensure that the technology is secured to
the utmost of its ability, especially as many businesses store customer information
and collect data that those with nefarious intentions can use.

Fairness
A workplace should be inclusive, diverse, and fair for all employees regardless of
race, religion, beliefs, age, or identity. A fair work environment is where everyone
can grow, be promoted, and become successful in their own way.

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