(24) A Primer on Business Ethics

       

    We keep reading in the newspapers and hearing on the news about one ethical business scandal after another.......the most recent of the past year being the December 2010 inside trading scandal involving Apple and Primary Global Research; MF Global using client's money to pay off financial debts; the phone hacking scandal at Rupert Murdoch's British newspapers, Bernard Madoff's Ponzi scheme in which he used investor money to enrich himself, to name only a few of the most notorious. 

       The whole system is built upon trust. Therefore the whole free enterprise system will break down into chaos if business loses the trust of its customers and clients. Business people must be aware of the ethical implications of its business decisions especially involving its customers, clients, employees, stockholders, the surrounding community, and the common good of all. The basis of it all is God's moral law which is absolute and the great human dignity of the person, created according to the image and likeness of God for eternity. So a little primer on Business Ethics is in order.

ETHICS

        Social Responsibility refers to doing what is best for the common good of the community. It includes ethics which refers to doing what is morally right.

Definition: The study of moral values, standards, and duties in conduct among individuals with their to specific situations...i.e., the study of what is right and wrong OR a body of moral values which determines what is RIGHT and what is WRONG. People are often vague on that. Doing what is morally right is ethical. Ethics is the basis of law.

The Law: rules that the community enforces in order to function more effectively for the common good.

Code of Conduct: a set of rules that guides the conduct of a person in a given profession plus an enforcement mechanism.

Is AI didn=t know it was wrong@ an excuse? It=s hard to blame one who didn=t know, BUT we still have the duty to think and investigate the ethical implications of our decisions.

General Ethical Principles: include a concern for the great dignity of the person, human well being, human rights, and personal responsibility for the consequences of one=s decision or action. Life is more precious than property; basic needs are superior to luxuries. From these principles, follow ethical derivatives such as the right to private property, the worker=s right to organize, etc. Be careful with situational ethics & rationalization.....to talk yourself into believing that wrong is right.

Business Goals and Practices

vs

Moral Values and the Common Good of the Community

They should be in harmony with each other.

Why is Sound Ethics Good Business?

*The company gains the confidence and trust of the customer, who will do word of mouth advertizing for it.

*It improves its image and public relations. It=s much more difficult and costly to repair an image gutted by a scandal.

*It avoids costly and scandalous law suits and court trials that can destroy a company=s good name.

*It gains the respect of its employees and gives them an example for being honest with the company.

*A reputation for ethical practices attracts better employees and more customers looking for a supplier they can trust.

How Can We Make Business More Ethical?

*Individual responsibility. Do your part. It begins with you......your example and your courage to do what is right.

*Top Management Support. They determine the ethical atmosphere in the organization more than any single factor.

*Hire people who are ethical. Look for it in the selection process as the most important criterion.

*Ethics training in pamphlets, seminars, workshops, etc. This reinforces the Code of Conduct & further clarifies.

*Performance Appraisals, Promotions and Raises based on both successful performance and being ethical doing it.

*Code of Conduct - A set of rules that guide the conduct of each employee plus an enforcement mechanism.

*Ethics Help Lines and Ethics Advisors with an Ethics Program Director. They also do corporate     monitoring.

*Appeals Process to raise ethical questions or blow the whistle with no risk to themselves.

*Social Audit - A comprehensive evaluation of how an organization is doing regarding ethical practices.

Determinants of the Level of Ethical Behavior

*Individual Factors: Character of the person; Family Values; and Professional Formation.

*Social Factors: Religion; colleagues; superiors; Society; Code of Conduct; School & Colleges; and Corporate Culture.

*Opportunity: The probability of not being caught and position of power. Power corrupts; absolute power corrupts absolutely@, i.e., completely. Character is doing what is right when nobody is looking. Integrity is honesty and character plus; remaining faithful to ones principles and doing what is right despite the consequences. Right is right and wrong is wrong@. One may get away with unethical practices for just so long. Eventually corruption is discovered. Then a very promising future, an apparently successful career, and a good reputation are destroyed. What a legacy after death!!!!!