Introduction
The determination of right and wrong cannot be
judged by one individual. This is because the
value of right or wrong depends on how one view
the situation, those affected by it and the consequences
of the same. Since individuals exist in groups
the judgment of what is right and what is wrong
must also be collective. The principles upon which
groups decide actions, wrong or right is called
ethics. Ethical values therefore are applicable
to all members of the society as it has been agreed
by all. The basic premise in setting up ethical
values and moral conducts to individuals so as
to assign responsibility for preserving the interest
of the society is inherent in the individuals
and the community alike. In doing so the society
supposedly becomes free from social malaise.
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However, one often hears of breach of ethical
conduct by some individuals or the other due to
the fact that these individuals do not comply
with the agreed upon moral codes. Consequently,
they are subject to punishments. The issue arises
who is to judge what conduct is ethically correct
and what is not. Individuals who breach moral
code may consider they are justified in taking
particular actions while the society may consider
it a breach of conduct. The individual may consider
that his/her conduct as justified due to particular
situations but others are more keen in the interest
of the society. As a result some individuals are
incarcerated for the crime of acting against the
interest of the society.
Business ethics in this context although to some
extent is similar to the social ethics but at
times differ due to the nature of the environment
in which it exists. It has its own norms, principles,
codes and moral values, and it is usually applicable
to individuals within the business community.
However, it does not mean that the business individuals
are excluded from the society. In fact the business
is accountable to the society as it operates within
the society and it depends on the society to support
it. It is only ethically correct to conform with
the social norms as well as within the business
community.
Thesis Statement
It could be said that determination of ethical
values in businesses is the work of both the society
and the business community including the entities
that operate within it.
Discussion
Ethics within the business community is a complex
issue as it deals with not only right and wrong
but also with how to determine the fine line life
and death, profit over public interest, employees
or employer interests etc. While for some businesses,
ethics may be inherent in their way of operations
such as the banking industry where the financial
products and services is based on the trust of
the consumers, on the other hand, in industries
such as the casinos retaining ethical values is
difficult. Yet it cannot be said that they are
without ethical values and do not follow any moral
principles. In essence determination of ethical
values and code of conduct depend on the organization's
business and its operations along with the way
the management perceive inherent culture for that
particular organization. This is the reason why
one often observes companies promoting their organizational
culture, corporate governance and code of conduct
etc. By outlining the set of ethical values within
the organization not only clarifies any doubt
among employees as to how to conduct their business
but also to make them aware of the fact that breach
of such codes would result in punishment in the
form of demotion, expulsion or even jail. Business
and ethics therefore go hand and hand, and not
a different concept that can be implemented through
mutual understanding. Milton Friedman (1970) in
his essay "The Social Responsibility of Business
is to Maximize its Profits" writes:
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A corporate executive is an employee of the owners
of the business. He has direct responsibility
to his employers. That responsibility is to conduct
the business in accordance with their desires,
which generally will be to make as much money
as possible while conforming to the basic rules
of the society, both those embodied in law and
those embodied in the ethical custom."
Hence, ethics is inherent in both the community
as well as within the business environment. Yet
one observes that the business community is strived
with scandals like Enron, WorldCom and Anderson
where corporate governance have been breached
not to mention earning public despise. How then
can one justify for the conducts of such executives
and head of organizations that breach ethical
code of conduct themselves? One of the reasons
why such ethical values are not respected at the
executive level by organizations like Enron, WorldCom
and Anderson is that there are no checks and balances.
Just like a society that closely monitor the conduct
of individuals for the preservation of the community,
the business community too must have an authority
that monitors the business entities. Such an authority
should also monitor the organizations for any
breach of conduct. This not only keeps a check
on proliferation of unethical conducts but also
retains the trust of the customers and business
entities. Why the presence of such authority is
needed is because it would follow standard procedures
for monitoring the business entities. Organizations
tend to depend on the authority to keep the balance
of correct business practices. Yet this very fact
tends to act against the interests of the community
because at times the authority tends to lag in
their procedures thereby neglecting to keep a
check on truant companies. The result is the proliferation
of misconduct like financial misstatements, projection
of inflated revenues and involvement in hedging
activities etc.
The ramifications for such conducts however are
long term due to several reasons. The internal
infrastructure becomes distraught by the breach
of conduct. Employees especially are sensitive
to their peers and leaders' actions. Distrust
would lead to resignation and disappointment in
corporate values. Fostering conducive and satisfying
working environment for the employees is imperative
but even more important is the company's ability
to sustain a reputation within the organization
as well as outside. Employee trust therefore is
important for the organization to sustain and
survive within the industry.
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Authors like Jennifer J. Salopek (2001) is of
the belief that implementing ethical programs
within the organization not only spur relations
with the staffs but it also help in the motivating
the staffs to envision and achieve company's mission
and vision. A breach of institutional code of
ethics tends to deescalate the motivation and
trust level and enhance pressure on accountability.
Issues such as legal risks, reputation, response
to change and loss of stakeholder trusts all comes
to the front.
The reason why such ethical values are necessary
for improving the reputation, health and safety
of organization is that it earns the trust of
the community at large as well as ensure that
the organization comply with the external environment.
The logic is simple: as long as the organization
respect the ethical codes and values of the community
and members of the community (employees and other
stakeholders) it is ethically correct. It would
earn the trust of the stakeholders who consequently
would boost the business. In the event of breach,
the reverse cycle comes into existence. The organization,
as a member of the society must comply with ethically
correct practices. As ERC (Ethical Resource Center
qt. Salopek 2001) notes:
"The code needs to address the organizational
realities of today in dynamic fashion. The code
doesn’t need to re-articulate every possible
situation that could arise, nor does it need to
cover every rule and regulation. But it should
address the areas of uncertainty, confusion, and
significant risk that the organization faces today
and in the near future."
As long as values are determined, organizations
cannot differ from the beliefs and principles
which the community and its member follow. The
responsibility of standardizing correct behaviors
and setting obligations upon executives and employees
alike thus fall on the shoulders of organizations,
the community, the employees as well as the authority
that monitors it. One cannot train employees to
change their behaviors but to value certain norms
and principles. For this reason corporate values
are important for training individuals to believe
in them as well as to promote them so that everyone
follows one set of code of conduct and principle.
Albert Carr's comments in "Is Business Bluffing
Ethical?" (1968):
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"[A]s long as a company does not transgress
the rules of the game set by law, it has the legal
right to shape its strategy without reference
to anything but its profits. If it takes a long-term
view of its profits, it will preserve amicable
relations, so far as possible, with those with
whom it deals. A wise businessman will not seek
advantage to the point where he generates dangerous
hostility among employees, competitors, customers,
government, or the public at large."
On the other hand there are businesses that consider
such man-made rules are meant to be breached and
can be discarded in the interest of profits. For
this reason these businessmen tend to ignore the
values accepted by all and eventually lose out
in the race of competitors. The dollars involved
in making reputation is none comparable to the
dollars lost due to a bad business reputation,
especially when customers find out of the nature
of reputation involve breach of ethics (Barrier
1998). The gravity of the nature of corporate
ethics among consumers, the stakeholders and the
public can be determined by the degree of concern
that they are demonstrating. According to authors
Laczniak et al (1995) ethical values should be
put ahead of the bottom line profitability to
ensure of future progress and growth. They write
that:
"A goal of zero ethical transgressions is
also something organizations must increasingly
strive for. .... Since then, public expectations
have evolved to suggest that environmental concern
is a strategy that companies must internalize
as part of their basic operation fabric. In short,
higher public standards have emerged and businesses
have adjusted accordingly." (Laczniak et
al 1995)
Thus, the aim of organizations should be zero
tolerance towards misconduct, breach of ethical
conduct and conduct that is against good business
practices. The determination of good business
practice largely depends on the entities within
the organization as well as those outside the
organization who govern the community. According
to the utilitarian theory of ethics by Mill (Gray
2002) moral codes and principles should be for
the benefit of the whole community but it should
also be in the interest of the individuals. In
this context, the individuals must make sure that
all codes of conduct conform with agreed upon
terms and practices so that there is little room
left for doubts which would result in breach of
ethics.
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