Business Ethics

The Nature of Ethics

• Ethics are moral principles by which people conduct themselves personally, socially, or professionally.

• Business ethics are rules based on moral principles about how businesses and employees ought to conduct themselves.

  • Most businesses are committed to providing safe products, creating jobs, treating their employees fairly, protecting the environment, and being truthful about their financial situation.

• Different cultures, businesses, and industries have different ethical standards.

• Ethics involve a system of moral principles that govern the appropriate conduct for a person or group.

• Laws involve rules for conduct that may be used to punish violators.

  • In business, people follow rules as well as a code of ethics.

• A code of ethics is a set of guidelines for maintaining ethics in the workplace.

• A sweatshop is a shop or factory in which workers are employed for long hours at low wages and under unhealthy conditions.

  • The Occupational Safety and Health Administration (OSHA) is a division of the U.S. Department of Labor.

  • OSHA sets and enforces work-related health and safety rules.

Ethics as a Good Business

• A code of ethics can cover issues such as employee behavior and environmental safety.

• Unethical business practices include lying, offering merchandise known to be substandard, or treating customers or employees unfairly.

• The fact is that most businesses (especially small businesses) rely on repeat customers and word of mouth to get new customers.

• Treating employees unethically can also backfire.

• Another major ethical question that is generally not illegal relates to conflict of interest.

• A conflict of interest is a conflict between self-interest and professional obligation.

• When making business decisions, employees have an ethical obligation to act in the best interest of the company.

Ethical Questions

• When you encounter an ethical decision and must choose a course of action, ask yourself these important questions:

  • Is it against the law? Does it violate company or professional policies?

  • Even if everyone is doing it, how would I feel if someone did this to me?

  • Am I sacrificing long-term benefits for short-term gains?

• Here are some steps to take if you find yourself in an ethical dilemma:
  1. Identify the ethical dilemma.
  2. Discover alternative actions.
  3. Decide who might be affected.
  4. List the probable effects of the alternatives.

  5. Select the best alternative.

Social Responsibility

Business and Social Responsibility

• Social responsibility is the duty to do what is best for the good of society.

• Businesses that follow ethical standards value integrity and honesty in employees.

• Customers are a business’s first responsibility.

  • Businesses should offer a good, safe product or service at a reasonable price.

• The Food and Drug Administration (FDA) is a federal government agency that protects consumers from dangerous or falsely advertised products.

• Some companies use unethical tactics to eliminate competition.

  • One of the most common means is to conspire with other companies to control the market for a product.

• Businesses have a social responsibility to provide employees with safe working conditions, equal treatment, and fair pay.

• Businesses have responsibilities not only to customers and employees but also to society.

• One of the biggest social issues facing businesses today is environmental responsibility.

• In the late l990s and the early part of the 21st century, a number of major corporations reportedly kept inaccurate accounting records.

  • Records showed that the firms had higher profits than they reported.

• The Sarbanes-Oxley Act mandates truthful reporting and makes the CEO more accountable for the actions of the financial managers of a firm.