A personal code of ethics or a set of moral values serves as a compass, guiding individuals to differentiate between right and wrong in their daily interactions. In the realm of business, the concept remains similar but extends to encompass broader implications. From the front-line employee to the top-level executive, workplace decisions are subjected to scrutiny by a larger audience compared to personal choices. The perceived integrity of these decisions can significantly impact an employee’s career and the organization’s overall success. In essence, a company’s ethical standards wield considerable influence over its achievements.
An executive driven solely by profit, potentially resorting to unfair or questionable business practices, risks causing significant harm despite the short-term financial gains. The long-term consequences of organizational and public disapproval can severely damage the executive’s reputation and the organization’s long-term sustainability. As Warren Buffet wisely stated, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Understanding Ethical Behavior
A Guide To Acceptable And Ethical Behavior Is Known As a moral compass or a code of conduct. However, defining ethical behavior with a singular set of actions or moral values isn’t straightforward. Encyclopedia Britannica defines ethics as a discipline concerned with morally good and bad, right and wrong, differing from factual knowledge like sciences, instead focusing on determining normative theories and applying them to practical moral problems.
While certain ethical or moral principles are widely accepted, such as the wrongfulness of murder, the virtue of returning lost items, and the negativity of littering, personal and business scenarios often present less clear-cut choices.
In business, ethical behavior is determined by basic business principles, company morals, and industry-specific codes of conduct. Core business principles advocate for quality products and fair wages. Corresponding ethical examples include avoiding false advertising and ensuring equal pay regardless of race or gender. Company morals may dictate advertising restrictions based on political views or the public disclosure of executive salaries. A further business ethics example is the code of ethics where financial advisors have “fiduciary duty,” a legal mandate to act in their clients’ best interests.
Ethical behavior is defined by considering business principles, company morals, and industry code of conduct.
The Road to Sustainable Success
While ambition, competitiveness, and market acumen are essential for success, they must be balanced by a robust foundation of ethical principles. For enduring success, organizations require ethical decision-making from all personnel regarding both job performance and personal conduct, especially in high-stakes, unsupervised situations.
Executives who genuinely value ethics can foster a supportive environment that encourages and nurtures ethical behavior. Business leaders dedicated to excellence are often tasked with defining company-specific ethical business practices to guide employee judgment. These principles, once implemented, offer a pathway to sustained success.
1. Honesty
Truthfulness is paramount in all communication and actions. This means avoiding partial truths, selective omissions, misrepresentations, or overstatements. Honesty entails openly sharing both positive and negative news.
2. Fairness
All interactions and relationships must be rooted in fairness, treating others with the same consideration you desire. This involves equal and courteous treatment, avoiding arbitrary power plays, and resisting the temptation to exploit weaknesses or mistakes for personal or corporate gain.
3. Leadership
Ethical leadership sets a positive example through ethical decision-making and a commitment to excellence. Companies and executives maintain their leadership positions through ongoing improvements in operational efficiency, employee satisfaction, and customer approval.
Ethical leadership inspires trust and encourages ethical behavior throughout the organization.
4. Integrity
Integrity is demonstrated through consistent actions and words that inspire trust and credibility. This includes keeping promises, honoring commitments, meeting deadlines, and avoiding participation in unscrupulous activities or business dealings.
5. Compassion
A compassionate business environment fosters empathy and care for all personnel, partners, and customers. Business goals should be benevolent, achieved by understanding the needs and sensitivities of others, including the local community.
6. Respect
Respect entails a commitment to the human rights, dignity, autonomy, interests, and privacy of all personnel. It means recognizing the equal worth of every individual and supporting the free exchange of ideas and opinions without fear of penalty or discrimination.
7. Responsibility
Employees demonstrate responsibility by taking ownership of their jobs and being mindful of the emotional, financial, and business consequences of their actions. Taking responsibilities seriously demonstrates employee maturity and ability to do a job without needing strict supervision.
8. Loyalty
Loyalty is demonstrated by protecting confidential information and remaining faithful to coworkers, clients, partners, and suppliers. Loyal employees avoid conflicts of interest, contribute to the company’s reputation, and boost coworker morale.
9. Law-Abiding
Organizations must adhere to all applicable laws and regulations at the local, state, and federal levels. This includes industry and trade regulations, marketplace standards, and all mandatory organizational policies and procedures.
10. Accountability
Accountability requires a commitment to ethical quality in all decisions, actions, and relationships. High expectations for ethical behavior drive business practices when an organization and its personnel are held accountable to fellow employees, consumers, the community, and the wider public.
11. Transparency
Transparency involves making business information and policies accessible to relevant stakeholders, such as investors, personnel, and consumers. This includes sharing criteria for price increases, wages, hiring, promotions, workplace infringement resolution, and employee termination.
12. Environmental Consciousness
Organizations and personnel demonstrate environmental responsibility by mitigating the effects of climate change. This includes improving energy efficiency to lower carbon emissions, reducing water usage, and minimizing waste.
Real-World Ethical Business Practice Examples
Balancing company morals with core business principles might seem challenging, yet it’s achievable and yields positive results. Here are some ethical business practice examples:
- Chick-fil-A has invested $136 million in scholarships for over 80,000 employees since 1970.
- McDonald’s is transitioning to using only cage-free eggs worldwide, demonstrating commitment to animal welfare and corporate responsibility.
- In 2018, Nike supported Colin Kaepernick, a brand ambassador who claimed NFL teams wouldn’t hire him due to his support for the Black Lives Matter movement. This strengthened Nike’s brand reputation and potentially boosted its stock price.
Nike’s support for Colin Kaepernick increased its brand reputation.
Cultivating Sustainable Business Success
Organizations increasingly prioritize hiring and retaining individuals with strong moral integrity and ethical business practices. The principles outlined above are a guide to acceptable and ethical behavior and set the tone for positive interactions and outcomes.
Individuals seeking to become confident leaders with strong ethical principles and the ability to navigate business challenges may consider an online MBA.
