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Home > Free Essays & Book Reports > Ethics > Business Ethics

Business Ethics

How to behave toward oneself and toward other individuals is a matter of making choices: whether to be friendly or unfriendly; whether to tell the truth or lie; whether to be generous or greedy; whether to study in order to pass an exam or to spend valuable study time watching television and cheat to pass it. These, and all other questions about how people act toward themselves and one another are dealt with in a field of study called ethics. Another name for ethics is morality. Because both words suggest customary ways of behavior, they are somewhat misleading. It had to do with what should or should not be done. Divide practical wisdom into two parts: moral philosophy and political philosophy. They’re defined together as a “true reasoned state of capacity to act with regard to the things that are good or bad for man” (Drucker, 1996). One statement of the problem is business organizations, as well as members of society in general, are plagued by the fact that there are liars, cheats, and thieves among us. Liars, cheats, and thieves are not new nor are they likely to disappear. People will do anything and go to whatever extent to get what they want. This is why there’s a lack of ethics. Definition of terms: The word ethics is derived from the Greek ethos, meaning “character,” the pattern of behavior or personality found in an individual or group; moral constitution, moral strength, self discipline and fortitude (Compton’s Interactive Encyclopedia). The other is from the Latin mores, meaning “custom” (Compton’s Interactive Encyclopedia). Business Ethics refers to what is right or wrong, or good or bad, human behavior. The concept of business ethics is “being able to look at your face in the mirror”(Drucker, 1996). Ethics is a code of conduct and values that is accepted by society as being right and proper. Code of ethics is simply a compilation of the rules that are meant to govern the conduct of members of a particular organization or profession. Moral philosophy and political philosophy is true and reasoned state of capacity to act with regard to the things that are good or bad for man. In the daily scramble to get ahead, earn a profit, and outwit competitors, some people don’t play by the rules. Sometimes the culprits are respected and ordinarily well-behaved persons even though they are accused of a crime or offense. Unfair and unscrupulous actions hinder the development of harmonious relationships between workers and co-workers, and between workers and supervisors. A person who cannot be trusted to do the right thing, fails to win the respect of others. It should be recognized, however, that ethical dilemmas are faced by people at all levels within an organization. Various firms have experienced breaches of ethics. The respected business firms suffer damage to their reputation when questions concerning ethical behavior arise. This is one of the reason formal codes of ethics, developed by many business organizations, and trade associations are popular today. Code of ethics is simply a compilation of the rules that are meant to govern the conduct of members of a particular organization or profession. A recent survey found that 94% of the fortune 500 service and industrial companies have a written code of ethics (American Marketing Association). Companies and trade associations expect their members to abide by such rules as a condition of their engaging in the profession. There are at least two noteworthy limitations to codes of ethics. First, the written rules are sometimes so vague and general they prove to be of little value. Second, codes of ethics are neither a complete nor a completely reliable guide to one’s moral obligations. It is impossible for the drafters of such codes to anticipate all the moral dilemmas which may be encountered and impossible for them to draft rules to govern all behavior. Nothing wins support from external groups as much as adherence to strong codes of ethics. People in businesses and businesses are expected to conduct their activities in an ethical manner. Ethics is a code of conduct and values that is accepted by society as being right and proper. Employers and employees practice honesty, fairness, and adherence to the law. However, there is always the possibility of divergence from what is considered to be ethical and what is actually practiced. No one commands more respect and admiration than the worker who adheres to ethical principles and exhibits professional behavior. Specialists in the field of Human Resource Development suggested that human relation is doing to others what they would have you do to them. In either case, rather it’s good or bad you or they should expect nothing less than coworkers or supervisors to behave in an ethical, professional manner. The public image of business has been slipping since the 1960's. According to a poll conducted in 1966, 55% of the American people had a “great deal of confidence” in American business executives (Matthews, Washington State University, 1995). In recent years, that percentage has dropped to about 20%. Surveys indicate that confidence in business leaders is low, especially with regard to honesty and ethical standards. Confidence in political leaders and institutions is even lower. One explanation is that personal and corporate ethical standards have fallen. Cases of insider trading, product content deceptions, bribery, pollution, and other business misconduct were seen as confirmation of the public perception. Due to increased concern about ethical issues by the public, it is more likely that some decline in an image is due to increased concern about ethical issues by the public. The public expects more from businesses now than they did in the past. Ethical problems are inevitable at all levels of a business and this means that it's simply good sense for companies to take seriously the task of institutionalizing ethics in their organizations. Accordingly, an important segment of corporate America has begun relying on such tools as: statements of corporate values, codes of conduct, ethics workshops, hotlines, even corporate ethics offices and board level ethics committees. In short, they are setting up corporate ethics programs. Formal ethics programs are relatively new to the world of American business. Although a handful of companies have had them for twenty to thirty years, the majority of ethics programs are no more than a few years old and some have been around for only a few months. Nonetheless, their number is growing as their usefulness becomes evident. Why Ethics? The view from the top. When one looks at corporations with a strong commitment to ethics, the first thing one notices is that the leaders of these organizations are the strongest advocates of corporate integrity. CEOs and Chairmen of such companies are clear and vocal, forcefully charging everyone in the company to look at not only how profitable their actions is, but how ethical. To the skeptics who think that ethics and business go together as well as oil and water, their message is a little short of heresy. Yet another issue cited is the effect of unethical conduct by the corporation on its employees. If the company is unethical, that company is going to be cheated by its own employees. Taking something as seemingly harmless as lying to help the company. “What you may perceive as a simple lie or a simple misstatement that doesn't hurt anybody and protects the company, sooner or later will come back to bite you. It'll bite you with people in your organization who know it's a lie. If you can't be open and honest at all times, you're sending a signal to the organization that you will let them get away with lying occasionally. And that includes lying to you (Walter Klein). More than anything else, however, the view from the top is that ethics is critically important for the health of the organization. CEO's of ethically committed corporations believe that “no matter how large the financial gain may be from doing something unethical, there's a cost somewhere else in the business” (Jerry Junkins). If employees are directed to do something unethical for the company or even if they simply witness dishonesty by their superiors, this inevitably leads to a rotting of the organization. And there's no way that you're going to be able to rebuild credibility with those people when you're trying to energize an organization to go do something else. You've created a permanent problem in terms of how people view you as an individual and how they view the management of the organization. Ethics is primarily concerned with attempting to define what is good for the individual and for society. It also tries to establish the nature of obligations, or duties, that people owe themselves and each other. I feel that people do not willingly do what is bad for themselves, but may do what is bad for others if it appears that good for themselves will result. I’ve found that it’s difficult to define what is good and how one should act to achieve it. Individuals and whole societies have performed outrageous criminal acts on people. After research, I’ve found that business ethics now compared to 20 years ago has increased, and lack of business ethics will probably not decrease. In addition, every one of us must comply with business ethics of all applicable laws and regulations, and with other company policies and instructions. Our conduct is our responsibility. None of us should ever commit dishonest, destructive, or illegal acts even if directed to do so by a supervisor or coworker, nor should we direct others to act improperly. In addition don’t deviate from Business Ethics, policies and instructions even if doing so appears to be to the company’s advantage. Work Cited 1. American Marketing Association 2. Compton’s Interactive Encyclopedia, 1994-1997 3. Drucker, Peter, Florida State University, 1996 4. W. Michael Hoffman and Edward S. Petry, Jr. “Phi Kappa Phi Journal.” Winter 1992, 10-11 5. Jerry Junkins, Florida State University, 1996 6. Klein, Walter, Washington State University, 1995 7. Marilyn Cash Mathews, Washington State University, 1995 8. Roger E. Meiners, Al H. Rinleb, and Frances L. Edwards. “Legal Environment of Business,” Chap.1, p.19-21 9. Ralph D. Wray, Roger L. Luft, and Patrick J. Highland. “Human Relations,” Chap. 17, p. 487-491 AEthical and unethical behavior that occurs in organizations frequently.@ Below are a few that occur with customers daily Example 1: A consumer chooses to purchase a used car and the car odometer shows it only has 40,000 miles, although the seller knows that the car should have 80,000 miles. What has occurred to the consumer is misrepresentation, as well as deception by failure to disclose the actual reading. The consumer probably would not have purchased the vehicle had they knew the actual mileage. It is the seller=s duty to inform the buyer of any defects that might affect the customer=s decision. Example 2: Price-fixing-Managers of firms manufacturing paper bags used for packaging foods, coffee, and other goods were fined for getting together and conspiring to fix the prices of those paper bags. When firms are operating in an oligopoly market, it is easy enough for managers to meet secretly and agree to set their prices at artificially high levels. Example 3: Manipulation of Supply-When hardwood manufacturers met periodically in trade associations, they would often agree on output policies that would secure high profits. Firms in an oligopoly industry might agree to limit their production so that prices rise to levels higher that those that would result from free competition. Example 4: Price Discrimination-Used by one organization in an attempt to undersell another organization, which may have taken away all of their business. In 1960, Continental Pie Company attempted to undersell Utah Pie Company, which had managed to take away much of its business. The Supreme Court found such pricing practices Apredatory.@ Prices should be based on true differences in the cost of manufacturing, packaging, marketing, transporting, and service goods. These things often occur because most industrial markets are dominated by what is known as an oligopoly (control of a commodity or service given market by a small number of companies or suppliers). Most of the markets are shared by a large number of firms that can have some influence on prices. AOrganizational Business Ethic Awareness Survey@ Some of the principles you will find in companies with well defined Business Ethics are listed below. Are you aware of the following principles in your current organization? Answer the following question by circling the appropriate choice. 1= Not Aware 2= Somewhat Aware 3= Aware 4= Very Aware 1. We earn customers= business and build relationships with them by representing our products and services honestly. 1 2 3 4 2. We select suppliers based on the merit and value of their products and services. 1 2 3 4 3. We don=t accept gifts, entertainment, or favors that could cloud our business judgement. 1 2 3 4 4. We compete vigorously, rely on the merits of our products, services, and people. 1 2 3 4 5. We support involvement in the communities where we live and work. 1 2 3 4 6. We protect the environment in many locations where we conduct business. 1 2 3 4 7. We notify Corporate Security whenever we suspect, observe, or learn of unethical business conduct or the commission of any dishonest or illegal act. 1 2 3 4 8. We comply with applicable laws that govern the company=s operation. 1 2 3 4 Open communication and sharing of ideas 1 2 3 4 Respect for individuals and freedom from unlawful discrimination 1 2 3 4 Safe and healthy working conditions 1 2 3 4 Respect for employee privacy. 1 2 3 4 10. We never let our business dealings on behalf of the company information be influenced by personal or family interest. 1 2 3 4 11. We don=t take advantage of non-company information to which we have access. 1 2 3 4 12. We ensure that proprietary information is never improperly revealed. 1 2 3 4 13. We safeguard and make proper and efficient use of company funds and property. 1 2 3 4 14. We follow proper record keeping and financial reporting procedures. 1 2 3 4 Calculate you company=s total score by adding the numbers circled for each statement. Ethical Scenarios These are different types of ethical scenarios you could be challenged within your companies. If you were challenged with any of these type scenarios do you think you would have handled them the same way? Answer all questions as ethically as you know how, by circling the appropriate choice. 1= Ethical 2= Less Ethical 3= Unethical 1. A sales representative for a line of women=s sportswear offers a 10%-to-15% discounts to a few favored buyers; other buyers are not informed of any discounts. 1= Ethical 2= Less Ethical 3= Unethical 2. Invited to come to New York for an interview with all expenses paid, a recent graduate with heavy student loans decides to stay with a cousin in the area and report that he stayed in a $100-a-night hotel; he is not asked to provide receipts. 1= Ethical 2= Less Ethical 3= Unethical 3. A battery manufacturer, concerned about the effect of lead on the fetuses of pregnant women, adopts a policy barring women of childbearing age from jobs in areas where lead is present. 1= Ethical 2= Less Ethical 3= Unethical 4. After learning that a chemical it manufactures can cause cancer, the company institutes new safety procedures and monitors workers for the onset of the disease, but it does not notify workers of the cancer-causing potential of the chemical. 1= Ethical 2= Less Ethical 3= Unethical 5. A bank loan officer routinely passes the names of people applying for home improvement loans to her brother-in-law in the home improvement business for contacting as prospects. 1= Ethical 2= Less Ethical 3= Unethical 6. Upon washing a new dress according to the manufacturers directions a woman found that the garment faded and the colors streaked. The retailer refused to return the customers money. 1= Ethical 2= Less Ethical 3= Unethical 7. A customer returned a car to a dealer several times during the 1-year warranty period to correct transmission problems. In the 13th month the dealer overhauled the transmission and charged the customer the full price. 1= Ethical 2= Less Ethical 3= Unethical 8. An auditor discovers an illegal loan made by a savings and loan association. The auditor destroyed working papers involving the loan when instructed to do so by the supervisor. 1= Ethical 2= Less Ethical 3= Unethical 9. An employee uses company services for personal use. 1= Ethical 2= Less Ethical 3= Unethical 10. A manager authorizes a subordinate to violate company rules. 1= Ethical 2= Less Ethical 3= Unethical Answers 1. Unethical 2. Unethical 3. Ethical 4. Unethical 5. Unethical (it would be Less Ethical if they were not approved by her bank, but it would still not be ethical). 6. Unethical 7. Less Ethical 8. Unethical 9. Less Ethical 10. Unethical Speech Business Ethics Introduction How to behave toward oneself and toward other individuals is a matter of making choices: whether to be friendly or unfriendly; whether to tell the truth or lie; whether to be generous or greedy; whether to study in order to pass an exam or to spend valuable study time watching television and cheat to pass it. These, and all other questions about how people act toward themselves and one another are dealt with in a field of study called ethics. Another name for ethics is morality. Because both words suggest customary ways of behavior, they are somewhat misleading. It had to do with what should or should not be done. Divide practical wisdom into two parts: moral philosophy and political philosophy. They’re defined together as a “true reasoned state of capacity to act with regard to the things that are good or bad for man”. Definition of terms The word ethics is derived from the Greek ethos, meaning “character,” the pattern of behavior or personality found in an individual or group; moral constitution, moral strength, self discipline and fortitude. The other is from the Latin mores, meaning “custom”. Business Ethics refers to what is right or wrong, or good or bad, human behavior. The concept of business ethics is “being able to look at your face in the mirror”. Ethics is a code of conduct and values that is accepted by society as being right and proper. Code of ethics is simply a compilation of the rules that are meant to govern the conduct of members of a particular organization or profession. Moral philosophy and political philosophy is true and reasoned state of capacity to act with regard to the things that are good or bad for man. WHY ETHICS? THE VIEW FROM THE TOP When one looks at corporations with a strong commitment to ethics, the first thing one notices is that the leaders of these organizations are the strongest advocates of corporate integrity. CEOs and Chairmen of such companies are clear and vocal, forcefully charging everyone in the company to look at not only how profitable their actions is, but how ethical. To the skeptics who think that ethics and business go together as well as oil and water, their message is a little short of heresy. Yet another issue cited is the effect of unethical conduct by the corporation on its employees. If the company is unethical, that company is going to be cheated by its own employees. Taking something as seemingly harmless as lying to help the company. “What you may perceive as a simple lie or a simple misstatement that doesn't hurt anybody and protects the company, sooner or later will come back to bite you. It'll bite you with people in your organization who know it's a lie. If you can't be open and honest at all times, you're sending a signal to the organization that you will let them get away with lying occasionally. And that includes lying to you.” More than anything else, however, the view from the top is that ethics is critically important for the health of the organization. CEO's of ethically committed corporations believe that “no matter how large the financial gain may be from doing something unethical, there's a cost somewhere else in the business.” If employees are directed to do something unethical for the company or even if they simply witness dishonesty by their superiors, this inevitably leads to a rotting of the organization. And there's no way that you're going to be able to rebuild credibility with those people when you're trying to energize an organization to go do something else. You've created a permanent problem in terms of how people view you as an individual and how they view the management of the organization. Conclusion Ethics is primarily concerned with attempting to define what is good for the individual and for society. It also tries to establish the nature of obligations, or duties, that people owe themselves and each other. I feel that people do not willingly do what is bad for themselves, but may do what is bad for others if it appears that good for themselves will result. I’ve found that it’s difficult to define what is good and how one should act to achieve it. Individuals and whole societies have performed outrageous criminal acts on people. After research, I’ve found that business ethics now compared to 20 years ago has increased, and lack of business ethics will probably not decrease. In addition, every one of us must comply with business ethics of all applicable laws and regulations, and with other company policies and instructions. Our conduct is our responsibility. None of us should ever commit dishonest, destructive, or illegal acts even if directed to do so by a supervisor or coworker, nor should we direct others to act improperly. In addition don’t deviate from Business Ethics, policies and instructions even if doing so appears to be to the company’s advantage. sploo-nuchy

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