Business ethics ensures a certain fundamental trust between consumers and the different forms of market players with companies. For example, a portfolio manager must consider the portfolios of family members and retail investors. These types of practices ensure that the public is treated fairly. The consequences of ethical failure can be serious and far-reaching. Organizations can quickly become entangled in a devouring web of lawsuits. The risk of litigation and liability has increased over the past decade as legislators have legislated new civil and criminal offenses, tightened penalties, and improved enforcement support. Equally, if not more important, is the damage that an ethical error can inflict on a company`s reputation and relationships. Sears and Beech-Nut, for example, struggled to regain consumer confidence and market share long after the lawsuit ended. Even in the best-case scenario, regulatory compliance is unlikely to unleash much moral imagination or commitment. Law does not generally seek to inspire excellence or human distinction. It is not a guide to good behaviour – or even good practice.
Managers who define ethics as legal compliance implicitly advocate a code of moral mediocrity for their organizations. As Richard Breeden, former chairman of the Securities and Exchange Commission, noted, “it is not an appropriate ethical standard to go the day without being charged.” In any organization, sound moral, commercial and financial practices must be followed at all times. No one is above the law or has special ethical privileges. Decision-making must take into account corporate governance. According to Michigan State University, the six steps to ethical decision-making are: Under this new organizational pressure and incentives, with few opportunities to legitimately achieve their sales goals, some employees` judgment suffered. Management`s inability to cross the line between unnecessary service and legitimate preventative maintenance, coupled with consumer ignorance, has left employees making their way through a vast gray area subject to various interpretations. Without management`s active support for ethical practices and mechanisms to detect and investigate questionable sales practices and poor work, it is not surprising that some employees responded to contextual forces through exaggeration, negligence or even misrepresentation. An ethical compliance approach also emphasizes the threat of exposure and punishment to steer behavior in legal directions. The underlying model of this approach is the theory of deterrence, which views people as rational maximizers of self-interest who respond to the personal costs and benefits of their decisions, but are indifferent to the moral legitimacy of those decisions. But a recent study published in Why People Obbeyon the Law by Tom R.
Tyler shows that obedience to the law is strongly influenced by a belief in its legitimacy and moral rectitude. People generally feel compelled to obey the law. Education about legal standards and an enabling environment can be all that is needed to ensure compliance. Each company develops and enforces its own laws that govern the conduct of its employees, companies and other organizations that operate there. The United States enacts and enforces these laws through the collective action of its legislative, executive, and judicial branches. As a manager, if you declare a contract to a client and that client signs the contract, you are both bound by the terms of that contract. If you don`t, one of the parties will likely take legal action. In this example, according to your company`s code of conduct, it is both ethical to be honest and open about the contract, as well as legally binding in court. It should be noted that in addition to a code of conduct, there must be a clear “whistleblowing” policy in which violations are identified and action taken. This process must be treated with absolute confidentiality and sensitivity towards the company and all stakeholders.
Retaliation should never be tolerated when it comes to ethical violations. The company should have a step-by-step action plan to address ethical issues at all levels up to the company`s senior management. An external investigation firm may be called upon to address such issues in order to eliminate the burden and influence that internal resources may have. The WAI approach might be difficult to implement in a larger, more traditional organization. WAI is a small company founded by 34 people who share the belief in doing well. Its ethical values were naturally integrated into the organization from the beginning. These values are so deeply ingrained in the company`s culture and operating systems that they are largely autonomous. Nevertheless, the company has developed its own training program and pays special attention to hiring employees willing to support the good deed. Ethics and professional competence are considered equally important in determining a person`s competence and suitability for employment. For WAI, the challenge will be to maintain its vision as the company grows and enters foreign markets. Even if you think you`re a legal entity that knows right from wrong, as a business owner you`re likely to encounter situations where you have to make ethical choices you`ve never considered before. Here, a good course in business ethics and law will serve you well.
Business ethics and law are fields of study specifically designed to address the moral concerns of organizations. While they consist of a variety of ever-changing topics, understanding the roles they play in organizations is a good place to start. The roots of ethics as a branch of philosophy go back to Socrates, Plato, Aristotle, and other early Greek philosophers; Many of them have developed the framework of modern ethical thought in relation to the Western world. The word “ethics” itself comes from the Greek word ethikos, derived from ethos, which means “character or disposition of a community, group, person, etc.” If you are commenting on a particular law or regulation, seek advice from your company`s legal department or consult a reputable business lawyer of your choice. As a manager, you are not expected to be a legal expert. However, you must have a basic understanding of labour laws and discrimination; For example, how many hours a person can work, equal opportunity and affirmative action laws, and laws that regulate job security. Since then, the concept of business ethics has evolved. Business ethics go beyond a moral code of right and wrong; It attempts to balance what companies are legally required to do with maintaining a competitive advantage over other companies.
Companies demonstrate business ethics in different ways. Company leaders are also confident that the program has helped reduce the incidence of misconduct. When allegations of wrongdoing surface, the company says it deals with them more openly. On several occasions, for example, Martin Marietta has voluntarily disclosed and made amends to the government for misconduct involving possible violations of the federal law on public procurement.
