Business Ethics

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A company's business ethics are neither part of its product or service lineup; yet neither of these will deserve or get trust unless the company can be trusted and presumed to have a professional code of ethics that is respected and followed. Moreover, business ethics are a first line of defense or an early warning system with regard to legal compliance. Chances are that if a company has an articulated, promulgated and enforced code of conduct for its members, and one that meets the prevailing legal, as well as moral standards governing employee behavior, it is unlikely to get into legal hot water or become embroiled in public scandal, e.g., upon exposure of deceptive advertising practices or of the use of unsafe additives in food products.

The more morally complex, difficult or uncertain company policies are, e.g., in commercial applications of stem-cell research, the more indispensable the services of well-informed and clear thinking experts, e.g., bioethicists, will be. In the long run, the financial costs of retaining their services may be more than offset by the community benefits, spared legal costs and by the resulting enhancement of the company's reputation and image.

Business ethics, which comprise the moral standards, principles and sanctions adopted by a profession and urged or mandated for members, should factor into every important decision an organization makes. Although the moral norms a business adheres to are commonly based upon industry norms, namely, what most people in the industry or serviced by it would consider to be fair, just, and equitable within the industry, at times those norms need to challenged by conscience, e.g., the norms governing the hiring, promotion and admissions of racial minorities 70 years ago. Ethical decisions should conform to existing law, but in those instances where the law seems ethically deficient, it can be incumbent upon the organization to press for needed legal reforms.

When what is sincerely believed to be an ethical business decision seems to infringe the recognized or presumed rights of others, e.g., policies upholding affirmative action, best efforts should be made to reconcile all parties, including by means of cogently arguing for the prioritization of hiring, promotion and admissions rights that may require relinquishing, diluting, limiting or waiving rights or claims.

Ethics go beyond the decisions of an organization, to include other organizations with which it associates. For example, is it ethical to do business with an organization that permits child labor or destruction of natural resources?

Executives and managers must come to an agreement on what ethical behavior is and should agree to enforce those standards. Some large organizations may employee an ethics officer for this purpose. Managers and human resource departments are responsible to make clear the organization's expectations regarding ethical behavior. At it base, professional ethics requires that all employees abide by the organization's standard of conduct in all situations.
Ethics are important because they keep commerce fair and prevent harm to someone or something. There are some laws governing ethical behavior, and if organizations do not follow them, they are faced with penalties. If unethical behavior begins to run rampant, more laws governing organizations will eventually be forged; and this will add to the government costs of enforcing such laws and the organizational costs of complying with them. It is therefore better for organizations to learn to govern themselves.

Business ethics are made clear through codes of ethics, policies, and codes of conduct that organizations adopt on their own. Once these are in place, they must be communicated throughout the organization; and the penalties for failing to abide by them must be determined and carried out when needed, and in a clear and consistent way.
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