Essay Summary of Business Ethics

Let’s Start With “What is ethics?” Simply put, ethics involves learning what is right or wrong, and then doing the right thing, but “the right thing” is not nearly as straightforward as stated in a great deal of business ethics literature. Most ethical dilemmas in the workplace are not simply a matter of “Should Bob steal from Bill?” or “Should Sue lie to her boss?”

Many ethicists assert there’s always a right thing to do based on moral principle, and others believe the right thing to do depends on the situation, ultimately it’s up to the individual.

Values that guide how we ought to behave are considered moral values, ex. values such as respect, honesty, fairness, responsibility, etc. Statements around how these values are applied are sometimes called moral or ethical principles.

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So What is “Business Ethics”? The concept has come to mean different things to different people, but generally it’s coming to know what is right or wrong in the workplace and doing what’s right; this is in regard to effects of products/services and in relationships with stakeholders. Attention to business ethics is critical during times of fundamental change, times much like those faced now by businesses, either nonprofit or for-profit.

In times of fundamental change, values that were previously taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should act. Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass.

Note that many people react that business ethics, with its continuing attention to “doing the right thing,” only asserts the obvious (”be good,” “don’t lie,” etc.), and so these people don’t take business ethics seriously. For many people, these principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine.

Two Broad Areas of Business Ethics

1. Managerial mischief: “Managerial mischief” includes illegal, unethical, or questionable practices of individual managers or organizations, as well as the causes of such behaviors and solutions to remove them. There has been a great deal written about managerial mischief, leading many to believe that business ethics is merely a matter of preaching the basics of what is right and wrong. More often though, business ethics is a matter of dealing with dilemmas that have no clear indication of what is right or wrong.

2. Moral mazes: The other broad area of business ethics is “moral mazes of management” and includes the many ethical problems that managers must deal with on a daily basis, such as potential conflicts of interest, wrongful use of resources, mismanagement of contracts/agreements, etc.

Business Ethics is Now a Management Discipline. Business ethics has come to be considered a management discipline, especially since the beginning of the social responsibility movement in the 1960s. In that decade, social awareness movements raised expectations of businesses to use their great financial and social influence to address social problems such as poverty, crime, environmental protection, equal rights, public health and improving education.

An increasing number of people believed that because businesses were making a profit from using our country’s resources, these businesses owed it to our country to work to improve society. Many researchers, business schools and managers have recognized this broader following, and in their planning and operations have replaced the word “stockholder” with “stakeholder,” meaning to include employees, customers, suppliers and the wider community. The emergence of business ethics is similar to other management disciplines.

For example, organizations realized that they needed to manage a more positive image to the public and so the recent discipline of public relations was born. Organizations realized they needed to better manage their human resources and so the recent discipline of human resources was born. As commerce became more complicated and dynamic, organizations realized they needed more guidance to ensure their dealings supported the common good and did not harm others, and so business ethics was born.

Ninety percent of business schools now provide some form of training in business ethics. Today, ethics in the workplace can be managed through use of codes of ethics, codes of conduct, roles of ethicists and ethics committees, policies and procedures, procedures to resolve ethical dilemmas, ethics training, etc.

About Codes of Ethics A credo generally describes the highest values to which the company aspires to operate. It contains the `thou shalt’s. A code of ethics specifies the ethical rules of operation. It’s the `thou shalt not’s. Some business ethicists disagree that codes have any value. Usually they explain that too much focus is put on the codes themselves, and that codes themselves are not influential in managing ethics in the workplace. Many ethicists state that it’s the developing and continuing dialogue around the codes values that is most important.

Occasionally, employees react to codes with suspicion, believing the values are “motherhood and apple pie” and codes are for window dressing. But, when managing a complex issue, especially in a crisis, having a code is critical. More important, it’s having developed a code. In the mid-70s, Johnson and Johnson updated their credo in a series of challenge meetings. Bob Kniffin, Vice President of External Affairs, explains, “We pored over each phrase and word. We asked ourselves, `Do we still believe this?’ Our meetings resulted in some fine-tuning, but basically we didn’t change the values. The meetings infused the values in the minds of all of us managers.”

Many believe this process guided them in their well-known decision to pull Tylenol bottles off the shelves and repackage them at a $100 million expense. Kniffin offers some sound, practical advice. “In a crisis, there’s no time for moral conclusions. Get those done beforehand. But also realize there’s no substitute for sound crisis management. For example, have a list of people with fundamental knowledge, such as who transports your products where and when.”

Developing Codes of Ethics If your organization is quite large, (ex. includes several large programs or departments), you may want to develop an overall corporate code of ethics and then a separate code to guide each of your programs or departments.

Also note that codes should not be developed out of the Human Resource or Legal departments alone, as is too often done. Codes are insufficient if intended only to ensure that policies are legal. All staff must see the ethics program being driven by top management.

Codes of ethics and codes of conduct may be the same in some organizations, depending on the organization’s culture and operations and on the ultimate level of specificity in the codes.

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