Lesson 7: Business Ethics
Learning Objectives
Evaluate levels of congruence and conflict between personal and business ethics.
Lesson Introduction
When was the last time you heard or read in the news about the ethics of either a person or a company?
Business ethics is not something you study for a short time and then never revisit the topic. Every day, you will face situations requiring you to determine what is the “good” thing to do.
Photo by Author, Unsplash is licensed under Unsplash License
Probably not that long ago you heard either praise or criticism about someone’s actions. You may have heard the word moral or immoral.
Your actions are based on your core beliefs and values. If at some point in time you acted in opposition to a value, you probably felt uncomfortable and perhaps guilty. You form your personal ethics from a young age: you are influenced by your parents, family, peers, teachers, and certainly from your social interactions as you mature. Examples include honesty, integrity, loyalty, sincerity, and fairness.
If you believe that you are accountable for all your actions, you will not shirk from taking responsibility even if the consequences are negative and grim.
You likely were asked to sign a code of conduct at your company, signifying that you had read the document and that you agreed to abide by those ethics imposed by the company. Certain professions, such as law and medicine, also have a code of conduct that professionals must abide by to stay in good standing. Business ethics may include honesty, safety (construction, oil and gas, etc.), confidentiality, respect for all, communicating in a professional manner at all times, supporting local communities, and following the law. Recently, businesses are more concerned with how social media is used and accessed during work hours. As you can see, there is definitely an overlap of personal and business ethics.
This lesson looks at personal and business ethics and how they are interrelated.
The Interplay of Personal and Business Ethics
As people grow into adolescence and beyond, they are asked to be more discerning about which behaviors are right and wrong. Psychologist Lawrence Kohlberg built upon Piaget’s theory of cognitive development. Kohlberg believed that moral development, similar to cognitive development, follows a series of stages. These are outlined next:
Level 1: Pre-conventional morality
Stage 1: Obedient behavior driven by avoiding punishment
Stage 2: Behavior driven by self-interest and rewards
Level 2: Conventional morality
Stage 1: Interpersonal behavior driven by social approval
Stage 2: Behavior driven by obeying authority and conforming to social order
Level 3: Post-conventional morality
Stage 1: Behavior driven by balance of social order and individual rights
Stage 2: Behavior driven by internal moral principles
It is important to note that Kohlberg’s theory relates to the way people think they ought to behave. However, sometimes people do not do what they said they would.
In general, though, your sense of morality does change over time and, as Kohlberg notes, tends to grow from self-centered thinking to conforming and obeying authority to behaving according to your internal compass, balancing the social order and individual rights. Thus, a 30-year-old employee will have a different sense of ethics than a 50-year-old. Individuals who are leaders within an organization are called upon, whether implicitly or explicitly, to be role models and that includes ethics.
As an officer of a company, you are held accountable for the highest degree of ethical behavior, not only because you represent the company, internally and externally, but also because people will look at you and decide what is deemed as acceptable behavior (Kohlberg, 1981).
Your moral behavior includes how you treat other people, especially when they are vulnerable or at a disadvantage. For example, if you see someone who is emotionally distraught, what is the right thing to do? Do you take advantage of or manipulate him or her?
If you are with someone who is experiencing difficult emotions, whether it be sadness, extreme frustration, or embarrassment, the best thing to do is to listen. Allow the person to share what he or she is comfortable sharing, and do not be quick to give advice or recommend any particular actions. The worst time to decide upon an action plan is when you are feeling intense emotions. Be a willing listener and an understanding person—demonstrating emotional intelligence without judging.
Whenever you think about the behavior you expect of yourself in your personal life and as a professional, you are engaging in a philosophical dialogue with yourself to establish the standards of behavior you choose to uphold, that is, your ethics. You may decide you should always tell the truth to family, friends, customers, clients, and shareholders, and if that is not possible, you should have very good reasons why you cannot.
You may also choose never to defraud or mislead your business partners. You may decide, as well, that while you are pursuing profit in your business, you will not require that all the money on the table come your way. Instead, there might be some to go around to those who are important because they are affected one way or another by your business. These are your stakeholders.
Clients, customers, suppliers, investors, retailers, employees, the media, the government, members of the surrounding community, competitors, and even the environment are stakeholders in a business; that is, they are individuals and entities affected by the business’ decisions.
When you show up at work, you bring all your knowledge, experiences, skills, talents, and ethics to the job. If your personal ethics are at odds with the ethics of that particular organization, you will be, at the very least, uncomfortable. That is because you cannot just turn off your own beliefs to accept behaviors that are contradictory to those. Ethical organizations that value you and your contributions will want to leverage those beliefs that motivate you to behave in conscientious ways that benefit the greater good. As an employee, the business’ stakeholders become your stakeholders.
Stakeholders are the individuals and entities affected by a business’ decisions, including clients, customers, suppliers, investors, retailers, employees, the media, the government, members of the surrounding community, the environment, and even competitors.
“Stakeholders” by Rice University, OpenStax is licensed under CC BY 4.0 and has been modified by WGU
Behaving ethically requires that you meet the mandatory standards of the law, but that is not enough. For example, an action may be legal that you personally consider unacceptable. Companies today need to be focused not only on complying with the letter of the law but also on going above and beyond that basic mandatory requirement to consider their stakeholders and do what is right.
Culture has a tremendous influence on ethics and its application in a business setting. In fact, you can argue that culture and ethics cannot be separated because ethical norms have been established over time by and make sense to people who share the same background, language, and customs. For its part, business operates within at least two cultures: its organizational culture and the wider culture in which it was founded.
When a business attempts to establish itself in a new environment, a third culture comes into play. With increasingly diverse domestic and global markets and the spread of consumerism, companies must consider the ethical implications of outsourcing production and resist the temptation to look the other way when their values are challenged by the reality of overseas supply or distribution chains.
As a function of culture, ethics is not static but changes in each new era. Technology is a driving force in ethical shifts, which is apparent as you trace changes from the age of mercantilism to the Industrial Revolution to the postindustrial era and the Information Age. Some of the most successful recent efforts to advance ethical practices have come from influences outside industry, including government regulation and consumer pressure.
Business is primarily about relationships—with employees, business partners, and customers and clients. Ethical standards and practices governing these relationships depend on the environment they exist in, an environment that, in turn, depends on additional factors such as geography and religion. Religion’s role in business is less certain today; you are perhaps more likely to see a universal, secular code of ethics develop than to see religion serve as common ground for different cultures to come together.
Any system of business ethics must consider the processes of enculturation and acculturation as well as the fact that ethical standards may shift depending on geography or time, even if certain underlying ethical values (for example, prohibitions against lying, fraud, or murder) may remain constant. It is usually in a business’ best interest to promote human flourishing within the organization, providing comprehensive training along a humanistic business model, which applies the social sciences to ensure profitability and responsibility in an organization as well as happy, productive employees.2
When looking for a new job or deciding to do business with a company, make sure you research the company thoroughly by following these steps:
Check out the company’s website and other social media.
Read the company’s mission statement. This will give you a broad sense of what is most valued.
Check news archives for articles about the company and its officers.
Talk to people in your network who may know someone who has worked or is currently working there.
Ask yourself if the product(s) or service(s) are aligned with your personal beliefs. If you are a pacifist, you may want to avoid working for a company that supplies materials for combat.
Behaving ethically applies to small, less expensive items. For example, is taking a pen from work a form of stealing? Can it be justified as “just a pen” when you know the company buys thousands of pens, and at a discount, no doubt. If you consider that the pen belongs to the company, then it is not something you can take. And some individuals might not consider even 25 cents as a bribe, but depending on when or why the payment was made, it could be considered a bribe.
Life is filled with complexities, and there are often nuances to any situation. It is possible not only to stay within the law and with the code of conduct but also to step outside our own personal values. An example would be agreeing to work overtime for a rush delivery that is occurring on your brother’s wedding day even though you value your family above all else. You are torn between having an open and honest conversation with your manager or facing the wrath of your brother and mother. In the end, you have a decision to make. Following your personal values does not mean it is an easy decision or that you will not need to have a difficult conversation.3
Essential Video
“A Simple Approach to Personal Ethics” (2:33)
Watch “A Simple Approach to Personal Ethics” (opens new tab).
Todd Dewett, author and inspirational speaker, provides guidance on how to make sure you are following your personal values when faced with a decision.
I watched it.
Essential Video
“Business Ethics: Matters and Practice” (4:30)
Watch “Business Ethics: Matters and Practice” (opens new tab).
In this video, Bob McGannon shares why it is important to implement a code of ethics in your business.
I watched it.
Learning Check
Which behavior is seen during the pre-conventional morality stage according to psychologist Lawrence Kohlberg?
Behavior that is motivated by internal moral principles
Interpersonal behavior that is motivated by social approval
Obedient behavior that is motivated by punishment avoidance
Behavior that is motivated by obeying authority
Nextquestion
Lesson Summary
Take a moment to think about what you have learned in this lesson:
You bring your own personal ethics to the workplace.
It is worth your time to research a company before applying to determine whether your values are aligned with the organization’s values.
Ethical standards govern the relationships a business has with its stakeholders.
Ethics are affected by culture, geography, and the historical time period.
Ethics require us to go above and beyond what is stipulated by law.
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