Business Ethics
Introduction
Businesses have power through their
ability to spend vast amounts of money. They have the ability to enhance or
change situations that the common individual does not. As organisations affect
many people, they have obligations to their employees, consumers, community and
the world. They have a responsibility to conduct business in a way that is not
harmful and which positively benefits as many people as possible and
themselves. Although this sounds simple, it is easier said than done! as there
will always be a conflict of interest between various groups of people. Any
decisions made by businesses need to be made with an informed awareness of the
specific situation and then act according to some sort of system of principals
which is Business Ethics.
What is Business
Ethics?
Business ethics is exactly the same
as normal ethics, and that is knowing what is right or wrong, and learning what
is right and what is wrong in a business environment. Then doing the right
thing, but the right thing is not as straightforward as explained in many
business ethics books. Most ethical dilemmas in the workplace are not simply a
matter of Should she steal from him? or Should he lie to his boss? Businesses
cannot function without ethics, why? Society dictates a set of rules and
conformities and seeing as all businesses strive after common goals it means that
these goals can only be achieved on the basis of standards, values and morals
in society. It can be assumed that business life has to be called 'moral' as
well. As in society, standards and values are spontaneously formed once people
come together and start 'behaving', likewise, business life becomes exactly the
same and that's when morals come into effect, and when businesses decide on
implicit or explicit ways to achieve certain goals and then are agreed on.
Businesses in general are working on the basis of an ethics that settles
different interests. The standards and values within companies can be
characterised as mutual respect. In this respect it is in everyone's interest,
and is considering people as an end in themselves, not as a means, reciprocity
and fairness. This ethics is passed down and filtered to a group of
stakeholders who have an interest in the company. These parties usually
are: personnel, customers, suppliers, subcontractors, shareholders, society and
those who speak on behalf of the environment and future generations Many
ethicists say 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 on what they do and on what they believe to be the right
thing is. Sometimes the right thing is not necessarily the best thing to do.
Many philosophers consider ethics to be the science of conduct. Twin Cities
consultants Doug Wallace and John Pekel (of the Twin Cities-based Fulcrum
Group) explain that ethics includes the fundamental ground rules by which we
live our lives. Many professionals in ethics say that new ethical beliefs are
state of the art legal matters, and that what becomes an ethical issue of today
is then later made into a law. Values that say how we should behave are said to
be moral values, values such as respect, honesty, fairness, responsibility,
etc. Statements about how these values should be implemented are sometimes
called moral or ethical principles. The concept of business ethics has been
seen to mean various things to different people, but usually it's knowing what
is right or wrong in the workplace and doing what's right in regard to effects
of products, services and relationships with stakeholders. Wallace and Pekel say
that attention to business ethics is critical during times of fundamental
change, times much like those faced now by businesses, both non-profit and
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.
Therefore,
there are no clear morals to guide today's leaders through difficult problems
about what is right or wrong, just vague perceptions of what should and has
already been done. A focal point on ethics in the workplace shows and alerts
leaders and staff on how they should act. An 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 focus. However, attention to business ethics provides numerous
other benefits, as well. Note that many people believe that business
ethics, with its continuing focus on doing the right thing, only asserts the
obvious be good, don't lie,, and so these people don't take business ethics
seriously. For many people, these principles can go right out the door during
times of stress. Business ethics can be a strong preventative medicine.
10 Benefits of Business Ethics
These
benefits were attained from http//: www.businessethics.com/index/benefits.htm
Many people are used to reading or hearing of the moral benefits of attention
to business ethics. However, there are other types of benefits, as well. The
following list describes various types of benefits from managing ethics in the
workplace.
Attention
to business ethics has substantially improved society. A matter of decades ago,
children in our country worked 16-hour days. Workers 'limbs were torn off and
disabled workers were condemned to poverty and often to starvation. Trusts
controlled some markets to the extent that prices were fixed and small
businesses choked out. Price fixing crippled normal market forces. Employees
were terminated based on personalities. Influence was applied through
intimidation and harassment. Then society reacted and demanded that businesses
place high value on fairness and equal rights. Anti-trust laws were instituted.
Government agencies were established. Unions were organised. Laws and
regulations were established.
Ethics
programs help maintain a moral course in turbulent times. As noted earlier in
this document, Wallace and Pekel explain that attention to business ethics is
critical during times of fundamental change - times much like those faced now
by businesses, both non-profit and for-profit. During times of change, there is
often no clear moral compass to guide leaders through complex conflicts about
what is right or wrong. Continuing attention to ethics in the workplace
sensitises leaders and staff to how they want to act.
Ethics
programs cultivate strong teamwork and productivity. Ethics programs align
employee behaviours with those top priority ethical values preferred by leaders
of the organisation. Usually, an organisation finds surprising disparity
between its preferred values and the values actually reflected by behaviours in
the workplace. Ongoing attention and dialogue regarding values in the workplace
builds openness, integrity and community - critical ingredients of strong
teams in the workplace. Employees feel strong alignment between their values
and those of the organisation. They react with strong motivation and
performance.
Ethics
programs support employee growth and meaning. Attention to ethics in the
workplace helps employees face reality, both good and bad, in the organisation
and themselves. Employees feel full confidence they can admit and deal with
whatever comes their way. Bennett, in his article Unethical Behaviour, Stress
Appear Linked (Wall Street Journal, April 11, 1991, p. B1), explained that a
consulting company tested a range of executives and managers. Their most
striking finding: the more emotionally healthy executives, as measured on a
battery of tests, the more likely they were to score high on ethics tests.
Ethics
programs are an insurance policy - they help ensure that policies are legal.
There are an increasing number of lawsuits in regard to personnel matters and
to effects of an organisation's services or products on stakeholders. As
mentioned earlier in this document, ethical principles are often
state-of-the-art legal matters. These principles are often applied to current,
major ethical issues to become legislation. Attention to ethics ensures highly
ethical policies and procedures in the workplace. It's far better to incur the
cost of mechanisms to ensure ethical practices now than to incur costs of
litigation later. A major intent of well-designed personnel policies is to
ensure ethical treatment of employees, eg, in matters of hiring, evaluating,
disciplining, firing, etc. Drake and Drake (California Management Review, V16,
pp. 107-123) note that an employer can be subject to suit for breach of
contract for failure to comply with any promise it made, so the gap between
stated corporate culture and actual practice has significant legal, as well as
ethical implications.
Ethics
programs help avoid criminal acts of omission and can lower fines. Ethics
programs tend to detect ethical issues and violations early on so they can be
reported or addressed. In some cases, when an organisation is aware of an
actual or potential violation and does not report it to the appropriate
authorities, this can be considered a criminal act, eg, in business dealings
with certain government agencies, such as the defence Department. The recent
Federal Sentencing Guidelines specify major penalties for various types of
major ethics violations. However, the guidelines potentially lower fines if an
organisation has clearly made an effort to operate ethically.
Ethics
programs help manage values associated with quality management, strategic
planning and diversity management - this benefit needs far more attention.
Ethics programs identify preferred values and ensuring organisational
behaviours are aligned with those values. This effort includes recording the
values, developing policies and procedures to align behaviours with preferred
values, and then training all personnel about the policies and procedures. This
overall effort is very useful for several other programs in the workplace that
require behaviours to be aligned with values, including quality management,
strategic planning and diversity management. Total Quality Management includes
high priority on certain operating values, eg, trust among stakeholders,
performance, reliability, measurement, and feedback. Eastman and Polaroid use
ethics tools in their quality programs to ensure integrity in their
relationships with stakeholders. Ethics management techniques are highly useful
for managing strategic values, eg, expand marketshare, reduce costs, etc.
McDonnell Douglas integrates their ethics programs into their strategic
planning process. Ethics management programs are also useful in managing
diversity. Diversity is much more than the colour of people's skin - it's
acknowledging different values and perspectives. Diversity programs require
recognising and applying diverse values and perspectives - these activities
are the basis of a sound ethics management program.
Ethics
programs promote a strong public image. Attention to ethics is also strong
public relations - admittedly, managing ethics should not be done primarily
for reasons of public relations. But, frankly, the fact that an organisation
regularly gives attention to its ethics can portray a strong positive to the
public. People see those organisations as valuing people more than profit, as
striving to operate with the utmost of integrity and honour. Aligning behaviour
with values is critical to effective marketing and public relations programs.
Consider how Johnson and Johnson handled the Tylenol crisis versus how Exxon
handled the oil spill in Alaska. Bob Dunn, President and CEO of San
Francisco-based Business for Social Responsibility puts it best: Ethical
values, consistently applied, are the cornerstones in building a commercially
successful and socially responsible business.
Overall
benefits of ethics programs: Donaldson and Davis, in Business Ethics? Yes, But
what can it Do for the Bottom Line? (Management Decision, V28, N6, 1990)
explain that managing ethical values in the workplace legitimizes managerial
actions, strengthens the coherence and balance of the organisation's culture,
improves trust in relationships between individuals and groups, supports
greater consistency in standards and qualities of products, and cultivates
greater sensitivity to the impact of the enterprise's values and messages.
Last
and most formal attention to ethics in the workplace is the right thing to do.
Case
Study on Nestle
All
information for this was ascertained at the nestle web site
http// www.nestle.com.
Nestle's view on Business Ethics
Nestle's view on business ethics is
one of great importance. As you can see from their web site
www.nestle.com this is one of their major focal points. Nestle, like many other
businesses have created what they believe to be a comprehensive ethical policy
or codes of ethics, in plain they are lists of what they believe is ethical
behaviour and how they should behave. However, the existence of a code of
ethics may not guarantee that the company will conduct itself ethically. Ethics codes are often drawn up in
response to scandals and to protect the name of the company, and then this only
state its legal responsibilities and the conduct it expects from its employees,
rather than listing any ethical principals and aspirations that it holds. The
emphasis has often been on the company setting standards for the employees to
meet, so it will not be caught breaking the law, rather than realising that the
company itself needs to be guided in its business conduct. Nestle have
got an ethics policy from legislation to child labour, they have covered every
single topic they believe comes under the word of ethics. Nestle believe that
every single area of their business needs to have an ethics policy in which
they should be able to follow, as they are a global company and their arms
stretch to many different area's. Nestl
