Over time, society has become increasingly dependent on corporation and industry. Many depend on businesses as a source of employment, goods, services, economic stability, and conveniences. As people become more and more dependent on corporations and large industries, society continues to monitor and show concern for ethics and morality displayed in business organizations. Increasingly, society admires corporations that show concern over various ethical issues. These include how a company chooses to treat others, maintain honesty, integrity, and conduct business. Those who are dishonest and show no morality or concern with citizens, consumers, or employees are looked down upon. Furthermore, they are shunned, and receive negative attention and publicity. Consequently, ethics and morality is a major concern not only for the consumer but for the industry as well. To discourage government intervention, maintain public satisfaction, and improve business conduct and appropriate decision making, many companies have developed an ethical code of conduct for employees. As a result, this research will define ethics, differentiate good ethics from bad ethics, and provide recommendations for employees on how to determine ethical practices in business organizations.
In the text, Legal and Regulatory Environment of Business, ethics is defined as, “a systematic state of right and wrong together with a philosophical system that both justifies and necessitates rules of conduct” (Corely, Reed, Shedd & Moorehead, 1999). In other words, ethics clarifies acceptable business practices of an organization. Ethics is a guide to acceptable conduct of employees and business decisions. In addition, it “foster social cooperation within the organizational structure” (Corely, Reed, Shedd & Moorehead, 1999). The text goes on to explain that ethics are, “values that guide our behavior and constitute our morality” and “involve a broader-based commitment to proper behavior”. A great example is security cameras placed in retail stores to ensure employee safety and reduce theft. However, placing a security camera inside dressing rooms of retail stores is unethical and immoral. This violates the privacy of the consumer. It is also an example of consequentialism; it considers the ethics of an action by the possible consequence, in this case a lawsuit. To put a security camera outside the dressing room and place signs in the area informing customers that they are under surveillance is a better tactic to handle theft and safety. This does not violate the privacy of the consumer and informs the consumer they are being monitored, this is an example of formalism.
In Western cultures specifically, there are ideologies that dominate the moral philosophy of society. The two principal systems of ethics are known as formalism and consequentialism. They help people formulate the conclusion of whether an act or decision is fundamentally right or wrong. Formalism is recognized as, “an act with good intent”. The rule of formalism is that, “a particular act is in its self, right or wrong, always and in every situation” (Corely, Reed, Shedd & Moorehead, 1999). On the other hand, consequentialism determines the ethics of an action by the moral or actual consequences of the action. The root of consequentialism is seen in utilitarianism, they “judge actions by the usefulness they serve to increase the common good” (Corely, Reed, Shedd & Moorehead, 1999). However, it is the “usefulness” that is questionable. Since colonization, Protestant ethics has consumed members of American society and gave way to the birth of capitalism and our consumer driven culture. As a result, the goal of consequentialism is to produce profit. This includes maintaining profits by any means necessary. It is this form of ethics that have driven society to question the motives of business and corporations.
Currently, ethics and code of conduct are implemented to reduce risks. Ramamoorti and Evans, authors of the article, The Corporate Ethics Audit, explains that there are two risks that business and corporations should be aware of. The risks include informational risks and risks of integrity. Ramamoorti and Evans explain “when information and integrity risk is high, corporate governance failure is only a matter of time”. Informational risks include, “incomplete, inaccurate, inconsistent, stale, or unreliable information” (Ramamoorti & Evans 2011). Integrity risk include, “intentional falsification, manipulation, shading, or massaging information to create bias” (Ramamoorti & Evans 2011). Many businesses have failed or obtained law suits or judgments due to sketchy information, poor integrity, and a lack of ethics. A prime example is the movie Erin Brokovich. The movie represented a true story of Pacific Gas and Electric (PG&E) who was sued for polluting and contaminating the drinking water of a small town in California that caused death and illness to its citizens. To hide this information, PG&E employees falsified and removed documentation, lied to citizens, and violated environmental laws. Not only did the company practice poor ethics they also harmed citizens and the environment to save cost and increase profits.
“20% of big companies have ethics officers whose job is to develop ethic policies, listen to complaints of ethics violations, and investigate ethics abuses” (Corley, Reed, Shedd & Moorehead 1999). Even more companies have a general code of ethics for employees to follow or a mission statement that express company value and commitment. When working for any organization, it is important to know and be aware of the company’s values and ethics. No one wants to work for a company that goes against an individual’s morals, encourages personal conflicts of interest, or is hypocritical. Statistics found that, 29 of 30 recent college graduates reported that, “business pressure had forced them to violate their own ethical standards” (Hubbard 2011). This number is significantly high and represents the continuous struggles of the individual versus the integrity and productivity of the company. Consequently, “the ultimate source of ethical values for business decision making comes from the individual” (Hubbard 2011). To eliminate this, Andrew Hubbard, author of Five Essentials for Ethics Training has developed five questions one should ask to help you explore your ethical values before making personal or business decisions. This includes:
- Have I thought about whether the action I make take is right or wrong?
- Will I be proud to tell of my action to my family, employees, or the news media?
- Am I willing for everyone to act as I am thinking of acting?
- Will my decision cause harm to others or to the environment?
- Will my actions violate the law?
These are good questions to ask when working for a company. They are also fundamental questions to consider when making business decisions. If more companies follow these guidelines by asking questions of morality that can cause potential harm to the company, the consumer, the environment, and greater society, we would find more industries making better decisions and act with good intentions.
It is a relevant fact that, “when in groups, people often decide and act differently from the way they act as individuals” (Corley, Reed, Shedd & Moorehead 1999). As a result, businesses and organizations do things that maybe harmful to other people or the community, that they wouldn’t normally do. PG&E may not have polluted the water to intentionally kill people. However, it was the consequences of their actions that caused the disruption and illness of an entire community. This example of PG&E is also an example of consequentialism. The company polluted the water source for the best interest of the company, to maintain profitability and productivity. As a result, “the decisions people in business make have a significant impact on us” (Coreley, Reed, Shedd & Moorehead 1999). Such hazards and low value of ethics is a great concern for the society at large. With the help of the media, more and more businesses are coming under the radar of faulty and sketchy business practices. Consumers will go as far as to cease business with the company who has little morals and poor ethics. To curtail faulty business practices, the government has continued to regulate business and encourage fair practices. Therefore the government developed laws, policies, and encourage self-regulation. Despite these intervention strategies, the law is not able to force a company to act on good intention and provide social guidance. As society continues to display social norms and ethical morality, they continue encourage big businesses and corporations to include basic ethical philosophies into their infrastructure. In conclusion, “business plays a vital role in serving society and we cannot isolate the impact of important business decisions from their social consequences” (Corley, Reed, Shedd & Moorehead 1999).
Corely, R., Reed, O., Shedd, P., & Moorehead, J. (1999). Legal and regulatory environment of business. (11 ed.). Boston, MA: McGraw-Hill.
Hubbard, A., “Five Essentials For Ethics Training (OK, Four And A Half).” Mortgage Banking 72.3 (2011): 110. Legal Collection. Web. 17 Apr. 2012.
Ramamoorti, S., & Evans, L. (2011). “The Corporate Ethics Audit.” Internal Auditor 68.4 (2011): 25-27. Legal Collection. Web. 17 Apr. 2012.