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Business ethicsbusiness ethics


Business ethics is…

An organization doing what is right in the eyes of its employees and people outside (e. g. customers). 

So an organization must serve the needs of these different groups with honesty, fairness, trust and compassion.

Conscience is important, telling employees what's right or wrong.

Ethics can make money (profit through principle)...


How can business ethics increase profit?Business ethics


1. Motivated employees 

People like an ethical organization more, and so work harder for it.


2. Satisfied customers 

Some people prefer to buy from ethical companies e.g. Fairtrade coffee from growers who aren’t exploited.


3. Less interference from pressure groups (e.g. Greenpeace) and government 

(because they like what the company is doing).Business ethics


4. Better corporate image and reputation

People like nice companies e.g. Virgin providing planes free for transporting food to Ethiopia during Live Aid in 1985 (a fund raising concert) .



How to be an ethical organisation


1. Knowing what’s right

This is linked to duty to do what you think should be done. So any decision or strategy should ask:

  • is it legal, honest and helpful to others? (it shouldn’t hurt anyone).
  • is it being done for the right reasons? (e.g. revenge can cause hatred)
  • does it make you feel good or bad?
  • could you tell the people you love about it?
  • what does your conscience say about it?

 Business ethics

But what is right or wrong may not be clear...

You may have to choose between two right things or the lesser of two evils

For example, if you don’t bribe people in a country where it's expected, you might lose the contract, and people’s jobs at home.



2. Corporate culture and codes of practice

The organisation must:

  • be clear about the values it believes in (e.g. treating employees well).
  • clearly communicate them to every employee.

That’s why codes of practice are helpful, telling employees what they should do and not do.



3. Recruit ethical people

You can’t have an ethical organization without ethical employees.

Ask them about their values and beliefs at interview.



4. Doing what’s right

To find out what is right, look at:

  • the utilitarian principle - doing something, if it gives the greatest happiness to the greatest number of people.
  • enlightened self-interest – helping others to help the organization e.g. treating employees and customers well leads to customer satisfaction, and so higher profits.
  • altruism (or self-sacrifice) – helping others when it reduces profits. This is unlikely, but may happen in highly ethical, private companies without outside interference (e.g. a family business).

But some employees can still be unethical because of:Business ethics

  • greedy, bad people - they cheat, steal money and have bad beliefs, e.g. racist, sexist. For example, the American energy company, Enron, led by Kenneth Lay (pictured right), fiddled its accounts, lost its shareholders $11 billion and went bankrupt in 2001.
  • competition - pressure to beat competitors can persuade people to cheat.
  • bad culture – the organisation accepts and rewards cheats and liars.

Ethical organisations do what they say and live by their principles.



5. Listening to employees

An organization should listen to and act upon the ethical concerns of employees, particularly if it has done something that might seriously harm employees or the public.Business ethics

If the organization doesn’t, employees may be forced to go public and become whistle-blowers like Frank Serpico (pictured right), publicizing police corruption in New York. Punishing them sends a bad ethical message to other employees.



6. Reflection and learning

Employees need time to reflect on what is right and learn from their experience. This is difficult when they:

  • work long hours.
  • have little or no time for reflection.

That’s why balance between work and leisure is important for business ethics.

Choosing between the family and organization is a serious ethical problem for employees.



Key quotes explained


Business ethics

“I believe in God, family and McDonald’s, and in the office that order is reversed”

Ray Kroc(founder of McDonald’s, pictured right).

Managers may sacrifice their ethics for success and profit and lead a double life, being nicer at home than at work. This was confirmed by research in America by Albert Carr.

“Better a little with righteousness than great revenues without right”, the Book of Proverbs says in the Bible.



Business ethics

“Ethics in business (or anywhere else) starts with a person”,

Bob Greenleaf (American management writer, pictured right).

People decide what is ethical by listening to their conscience and saving their soul.

Greed is the biggest temptation in business . “The love of money is the root of all evil”, St. Paul wrote.



Business ethics

“Few things are totally good or totally evil”,

- Abraham Lincoln (American president, pictured right)

You may have to do something that isn’t totally good e.g. fire people to keep a company in business. There is also good in everything, even in something evil.



Business ethics

“The market has no morality”,

- Michael Heseltine (British politician, pictured right).

Markets don’t have morals. But people do and they must act with honesty and integrity.

“No legacy is so rich as honesty”, Mariana says in Shakespeare’s All’s Well That Ends Well.


Best books and articles


Bowen McCoy, The Parable of the Sadhu (1983 Harvard Business Review article)Business ethics

An expedition, including the author, Bowen McCoy (pictured right), and his friend Stephen, decided to leave a sadhu, an Indian holy man, at 15,000 feet to fend for himself, rather than take him to safety, because it would have jeopardized the expedition.

But should the sadhu have come first, as Stephen argued?

 Business ethics

Kenneth Blanchard (pictured) and Norman Vincent Peale (pictured right below), The Power of Ethical Management (1988)

Ethical management needs the 5 P’s:

Business ethics


1. Purpose and pride 

Doing something worthwhile.


2. Patience and persistence 

Keep on trying to do what’s right.


3. Perspective 

Knowing how important something is. Principles are most important.



Laura Nash (pictured right), Good Intentions Aside (1990)Business ethics

Organizations should have a “Covenantal Business Ethic” that emphasizes service to others and respect for people as human beings.

This not only gets the best from people but also boosts their self-esteem.

Key questions to assess ethical issues are:

  • is it right, honest and fair to stakeholders?
  • am I hurting anyone?
  • could I disclose it to the public, a respected mentor, or a loved one?
  • would I tell my child to do it?
  • does it stink?
  • is it consistent with my organization’s objectives?

 Business ethics

Max De Pree, Leadership is an Art (1989)

Like Laura Nash, De Pree (pictured right) supports the importance of covenantal relationships in which the organization and its employees accept mutual responsibilities towards each other like respect, trust and understanding.Business ethics


Randy Komisar (pictured right) and Kent Lineback (pictured right below) , The Monk and the Riddle (2000)

We should be missionaries (driven by virtue) not mercenaries (driven by power and money).Business ethics

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