“Ethics is knowing the difference between what you have a right to do and what is right to do.”

Associate Justice Potter Stewart of the Superior Court of America made that statement, and in so doing he made an important point – there's legal, and there's ethical. And which side of the issue a company chooses to come down on can sometimes be all about their values.

What Are Ethics?

Ethics are essentially a moral philosophy. It is a guiding principle that helps us choose between right and wrong, but “right” and “wrong” aren’t absolutes. That is, laws do not govern right and wrong. Instead, they are social constructs for what is considered good behavior that is learned from others in society and from experiences. Ethical standards tend to become defined by groups and cultures and are enduring long-held beliefs intended to guide not just individuals, but society as a whole.

For instance, it may be legal to walk past a dying man on the sidewalk and ignore his needs, but most people would consider it highly unethical. For most people, helping that man would speak to our deepest core ethics, because most societies have always dictated it to be “right” to feed the hungry and help the hurting.

Ethics and moral philosophy challenge us with big-picture ideas. Is it right for people to live indulgent lives and spend wrecklessly just because they can when people are living on a dollar a day in so many parts of the world? Legal, yes. Ethical, that’s a shades-of-grey answer, and where one stands on the issue mostly comes down to their values.

What Are Values?

Values are subjective; they’re personal or organizational, not societal, and they vary tremendously from one person to another, and from one company to another.

One person’s values may dictate that they feel an obligation to care for their aging parents themselves, while another feels their obligation is merely to ensure their parents have care – whether through in-home visits or via living in a care facility. Neither of these views is dictated by law and both could be considered ethical. Each person might vehemently disagree with the beliefs of the other person. These personal instincts are guided by their value system.

Values are not necessarily positive. They’re a reflection of the person, and the extent to which that person is moral or not defines their set of values. Usually, when one’s sense of values seems to be compromised, it’s said they have a “lack” of values or are amoral – but that lack of values is a reflection of their value system. For instance, a bank manager who insists on little to no flexibility on calling in loans has a value set that dictates he does everything in his power to make his company profitable. If that means a family of four with a new baby is evicted from their home or a woman in her 80s is left with no home, so be it. For him, being the most profitable bank manager is how he judges being his best self.

Whatever your political persuasion, it comes down to your values. If you’re a supporter of the left or right, or if you’re religious or an atheist, it all comes down to your values. All of these values can be ethical, according to society, but the values themselves are subjective and personal. Values are, essentially, what you can live with yourself doing, or not; it's whatever lets you respect yourself in the morning, and that is different for each person.

Business and Ethics

One could argue that the problem with business is that being ethical and being legal doesn’t always overlap, as the Associate Justice said.

Paul Polman, the CEO of Unilever, has spoken of the conflict between ethics and law in the past. He said, “I believe that the financial crisis of 2008/9 exposed more a lack of ethics and morality – especially by the financial sector – rather than a problem of regulation or criminality. There were, of course, regulatory lessons to be learned, but at heart, there was a collective loss of our moral compass.”

Ethical business is a sticky wicket. There are some companies that do very well at broadcasting their values, but when it comes to actual ethics, arguably, they are falling short. Companies like Nike have made billions, for instance, for making it clear where their values are on the issues of racial equality and equal representation with male and female athletes. But does the ethical side of their business measure up? Ethics can come down to things like whether children work in their factories, or if they use sustainable products or whether they honor equal representation in their workforce as they do in their advertising. For many companies, their values don't necessarily always reflect the ethical nature of their actions.

For example, in today’s business world, “sustainability” has become a buzzword bandied about by companies wanting to capitalize on trends popular with consumers, like environmental responsibility, energy consciousness, carbon footprints and recycling. The fact is, nearly two-thirds of global respondents are willing to pay more for eco-friendly products and packaging. As a result, the quest to be sustainable has companies speaking to sustainability-based values, but a lot of these claims are not regulated by industry oversight. So companies can make claims, but their definition of what is biodegradable or sustainable is often a matter of semantics.

In short, values can be complicated in a public forum.

A Values Case Study: L.L. Bean

It’s one thing to have a core values statement, but it’s quite another when your customers feel you stand by it and deliver that in everything you do.

One company experiencing devotion from many of its customers because they’ve had the same core values statement for so long is L.L. Bean. They have espoused the same values since Leon Leonwood Bean founded the store in 1912, and that statement is displayed for all to see in every store: “Sell good merchandise at a reasonable profit, treat your customers like human beings and they will always come back for more.”

In fact, so strongly did they believe in the “good merchandise” promise that they offered a lifetime guarantee on everything they sold for 106 years. They finally changed their product guarantee to one year in February 2018, with a possible longer-term return for items with defective manufacturing after the year lapsed.

But ending that century-old policy wasn’t about corporate greed. It came down to ethics – customer ethics.

Unfortunately for most of L.L. Bean’s customers, there was a small but shady group taking advantage of the liberal return policy. Executive Chairman Shawn Gorman released a statement when the policy was changed: “Our commitment to customer service has earned us your trust and respect, as has our guarantee, which ensures that we stand behind everything we sell. Increasingly, a small, but growing number of customers have been interpreting our guarantee well beyond its original intent. Some view it as a lifetime product replacement program, expecting refunds for heavily worn products used over many years. Others seek refunds for products that have been purchased through third parties, such as at yard sales.”

He went on to explain the new one-year return policy. Luckily, after a century of treating customers like human beings, this policy shift was greeted mainly with understanding, since the respect and human decency that was L.L. Bean's trademark was often a two-way street. Besides, a year is still far more generous than most retailers allow.

When Ethics and Values Meet

Following the law is good enough for some companies, but others believe in being ethical and having strong core values that guide their every action. Having mission and value statements that truly reflect who a company is and represents their ethos can go a long way toward cultivating employee dedication, strong customer loyalty and excellent public perception.