The Purpose of Ethical Practices in Business
Business ethics is a moral code of conduct companies follow. By setting ethical standards, a company denounces participation in, or tolerance of, actions considered to be irresponsible, immoral, unfair, unlawful, dangerous and generally harmful. Businesses that practice ethical standards lower their risks for legal claims and can raise their stature as honest, law-abiding corporate citizens.
Businesses with high moral codes generally hold everyone in their organizations responsible for maintaining honest and trustworthy behavior. But, ultimately, chief executive officers and other company leaders set ethical standards for their employees.
Laurie Haughey, author of “Athletes Off the Field: A Model for Team Building and Leadership Development Through Service Learning,” identifies five standards of excellence that ethical leaders practice: communication, where ethical behavior is not only practiced but also incorporated into a company’s slogan; high-quality products and services, which everyone strives to produce; and collaboration with a broad base of advisers. The last two standards of excellence are succession planning, in which patterns of ethical behavior are established for future company leaders, and tenure, whereby leaders work ethically and unselfishly for a company until they choose to step down.
To maintain ethical behavior in the workplace, businesses issue internal rules of conduct. Restrictions on email content and acceptable uses of the Internet and social media are common. Zero-tolerance rules on verbal abuse, bullying and office romances also are routine. Ethical companies foster compliance with government mandates on fair labor practices, sexual harassment, workplace discrimination and workplace safety. Companies publish rules of conduct in their employee handbooks and often have staff sign off on having read and understood both the rules and the consequences for violating them.
The pressure of setting and meeting sales goals has led some companies to exaggerate their product’s capabilities, overpromise and underdeliver services, and badmouth competitors to gain customer patronage and loyalty. Businesses are known to put products they know are unsafe on the market, deceive stockholders about the company’s financial performance and violate safety regulations. With the free flow of electronically delivered information, consumers have become more savvy about corporate misconduct and therefore more vigilant. The pressure on companies now is to behave ethically, says Robin Wilson, an executive coach and consultant who founded Reach and Achieve Associates (reachandachieve.com) of Rochester, New York. One strategy for building trusting relationships with customers is to establish values and principles and regularly communicate them in sales and marketing materials.
Nan DeMars, internationally recognized ethics trainer and author of “You Want Me To Do What?,” says managers are responsible for running what she calls the Ethical Office. Instead of being a physical space in a company, an EO is a culture that promotes trust, mutual respect and honest communication among employees, customers and vendors.
DeMars says companies are recognizing the connection between practicing ethical standards and becoming more competitive. Therefore, they’re adopting extensive codes of ethics, incorporating ethics guidelines in employee handbooks, providing ethics training, creating ethics hotlines for reporting violations, hiring ethics directors and creating ethics departments with human resources staff as point persons.