Business ethics is an area of philosophy that evaluates whether companies and individuals’ actions are right or wrong. Business ethics has been around since people started engaging in trade with one another; however, it wasn’t until the 19th century that philosophers began studying business ethics as their subject matter.
The term ethics comes from a branch of philosophy called meta-ethics which tries to understand the meaning and justification for ethical claims. Ethics is also considered normative because it deals with how things should be rather than how they are to help businesses decide whether their actions are justifiable or not; an essential business ethics concept is that of moral dilemmas.
Some Questions of Business Ethicists
Business ethicists study questions such as “What makes an action right?” and “Are some economic transactions justified by necessity or expedience?” Business ethicists also look at how businesses are structured, what types of people companies should employ, how companies relate to their community, and how organizations make decisions.
Finally, business ethicists may also look at whether or not corporations have social responsibilities that go above and beyond obeying the law. The field of business ethics is a hotbed for current issues in both academic research and public discourse. Research has looked into various moral concerns such as:
Businesses should adopt an ethical stance if they want to maintain consumer trust. A recent study from Yale found that when consumers lost confidence in a company, it was difficult for companies to regain customer loyalty without making some policy change or significant improvement in their performance.
Companies Following Ethics
Companies like Sacred Reviews, Patagonia and Starbucks have been praised by many for following ethics in their business plans. For example, Patagonia is a clothing company that sells outdoor apparel. It encourages environmentalism with its “Don’t Buy This Jacket” marketing campaign and donating one percent of all sales to environmental activism efforts.
Starbucks has also been seen as an ethical and socially responsible company because they don’t use milk from cows treated with artificial growth hormones, provide low-cost health insurance to full-time employees and encourage community involvement through involved baristas.
Businesses that maintain high ethical standards are seen more positively by consumers than those that do not. In addition, companies can help their image by being open about the information they gather from customers and doing all they can to protect private data.
The Importance of Ethics
Business ethics matters because it allows for a framework to determine what actions and practices companies should engage in regarding socially responsible measures such as protection of the environment, consumer rights, and good worker treatment.
While there will inevitably be cases where business ethicists disagree on how companies should act, both businesses and consumers alike need to hold companies accountable to moral values instead of only focusing on maximizing profit. Business ethics must be practiced within organizations because it will help build up trust in the long run.
Ethics in Leadership
When we hear ethics mentioned in the news, it’s often about some moral failing on the part of a public figure. We tend to think about business ethics regarding an individual’s ability to behave according to ethical standards. But what do we mean when we talk about business ethics?
We tend to understand “ethics” as good or bad – virtues and vices – but that approach is too limiting for today’s global marketplace. Instead, ethical decision-making requires considering your organization as a whole: weighing contingencies, anticipating consequences, and understanding what behaviors are required by your role within an organization, whatever that may be The path toward ethical leadership doesn’t need a particular background or personality, but it does require some preparation:
Identify your Ethical Responsibilities
Being successful in business means having sound judgment and being able to make tough decisions. But what are the ethical dimensions of those decisions? And how can you ensure that you’re following best practices?
Your experiences and responsibilities provide a framework for you to understand the values that should underpin your business interactions. Ask yourself what behaviors would be helpful – and unhelpful – as an employee, manager, director, or chairperson. What factors will inform your decision-making?
And what types of information do you need at hand for various scenarios? The more insight you have into how ethics influence everyday business decisions, the better prepared you’ll be to make ethically sound choices.
Advocate for Ethical Business Practices
Once you know your organization’s values and understand what constitutes good ethics, take the next step: implementing those same standards as a leader within your company.
It requires adhering to high ethical standards in all that you do – whether or not people are watching – by setting an example with your words and actions. Even if you don’t occupy a senior position, individual employees can help shift the culture toward better behavior for their co-workers.
For example, asking questions about how employees use resources and encouraging them to reuse office supplies is one way to instill more sustainable business practices in day-to-day interactions; having social gatherings at local, sustainable restaurants is another.
Whatever your role in a company, take a look at the decisions you make – and the practices you endorse – and ask yourself whether they’re consistent with the values that matter most to your organization. If not, it’s essential to speak up about what you see as unacceptable behavior and identify opportunities for improvement.
Building Trust
There are no shortcuts when it comes to business ethics; companies will always have shortcomings when it comes to following ethical standards. But taking steps toward building trust means engaging employees in dialogue about how power is distributed within an organization. This can help everyone involved better understand their responsibilities while upholding shared values and norms of excellence.
Bottom Line
Business ethics matters because it affects the lives of customers, employees, and co-workers, as well as the overall success of your company. Being a leader means that you need to communicate what those values are and why they’re essential.
By identifying ethical responsibilities, following best practices, and advocating for ethical behavior within your organization, businesses can build long-term trust with their stakeholders – something that’s critical to the health of any business, no matter how big or small.
