A definition for business ethics.
Quite simply, a definition for business ethics really comes down to one thing.
Knowing the difference between right and wrong.
Because unless you adhere to your own personal code of ethics, it will be difficult to practice business ethics. Or to ask others to follow them.
Do you have a well-developed value system? A moral compass that keeps you pointed in the right direction? Is it clear to you and to those around you where you draw the line? It matters, you know.
Code of Honor / Code of Ethics
That being said, a definition for business ethics is simply a code of principles based on values that govern an organization's actions and decisions.
How does that translate to real business?
Almost everyone in business - whether as an owner, officer, stockholder, or employee - will eventually face some type of moral or ethical dilemma. Business ethics come into play whenever a conscious decision has to be made about those dilemmas. These can include things like harassment, discrimination, corporate social and environmental responsibility, fiduciary responsibility, governance, and employee relations. How individuals within the corporation deal with these types of issues defines what type of business ethics they subscribe to.
One would hope that all businesses would choose to do the right thing - the ethical thing - but all you have to do is think about the recent financial debacle to know that isn't always true.
How is this possible when the number of corporations that provide ethics training and social responsibility programs has increased dramatically over the last 20 years? Many ethicists believe that the drive for profitability and maximizing shareholder returns has snowballed over the last few years, causing pockets of dysfunction. Enough, apparently, to cripple a country.
Almost all businesses are driven by profit, but it's pretty obvious that many large corporations are driven by greed as well. And when that happens, their business ethics - if they ever had any - fall by the wayside.
Perhaps it's up to us small business owners to redefine a definition for business ethics and take it to the next level.
So where to start? With your company. If you haven't yet read the part of the site on how to
combine business and ethics
, I'd recommend you start there. Other things I would suggest include:
- Establish a written code of ethics that clearly states your company's values and principles. This offers employees and associates a "roadmap" to follow in conducting themselves and business with you. It also lets the community as a whole know what your company stands for.
- Lead by example. After all, our employees take their cues from us. If the boss displays honor and integrity, then chances greatly increase that the employees will, too.
- Review all your mission statement, strategic plan, and operating procedures to make sure you're not inadvertently encouraging unethical conduct. For instance, make sure your performance reviews aren't structured or worded to encourage employees to move ahead at any cost.
- Provide venues where employees can voice concerns, ask questions, and seek resolution to ethical issues.
But a definition for business ethics wouldn't be complete without listing the reason why it's important. Besides the obvious rightness and wrongness issues, there are also monetary ones. Consumers like the way it feels to do business with an ethical company. Running an values-based company earns customer respect and loyalty.
And that directly affects the bottom line.
One of the ways I stay informed on business and ethics in today's tough climate is by reading The Wall Street Journal. I've found it to be a publication of honesty and integrity, and I highly recommend it. If you think you might be interested in subscribing, click the link below and you'll receive great subscription savings:Get The Wall Street Journal for 75% off!
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Combining Business and Ethics
Go here to read for specific ways in which small businesses can bring business and ethics together.
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