Business organization with ethical objectives in mind will acts morally towards its stakeholders: workers, managers, customers, shareholders, the government, suppliers, lenders, competitors, local community and the natural environment.
Those that act morally towards their stakeholders will be called ‘socially responsible’ businesses and their obligations will be known as Corporate Social Responsibility (CSR).
Ethics
In general, ethics is concerned with being right or wrong from society’s point of view.
Ethics is the area of study related to rightdoing or wrongdoing – all the standards (moral principles) that govern the conduct (behavior) of a person.
Business ethics
Business ethics refers to actions of people and businesses considered to be morally correct when conducting business affairs.
All the moral principles that guide the actions of people in a business organization, the decision-making process and business strategy. For example, being honest when calculating costs and profit, paying fair salaries to the employees, providing safe working environment for production workers or righteously buying raw materials from suppliers.
Business ethics also guides behaviors of members of a profession such as CEOs or accountants.
Examples of ethical business practices
1. Fair treatment of employees when it comes to payments ,or terms of trade when it comes to suppliers.
2. Honesty toward customers regarding the raw materials or ingredients used to produce the product.
3. Paying bills on time and in full as specified in commercial contracts.
4. Using resources efficiently and implementing recycling into production practices.
5. Protecting natural environment by reducing pollution levels, waste and energy consumption.
6. Providing transparency and integrity to the general public regarding company’s final accounting documents.
7. Ensuring that all workers have good and safe working conditions according to specific health and safety laws and regulations.
8. Avoiding misleading marketing gimmicks, advertising to children or taking advantage of underprivileged groups in the society.
Ethical influences on business objectives – The Ethical Code of Practice
Usually, pressures to act ethically will come both from within the business, e.g. employees who demand better opportunities for professional development and promotion, as well as might also be imposed upon a business by the external environment e.g. customers who do not want to be associated with businesses that earn profit through immoral or illegal actions.
Because of the growing awareness of Corporate Social Responsibility (CSR) in the modern society, the larger numbers of companies these days are adopting The Ethical Code of Practice. So, in order to achieve their ethical objectives, an increasing number of businesses have adopted that code. The code refers to beliefs of the business and is published regularly in the annual reports.
Specifically, The Ethical Code of Practice is a written document that a company produces in order to set out the way it believes its employees should behave to act ethically, for example how to respond to situations such as bribery, discrimination or exploitation that challenge integrity or social responsibility. It details, all company’s rules and guidelines on everyday behavior and the way in which business decisions are taken. It must be followed by all employees as it provides a framework for consistency and uniformity.
The Ethical Code of Practice is important because people need to know what is considered acceptable or not acceptable within an organization, e.g. guidelines and expectations on employee behavior, such as having personal integrity and consideration for others.
These values might be different from one business to another, therefore different businesses will have their own codes of practice, and ethical values will certainly be different in different countries.
Examples of unethical business practices
Most decisions in a company have an ethical or moral dilemma attached to them. Companies and managers often wonder whether they should focus on maximizing earnings or being a good guy. Here is the list of business decisions that have an unethical or immoral dimension.
1. Exploitation of employees, suppliers, or customers. Paying very low wages for long hours of work – as this will reduce the firm’s costs and increase profit.
2. A purchasing manager taking bribes from a supplier to place an order with another company.
3. Exploitation and neglect of the environment. Increasing profits in the short-term by purchasing more polluting production equipment.
4. Financial dishonesty toward the investors (the amount of profit), employees (salary discrimination based on gender or race) or the government (the amount of TAX that should be paid).
5. The use of direct marketing techniques aimed at children. Advertising products to young children, so that they pester their parents into buying those products.
6. Investing in a company that manufactures weapons or tests new chemicals on animals.
7. Feeding genetically modified food to cattle to speed up their growth.
8. Chief executives receiving substantial pay raises and bonuses, and flying first class around the world while other workers in the business are being made redundant and forced to accept salary cuts.
9. Employing child labor to reduce costs compared to employing adults and paying fair amounts of salary.
10. Producing potentially dangerous goods as long as no one in the society finds out.
