What is Business Ethics?

The question "What is Business ethics?" has received a great deal of attention following the financial scandals and the collapse of Enron, Arthur Andersen, and WorldCom. For the past few decades business ethics has been an academic discipline at many international business schools, especially those in the USA.

Since the attention brought on by the disasters at Enron, WorldCom and other scandals involving numerous financial institutions, business ethics has received greater prominence as a field of study at business schools around the world.

As a result, in recent years, the implementation of business ethics policies and programs in businesses have increased dramatically. Companies are discovering that ethics in the workplace is good business.

What is Business Ethics?

Business ethics is the practice of knowing what is right and what is wrong in the workplace, and choosing to implement "doing what is right" as the company policy.

A good ethics program is based on fundamental values, and seeks to keep the working relationships, between the company's owners, employees, customers, and the public at large, honest and above-board.

It sets the tone for all interactions within the company, and goes beyond the company's legal requirements.

Importance of Ethics in Business

In determining 'what is business ethics' we should also look at the importance of ethics in business.

Many people believe that businesses should act ethically, simply because that is the right thing for them to do. While this statement is true, it is also important to realize that acting ethically, can actually also increases the profitability of businesses.

Ethical businesses, attract high quality employees, have a positive reputation with the general public, thereby attracting customers who appreciates the company's reputation for honest and fair dealings.

Businesses that make unethical decisions, may save themselves money in the short run, but lose the respect of their current and future customers, and eventually lose money.

Developing an Ethics Program

Companies that are serious about ethics in business should develop an ethics program for its employees based on, quality, honesty, and integrity.

The program should set the standards of conduct that the business expects, particularly in areas such as accounting practices, sales, suppliers, quality control, environmental issues, international business, and the workplace environment.

It is also important that management fully and visibly supports the program, as it should set the tone for the entire company. It will be up to management to implement the policies. Publicizing the policies emphasizes the company's commitment to ethics, to the public.

Implemening a Code of Ethics

Once the ethics program has been developed, management must then try to implement the policies together with the employees.

It is important that the ethics training program be written clearly and simply, so that the policies are easily understood, at company meetings, and workshops. Online training is an additional way of positively introducing the ethics material.

Employees should understand thoroughly what is expected of them, and to whom they can go, if they experience an unethical situation in the workplace.

Ethics Considerations

Retaliation for reporting ethical violations can be an important issue for employees. Even when the company itself has a clearly stated policy against retaliation, employees fear that their supervisors or peers may retaliate against them if they report an ethics violation.

It is also possible that an employee will report an ethics violation to retaliate against another employee who may have offended them in some way. It is therefore very important that management follow up on every business ethics violation report, to eliminate these situations as much as possible.

Understanding what is business ethics, and implementing a business ethics code is a positive move for any company. By increasing the good will between the company and its employees, shareholders, customers, and the general public, businesses can have a positive impact on both their communities as well as to their bottom line.