What is Business Ethics?

By Louise Manning, PhD

The word “ethics” comes from the Greek word “ethos” meaning conduct, customs or character. Ethics addresses the implementation of concepts such as responsibility, right and wrong and the application of moral ideals to practical human activities.

Ethical analysis will address the constraints of moral standards and legal requirements and the consequences of actions.

The output of such analysis is the determining of principles and protocols, the development of individual and group responsibilities and the verification of the outcome of the implementation of such a framework.

Individual countries, cultures and business organizations will determine distinct codes of ethical behavior. Individual organizations therefore need to determine and develop their ethical strategy and the scope of such strategy may include the following:

1. Criminal behavior and the need to operate within the legal framework. The strategy may include awareness training for individuals and teams so that employees understand the legal constraints on the business and the responsibilities this places on individuals;
2. Human values and personal behavior. Ethical policy needs to define at a strategic and human resources level how people are expected to behave both internally within the business and also in their interactions with suppliers, customers and competitors and the development of business relationships;
3. Behavior in business. Ethical policy should address how all corporate activities are undertaken, monitored and verified to ensure that they comply with legal guidelines and ethical standards. Ethical strategy should also include a review of potential ethical business risks and how these can be mitigated.

Organizations with Vision

How do you recognize organizations with corporate vision? Is the organization’s corporate social responsibility policy produced as a result of commercial one-upmanship or as a result of deep ethical foundations within the organization?

Politicians are in a cycle of ever increasing their environmental credentials over and above their opponents, but does this encourage voters to actually change the environmental impact of their personal lifestyle?

Nearly every day corporations and business organizations are declaring their worthiness with regard to social responsibility, food safety, environment impact, personnel health, safety and welfare, fair trade and ethical supply chains in a variety of reports and policy statements.

Third party standards have also been developed that address many of these issues and organizations continue to increase the portfolio of certificates that they display in their reception areas and on their websites.

What impact does all this have on the purchasing decisions of the consumers of their products and services?

Mahatma Gandhi said that "An eye for an eye leaves the whole world blind..." so does this suggest that the constant declaration of improved and enhanced corporate ethical credentials leaves consumers and customers non-plussed? Does the psychology of we will worry about the environment, employee health and safety, etc. when you do, leave us all inactive and weaken organizations by increasing their business risk?

Consumers and customers must be able to trust the integrity of organizations and their brands and if this is based on claims and statements of intent then these criteria must be measurable otherwise performance cannot be verified and ultimately that trust may be lost.

There are a growing number of organizations where ethical standards are embedded in goals and organizational aspirations, organizational and departmental structure, job descriptions, and brand marketing is firmly based on these standards where actual performance can be measured and verified. Organizations that produce policies and associated reports without such foundations run the risk of undermining the very equity of their brands.

Louise Manning, PhD, is the president of LJM associates in the United Kingdom.  LJM associates works predominately in the food industry in the areas of risk management and corporate social responsibility. You can read more about her work at The Human Imprint.