There is a misconception that if a business complies with all legal requirements, it also has good business ethics. However, legal compliance does not automatically equate to morally sound business practices. A member of management or an employee’s conduct may not break any laws, but it may breach the standards of business ethics.
What is business ethics?
Business ethics is a framework for acceptable moral behaviour in the workplace by both management and employees.
Benefits of good business ethics
Good business ethics create trust among colleagues as well as between employees and customers.
Companies with good business ethics are better able to attract top talent, maintain and improve their reputation and stay out of legal trouble.
Good business ethics make for happier employees and happier employees are more productive employees.
Examples of bad business ethics
Undercutting, i.e. where an organisation first drops prices to put competitors out of business and then increases prices again, is not only an example of bad business ethics but it is also illegal.
Unacceptable conduct by management and/or employees in the workplace, for example lying, stealing, sexual harassment and discrimination, erodes trust among employees and between employees and management.
Another example of bad business ethics would be using company assets or consumables for private purposes, e.g. taking office supplies home with you and justifying it to yourself with the fact that you put in some overtime earlier in the month.
Examples of good business ethics
Good business ethics practices by an employer include issues such as the overall treatment of colleagues with respect, dignity, non-discrimination, fairness, intolerance of sexual harassment, tolerance of people’s differences and diversity, and understanding and respecting conflicting points of view.
Environmental ethics apply to an organisation’s responsibility towards nature and the community and will address issues such as accountability for and prevention of pollution.
Employee ethics include, amongst others, honesty towards customers and colleagues, humility, trustworthiness, treating others with respect, commitment to the employee’s work and productivity.
The area of customer ethics may include principles such as honouring contracts, disclosure of and owning up to mistakes made by employees of the organisation and the disclosure of any flaws in a product.
Examples of financial ethics would be to uphold honest accounting practices and not inflating reimbursive travel claims.
The identification of business ethics goals and the training of employees on these goals is a requirement in creating a culture of good business ethics and trust in the organisation, as well as between the organisation and clients or suppliers. Providing ethics training teaches employees sensitivity to ethical issues and how to resolve difficult moral situations on their own within the organisation’s ethics guidelines.
Changes in technology and working environments constantly raise new ethics issues. Ethics training should be reviewed from time to time to ensure that the organisation’s ethics policy remains up to date with current circumstances and issues in the working environment.
An effective type of enforcement of business ethics is a whistle-blower system which allows an employee to anonymously inform management of unethical behaviour which comes under the employee’s attention. Employees often fear retaliation when they bring cases of unethical behaviour under attention of management; with this system employees have the option of remaining anonymous.
You will know that you are guilty of bad work ethics when you start making excuses for your behaviour and justifying your behaviour to convince yourself that your actions are not really that unacceptable.
Senior management as well as lower-ranking employees must be equally committed to moral standards in order to create a culture where good business ethics is the norm rather than the exception.
If you would like more information about business ethics, please contact your financial adviser.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)