A definition of ethics is, at a simplistic level, to 'do no harm'. An understanding of the definition of business ethics and ethics in decision making is important in today's business environment. Once you've gained that understanding, it is necessary to consider the impact of ethical decision making and problem solving on your business.
What is the definition for business ethics? And why is it important to business owners and managers?
Ethics is also called 'moral philosophy'. This area of thought seeks to understand fundamental values, both personal and professional, and how to effectively facilitate business actions that reflect those values.
The importance of ethics to business is because the values that you use to build and manage your company need to be rooted in ethical decisions and strategies.
Recently, there has been a lot of media attention given to ethics in decision making; particularly in the workplace. Consumers and society as a whole want to see more corporate accountability. Additionally, we want business to more actively think about not only how a company treats employees, but also how a company's code of ethics extends to all of its stakeholders, such as customers, suppliers, and community.
From the time a business begins its operations to the time it delivers a service or product, there are a lot of choices to be reviewed, problems to be solved and decisions to be made. The manner in which those choices, problems and decisions are handled speaks volumes about the business' ethics.
As a small business owner or manager, it is your responsibility to ensure that your organization follows ethical practices and behaviors; and to ensure that your vision, mission, and value statement are ethically aligned and understood by all your employees, suppliers and other stakeholders.
All ethical questions are focused on making a decision.
So how does one go about framing that choice? Initially, of course, a person (or the organization) has to recognize that an ethical issue exists. The issue could be a legal one, or more of a judgment call, but in both cases the question of 'what is in the greatest good' for all stakeholders must be asked (and answered).
In determining right versus wrong, we have to remember that those terms are subjective. That's where understanding the definition of ethics, and relying on a corporate code of ethics, can be very helpful. The code is the baseline by which a person, group, or organization can measure the facts of a case (including whether a determination can be made impartially). It is also important to develop an organization's value statement to reflect your ethical values as well; this will help employees understand your commitment and direction.
When analysis and evaluation begins, the rights of the individual and group, the equality of treatment, and the steps taken to remedy the issue or situation in a way that best serves the organization's vision or identity must all come into play. By examining each of these elements, a decision that's cohesive, consistent and appropriate will begin to form. Finally, that decision must be implemented (otherwise you're spinning your wheels).
Ethical reasoning can be focused on answering two kinds of questions:
What are the other competing, interpretations of the situation or problem? (Consider other perspectives or points of view.)
What is the cash value of the situation or problem? (Both from a risk and benefit perspective.)
For example, if your statements clearly indicate a strong commitment to a respectful workplace, yet one of your customers has been abusive, bullying and disrespectful, your decision in dealing with that situation is clear: you need to advise your customer that you cannot accept that behavior and that if they can't accept your policy then you can no longer be a supplier to them.
As the individual who needs to make the ethical decision, are you committed to doing the right thing?
Defining ethics in a business environment is a little different than defining personal morals and values. A business is an entity of many parts. Within that entity, there are both written and unwritten principles that drive actions, ideas, and decisions. The individuals within an organization determine whether or not those principles manifest substantively; that is, in good behavior and positive choices.
Ethical business behavior may be defined by law, but it also can be defined by business leadership. Generally speaking an action or choice can be considered ethically correct if it's honest, fair, supports a beneficial outcome for both (or all) parties, and generally enables the overall corporate image and vision.
Using this guideline it's easy to see why an organization's managers are incredibly important to building a business' ethical atmosphere and inspiring it in others.
To integrate managerial ethics into your business culture, you and your staff need to operate in an environment where all can not only see ethical actions, but all are inspired to do likewise.
Defining ethics does nothing, in itself, to motivate ethical behavior. While there is no way for any company to 'force' ethics, the organization's culture and written code of ethics or conduct certainly help create an atmosphere where ethical behavior becomes more natural.
When employees feel fairly treated and rewarded, they're less likely to undermine that culture. Similarly when employees see their leaders being treated equally in ethical decisions and issues, it inspires trust.
With this in mind, understanding the definition of ethics and adopting a sound business code of ethics needs to be a high-ranking priority for socially responsible companies.
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Hello. I am a professor teaching Human Resources Management. You have an excellent page on writing business value statements entitled your "Value Statement: Develop a Definition of Values in Your Business". I would like to use this page (giving full credit) to teach my students how to write good business value statements for the HR Strategic Plan they are required to prepare. Thank you. Richard C. Brocato, Ph.D. Professor of Management, Maryland, USA
(Note from Kris: I was happy to give permission to use as the source was fully credited.)
Hi Kris, I really appreciate your collection of business resources on your site; it provides a fantastic outline for writing a business plan as well as the detailed information needed to prepare the content for a great plan. Thanks, Pierce, USA
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