Business Ethics And Professionalism Management Essay

Ethics mean different meanings to different people. It can be principles, morals, beliefs, moral principles, moral values, moral code and so on. Ethics in general includes the fundamental ground rules by which we live our lives. Philosophers have been discussing ethics for at least 2500 years, since the time of Ramayana, Mahabharata, Socrates and Plato. Many ethicists consider emerging ethical beliefs to be “state of the art” legal matters, i.e., what becomes an ethical guideline today is often translated to a law, regulation or rule tomorrow. Values that guide how we ought to behave are considered moral values, e.g., values such as respect, honesty, fairness, responsibility, etc. Statements around how these values are applied are sometimes called moral or ethical principles.

But far too many resources about business ethics are not written for those people who are charged to manage ethics in the workplace: leaders and managers! Most of the resources speak about palpable questions such as ” Should employees cut corners? Should a manager steal from the company? Should the directors lie in the prospectus? Etc.

Professionalism on the other hand is said to be practicing professional ethics by a learned or specialized person in his area of discipline. An ethical person need not be a well read. But a professional need to follow some ethics. For example code of ethics is prescribed for company secretaries, chartered accountants, cost accountants, doctors, lawyers, etc., by their governing body. In fact the body gives printed norms at the time of admitting them as members. So the business ethics dealt in at length is mainly for professionals to inculcate professionalism in their career.

Two Broad Areas of Business Ethics

1. Managerial mischief: Madsen and Shafritz, in their book “Essentials of Business Ethics” (Penguin Books, 1990) explain that “managerial mischief” includes “illegal, unethical, or questionable practices of individual managers or organizations, as well as the causes of such behaviors and remedies to eradicate them.” There has been a great deal written about managerial mischief, leading many to believe that business ethics is merely a matter of preaching the basics of what is right and wrong. More often, though, business ethics is a matter of dealing with dilemmas that have no clear indication of what is right or wrong.

2. Moral mazes : The other broad area of business ethics is “moral mazes of management” and includes the numerous ethical problems that managers must deal with on a daily basis, such as potential conflicts of interest, wrongful use of resources, mismanagement of contracts and agreements, etc.

This article envisages the business ethics dimension and professionalism starting from trying to answer what is business ethics followed by analyzing the myths, ethical dilemmas, benefits of practicing ethics at workplace and training needs for managers / employees.

What is ethics? : “To put it simply, ethics involves learning what is right or wrong, and then doing the right thing – but “the right thing” is not nearly as straightforward as conveyed in a great deal of business ethics literature. But business ethics gaze at effects of selling products / services and in relationships with stakeholders.

It is also sometimes said suppressing facts or lying is not business ethics. On the other hand in some business suppressing facts or lying is ethics that are even advised to follow. For example an astrologer is not supposed to disclose the fact about the time of death of an individual from reading the horoscope even though he comes to know about it. In the case of journalism catastrophic accidents to be reported with less intensity to avoid people panic. Medical discipline advocates not deterring patients in case of dreaded deceases with dire outcome.

* ACS, M.Com., MBA, M.Ed.

Myths

Myths Abound About Business Ethics, e.g., “Ethics is Simply to Do What’s Right” Lack of involvement from leaders and managers in the field of business ethics (again, this is the fault of no one or of everyone) has spawned a great deal of confusion and misunderstanding among leaders and managers about business ethics.

McDonald and Zepp, in their article “What Should Be Done? A Practical Approach to Business Ethics” (Management Decision, 28, 1, 1990, pp. 9-13), note that when someone brings up the topic of business ethics “… it tends to bring up cynicism, righteousness, paranoia, and laughter.” Many leaders and managers believe business ethics is religion because it seems to contain a great deal of preaching. Or, they believe it to be superfluous because it seems to merely assert the obvious: “do good!”

10 Myths About Business Ethics

Business ethics in the workplace is about prioritizing moral values for the workplace and ensuring behaviors are aligned with those values – it’s values management. Yet, myths abound about business ethics. Some of these myths arise from general confusion about the notion of ethics. Other myths arise from narrow or simplistic views of ethical dilemmas.

1. Business ethics is more a matter of religion than management.

Diane Kirrane, in “Managing Values: A Systematic Approach to Business Ethics,” (Training and Development Journal, November 1990), asserts that “altering people’s values or souls isn’t the aim of an organizational ethics program – managing values and conflict among them is …”

2. Our employees are ethical so we don’t need attention to business ethics.

Most of the ethical dilemmas faced by managers in the workplace are highly complex. Wallace explains that one knows when they have a significant ethical conflict when there is presence of a) significant value conflicts among differing interests, b) real alternatives that are equality justifiable, and c) significant consequences on “stakeholders” in the situation. Kirrane mentions that when the topic of business ethics comes up, people are quick to speak of the Golden Rule, honesty and courtesy. But when presented with complex ethical dilemmas, most people realize there’s a wide “gray area” when trying to apply ethical principles.

3. Business ethics is a discipline best led by philosophers, academics and theologians.

Lack of involvement of leaders and managers in business ethics literature and discussions has led many to believe that business ethics is a fad or movement, having little to do with the day-to-day realities of running an organization. They believe business ethics is primarily a complex philosophical debate or a religion. However, business ethics is a management discipline with a pragmatic approach that includes several practical tools. Ethics management programs have practical applications in other areas of management, as well. (These applications are listed later on in this document.)

4. Business ethics is superfluous – it only asserts the obvious: “do good!”

Many people react those codes of ethics, or lists of ethical values to which the organization aspires, are rather superfluous because they represent values to which everyone should naturally aspire. However, the value of codes of ethics to an organization is its priority and focus regarding certain ethical values in that workplace. For example, it’s obvious that all people should be honest. However, if an organization is struggling around continuing occasions of deceit in the workplace, a priority on honesty is very timely – and honesty should be listed in that organization’s code of ethics. Note that a code of ethics is an organic instrument that changes with the needs of society and the organization.

5. Business ethics is a matter of the good guys preaching to the bad guys.

Some writers do seem to claim a moral high ground while lamenting the poor condition of business and its leaders. However, those people well versed in managing organizations realize that good people can take bad actions, particularly when stressed or confused. (Stress or confusion is not excuses for unethical actions- they are reasons.) Managing ethics in the workplace includes all of us working together to help each other remain ethical and to work through confusing and stressful ethical dilemmas.

6. Business ethics in the new policeperson on the block.

Many believe business ethics is a recent phenomenon because of increased attention to the topic in popular and management literature. However, business ethics was written about even 2,000 years ago – at least since Cicero wrote about the topic in his On Duties. Business ethics has gotten more attention recently because of the social responsibility movement that started in the 1980s.

7. Ethics can’t be managed.

Actually, ethics is always “managed” – but, too often indirectly. For example, the behavior of the organization’s founder or current leader is a strong moral influence, or directive if you will, on behavior or employees in the workplace. Strategic priorities (profit maximization, expanding market share, cutting costs, etc.) can be very strong influences on morality. Laws, regulations and rules directly influence behaviors to be more ethical, usually in a manner that improves the general good and/or minimizes harm to the community. Some are still skeptical about business ethics, believing you can’t manage values in an organization. Donaldson and Davis (Management Decision, V28, N6) note that management, after all, is a value system.

8. Business ethics and social responsibility is the same thing.

The social responsibility movement is one aspect of the overall discipline of business ethics. Madsen and Shafritz refine the definition of business ethics to be: 1) an application of ethics to the corporate community, 2) a way to determine responsibility in business dealings, 3) the identification of important business and social issues, and 4) a critique of business. Items 3 and 4 are often matters of social responsibility. (There has been a great deal of public discussion and writing about items 3 and 4. However, there needs to be more written about items 1 and 2, about how business ethics can be managed.) Writings about social responsibility often do not address practical matters of managing ethics in the workplace, e.g., developing codes, updating policies and procedures, approaches to resolving ethical dilemmas, etc.

9. Our organization is not in trouble with the law, so we’re ethical.

One can often be unethical, yet operate within the limits of the law, e.g., withhold information from superiors, fudge on budgets, constantly complain about others, etc. However, breaking the law often starts with unethical behavior that has gone unnoticed.

The “boil the frog” phenomenon is a useful parable here: If you put a frog in hot water, it immediately jumps out. If you put a frog in cool water and slowly heat up the water, you can eventually boil the frog. The frog doesn’t seem to notice the adverse change in its environment.

10. Managing ethics in the workplace has little practical relevance.

Managing ethics in the workplace involves identifying and prioritizing values to guide behaviors in the organization, and establishing associated policies and procedures to ensure those behaviors are conducted. One might call this “values management.” Values management is also highly important in other management practices, e.g., managing diversity, Total Quality Management and strategic planning.

Ethical Dilemmas

Business Ethics Literature is Often Far Too Simplistic – So Many Leaders and Managers Think Business Ethics is Irrelevant

Stark notes that “often ethicists advance a kind of moral absolutism that avoids many of the difficult and most interesting questions.” Case studies to explore ethical dilemmas are often far too simplistic, presented as if every real-life situation has a right and wrong e.g., “should I lie, cheat or steal?” Consequently, many managers believe business ethics is irrelevant because too much business ethics training avoids the real-to-life complexities in leading organizations.

Bob Dunn, President and CEO of San Francisco-based Business for Social Responsibility, explains, “Ethical decisions aren’t as easy as they used to be. Now, they’re the difference between right – and right.” Preston Townley, in his speech “Business Ethics: Commitment to Tough Decisions” (Vital Speeches, January 1992, pp. 208-211), states that “… it ought to be fairly easy to choose between right and wrong by relying on principles, but business activity often demands that we select from alternatives that are neither wholly right or wholly wrong.”

Real-to-Life Examples of Complex Ethical Dilemmas

“A customer (or client) asked for a product (or service) from us today. After telling him our price, he said he couldn’t afford it. I know he could get it cheaper from a competitor. Should I tell him about the competitor – or let him go without getting what he needs? What should I do?”

“My board of directors is refusing to register a share for flimsy reasons. The shareholder approached me for knowing the result. Should I reveal the facts?”

“Our company prides itself on its merit-based pay system. One of my employees has done a tremendous job all year, so he deserves strong recognition. However, he’s already paid at the top of the salary range for his job grade and our company has too many people in the grade above him, so we can’t promote him. What should I do?”

“My boss told me that one of my employees is among several others to be laid off soon, and that I’m not to tell my employee yet or he might tell the whole organization which would soon be in an uproar. Meanwhile, I heard from my employee that he plans to buy braces for his daughter and a new carpet for his house. What should I do?”

“My computer operator told me he’d noticed several personal letters printed from a computer that I was responsible to manage. While we had no specific policies then against personal use of company facilities, I was concerned. I approached the letter writer to discuss the situation. She told me she’d written the letters on her own time to practice using our word processor. What should I do?”

“The auditors of my company told me that there is enough reason to believe that the funds are misappropriated. Our company is accepting fixed deposits from the general public. Since the company is sinking for want of good results, the depositors money is not definitely going to be returned in time on maturity. Should I inform the depositors?”

“A fellow employee told me that he plans to quit the company in two months and start a new job which has been guaranteed to him. Meanwhile, my boss told me that he wasn’t going to give me a new opportunity in our company because he was going to give it to my fellow employee now. What should I do?”

“Our company boasts itself on hiring minorities. One tribal candidate fully fits the job requirements for our open position. However, we’re concerned that our customers won’t understand his limited command of the English language. What should I do?”

Benefits of Practicing

What’s Conspicuously Missing is the “How to” of Managing Ethics in the Workplace? But it isn’t from lack of examples that managers aren’t better at managing ethics in the workplace – they require more practical information about managing ethics. This problem was explained very well by Stark in his article, “What’s the Matter with Business Ethics?” published in the Harvard Business Review (1993, May/June, pp. 38-48).

Benefits of Managing Ethics as a Program

There are numerous benefits in formally managing ethics as a program, rather than as a one-shot effort when it appears to be needed. Ethics programs:

– Establish organizational roles to manage ethics

– Schedule ongoing assessment of ethics requirements

– Establish required operating values and behaviors

– Align organizational behaviors with operating values

– Develop awareness and sensitivity to ethical issues

– Integrate ethical guidelines to decision making

– Structure mechanisms to resolving ethical dilemmas

– Facilitate ongoing evaluation and updates to the program

– Help convince employees that attention to ethics is not just a knee-jerk reaction done to get out of trouble or improve public image.

Training Needs for Managers and Employees

Many Leaders and Managers Think Business Ethics is Irrelevant. However, the field of business ethics has traditionally been the domain of philosophers, academics and social critics. Consequently, much of today’s literature about business ethics is not geared toward the practical needs of leaders and managers – the people primarily responsible for managing ethics in the workplace.

Business ethics is now a Management Discipline. Business ethics has come to be considered a management discipline, especially since the birth of the social responsibility movement in the 1980s. In that decade, social awareness movements raised expectations of businesses to use their massive financial and social influence to address social problems such as poverty, crime, environmental protection, equal rights, public health and improving education. An increasing number of people asserted that because businesses were making a profit from using our country’s resources, these businesses owed it to our country to work to improve society. Many researchers, business schools and managers have recognized this broader constituency, and in their planning and operations have replaced the word “stockholder” with “stakeholder,” meaning to include employees, customers, suppliers and the wider community.

The emergence of business ethics is similar to other management disciplines. For example, organizations realized that they needed to manage a more positive image to the public and so the recent discipline of public relations was born. Organizations realized they needed to better manage their human resources and so the recent discipline of human resources was born. As commerce became more complicated and dynamic, organizations realized they needed more guidance to ensure their dealings supported the common good and did not harm others – and so business ethics was born.

Note that 90% of business schools now provide some form of training in business ethics. Today, ethics in the workplace can be managed through use of codes of ethics, codes of conduct, roles of ethicists and ethics committees, policies and procedures, procedures to resolve ethical dilemmas, ethics training, etc.

The ethics program is essentially useless unless all staff members are trained about what it is, how it works and their roles in it. The nature of the system may invite suspicion if not handled openly and honestly. In addition, no matter how fair and up-to-date is a set of policies; the legal system will often interpret employee behavior (rather than written policies) as de facto policy. Therefore, all staff must be aware of and act in full accordance with policies and procedures (this is true, whether policies and procedures are for ethics programs or personnel management). This full accordance requires training about policies and procedures.

Training Basics for Supervisors and Learners

1. Orient new employees to the organization’s ethics program during new-employee orientation.

2. Review the ethics management program in management training experiences.

3. Involving staff in review of codes is strong ethics training.

4. Involving staff in review of policies (ethics and personnel policies) is strong ethics training.

5. One of the strongest forms of ethics training is practice in resolving complex ethical dilemmas. Have staff use any of the three ethical-dilemma-resolution methods in this guidebook and apply them to any of the real-to-life ethical dilemmas also listed in this guidebook.

6. Include ethical performance as a dimension in performance appraisals.

7. The best ethics trainer: Bill Goodman, Chief Human Resource Officer at Aveda, describes, “We start our training even in our job ads,” then adds, “but the best trainer is the behavior of our leaders.”

8. Give all staff a copy of this free “Complete Guide to Ethics Management.”

Leaders and Managers Require More Practical Information About Managing Ethics : Managing ethics in the workplace holds tremendous benefit for leaders and managers, benefits both moral and practical. This is particularly true today when it is critical to understand and manage highly diverse values in the workplace.

However, the field of business ethics has traditionally been the domain of philosophers, academics and social critics. Consequently, much of today’s literature about business ethics is not geared toward the practical needs of leaders and managers – the people primarily responsible for managing ethics in the workplace.

The most frequent forms of business ethics literature today typically include: a) philosophical, which requires extensive orientation and analysis; b) anthologies, which require much time, review and integration; c) case studies, which require numerous cases, and much time and analyses to synthesize; and d) focus on social responsibility, which includes many examples of good and bad actions taken by companies. (This lack of practical information is not the fault of philosophers, academic or social critics. The problem is the outcome of insufficient involvement of leaders and managers in discussion and literature about business ethics. More leaders and managers must become involved. This guidebook aims to increase that involvement.)

“Wong and Beckman (Journal of Business Ethics, V11, pp. 173-178) noted, “Researchers are claiming that current literature is filled with strong arguments for more ethical corporate leadership and incorporation of ethics in business curriculum, but what is conspicuously missing is the “how to” in actually putting ethical goals and theories into practical action.”

Wallace and Pekel explain that attention to business ethics is critical during times of fundamental change – times much like those faced now by businesses, both nonprofit or for-profit. In times of fundamental change, values that were previously taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should act. Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass. However, attention to business ethics provides numerous other benefits, as well (these benefits are listed later in this document).

Note that many people react that business ethics, with its continuing attention to “doing the right thing,” only asserts the obvious (“be good,” “don’t lie,” etc.), and so these people don’t take business ethics seriously. For many of us, these principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine. Anyway, there are many other benefits of managing ethics in the workplace. These benefits are explained later in this document.

10 Benefits of Managing Ethics in the Workplace

Many people are used to reading or hearing of the moral benefits of attention to business ethics. However, there are other types of benefits, as well. The following list describes various types of benefits from managing ethics in the workplace.

1. Attention to business ethics has substantially improved society.

A matter of decades ago, children in our country worked 16-hour days. Workers’ limbs were torn off and disabled workers were condemned to poverty and often to starvation. Trusts controlled some markets to the extent that prices were fixed and small businesses choked out. Price fixing crippled normal market forces. Employees were terminated based on personalities. Influence was applied through intimidation and harassment. Then society reacted and demanded that businesses place high value on fairness and equal rights. Anti-trust laws were instituted. Government agencies were established. Unions were organized. Laws and regulations were established.

2. Ethics programs help maintain a moral course in turbulent times.

As noted earlier in this document, Wallace and Pekel explain that attention to business ethics is critical during times of fundamental change- times much like those faced now by businesses, both non-profit or for-profit. During times of change, there is often no clear moral compass to guide leaders through complex conflicts about what is right or wrong. Continuing attention to ethics in the workplace sensitizes leaders and staff to how they want to act – consistently.

3. Ethics programs cultivate strong teamwork and productivity.

Ethics programs align employee behaviors with that top priority ethical values preferred by leaders of the organization. Usually, an organization finds surprising disparity between its preferred values and the values actually reflected by behaviors in the workplace. Ongoing attention and dialogue regarding values in the workplace builds openness, integrity and community – critical ingredients of strong teams in the workplace. Employees feel strong alignment between their values and those of the organization. They react with strong motivation and performance.

4. Ethics programs support employee growth and meaning.

Attention to ethics in the workplace helps employees face reality, both good and bad – in the organization and themselves. Employees feel full confidence they can admit and deal with whatever comes their way. Bennett, in his article “Unethical Behavior, Stress Appear Linked” (Wall Street Journal, April 11, 1991, p. B1), explained that a consulting company tested a range of executives and managers. Their most striking finding: the more emotionally healthy executives, as measured on a battery of tests, the more likely they were to score high on ethics tests.

5. Ethics programs are an insurance policy – they help ensure that policies are legal.

There are an increasing number of lawsuits in regard to personnel matters and to effects of an organization’s services or products on stakeholders. As mentioned earlier in this document, ethical principles are often state-of-the-art legal matters. These principles are often applied to current, major ethical issues to become legislation. Attention to ethics ensures highly ethical policies and procedures in the workplace. It’s far better to incur the cost of mechanisms to ensure ethical practices now than to incur costs of litigation later. A major intent of well-designed personnel policies is to ensure ethical treatment of employees, e.g., in matters of hiring, evaluating, disciplining, firing, etc. Drake and Drake (California Management Review, V16, pp. 107-123) note that “an employer can be subject to suit for breach of contract for failure to comply with any promise it made, so the gap between stated corporate culture and actual practice has significant legal, as well as ethical implications.”

6. Ethics programs help avoid criminal acts “of omission” and can lower fines.

Ethics programs tend to detect ethical issues and violations early on so they can be reported or addressed. In some cases, when an organization is aware of an actual or potential violation and does not report it to the appropriate authorities, this can be considered a criminal act, e.g., in business dealings with certain government agencies, such as the Defense Department. The recent Federal Sentencing Guidelines specify major penalties for various types of major ethics violations. However, the guideline potentially lowers fines if an organization has clearly made an effort to operate ethically.

7. Ethics programs help manage values associated with quality management, strategic planning and diversity management – this benefit needs far more attention.

Ethics programs identify preferred values and ensuring organizational behaviors are aligned with those values. This effort includes recording the values, developing policies and procedures to align behaviors with preferred values, and then training all personnel about the policies and procedures. This overall effort is very useful for several other programs in the workplace that require behaviors to be aligned with values, including quality management, strategic planning and diversity management. Total Quality Management includes high priority on certain operating values, e.g., trust among stakeholders, performance, reliability, measurement, and feedback. Ethics management techniques are highly useful for managing strategic values, e.g., expand market share, reduce costs, etc.

McDonnell Douglas integrates their ethics programs into their strategic planning process. Ethics management programs are also useful in managing diversity.

Diversity is much more than the color of people’s skin – it’s acknowledging different values and perspectives. Diversity programs require recognizing and applying diverse values and perspectives – these activities are the basis of a sound ethics management program.

8. Ethics programs promote a strong public image.

Attention to ethics is also strong public relations- admittedly, managing ethics should not be done primarily for reasons of public relations. But, frankly, the fact that an organization regularly gives attention to its ethics can portray a strong positive to the public. People see those organizations as valuing people more than profit, as striving to operate with the utmost of integrity and honor. Aligning behavior with values is critical to effective marketing and public relations programs. Consider how Johnson and Johnson handled the Tylenol crisis versus how Exxon handled the oil spill in Alaska. Bob Dunn, President and CEO of San Francisco-based Business for Social Responsibility, puts it best: “Ethical values, consistently applied, are the cornerstones in building a commercially successful and socially responsible business.”

9. Overall benefits of ethics programs

Donaldson and Davis, in “Business Ethics? Yes, But What Can it Do for the Bottom Line?” (Management Decision, V28, N6, 1990) explain that managing ethical values in the workplace legitimizes managerial actions, strengthens the coherence and balance of the organization’s culture, improves trust in relationships between individuals and groups, supports greater consistency in standards and qualities of products, and cultivates greater sensitivity to the impact of the enterprise’s values and messages.

10. Last and most- formal attention to ethics in the workplace is the right thing to do.

One Description of a Highly Ethical Organization

Mark Pastin, in The Hard Problems of Management: Gaining the Ethics Edge (Jossey-Bass, 1986), provides the following four principles for highly ethical organizations:

1. They are at ease interacting with diverse internal and external stakeholder groups. The ground rules of these firms make the good of these stakeholder groups part of the organizations’ own good.

2. They are obsessed with fairness. Their ground rules emphasize that the other persons’ interests’ count as much as their own.

3. Responsibility is individual rather than collective, with individuals assuming personal responsibility for actions of the organization. These organizations’ ground rules mandate that individuals are responsible to themselves.