Business Ethics

Traditionally, business ethics was considered to be a very controversial notion because even nowadays some people believe that it is a cornerstone of any future more or less prospective company’s strategy while others perceive it like an oxymoron. Personally, I think that business ethics have to be developed yet and, unfortunately, it is mainly the question philosophers or social critics are worried about but not those who are in the center of its attention, namely businessmen, managers, employees, etc. As far as I understand, the relations between all participants of a business process have to be controlled and regulated by some ethical norms because business ethics has an overwhelming influence on so many process in a company, and these processes can have not only interior but exterior character as well.

It plays a very important role for the climate within a company, shapes its public image, and the list may be continued. One more thing I would like to emphasize is the growing importance of business ethics in the future because moral standards and ethical norms became more and more important in our society and this trend will only progress accompanying the social development. Unfortunately, not all of businessmen and top managers realize this fact and they do not treat the problem of the business ethics seriously. Moreover, very often there actions may be characterized as absolutely immoral and contradicting to the main principles of the business ethics.

Among one of the most notorious examples of such attitude to ethical norms I may name the crisis and the following collapse of the Enron that had happened in recent years. As for me, I am convinced that it was the result of a permanent violation of ethical norms that gradually transformed into the violation of laws. Despite the fact that we shouldn’t equate these two notions, I mean ethics, or it is better to say the lack of it, and the violation of laws, because immoral or unethical doesn’t necessarily mean illegal, it is still quite evident that the latter may be a logical consequence of the former. In other words if decisions contradicting to ethical norms are acceptable within a company or for some members of this company it wouldn’t be a great surprise for me if soon this company or any of its staff will break the law. So I believe that the roots of a crime lie in the moral decay of a personality or the whole social group. Probably, that is exactly what happened to the Enron at large, and to some of its top executives in particular. Now I’ll try to describe briefly the collapse of this company, find out its causes and comment on it.

First of all I want to underline the following markers of a serious ethical conflict, namely it is a presence of 1) significant value conflicts of interests of different people or groups of people, 2) real alternatives that are justifiable, and, finally, 3) significant consequences on ’stakeholders’ in the situation (Madsen and Shafritz, 1990). Practically all of these markers may be found in the Enron situation, particularly the third one. So, what was the starting point of the disaster as it is called by many because it is one of the most serious and biggest financial scandals in history? Now it is evident that the crisis had begun after the company reported about huge debts. Certainly, an investigation had been started and not surprisingly that very soon top executives were under suspect. It is not a secret anymore that top executives hide debts because they were trying to sustain the permanent growth of their company on the market and to increase the value of its shares in order to earn more money for them despite a very probable bankruptcy. They organized a very subtle web of transaction which helped them to hide millions of dollars of debts of the company as well as they also used for the same purposes complex financial partnerships. Moreover, the Enron executives profited from the situation and sold their shares in the nick of time just before the company failure.

As for top executives they also earned millions of dollars with the help of their families, some friends and partnerships which were controlled by them.

The next question that logically arises is who exactly was guilty and what were consequences of the Enron collapse. Among the most important and guilty is often called Andrew Fastow, a former Enron finance chief who is considered by many specialists to be a mastermind of the Enron failure but it is quite natural to presuppose that one person couldn’t organize such a complicated system of transactions without any other executive or manager knowing. Another person responsible for the Enron crisis is a former Enron chief executive Jeff Skilling. But what seems to me the most shocking, immoral, and absolutely unethical is the fact that one more chief executive of the company Kenneth Lay was extensively informed and warned by middle-managers about the situation within the Enron. And in the meantime, hypocritically, he, in person, announced that he was a good, hardworking, and absolutely ignorant about all those transactions and frauds that took place in the company he was responsible for as a chief executive.

It seems unbelievable but he is really so hypocritic. I think such cynic reaction reveals great problems that existed in the Enron and that there were no ethical norms that regulated relations between the Enron staff. It is even surprising, to some extent, that having such chief executives there still were some people who were fully aware of the danger for stockholders and tried to prevent the catastrophe. Probably, these people had those moral principles that are necessary for normal work of any company in the modern world and I think if they headed the Enron they could save it.

By the way, I want to say a few words about what could be done in order to save the Enron. I’m not going to analyze financial possibility to improve the position of the company on the market. I’d like to analyze ethical part of the problem because I believe that the lack of business ethics finally led to the numerous frauds and the legal crisis in the company. So, what could be done to prevent the Enron collapse? One of the possible ways to prevent it was the Ethical Code of the company. It shouldn’t be just a set of rules, principles or regulations written by one or several persons. To create an effective Ethical Code all members of the company everyday life should work on the project of such a code. Only this condition could provide that written regulations and principles would work in real life because all opinions would be taken into account. Certainly, an effective system of the control of the execution of norms of the Code would be vitally important and would prevent such situations when a chief executive being warned by middle-managers didn’t do anything to stop the terrible fraud. But none of the measures I have just mentioned were taken and, naturally, ethical decay ended in the financial collapse of a gigantic company. As a result many stockholders were ruined, thousands of people lost their jobs, and the criminals were imprisoned. Thus, a prospective company was ruined though who knows what could happen if the ethical principles were dominant in the company’s policy. The only thing I can say for sure is that, to my mind, the Enron would have much more prospects and could hardly collapse.

Finally, I want to say that it seems to me that the main aim of those who were responsible for the Enron failure was just to make more money regardless the fact that other stockholders could lose their life savings. I think it is absolutely unacceptable in business because nobody can get richer and richer and, in the meantime, lead his or her own company to the collapse. On the one hand it is absolutely immoral, on the other hand it is a serious crime that will be severely punished and the sentences of the Enron executives prove it vividly. So, it is evident that a priori modern business, and leading executives of any company should care about prosperity of the company and society but not only about there own financial success. Nowadays, the most successful companies pay a lot of attention to the effective ethical education of there staff because really working ethical principles contribute not only to the public image of the company but they also provide for the company interior stability, and, consequently, make it more competitive on the market. In general, I think that moral values must gradually transform into the common law. Anyway, moral principles of the business ethics become evident mainly in critical situations and if the company has any they usually unite all of the company’s staff and make it stronger and more survivable.

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This article relates to the Ethics in the Workplace competency, commonly evaluated in employee surveys. It gives examples of how employees and customers consider ethical behavior and sound values an integral part of your organization. This competency covers a variety of topics like customer treatment, employee professionalism, and expected/acceptable organizational behaviors. At a high level, this competency will investigate the standards by which your employees treat your customers, co-workers, and the organization itself.

This short story, Work Ethics and the Customer, is part of AlphaMeasure’s compilation, Tales from the Corporate Frontlines. It provides a view from the customer’s side of the counter that might inspire you to rethink the old phrase “the customer is king”.

Anonymous Submission

I work in a back office environment. The front lines of customer service are far away, so I don’t think much about the ethical matters involved in providing good service.

All of that changed recently, when I found myself on the customer side of that check out terminal (formerly known as a cash register), and in dire need of help.

I was shopping for a USB computer keyboard to attach to my computer. I needed that type, and only that type, and I needed it that very day. I visited four different retail stores, all large chains, and had four noteworthy experiences that left me thinking about ethical behavior.

On he first visit, I asked an obviously available (he was playing a video game) sales person how I could tell the difference between PS2 and USB port keyboards as the display models cords were embedded into the rack. His response was -” I just know from working here”. Okay. Not unethical, but not helpful either. Well, which one is cheapest, I asked. He showed me a $70 keyboard. I left the store.

At the next stop, I saw no keyboards, so asked a sales person (once she was off the telephone making plans for the evening.) “Oh, she said, the only ones we have come with the computers.” I thanked her and went home. The rest of this odyssey would have to wait.

At home, I called another chain store, navigated the voice mail, and asked the clerk if they had USB keyboards in the store and for the cost of the lowest priced model. After a quick click and a short silence, he told me of course, they are $24. Great, I was on my way. It was Saturday evening and the store was packed. I found the keyboard section, and stood there amazed. He had outright lied. The lowest priced model was $80. There was nothing remotely near $24. The few clerks on duty were swamped. I found one available in another department and told him about my situation. He was genuinely sympathetic and suggested that I visit the nearby superstore on the hill. I thanked him and left.

There my journey ended. I found my keyboard, after hours of searching, amid opened boxes (apparently some of them lied, too) in a crowded aisle in the electronics department of a store selling every product imaginable. I was exhausted. No wonder people shop online.

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Josh Greenberg is President of AlphaMeasure, Inc.

AlphaMeasure provides organizations of all sizes a powerful web based method for measuring employee satisfaction, determining employee engagement, and increasing employee retention.

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Workplace Ethics is a subject that we have all heard of. In fact, the subject of Ethics in general is something that most people are familiar with. And, what is commonly understood about ethics is there are ethics and then there are workplace ethics. What most people don’t realize, however, is that there is no such thing as workplace ethics; ethics are the same, (or, should be) whether in the workplace or in personal life.

WHAT IT’S ABOUT

Ethics are about making choices that may not always feel good or seem like they benefit you but are the “right” choices to make. They are the choices that are examples of “model citizens” and examples of the golden rules. We’ve all heard the golden rules: Don’t hurt, don’t steal, don’t lie, or one of the most famous: “Do unto others as you would have done to you.” These are not just catchy phrases; these are words of wisdom that any productive member of society should strive to live by.

In our personal lives, most people try to do exactly that. Ethics are thought of by many people as something that is related to the private side of life and not to the business side. In many businesses, having ethics is frowned upon or thought of as a negative subject. This is because business is usually about doing what’s best for number one, not about what’s really the right thing to do. You probably are already feeling uneasy just reading this.

A GOOD EXAMPLE

Take ENRON, for example. Were the actions of ENRON’s CEO’s a good example of ethics? No. But, what they WERE was a CLASSIC example of was two things: One, those actions displayed how ethics were not used in any way. Two, their actions painted a grim and realistic picture of what can happen when ethics are neglected. Had ethics been considered in the first place by the leaders of the company, there would have been no scandal. If ethics were used on a daily basis in every company, there would never be scandals.

Martha Stewart comes to mind when speaking of ethics. Again, there is a feeling of uneasiness when dealing with this topic. But, why is it like that? Ethics are supposed to improve our lives and invoke good feelings. Perhaps the reason ethics is such a sore subject is because they are so often poorly used, if used at all.

A NEW WAY

Ethics are making a comeback. To begin with, more and more corporations and businessmen and woman are now realizing that ethics aren’t checked at the door when entering the workplace. Ethics have every bit as much a place in the public as they do the private. How is it there should be separate sets of ethics, depending upon whether it is your personal life or your work life? The answer is that there shouldn’t be a separate set and in light of recent events that we see on our television sets as of late, more and more companies are realizing this fact.

Some companies are incorporating ethics into their training. It is s subject that can go hand-in-hand with business and when employees and CEO’s alike understand what ethics are about, business can improve. Not only will the community take note of the ethical nature of a business but also so will customers.

Periodic reevaluations are suggested in ethics training as well, since times change many things that some would never consider ethical or non-ethical. For instance, when the first computer hacker to send a work into a university computer system crippled the entire network that the system was a part of, including that of public utilities - simply because he could do it - a question of ethics is hard to pose. Computers were new, at the time. And, no one had ever been able to do such a thing before. With new times comes new technology and new ways of doing things. Ethics will still play a part of it all and refreshing ethics training only re-strengthens what has already been learned, when new ages come about.

In the end, it’s all about what a person understands about ethics. Many university curriculums are now heavily applying the teaching of Ethics and for good reason. Young minds will take this information into the workforce and understand that ethics need to be applied there as well as in the private sector. Corporations will be able to avoid embarrassing scandals that are presented all over national news. Small business will be able to keep and attract more clients and customers. Negotiations between businesses could be accomplished with more consideration for the other company in mind, which would only help both.

Above all, a high level of ethics in your business should be in place at least for the customers. If anything, it is the customer that should be considered the most when it comes to ethical business practices. In the long run, a company will reap great profits from a customer base that feels it is being treated fairly and truthfully.

About The Author

Myron Curry is President and CEO of BusinessTrainingMedia.com a leading provider of workforce and business development training programs designed exclusively for corporate deployment. Myron has over 20 years of successful management experience with leading fortune 500 companies and has written numerous articles about workforce management issues. You can contact Myron at: myron@business-marketing.com or visit his company’s website http://www.businesstrainingmedia.com

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