Business ethics is…
An organization doing what is right in the eyes of its employees and people outside (e. g.
So an organization must serve the needs of these different groups with honesty, fairness, trust and
Conscience is important, telling employees what's right or wrong.
Ethics can make money (profit through principle)...
How can business ethics increase profit?
1. Motivated employees
People like an ethical organization more, and so work harder for it.
2. Satisfied customers
Some people prefer to buy from ethical companies e.g. Fairtrade coffee from growers who aren’t exploited.
3. Less interference from pressure
groups (e.g. Greenpeace) and government
(because they like what the company is doing).
4. Better corporate image and reputation
People like nice companies e.g. Virgin providing planes free for transporting food to Ethiopia during Live Aid
in 1985 (a fund raising concert) .
How to be an ethical organisation
1. Knowing what’s right
This is linked to duty to do what you think should be done. So any decision or strategy should ask:
- is it legal, honest and helpful to others? (it shouldn’t hurt anyone).
- is it being done for the right reasons? (e.g. revenge can cause hatred)
- does it make you feel good or bad?
- could you tell the people you love about it?
- what does your conscience say about it?
But what is right or wrong may not be clear...
You may have to choose between two right things or the lesser of two evils
For example, if you don’t bribe people in a country where it's expected, you might lose the contract, and
people’s jobs at home.
2. Corporate culture and codes of practice
The organisation must:
- be clear about the values it believes in (e.g. treating employees well).
- clearly communicate them to every employee.
That’s why codes of practice are helpful, telling employees what they should do and not
3. Recruit ethical people
You can’t have an ethical organization without ethical employees.
Ask them about their values and beliefs at interview.
4. Doing what’s right
To find out what is right, look at:
- the utilitarian principle - doing something, if it gives the greatest happiness to
the greatest number of people.
- enlightened self-interest – helping others to help the organization e.g. treating
employees and customers well leads to customer satisfaction, and so higher profits.
- altruism (or self-sacrifice) – helping others when it reduces profits. This is
unlikely, but may happen in highly ethical, private companies without outside interference (e.g. a family
But some employees can still be unethical because of:
- greedy, bad people - they cheat, steal money and have bad beliefs, e.g. racist,
sexist. For example, the American energy company, Enron, led by Kenneth
Lay (pictured right), fiddled its accounts, lost its shareholders $11 billion and went bankrupt
- competition - pressure to beat competitors can persuade people to cheat.
- bad culture – the organisation accepts and rewards cheats and liars.
Ethical organisations do what they say and live by their principles.
5. Listening to employees
An organization should listen to and act upon the ethical concerns of employees, particularly if it has done
something that might seriously harm employees or the public.
If the organization doesn’t, employees may be forced to go public and become
whistle-blowers like Frank Serpico (pictured right), publicizing police
corruption in New York. Punishing them sends a bad ethical message to other employees.
6. Reflection and learning
Employees need time to reflect on what is right and learn from their experience. This is difficult when
- have little or no time for reflection.
That’s why balance between work and leisure is important for business ethics.
Choosing between the family and organization is a serious ethical
problem for employees.
Key quotes explained
“I believe in God, family and McDonald’s, and in the office that order is
Ray Kroc(founder of McDonald’s, pictured right).
Managers may sacrifice their ethics for success and profit and lead a double life, being nicer at home than at
work. This was confirmed by research in America by Albert Carr.
“Better a little with righteousness than great revenues without right”, the Book of Proverbs
says in the Bible.
“Ethics in business (or anywhere else) starts with a
Greenleaf (American management writer, pictured right).
People decide what is ethical by listening to their conscience and saving their soul.
Greed is the biggest temptation in business . “The love of money is the root of all evil”, St.
“Few things are totally good or totally evil”,
Lincoln (American president, pictured right)
You may have to do something that isn’t totally good e.g. fire people to keep a company in business. There is
also good in everything, even in something evil.
“The market has no morality”,
- Michael Heseltine (British politician, pictured
Markets don’t have morals. But people do and they must act with honesty and integrity.
“No legacy is so rich as honesty”, Mariana says in Shakespeare’s All’s Well That Ends
Best books and
Bowen McCoy, The Parable of the Sadhu (1983 Harvard
Business Review article)
An expedition, including the author, Bowen McCoy (pictured right), and his friend
Stephen, decided to leave a sadhu, an Indian holy man, at 15,000 feet to fend for himself, rather
than take him to safety, because it would have jeopardized the expedition.
But should the sadhu have come first, as Stephen argued?
Blanchard (pictured) and Norman Vincent Peale (pictured right below),
The Power of Ethical Management (1988)
Ethical management needs the 5 P’s:
1. Purpose and pride
Doing something worthwhile.
2. Patience and persistence
Keep on trying to do what’s right.
Knowing how important something is. Principles are most important.
Laura Nash (pictured right), Good Intentions Aside (1990)
Organizations should have a “Covenantal Business Ethic” that emphasizes service to
others and respect for people as human beings.
This not only gets the best from people but also boosts their self-esteem.
Key questions to assess ethical issues are:
- is it right, honest and fair to stakeholders?
- could I disclose it to the public, a respected mentor, or a loved one?
- would I tell my child to do it?
- is it consistent with my organization’s objectives?
Max De Pree, Leadership is an Art
Like Laura Nash, De Pree (pictured right) supports the importance of covenantal
relationships in which the organization and its employees accept mutual
responsibilities towards each other like respect, trust and understanding.
(pictured right) and Kent
Lineback (pictured right
below) , The Monk and the Riddle
We should be missionaries (driven by virtue) not mercenaries (driven by power and