Business Ethics

BusinessEthics is often a required subject in graduate programs, not just in Business streams such as MBA, but also in InformationandCommunicationTechnology? (ICT).

However in real workplaces, even with cast-in-stone "codes of conduct", "value statements", BusinessEthics concerns are relegated to mere lip service. Often the argument is like "When in Rome, do as the Romans do".

This is a pattern that gets repeated over and over again, at different companies and at different levels of granularity.

In a globalized economy, there appear to be a RaceToTheBottom, as far as BusinessEthics go.

For the few who would like to think otherwise, there are MuchWindmillsToTilt.

This page is dedicated to resources that are CounterCulture, and promote better BusinessEthics backed up by deeds.

Resources

Crisis in Corporate Ethics... at http://leadership.wharton.upenn.edu/digest/02-03.shtml#Crisis%20in%20Corporate%20Ethics:%20%20Where%20Have%20All%20the%20Leaders%20Gone?

A lengthy article by author of AuthenticLeadership William George. Has UserStory of how GoodLeadersCanAdmitMistakes as well.

Different approaches to the issue of Ethics at http://www.scu.edu/ethics/practicing/decision/thinking.html

For many in business, BusinessEthics is starts and ends with maximizing shareholder value. In this viewpoint, all other considerations (upholding the law, treating employees and customers well, not polluting the environment) are secondary to this. Why should companies obey the law? Because if they do not, the resulting penalities will reduce shareholder value. Treat employees well? OK, if doing so is necessary to retain employees capable of boosting shareholder value; otherwise the ethical thing to do is outsource, sack, and exploit. The environment (and other externalities)? The ethical thing to do, in this ethical framework, is to do whatever brings in the most profits; if it profits to pollute, so be it. (Only if the social penalty for such pollution exceeds the benefits of polluting, does an alternate strategy become ethical). Even proper treatment customers--the source of revenue--is judged on this basis; such companies are good to their customers if and only if the rewards of repeat business outweigh the costs of keeping the customer happy. OTOH, if you can save money by producing an unsafe product (more than you risk losing in lawsuits), then by all means do so--even if that means customers die.

Thanks for your honest contribution. Please read the above reference article where the author did address this ("Thank you, Enron and Arthur Andersen" section). What you stated is the prevailing culture, and that is why I said this page main theme is CounterCulture.

Sadly William George is listened to because he succeeded in increading shareholder value. Lots others probably tried and failed. And practices of good culture is subsequently blamed for the failure due to other reasons.

You may wish to see the sample chapter at SoulOfAnOrganization on myths about company culture. -- dl

You know, I'm pretty sure I already contributed this but here goes:

REAL business ethics is an ordered list of concerns:

employees (most critical to corporate health)
customers (secondarily critical)
creditors and financial backers (least critical and also least involved)

Japan has something resembling real business ethics since they are quite willing to threaten, blackmail and otherwise coerce their shareholders into toeing the line. It also has some quirky bankruptcy laws that let the owner of repossessed property veto prospective buyers. Mexico also has something resembling real business ethics since its bankruptcy protection laws concern themselves with paying back employees first.

Realpolitik business non-ethics in the USA is enshrined in its bankruptcy protection laws which concern themselves with:

creditors
customers
employees

in that order. In particular, if a bankrupted company made a promise to its customers not to divulge confidential information it collected, that promise is worth scrap if the confidential information can be legally sold to pay back creditors.

There is such a thing as real business ethics. The problem is that US business ethics is anti-ethics.

(The only companies that hold to business ethics are cooperatives which make their employees into their primary shareholders, their customers into their secondary shareholders, and get rid of non-participating outside shareholders almost entirely.)

Have you read William George story in link above? I do not expect him to be totally free of the unethical practices he rallied against, but do expect by and large, a person like him would have indeed performed significantly better than others, on the scale of ethics.

I would concur these people are probably exception and not the rule. But at the same time I also believe most people want to be "as ethical as possible", unless they have a true split-personality with "behaviors that are role-dependent".

The problem is that companies aren't people and they don't allow people to be "as ethical as possible". The same goes for governments. So you see, it largely doesn't matter whether people do or do not want to be ethical.

REAL business ethics is an ordered list of concerns:

employees (most critical to corporate health)
customers (secondarily critical)
creditors and financial backers (least critical and also least involved)

After some consideration I find that the more correct model is

customers (most critical to corporate health)
employees (secondarily critical)
creditors and financial backers (least critical and also least involved)

... because without customers there is no business.

It should be said that the betrayal of any of these interests will sink the company, but while you can lose capital and survive (cheaper premises, pay cuts, no FreeCoffee), and while you can lose staff and survive (longer hours, more hats, less vacation), in contrast the loss of your customer base and thus your revenues will cost you everything else.

The following assumes that I know Bob well enough to trust him:

If I were working for Bob's Software Design And Kustom Krafted Bitstorms and Bob told me/us at a meeting one day that our primary investor was pulling his money and half the staff was quitting and those who stayed would have to take a pay cut, but our customers were still on board with our product(s) and wanted to continue doing business I would stay the course (given that the pay cut didn't suddenly threaten things like eating and housing).
If Bob called a meeting to tell us that we'd lost another customer but everyone was getting a raise, I'd quietly polish up my resume against the inevitable lay-off.
If Bob told us orders were down, customers were angry, and there would be lay-offs so that the owners/investors could take a bonus, I'd polish up the resume and not bother waiting for the lay-off.

In the end, if everyone is to continue getting paid, the company must continue to survive. Can't do that without customers.

Something that gets overlooked in this is the viability of the company's product(s). If the product is known to be a bad idea, and it directly or proximately harms people (or some broader scope), then keeping the company in business is itself unethical. Working for an outfit that causes harm in some fashion presents a dilemma for the employee: "Gotta feed my family, and I would quit but there's no other game in town," which some resolve by leaving the area, some by starting a business of their own, and some never resolve.

"BusinessEthics" as practiced seem to begin with the assumption that whatever the company is doing is "okay" and its customers, employees, and owners/investors are the essence of the rightness or wrongness of decisions. The "what is it we're doing here" question seldom gets asked. It does matter though, and should receive more scrutiny.

-- GarryHamilton

That would be morals, and an entirely different thing. Ethics is just what you managed to dance around; indirect enlightened self-interest. If you act in an unethical manner, eventually you will lose because your company will lose, or your profession will lose, or your industry will lose, or your economy will lose, et cetera. Ethics is about managing relations with outsiders so that the insiders, as a group, do not lose.

As for your putting customers before employees, consider the following scenario. You're a middle manager and the president tells you that business is doing great because there's plenty of customers onboard, but you're going to increase profits by:

cutting wages
increasing hours (overtime and unpaid)
cutting benefits
coming down on employees for "absenteeism" (rigidly defined)
eliminating "unproductive" behaviour (think of Taylorism)
randomly firing people to increase fear, so that you can cut wages
generally engaging in terrorism and slavery

Now tell me how long that company will last. Tell me whether or not the higher turnover rate, the shoddy work, the anger, the goldbricking, the apathy and yes even the sabotage are all worth it. The president sure seems to think they're worth it, but do you? And while you're at it, tell me whether you're going to stick around until your boss decides to apply these bright ideas to you, or whether you'll be polishing your resume ASAP.

Oh, wait, another response to your concern would be that 'the public' is a concern of a company, and that given its very small involvement in the company, it places 4th in the ordered list of concerns. Note that you can adopt either a cardinal or an ordinal model for ethical evaluation. That is, either "a customers' smallest need will always trump a member of the general public's greatest need" or "a customer's needs are worth precisely 10.0 times as much as an equivalent need belonging to a member of the general public's". -- RK