How to Run an Ethical Business

How to Run an Ethical Business

Ethics in business requires diligence and the entire organization needs to be on the same page in order to make ethical decisions. It is important to create principles and codes that directly reflect the needs of the business. A successful ethics program requires safeguards. It will be necessary to make adjustments from time to time. Becoming an ethical business is a process that takes time.

Addressing the Needs of the Business

The needs of the business should be determined by surveying both the customers and the employees. Anonymous surveys allow people to describe how the business runs and what it needs to increase ethical behavior.

The following needs should be addressed:

  • Company Values
  • Personal Responsibility
  • Employee Participation
  • Conflicts
  • Trust

Ethical Principles

A business’ ethical principles should reflect its needs. The following are some basic business ethics principles that most companies can benefit from instituting:

  • Trust: Customers and employees react better to a company they trust and which they feel trusts them.
  • Clarity: Make sure that all documents, codes, principles, etc. are clear and easy to understand.
  • Community: Support community involvement.
  • Accurate records: Keep all records and accounting up-to-date and above suspicion.
  • Respect: Treat all people with respect, regardless of their position.

Ethical Safeguards

Ethical safeguards need to be in place to ensure ethical behavior. Safeguards take away the excuse that employees do not know better. The following are some examples of ethical safeguards in business:

  • Code of Conduct
  • Employee training
  • Ethics audits

Developing a Code of Ethics

A Code of Ethics is the foundation of an ethics program. The Code of Ethics needs to address certain issues:

  • Laws and regulations: All legal requirements need to be considered.
  • Company needs: Consider the needs of the organization when creating a code.
  • Ethical values: Use the ethics and values of the company. Include two examples for each value.
  • Wording: Make sure that everyone knows that they have to abide by the Code of Ethics.

Update the code each year, and make sure that everyone has a copy of these guidelines.

Performing an Internal Ethics Audit

An internal ethics audit utilizes several different sources. An auditor or a committee usually goes over the information to determine if any adjustments need to be made.

Sources include:

  • Surveys
  • Interviews
  • Documents
  • Focus Groups
  • Direct Observation

The audit is used to evaluate the design, execution, and effectiveness of the organization’s ethical objectives, programs, and activities.

Upholding the Ethics Program

There needs to be complete buy-in for an ethics program to be successful. Managers must uphold the ethics program by adhering to it themselves and holding all of their employees to the same standards. Managers are also responsible for ensuring that employees have all of the necessary resources to be successful and that they are adequately trained in any new policies or procedures.


Making Ethical Decisions in Business

Making Ethical Decisions in Business

In business, it is essential that you always strive to make ethical decisions. You need to understand ethical dilemmas and the ethical decision-making process. People use different ethical standards to interpret the world around them. To get the best results, you need to put the different approaches together and choose the solution that is the best fit.

Ethical Standards

  • Utilitarian Approach: Focuses on the consequences of actions and the goal is to do more good than harm in a situation.
  • Rights Approach: Focuses on the rights of all involved and makes respecting the rights of others a moral obligation.
  • Fairness Approach: Focus is on treating everyone fairly using standards to determine actions that are unequal.
  • Common Good Approach: System and laws are created to ensure the welfare of everyone.
  • Virtue Approach: Uses virtues such as honesty, compassion, love, patience, and courage to guide behavior.

Balancing Personal and Organizational Ethics

Ethical behavior is important both on a personal and organizational level. Your personal ethics influences your decision-making both inside and outside work. While personal ethics is based on personal beliefs and values, organizational ethics determine workplace decisions. It is essential that companies have ethical standards in place. Leadership needs to promote ethical decisions by example as organizational ethics flows from the top down. There may be occasions that personal and professional ethics collide. When that happens, it is crucial to make a decision that will do the most good for all the parties involved.

Common Ethical Dilemmas

Although there are many different ethical dilemmas in business that are specific to industries, there are some common ethical dilemmas that most organizations will face.

  • Honest accounting practices
  • Responsibility for mistakes such as accidents, spills, and faulty product
  • Advertising that is honest and not misleading
  • Collusion with competitors
  • Labor issues
  • Bribes and corporate espionage

Steps to Making Ethical Decisions

  1. Determine the ethics of a situation: Does the decision affect a group or have legal ramifications?
  2. Gather Information: Learn as much as possible about the situation, and get the point of view from all parties involved.
  3. Evaluate Actions: Make different decisions based on the different ethical standards.
  4. Test Decisions: Would you be proud of this decision if it were advertised?
  5. Implement: Implement the decision, and evaluate the results.

How to Overcome Obstacles to Ethical Decisions

  1. Sympathize: Do not attack unethical people. Sympathize with their situation, but refuse to compromise your standards.
  2. Make them responsible: Do not quibble. Directly ask people if they want you to do something illegal or unethical. This removes their plausible deniability.
  3. Reason: Provide them with logical reasons for your refusal to compromise your integrity.
  4. Stay firm: Make a decision and stick to it. Do not let people wear you down.
  5. Take precautions: Keep a paper trail of your encounters, and be prepared to defend yourself.