BUSINESS ETHICS

 ETHICS: moral principles by which people conduct themselves personally, socially, or professionally
 BUSINESS ETHICS: rules based on moral principles about how businesses and employees ought to conduct themselves
o Different cultures, businesses, and industries have different ethical standards.
Ex. In Thailand, it is customary to exchange gifts during a second business meeting.
In China, gift giving is considered a form of bribery and is illegal.
 Code of Ethics: a set of guidelines for maintaining ethics in the workplace
Ex. Sweatshops: Shops or factories where workers are employed for long hours at low wages and under unhealthy
conditions.
 Many actions make up unethical business practices…
These Include: a. Lying b. Offering merchandise known to be substandard c. Treating customers or employees unfairly
 If a business violates government regulations, the owner can be fined or go to jail.
Example: Selling Products in Cuba
 If an employee violates a company or professional code, the employee might be fired or lose his or her license.
Example: A Doctor or Lawyer abusing their power

Violating of Ethical Code

 Violating ethical codes of conduct can have many unwanted consequences.
o These Include: If a business violates government regulations, the owner can be fined or go to jail.
 Example: Selling Products in Cuba
o If an employee violates a company or professional code, the employee might be fired or lose his or her license.
 Example: A Doctor or Lawyer abusing their power
o More unwanted consequences. Unethical business practices can result in bad word of mouth and result in lost sales.
 Example: Fair Trade Coffee
o Unethical behavior toward employees can lead to legal action or a high rate of employees quitting.
 Example: Poor Treatment/Unfair Pay/Abuse
- Major ethical questions that are generally not illegal –
 Conflict of Interest: A conflict between self-interest and a professional obligation.
 Examples: Hiring a friend over somebody more qualified
Abusing work privileges for personal gain, just because you can.
- Anything that is NOT ACTING IN THE BEST INTEREST OF THE COMPANY
When you encounter an ethical decision and must choose a course of action ask yourself 3 questions…
1. Is it against the law? Does it violate company or professional policies?
2. Even if everyone is doing it, how would I feel if someone did this to me?
3. Am I sacrificing long-term benefits for short-term gains?
STEPS TO SOLVE ETHICAL PROBLEMS
1. Identify the ethical dilemma.
2. Discover alternative actions.
3. Decide who might be affected
4. List the probable effects of the alternatives.
5. Select the best alternative.

 Social Responsibility: the duty to do what is best for the good of society
- Social responsibility of business takes into consideration all that business does or does not do to solve the problems of society.
Who are companies actually being responsible to?
a. Responsibility to customers - Businesses should offer a good, safe product or service at a reasonable price.
i. EXAMPLE: The FDA (Food & Drug Admin.) is a gov’t agency that protects consumers from dangerous or
falsely advertised products.
ii. Fair competition among businesses is necessary for the marketplace to operate effectively.
iii. When companies conspire to restrict competition, consumers are affected.
b. Responsibility to employees - Businesses can show responsibility to employees in various ways:
i. Providing work experience for people with limited job skills
ii. Volunteerism
iii. Providing safe working conditions
iv. Equal treatment
v. Fair pay
c. Responsibility to society- The EPA enforces rules that protect the environment and control pollution.
d. Responsibility to creditors and owners - Sarbannes-Oxley makes the CEO of a business more accountable for the actions of
the financial managers of a firm.

Core principles of fairness, accountability and transparency

 Notions of accountability, fairness and transparency
o Business leadership affects the moral capability and performance of organizations
o Business leaders influence the scope and character of formal ethic programs and the integration of ethics into everyday
organizational life.
 Accountability - to be accountable is to be liable to explain or justify one’s actions and decisions, Process of explanation and justification,
accountability implies responsibility: it is reasonable only to hold people to account for those things for which they are responsible
 FAIRNESS - quality of making judgments that are free from discrimination.
Ex. Judges, umpires and teachers should strive to practice fairness
- In business organization, it involves balancing the interests involving in all decision making including any decisions related to
HIRING, FIRING, COMPENSATION and REWARDS SYSTEM
 Transparency - publicly share information about their company — information that has traditionally been kept private and lack of hidden
agendas or conditions, accompanied by the availability of full information required for collaboration, cooperation, and collective decision
making
Ex. Diversity and inclusion data, Growth and performance, Pricing breakdowns, Internal processes, Hiring practices, Revenue
Four key benefits of transparency in business
1. Transparency breeds trust- Transparency breeds trust, and trust is the foundation of great teamwork. If all the information about
everything that’s going on is freely available, that helps everyone to feel completely on board with decisions.
2. Transparency helps with innovation as a company grows
If you want people to make the same decisions that you would make, but in a more scalable way, you have to give them the
same information you have.– Keith Rabois
3. Transparency leads to greater justice- eliminating unfairness and inequality.
4. You open yourself up to more feedback

 Technical Skills
– encompass the ability to apply specialized knowledge or expertise
- when you think of the skills of professionals such as civil engineers or surgeons, you typically focus on the technical skills they have
learned through extensive formal education.
- PROFESSIONALS DO NOT HAVE A MONOPOLY ON TECHNICAL SKILLS, AND NOT ALL TECHNICAL SKILLS HAVE TO BE LEARNED IN SCHOOLS
OR OTHER FORMAL TRAININGS.
 Human Skills
- ability to understand, communicate with, motivate and support other people
- many people are TECHNICALLY proficient but POOR LISTENERS, UNABLE TO UNDERSTAND THE NEEDS OF OTHERS & WEAK IN
MANAGING CONFLICTS.
 Conceptual Skills
- ar e the skills and the mental ability that managers must have to analyze and diagnose complex situations
- decision making: requires managers to identify problems, develop alternative solutions to correct those problems, evaluate those
solutions, select the best one. After they selected the course of action, then execute it.