UNIT 6_ THE CONCEPT OF ETHICS

The main aim of this unit is to introduce the concept of ethics in business. In
recent years, an organisation’s ethical stance has had an impact on determining its
reputation. The concept of business ethics initially began in the 1960s as
consumer opinion became more valued. It became increasingly apparent that
companies were not only expected to fulfil legal obligations but also to
demonstrate corporate responsibility in areas such as the environment and local
and social issues. An ongoing issue for modern business is to determine how to
retain a balance between ethics and competitive advantage.

Unethical conduct can take many forms but can be broadly categorised as
mistreatment of the workforce through low pay; poor working conditions or
safety violations; sweatshops and child labour; environmental issues, for example
engaging in business practices which have a negative impact on local communities,
wildlife or the land or using materials which have not been ethically sourced; lack
of transparency which might be through paying minimal tax, selling customer data
or being less than open about scientific or safety information. Once revealed, a
story spreads via the press, social media or through campaigns against an
organisation led by the public or interest groups. The resulting bad publicity can
create a backlash that dents the reputation of a previously respected company.

It can be diffcult to measure an organisation’s ethics. To this end, John

Elkington, founder of British company SustainAbility, introduced the phrase ‘the
triple bottom line’ in 1994. This involved a company preparing the traditional
bottom line, to measure profit and loss. In addition, there would be a bottom line of
the company’s ‘people account’ to measure how socially responsible the
organisation’s operations are and a ‘planet account’ to measure environmental
responsibility. The premise is that a company that produces
a triple bottom line can evaluate the full cost involved in doing business both in
financial and ethical terms.

Many organisations will have a code of ethics or ethical policy and will
include statements about their ethical stance on company websites. Social media can
often play a role in reporting when these policies or codes are broken and
reputations can quickly be damaged on a global scale.
 When problems occur, the main issue is often how well or badly a business
responds. A wise company acknowledges that mistakes have been made and takes
responsibility for their actions, often through issuing a press release to indicate how
this will be resolved and what measures will be taken to make sure that the issue is
not repeated in the future, such as making sure workers are paid a fair wage or using
materials from environment- friendly or politically acceptable sources. However,
some companies choose to focus efforts on discovering how the information was
leaked, tracking down whistleblowers or defending their position rather than
concentrating on how to make meaningful changes to how their operation is run.