ETHICS

Ethics in business
• Ethical business practices deal with doing what is right, moral and just in
practices.  Ethics depends on the individual perception of issues.

 Companies can develop ethical codes of conduct and communicate these practices
throughout the organization. There should be management commitment in
implementing ethical codes and new employees should be oriented towards the
process.

 Ethical issues in the organization can impact the corporate brand of an

organization. Business ethics provide guidelines for the organization's
interactions with internal and external stakeholder groups. The concept of
business ethics seeks to create a workplace that sees respect as a core value.
Moreover, it can foster a positive work environment.
CONTINUATION
• Some activities may be unethical but not illegal e.g. testing products on
animals. The choice of managers or workers to behave unethically can result in
illegal behaviours.

• Unethical activities include: misleading or advertisements with false claims;

improper disposal of waste; using expired or poor quality raw materials; taking
bribes in the tendering process; colluding to prevent competition; poaching
workers from other companies; not following clear policy guidelines; improper
handling of equipment; working in unsanitary conditions.

• Illegal activities are for example insider trading; money laundering, tax
evasion, not paying the minimum wage.
Legal Issues
• The obligation of the business to abide by the laws governing the work place such
as, occupational safety and health; employment laws; discrimination; equal
opportunities; minimum wages; payment of taxes; statutory deductions such as
deducting and remitting income taxes and national insurance payments;

• Registering the business to secure its name and to ensure the validity of the
business to help secure funding. In Trinidad and Tobago for instance: all sole
proprietors, partnerships and limited liability companies must reserve a business
name; Limited liability companies has to file articles of association; Businesses
may also seek to protect ideas and products by applying for trademarks, patents
or copyrights. (ttconnect.gov.tt) In Barbados , in establishing a business steps
include incorporation and registration with corporate affairs and Intellectual
property office. (gov.bb)
Ethical and Legal Principles that should be adopted in
the establishment and operation of a business
 The organization must know what it wants in establishing a 'culture of ethics'; adopt a code of ethics;
 Establish a climate that seeks to reinforce the core values such as respect, fairness, trust
worthiness, good citizenship that emphasize ethical conduct. This can be done by establishing a system of
incentives.

 The organization must put in place selection criteria aimed at pinpointing candidates who can fit into
the ethical environment of the organization;

 Ensure that training programmes, performance appraisals, coaching, mentoring, dismissal and discipline
programmes reflect and reinforce the desired ethical behaviours;

 Develop appropriate consequences and rewards to reflect ethical and legal compliance e.g. through the
dismissal and discipline procedures and rewards and incentive programme e.g. rewards for OSHA compliance;

 Create a physical environment to reflect what the organization stands for;  Management must reflect
what it expects from stakeholders;

 Develop and implement policies for environmental sustainability e.g. proper disposal of waste,
recycling, reducing use of non-biodegradable materials;
DEVELOPING A CODE OF ETHICS
• A code of ethics is a company document that communicates the organization's
values and shows the commitment to standards and benchmarks. The Sarbanes-Oxley
Act (2002), in response to business scandals, mandates a stricter code of conduct
with respect to corporate governance and financial controls. The code of ethics
is viewed as the standards that are 'reasonably necessary to promote' for
example; honest and ethical conduct,' 'full, fair, accurate, timely and
understandable disclosure in the periodic reports,' and 'compliance with
applicable governmental rules and regulations.'
• The code of ethics is also seen as guidelines governing the day to day decision
making processes. It brings clarity to what is expected within the scope of
organizational values and policies. It brings alignment of the organization's
vision, mission and values with standards /benchmarks of 'professional conduct’.

• A 'compliance code' forms part of the code of ethics whereby the organization
meets all legal requirements.

• The principles to be respected by all internal and external stakeholders in the

code of Ethics are for example:

• Observe the laws and regulations so that conduct of business activities will be
compliant with laws;
• Ensure integrity of conduct e.g. free and fair competition, honest relationships
with stakeholders;

• Avoid discrimination based on sex, sexual orientation, age, race, nationality,

religion, political opinion in dealing with stakeholders; recruitment and selection
and other personnel processes;

• Avoid the abuse of authority in the organization structure;

• Protection of occupational health and safety

• Protection of the environment  Prohibit unethical behaviours in the conduct of

business

• Ensure fairness and transparency in contracts and tendering process

• Promote fair competition

• Dealing with personnel: selection of personnel, establishing the employment
relationship, managing human resources, protection of workers, dissemination of
information on policies, training of human resources;

• Relationship with stakeholders e.g. dealing with customers with impartiality,

communication with customers, conduct of personnel towards customers; selection
of suppliers based on equal opportunities, loyalty, impartiality and based on
objective criteria of assessment; accounting to shareholders with transparency,
accuracy, in a timely manner according to company policy and legal requirements.

• Giving and accepting gifts to acquire advantages is prohibited;

• Organization can sponsor activities that benefit the community without conflict
of interest.
CONSEQUENCES OF ILLEGAL BUSINESS
ACTVITIES
• Unethical business practices can include: pilfering of company's property, dishonest
conduct in financial dealings, testing products on humans and animals, giving
kickbacks; using underhanded means to discredit a competitor; pollution; false
advertising; immoral behaviour based such as bullying, harassment; These behaviours
carry consequences such as:

• Impacting sales negatively as clients and customers stop buying products as they do
not want to be associated with an 'unethical business’;

• Can lead to a fall in share prices as investors lose confidence;

. Increase turnover of valued employees;  Affect the health and safety of customers;

• Workers can be dismissed;  Image of business can suffer  May be subject to

litigation in the courts

• Endangering users
• Illegal business practices would include: tax evasion; money laundering, failure
to comply with financial obligations, bribery: These behaviours carry
consequences such as:  'summary conviction or on conviction on indictment to the
penalty prescribed' (Part VII Offences and Penalties (42 and 43): The Financial
Obligations Regulations, 2010)  cheating the government of income  distorting
the GDP figures in the economy  enacting new legislation to prevent illegal
actions by business