Ethics In Business
Ethics is the study of moral obligation or separating right from wrong. It is important for managers to practice good business ethics as a way of enhancing corporate image and business survival.
Ethical behaviours uplin the organisations internal and external image, while unethical behaviours put a stigma on the organisation. For instance, the issue of bribery has so much stigmatise government operations in many African countries to the extent that they are gradually becoming pariah nations. The reality of ethics in business is that, almost all businesses get involved in unethical behaviours.
The degree or level at which such unethical behaviours affect our business dictates its acceptance or non-acceptance. For instance, it is unethical for an organisation to “steal” skilled labour from other organisntions with attractive pays. However, this behaviour is tolerated because the losing organisation could get a replacement it could afford in the labour market. But, it is totally unethical for a company to organise arson for its competitors in order to monopolise the market
The Need For Ethical Behaviour
Business ethics is of paramount importance to business success. Because of this, we to know what factors would inform ethical decisions. To successfully decide between right and wrong, the manager would need to focus on the following?
1. Consequences of his behaviours:
2. Duties, obligations and principles:
3. Integrity
When a trader thinks of ethics in business, he could consider the consequence of his action on his customer. It is common knowledge that traders selling auto parts sell both fake and genuine replacement parts. The trader knows for sure that to sell fake parts is unethical.
Since he sells such parts in place of the genuine one and at the same price, it is to his own business advantage. But before he sells such goods, he has to consider the consequence of the reaction of a customer who would discover his tricks. Such a customer could expose him and portray him as a dubious trader to other people.
The consequence could be negative. A trader could also make ethical decisions by having a second look at his duties and obligations to his customers. The trader has the duty of protecting his customer from incurring losses by buying fake products, The customer that buys fake replacement spare parts will be wasting part of his scarce resources. He may gradually be unable to maintain his vehicle and thus, the trader’s customers would be dwindling.
Another factor for determining ethics of behaviour focuses on the character of the person involved in the decision or action. A trader’s personal integrity matters. If the trade has good character, genuine motivation and intentions, he is said to be behaving ethically. (The society makes a man what he is).
The trader who does not care for the customer and the quality of goods he displays is behaving in reaction to tile society that makes him. For instance a society where people in government engage in kick-backs and over-invoicing without reprimands will lead the traders to develop exploitative tendencies, Some factors would contribute to unethical behaviours. These include:-
Individuals greed. The trader wants to maximise gain at the expense of his customers. He therefore raises prices without considerations for the consumers.
If the organisations work environment condones unethical behaviour. For instance, if managers steal or defraud the company unquestioned, the workers are bound to follow the example of the managers.
Moral decadence: In a country where people in authority are brazenly corrupt, businessmen would also exploit their customers unquestioned. The leadership shows the fellowship what to do.
How to Make Ethical Decisions
Managers, like every other human being are different from each other. There is individual differences in all we do as a result of our soci-cultural up bringing. Because of this, there is need for managers to examine and improve on their ethical decision making. The Centre for Business Ethics at Bentley College recommends the following self examination questions for improved ethical decisions making
Is what I’m I doing right?
Am I fair on others?
Who gets hurt or negatively affected?
How do I feel if my action is publicised?
Can I encourage my children to do just what I do?
What feelings do I have about this type of behaviour?
The Rotary Club of Nigeria also adopts the four-way test of the Rotary International to guide peoples behaviour
Is if the truth?
Is it fair to all concerned?
Will it build goodwill and better friendship?
Will it he beneficial to all concerned?
When all these questions are asked and answered in good faith, managers will be building good ethics and moral uprightness.
Social Responsibility
Social responsibility is the idea that firms have obligations to society beyond their obligations to owners or stockholders and also beyond those prescribed by law or contract. Ethics and social responsibility relate to the goodness or morality of organisations.
Business ethics is however a narrower concept that applies to the morality of an individuals decisions and behaviours Social responsibility is a broader concept that relates to an organisation’s impact on society, beyond doing what is ethical.
The concept of social responsibility assumes that it is the duty of organisation to serve the larger society. It should participate responsibly in improving the quality of life of the society by adopting the highest standard of ethical, just and fair conduct.
Corporate social performance is the extent to which a company reacts to the demands of its stakeholders for behaving in a socially responsible manner. Stake holders include the owners of the business, stockholders, employees and Board of Directors. Others are customers, suppliers, creditors. Labour unions, competitors, etc.
After the stakeholders have been satisfied with the reporting of financial information, they may turn their attention to the behaviour of the organisation as a good citizen in the community. They want to know how socially responsible the company had been.
Types of Social Responsibility
The organisation could therefore show responsibility in many ways:
(a) Creating job opportunities
By creating job for a diverse workforce is an important social responsibility initiative. A company that employs different categories of workers, e.g. handicapped, able-bodied men, the outcasts, ex-convicts, etc. is socially responsible. By creating job opportunities the company is helping to reduce social problems in the society.
(b) Community Development Projects
Rebuilding communities is part of social responsibility. Companies could provide social amenities like good roads, electricity, pipe-borne water, educational institutions, etc. All these would go a long way to alleviate societal problems.
In a situation where a company caters for only its workers within an impoverished community, there is bound to be agitation and restiveness. This is what is happening in the oil rich States of Nigeria where the foreign oil companies have totally neglected the communities to their poverty, while the companies live in affluence.
(c) Care for the disabled
Another type of social responsibility is care for the disabled and the aged. Companies could run disabled and old peoples home at no or little cost to the community.
(d) Leave of absence for community work
Companies could also assist in community development by giving public spirited workers time-off to do some community work.
Benefits Derivable From Ethics and Social Responsibilities
There are many advantages companies could gain in high ethical behaviour and social responsibility. These are:
(i) Increased patronage
A company that truthfully educate its customers and supports the peoples social demands will enjoy a lot of good will. The image carved for itself will increase the number of its customers as its activities will serve as corporate advertisements.
(ii) Government support
By engaging in community Development Projects, the company is likely reducing the financial burden of the government. As a recognition of such activity, government could do business with such a company. Government could buy the company products in large quantity. The company could equally be granted tax-relief and even preferential treatment in the, implementation of government policies.
(iii) Recognition and Respect
The company will enjoy widespread recognition and respect by being socially responsible. It is a sort of image making and good public relations. This could lead to increase sales since more customers would be attracted because of the ‘good work’ the company is doing.
How to Create an Ethically and Socially Responsible Work Attitude
Not a matter of luck or chance to establish an ethically and socially possible workforce. It is the management of an enterprise that dictates this. Therefore, the management would have developed strategies to encourage workers imbibe such attitudes. The following initiatives would need be taken by management.
(1) Setting up ethics committee
The management, having made policies towards ensuring good ethics, will need to set lip a monitoring committee to ensure strict compliance. The Committee will review complaints about ethical violations which may include sexual harassment by managers, infringement on individuals rights, etc.
(II) Organise training programmes
The company will need to train workers about ethics and social responsibility. The training will positively reinforce the idea that ethically and socially responsible behaviour is morally right, and good for business.
(III) Developing Codes of Conduct
Codes of Conduct and behaviour patterns could be systematised for all organisational workers. They are mandatorily encouraged to comply with such codes. Violator are disciplined.
(IV) Encourage Complaints
Every worker should be encouraged to complain loud of unethical behaviours by another worker, whatever may be his placement in the organisation. This, will go a long way to checking deviations.
(V) Leadership by Example
Doing it the right way by top managers will motivate other workers to doing it well.