Business Ethics

Business Ethics

It seems that every week we hear about another company that attempts to defraud its customers or employees. The recent Bernie Madoff scandal, real estate scams, insider trading, betrayals of confidentiality, telemarketing and ads that prey upon the fears of the elderly and other business ethics violations are common occurrences. Ethical violations usually result from conflicts between doing what is best for you and what’s best for others.
Business ethics cannot be separated from personal ethics. Many people try to make a convenient distinction between what is allowed in business and what it means to be ethical in their private lives. What is considered duplicity in a person’s private life is often called shrewdness in business. However, a clever falsehood that makes one financially prosperous is still a lie. Moral weakness takes possession of people (and businesses) by slow and imperceptible degrees. The effects of being unethical are much the same for businesses and individuals. Unethical behavior threatens the bonds of community that allow people to live and work together and so adversely affects us all, both businesses and individuals.
Here are some ways that unethical behavior adversely affects individuals and businesses:
First, unethical behavior creates a lack of trust towards anyone who develops a reputation for it. Conversely, if a person (or business) has the reputation of being fair and upright in all dealings, they will possess the confidence of all who come in contact with them. Companies and individuals are both affected in this way. Would you invest your money with Bernie Madoff’s company?
Second, a sense of self-respect, based upon good character, is important to both individuals and businesses. If your reputation is grounded in deception, your opinion of yourself (or your company) will be poor. Self-respect is nearly impossible if one is constantly worrying about being caught in a lie. Both individuals and businesses possess character. Character is formed by a course of actions, by many little acts and decisions over time. A person (or a business) should have a determination to form its own character, after the pattern of its own ideals and ethical values. No one should allow their character to be determined solely by the circumstances of the marketplace, or their job description.
A third, and very important, factor to consider are the legal problems that companies and individuals might experience when they violate ethical standards. Lying in a court of law, insider trading, falsifying documents and many other examples of business ethics violations are also violations of the law. Even if honesty does not appeal to you based upon the good that it does for your reputation and character, it is still a good policy to be honest, if only because breaking the law could mean legal trouble for you.
My solution to navigating the ethical conflicts between doing what is best for you and what is best for others is to apply certain tests to all decisions that you make, both in business and your private life.
First, ask yourself if you think the decision would be fair if your role was reversed with that of the other party and the situation were similar otherwise. What’s good for the other person should also be good for you.
Second, ask yourself if you are being honest. Are you exaggerating? Exaggeration is a form of falsehood. Are you omitting any relevant information? It is always better to admit shortcomings before they are discovered by the other party and so be able to present them in the best possible light.
Third, are you making or implying any promises that might not be kept? Most people know that guarantees should be in writing. However, none should be implied where they don’t exist. Always tell the truth about your company and yourself. The buyer should not have to beware.
Both in personal and business situations, these three tests (at a minimum) should be applied before making any decision. Ralph Waldo Emerson said, “Nothing astonishes men so much as common sense and plain dealing.” Good business ethics are built on good personal ethics and are the key to profitable, long-term relationships.