There is rarely a person who does not face an ethical or moral dilemma at some point in their business life. Whether that individual is the owner of a multinational corporation, a small business owner, or a new or established employee, it is likely that everyone will have to face such an instance eventually. Much like a personal ethical dilemma, an individual is faced with making a decision based on how it will affect not only him, but the organization as a whole. One of the main problems when dealing with an ethical dilemma in business is that people are often swayed by business profit and the legality of a decision.
The Institute for Business Ethics, whose motto is “doing business ethically makes better business,” describes the term business ethics as such.
Business ethics is the application of ethical values to business behavior. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements of a company and is therefore discretionary. Business ethics applies to the conduct of individuals and the conduct of the organization as a whole. It’s about how a company does its business, how it behaves intrinsically.
As clear as this definition is, it is certainly open to interpretation. Therefore, it must be understood that the application of business ethics to any situation is entirely subjective.
Business ethics, and ethics of any kind, can also be understood as applying a sense of justice to a situation. Even with a sense of clarity applied to the use of business ethics, reaching a fair and moral decision can be a complex process for most people. The topic of business ethics has been a source of much debate in recent years, as the heads of major (and minor) corporations reveal themselves to be less than ethical both in the way they do business and in their personal conduct. . However, it can be said that any individual who does not practice business ethics cannot be personally ethical, although the converse is not true either. Ethics in general has a long history of applications. Centuries ago, a man’s ethical practices defined who he was as an individual. However, as the population grew, the need to incorporate best business practices into a company became less important because there was always another customer around the corner and a business owner was rarely the center of attention in a community the way he or she. it may have been in the past. The management of a company sat in the background and hired representatives to deal with any consequences. Ethics depends on several factors, one of the most important is culture. Again, like the businessperson of the past, a culture’s ethical practices will depend largely on the value placed on them. Business ethics has the unattractive conflict of often being contrary to what is legal. Often what is “right” is not necessarily what is legal, and a company must consider this conflict when making ethical judgments. Although there are many in the business world who believe that a company has no room for ethics if it is to operate competitively, the number of corporate whistleblowers indicates that there is still room for ethics in business.
Western societies place a lot of emphasis on success. However, in business, there are often conflicts between ethical behavior and business success. This disparity is often multiplied for a small business owner. To compete with larger companies, it can be tempting to abandon ethics just to make a proper profit. In addition, the small businessman is relatively autonomous in his decision-making; he or she does not have to answer to a large employee base or a corporate board of directors. It is also interesting to note that the small business leader often makes her decisions impact a greater number of people than the small business employee. For example, a small business owner may have her decision affect her customer base as well as her employee base. The employee is likely to discover that her decision will only directly affect her immediate circle of coworkers. However, the pressure to succeed is both internal and external pressure, and often leads people to make ethical decisions that are based more on those pressures than on their own moral judgment. As consumers mistrust those they do business with, one must understand that there is a just reason for such mistrust. The cynical American consumer has learned, often the hard way, that there is little room for ethics in business. In a society where the customer used to be king, most of the time the consumer has experienced various unpleasant experiences with companies large and small.
Some experts argue that any focus on profitability is bound to test the limits of ethical practices. They claim that assuming that a company’s primary function is to serve its customer base ethically is idealistic, and that the nature of a free economy dictates that ethics should take a backseat to increasing profits. Although it is rarely the conscious intention of a company to harm the public interest, reality dictates that the ability of companies to increase profits will determine their success. Public companies experience additional pressure in this area. It is difficult to attract investors to a company based on its ethics. Investors are looking for a return on their investment and ethical performance does not equal dollars. There are economists who claim that, in any competitive economy, ethics are impossible to maintain; that a company can legitimately evade ethics with the excuse that unethical practices are the only way to make a profit.
Unlike larger corporations, the small business leader is in a unique position to shape the ethical practices of his or her business. Small businesses have a smaller employee base to police when enforcing ethical policies than larger companies. It is important to understand that, like the ethical dilemmas of large corporations, although an individual surely knows the difference between the right ethical decision and the wrong path, the choice to throw ethics to the wind is often made because the unethical choice it is more profitable. However, this may happen much less frequently in smaller organizations because the person or people who are harmed by the unethical decision, and someone is always harmed, are more visible to the small business. Large corporations and their decision-making machines are often far removed from the people affected by their immoral and/or unethical decisions. This can make the wrong decision much easier to make.
The unique position that the small business owner finds himself in regarding the formation of an ethics policy places great responsibility on him. A proactive business leader formulates a statement of organizational values that the company’s employees are expected to embrace, at least while in service to the company. An organizational ethics policy is an announcement to employees, the customer base and the community as a whole that the company is prepared to conduct itself and carry out its practices at an ethical level. Such statements invite the respect of all parties involved in doing business with said entity. However, it is imperative that the small business owner does not make the same mistake that larger organizations often make; The ethical policies that a company develops should not be in conflict with the organizational goals. It is unethical in itself to develop an ethics policy that an employee cannot follow and keep their job. When faced with the choice between an ethical decision and her job, an employee will almost always choose the job.
Therefore, the policy must be reasonably aligned with the organizational objectives of the business. It is just as important, if not more so, that the small business leader lead by example. Employees, especially in a smaller organization, are less likely to behave ethically if they are given implicit permission not to do so. The end result of such a practice is that the small business owner can be sure that he or she is conducting business in a manner that builds the trust of their customers, as well as their employees. And since consumers have become very wary of doing business with an entity they feel they cannot trust, the small business can enjoy the benefits of a loyal customer base. A small business owner has an advantage over larger corporations in that they can earn consumer trust by applying ethical business practices that give the customer the feeling of an equal business relationship rather than one on that the consumer buys based solely on need. There are many who believe that such practices are capable of moving business away from large corporate entities and back to a customer-centric business format.