September 27, 2005

Best Business Practices: Ethics

Today's theme is "Business Ethics"

The study of ethics helps us study the goodness in human action or the good life. As a "normative" field of study, it helps us study how we "ought" to act. Applying this to business, we find that ethics helps decipher the ethical and unethical decisions business make everyday. Interestingly, the decisions made by business affect not only themselves, but employees, customers, prospects, and the community. So establishing moral standards for a company, and even on an individual basis, is essential for leading the good life or in this case a good business.

What are Moral Standards?
  1. Moral standards concern behavior that is of serious consequence to human welfare, that can profoundly injure or benefit people
  2. Moral standards take priority over other standards, including self interest
  3. The soundness of moral standards depends on the adequecy of the reasons that support or justify them
Establishing a "Code for Moral Standards" is a great way to keep a business and all of its compenents working towards a common goal. Integrating the standards on both a company-wide and invidual basis will ensure success, maybe not immediately, but in the long run.

In addition, I would like to introduce the ...
Eight Rules for Ethical Thinking in Business:
  • Rule Number 1: Consider other people's well-being, including the well-being of nonparticipants
    • Make contributions where it is reasonable to do so and avoid consequences that are harmful to others
  • Rule Number 2: Think as a member of the buisness community and not as an isolated individual
    • Respect for contracts, paying one's debts, and selling decent products at a resonable price are not only to one's own advantage; they are necessary for the very existence of the business community (leading a good life, good business, and good community)
  • Rule Number 3: Obey, but do not depend solely on the law
    • Business and business people ought to obey the law. But what needs to be added is that ethical thinking is not limited to legal obedience. "Law is the floor of moral conduct."
  • Rule Number 4: Think of yourself--and your company--as part of society
    • Business people and businesses are citizens in society. It exists and thrives because it services and does not harm society. Thus, business is subject to the same ethical rules as everyone else.
  • Rule Number 5: Obey moral rules
    • This is the most obvious and unavoidable rule of ethical thinking. Moral rules are the heart of ethics, and there can be no ethics--and no business--without them.
  • Rule Number 6: Think objectively
    • The rules apply equally to everyone, and being able to be "disinterested"--to think for a moment from other people's perspective--is essential. Why? b/c business affects everyone (from employees to innocent bystanders)
  • Rule Number 7: Ask the question "What sort of person would do such a thing?"
    • Our word "ethics" comes from the Greek word "ethos" meaning "character." Accordingly, ethics is not just obedience to rules so much as it is concern for your personal (and company) character--your reputation and good name. Business ethics is "being able to look at your face in the mirror in the morning."
  • Rule Number 8: Respect the customs of others, but not at the expense of your own ethics
    • In general, one should follow the customers and ethics of the community. But depending on the severity and moral standard, one should look to their own moral principles to take priority.

Business ethics is also being able to practice the...
"The Three C's of Business Ethics"
  1. Compliance: the need for compliance with the rules, including the laws of land, the principles of morality, the customers and expectations of the community, the policies of the company, and such general concers as fairness
  2. Contributions: the contributions of business can make to society, through the value and quality of one's products or services, by way of the jobs one provides for workers, through prosperity, and uselfulness of one's activities to the surrounding community
  3. Consequences: the consequences of business activity, both inside and oustide the company, both intended and unintended, including the reputation of one's own company and industry

What have I learned? Thinking ethically...
  • is essential in creating a strategic plan
  • helps create products/services that satisfy the needs of customers without hurting the surrounding community
  • builds long term relationships with customers, which will lead to repeat business
  • requires the consideration for the well-being of others and respect for oneself and one's character (individually and as a whole business)
Just remember... unethical thinking isn't just "bad business;" it is an invitation to disaster in business! There is nothing unethical about making money, but money is not the currency of ethical thinking in business.

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