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Business ethics, also referred to as corporate ethics in large organizations, is a set of principles that deal with ethical and morality problems that may arise in a business environment. Business ethics applies to all elements of business activities and is important to the conduct of individuals and the whole organization.
It has both practical and descriptive parameters. However, as a business and career specialization, the field is largely practical. Descriptive methods are only used by academicians in an attempt to further understand business ethics’ application to corporate activities.
Business ethics entails a number of activities. Legal compliance, empirical studies into the ethical beliefs and mind-sets of business persons, a series of best practice claims, argument for or against compulsory staff involvement in management, and attempts at employing long-established ethical theories, theories of justice, or theories of the state are all advanced applications of business ethics (Pearce & Robinson, 2011).
Core Areas of Business Ethics
When talking about business ethics, business persons normally refer to one of the following: avoid breaking criminal laws while conducting business, avoid activities that may lead to legal action against the company, and avoid activities that may corrode the business’ image. In reality, business ethics encompasses various aspects or business management as stated below.
Basically, finance is a field of social science and embodies disciplines such as behavioral economics, sociology, accounting and management. It is frequently assumed to be free of ethical concerns. This is not the case, for instance, during the recent global financial recession, the ethics of company executives came under the spotlight after they awarded themselves huge bonuses with the funds that were supplied by the government as part of the economic stimulus package (Anand and Rosen, 2008).
Other financial ethical issues include trading practices, trading conditions, sales practices, tax returns, and audit activities. Corporate financial activities that contravene business ethics principles include insider trading, deceptive financial analyses, bribery, and facilitation payments. Real world cases include Enron, Lehman Brothers, and WorldCom.
Human resource practices occupy the centre of new staff recruitment, orientation, performance appraisal, training and development, health and safety concerns. HRM ethics is a source problem of numerous problems in corporations, and may be the solution to even more.
Ethical issues in HR practices include fairness in recruitment practices, various forms of discrimination, improvement of occupational safety and health, representation of an organization’s staff and the democratization of the workplace such as the formation of unions and strike or protest rights, privacy of employees such as workplace surveillance and drug testing, fairness of job contracts and the balance of power between the management and employees.
Larger economic issues that relate directly to HR ethical concerns include immigration, trade policy, and trade unionism. Employees should not just consider employees as an asset, rather, employees should be involved in decision making processes and be treated in a humane manner. Studies show a humanely treated and satisfied staff ensures sustainable organizational success.
Sales and Marketing
Ethics in sales and marketing concerns the principles, values and standards by which marketers should act. Marketing ethics mainly touches on the conflict between profitability and other organizational concerns.
Ethical marketing includes sale of harmful or dangerous products and services, transparency on environmental effects of products and product ingredients, probable health and financial risks and so on, value for consumer privacy and independence, accuracy or genuineness of advertising activities, and fair pricing activities (Velasquez, 2011).
Marketing concerns include activities such as price fixing, hoarding, price discrimination, promotional activities such as spam, viral marketing, and pyramid schemes, and advertising malpractices such as attack ads and sex in advertising. Business ethics also touches on production. These concerns include the environmental impacts of production methods and the health concerns to users.
Business ethics is very important towards the success of any business. Failure to comply to ethical standards frequently leads to hefty fines or loss of company image. However, such fines are normally nothing when compared to these organizations’ profit margins, therefore, it all comes down to the general public to ensure that a corporation adheres to the appropriate business ethics.
Anand, V., and Rosen, C. C. (2008). The Ethics of Organizational Secrets. Journal of Management Inquiry 17 (2): 97.
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Pearce, J. A., & Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control. (12th ed.). Boston: McGraw-Hill/Irwin.
Velasquez, M. G. (2011). Business Ethics: Concepts and Cases. Victoria, BC: Pearson College