Ethics – A ‘feel good’ Word?

Recently an acquaintance of mine spoke to me about ethics. It has become something of a style-statement for the pop culture.

But where do ethics come from? Is there a clear demarcation? Well I don’t know. I am no expert and incase you landed here looking for some professional advice you should probably pick up a heavy tome by one of the ‘industry expert’.

Anyway, although I am not against codes of ethics, I am not impressed with “codes of ethics” either. It basically means that we don’t need to actually understand ethics because someone will tell us what to think.

What would be great is to have “philosopher kings”. I am not talking about a dictator. I am merely saying that the more powerful a person is, the more ethical we want them to be. We want those in power to truly be ethical, not just have a code of ethics, which probably will have loopholes. CEOs/CXOs seem to have no ethical requirements whatsoever. In fact, corporations might actually be promoting those with few or no scruples in bending borders by what has been happening around.

The real question is: How can we live in a society where truly unethical people are rewarded and those in power tend to be the most unethical people? Is there a way to ensure that the most powerful or the most influential are ethical? A code of ethics seems to try to cover a symptom of a diseased society instead of trying to cure the society of the disease. The high-flying executives at Citigroup caved under pressure from President Obama and decided today to abandon plans for a luxurious new $50 million corporate jet from France. This decision did not spawn from their sense of business. Doing things out of compulsion unequivocally a failure because as soon as the need for compliance is done away with, people would resort to the ‘old’ practice. Inculcating these values right at the start of the career is necessary so that it becomes a way of life rather than compliance with corporate governance.

Business ethics are a big part of Corporate Governance. Business ethics set the standard for how your business is conducted. They define the value system of how you operate in the marketplace and within your business. With legal scandals concerning insider trading and employee theft making the news, it is no wonder that businesses are giving more attention to the ethical basis of their business and how to lead in an ethical way. While the examples above seem to be clear-cut breaches of ethics, many ethical dilemmas that are not so clear-cut are faced on a daily basis in business. In fact, there may not even be a “right” or “wrong” answer to the dilemma, but how you deal with it will says much about you and your business.

These decisions are often referred to as being in the “gray” area. They are not black-or-white, but could be argued appropriately either way.

Importance of Business Ethics in a company:

There are definite advantages to owning your own business when you want to establish an ethics policy. Basically ethics trickle from the top. Without setting an example at the top, it is often difficult, if not impossible, to convince your employees that they too should be ethical in their business dealings. A well-defined ethics policy along with an outline of related standards of conduct provides the framework for ethical, moral behavior within your company.

What is the benefit of developing such a policy, you may be wondering. The benefit is higher employee morale and commitment that in most cases leads to higher profits. But higher profits should not be your motivating factor in defining your ethics policy.

An ethics policy should look at the bigger picture of how we relate to society as a whole and what our responsibility is to the greater good. Of course, in these days of downsizing and increasing change, some may argue that these ideals are unrealistic. However, it is surprising that ethics have a direct correlation to long-term growth.

The bottom line is “What goes around, comes around”. If you treat your employees with disrespect and distrust, chances are they will do the same toward you. When you are developing your ethics policy, you must decide what it is you want your company to stand for, put it in writing and build consensus around it, enforcing would never work.

Ethics policy for your company

Consider 5 P’s

  • Before defining
    • Purpose
    • Pride
  • While implementing the ethics policy
    • Patience
    • Persistence
    • Perspective

Implications of not following ethical policy for your company

To give a live example for this, Satyam scandal raises serious questions about the business ethics. Ramalingam Raju (Chairman, Satyam), being a MBA from Ohio and a course in the Harvard Business School, how it is that people with such elite education are involved in such unethical conduct? I am not going to pass a judgment and thankfully it’s not for me to judge but it seems that the institutions have failed as far as inculcating these values are concerned. When a student of management goes out in the ‘big, bad world’ it’s upon him/her to ensure that they are able to skirt the loopholes however enticing they seem. An institution that is high on Business Ethics and Values that a friend talked a good deal about is SCMLD. Read about it’s USP.

Despite of having the above mentioned qualification, Raju wasn’t able to make his transition from the mode of governance suitable for a Small Entrepreneur, which he was before starting Satyam, to the kind needed to run a public limited company, where one deals with other people’s money.

As Edward Freeman, who suggested the stakeholder theory, says, “It’s not useful anymore to separate questions of business and questions of ethics.” An integrated way of thinking about business and ethics is via responsibility of action. That is, “businesses and executives are responsible for the effects of their action. They are responsible precisely to those groups and individuals that they can affect or be affected by…”

Importance of ethics for Small and Medium Enterprises

SMEs are characterized by informal understandings and shared expectations among the workforce of how business is done. Any values and ethical principles will usually be implicit rather than formally expressed through ethics policies, codes and programs that are familiar in large companies. The ethics of a small organization is typically influenced by the owner-manager or managing director. Through their very visible presence, their personal attitudes and behaviors will set the tone of the business and have the potential to signal to employees how seriously ethical behavior is to be taken in the organization. SMEs are not typically able to devote as many resources to building an ethical workplace culture as larger organizations.

As the case maybe since I am not an ‘expert’ on ethics, let alone business ethics, I am happy with the two-bit that I do.

You might still decide to live by the philosophy which says, ‘there is no right or wrong, there are things you do and things you don’t”… but while ethics don’t guarantee to speed you along your destination however as an Income Tax payment advertisement talks, it definitely gives you ‘peace of mind’…


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