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Running Head: Business Ethics

Business Ethics

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     Ethics are the rules or moral principles that individuals or group of individuals agree on and use as aspiration goals (Corey, Corey, & Callanan, 2003).  Businesses that enforce and abide clear ethical standards or ethical code of conduct create ethical working environment.  Business’s ethical working environment creates better reputation that brings more trust and profit from clients and dedication from employees.  Companies that operate unethically often are not successful in a long run, they gain negative reputation and distrust from the customers.

Business Ethics

     “Business ethics is a form of applied ethics that examines ethical rules and principles within a commercial context, the various moral or ethical problems that can arise in a business setting and any special duties or obligations that apply to persons who are engaged in commerce”.  Business world or the world of commerce is a competitive world.  Just like in sports, competition must have ethical rules that guide businesses.

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Businesses are created by people for people and operated by people.  Products and services that are produced by the organizations are for the customers.  People are involved in all aspects of business world.  Human factor must be counted when it comes to business world.  This is where business ethics plays a crucial role.  For example, telling the truth about the product or the deadline is an ethical dilemma in many businesses.  Ethics in Business world help create structures that are inviting for all members of the equation and encourage them to think globally about the future. It generates trust between all the members, grows good reputation, and strengthens interest in each other.  This in turn makes the business stronger and more productive.

Business ethics and employees

     Ethical environment at a business setting attracts better employees, supports “good will” of the employees which in turn raises the value of the business, promotes growth and development (Costa, 2006).  Employees in such environment are more creative and willing to make a difference to benefit the company. Vershoor (2006) explained, "According to the LRN study, 94% of employees said it is either critical or important that the company they work for is ethical.  Eighty two percent said that they would rather be paid less but work at a company that had ethical business practices than receive higher pay at a company with questionable ethics" (p. 21).  It is clear that ethics in business are important not only to the clients or customers but also to the employees of the companies.

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Business ethics and customers

     Ethical business performance attracts more customers. Customers would rather stay loyal to an ethical kind of organization, than to an organization that does not implement ethical practices.  It is because the customers know what to expect in return for what they pay.  Customers would rather stay with a business they can trust than a business with unreliable reputation.  Ethical approach pays off in a long term run with acquiring loyal customers.  For example, Welsch (2006), a business owner and an author of the article in the Air Conditioning Heating & Refrigeration News, explained that when service technician acts in the best interests of a customer, telling the truth and not overcharging for simple problem such as a turning “on” the switch of a thermostat, it develops a good trusting reputation that brings more customers.  Such clients are not afraid to refer their friends, neighbors, and families to use this company's services.  Welsch (2006) wrote: "I can tell you we have sold many systems to customers because we told them the thermostat was in the “off” position (or something similar), and when they really needed a system they remembered how we had treated them in a situation when a service technician acts in the best interests telling the truth about turned off thermostat instead of acting busy to run up a larger charge" (p.50).

Unethical example

     A friend of this writer works in an Information Technology (IT) department as a computer programmer, where it seems like the management focuses its attention only on accomplishing some ridiculous deadlines than quality of the product (Personal communication, 2006).  The management promises to the clients to deliver the product in an unrealistic timeframe.  By doing this, management creates a situation where employees are not satisfied with the working environment and customers are not satisfied with the products.  The applications that are done quickly, often have a lot of problems.  Therefore, frustrated clients have to come back again and again to fix the problems and make applications work as it supposed to work.  An audit of some applications that were quickly created to meet the deadlines showed that some of the applications were easier to rewrite than fix what needs to be fixed if there would be enough time allowed.    

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     The applications created are not of a good quality because programmers are being rushed to meet unrealistic deadlines.  The bugs in the applications cause problems with the customers. The number of complaints rises. Customers are not satisfied with such services and terminate their business with the company.  Thus, company looses a lot of its customers.  Who wants to work with the company that creates more problems then solutions?

     Employees are concerned that they are not given a chance to do a quality job and continuously rushed.  Also, no one takes time to listen and hear from the people who actually do the work.  Employees also have to work longer hours to support bad quality products. This situation makes employees leave the company to seek other opportunities.  Thus, creating a high turnover.  This situation has been there for years.  The upper management keeps changing project mangers and team leads to resolve the problem.  This author's friend told that he had worked under eight different managers in last two years (Personal communication, 2006).

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     This author has suggestions to resolve this situation.  One suggestion would be stop promising what one cannot deliver to the customers; the other is to change processes to revise requirements and come up with realistic deadlines that would promote quality solutions. Labich (1992) wrote: "In the current crunch much deception and unethical conduct can be avoided if top managers make sure that the performance goals they set are realistic" (p.167).  This is an example of a bad ethical situation because it has not been resolved in a long period of time.

     In the example described above the company loses money in a number of ways. First, the customers terminate their business with the company. Second, employees are not satisfied with the environment and tend to seek other opportunities outside of the company, which leads to a high turnover. Third, bad quality products are much more pricy to support.

     Business ethics play an important role in today’s business world. It is crucial for company’s growth and profitability to have good ethical practices in all aspects of the business including employees, customers, vendors, etc.  Costa (2006) concluded “Beyond bottom-line tangibles like higher profits, stronger economic value added and significantly better price/earnings stability, ethical companies also attract better employees, better use their skills and imagination, and achieve higher loyalty and commitment” (p.14).

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Corey, G, Corey, M.S & Callanan, P, (2003), “Issues and Ethics in the Helping Professions,” Pacific Grove, CA: Brooks/ Cole.

Costa, J.D, (2006), “The upside of ethics,” Marketing Magazine, 111 (32), 14-14.

Labich, K, (1992), “The new crisis in business ethics,” Fortune, 125 (8), 167-171.

Vershoor, C.C, (2006), “The value of an ethical corporate culture,” Strategic Finance, 88 (5), 21-22.

Welsch, B, (2006), “Questioning ethics in the workplace,” Air Conditioning Heating & Refrigeration News, 229 (6), 50-50.


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