Business ethics

Why they matter

Ethics
Ethics

Business ethics represent the decisive moment when a company does what’s right instead of what’s convenient.   

Let’s look at some interesting examples where the responsibility to do the right thing got lost somewhere:

  • Volkswagen cheated on its emissions tests for years.
  • Uber had a flood of internal scandals and excessive combativeness against almost everyone.
  • Facebook breached the privacy of millions of its users.
  • Wells Fargo created millions of fraudulent checking and savings accounts without client consent.

Each company had a responsibility to do what is right yet chose a far more self-serving, ambitious path.

It’s reasonable to assume that very good people work in each of those organizations. Yet competitive pressure and the quest for financial dominance led to increasing levels of self-deception and self-interest that fostered unethical behavior.

Unfortunately, there’s more.

Ethical stress from workplace pressures can also lead to employees who are disengaged and dissatisfied. They suffer mental fatigue and often leave for better jobs.

Left unchecked, unethical behavior can progressively move people and organizations from innocence to malevolence.

Likewise, feigning an appearance of ethical conduct or abdicating responsibility to others doesn’t work. Good intentions are insufficient. Studies show that people will lie, make bad decisions or even waste resources to protect their “honest” reputation.

An organization, working well within the boundaries of ethical behavior, earns the public’s trust. Companies want strong relationships with their employees, customers and stakeholders. Yet it takes time to build a trusted reputation, and it can be lost or severely tarnished when an ethical line is crossed.

How ethical are you?

To help determine if your company is doing the right thing, consider these three questions, suggested in the article “The Trust Crisis” in the Harvard Business Review:

  1. “Do we tell the truth?”
  2. “On whose behalf are we acting?”
  3. “Do our actions actually benefit those who trust us?”

If we can live in harmony with our beliefs, values and behaviors, we can find a better way to be honest and successful. The following principles help cultivate a path toward healthier alignment with good business ethics:

  • Identify a clear sense of purpose. Define what you stand for and know what you won’t tolerate. Determine what you feel good about at a conscience awareness level (known as a “gut check”).
  • Create your “true north” compass. Develop a list of things to do (or not do) if you face problems that can challenge your ethical responsibility. A prepared list represents a guidance system for self-control and social responsibility. You can expand and improve it in response to changing circumstances.
  • Develop safeguards. Studies show that anticipating “if/then” situations helps reinforce what you should do rather than what you want to do in the face of uncertainty. This is an ongoing interactive process.
  • Reflect and learn from ethical successes and failures. This is a time for introspection and honesty, which can help raise the standards of judgement, self-correction and performance. An objective support network helps you see and think more clearly and honestly in challenging situations.
  • Avoid self-deception. Other people’s unethical behavior doesn’t justify blind conformity. Look for clues that can trigger lapses in self-control or inaction, particularly when time and resources are limited.
  • Take responsibility for your own actions. Consider not just initial consequences, but other smaller consequences in determining how a decision will affect others. Put people first when considering the benefits and costs of what you want to do.

Peter Drucker, one of the most influential thinkers on management, said, “What do you want to be remembered for?” and “What do you want to contribute?”

What he means is that the quest for individual and organizational contribution is more relevant than a singular focus on achievement. Goals are important. But it’s how you get there and what you do that determine why your organization even exists and why it matters.

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George Satula is an executive leadership coach working primarily as a Vistage chairman, leading three CEO mastermind groups in southeastern Wisconsin. He is also a speaker and leadership development consultant. He can be reached at (262) 786-7400 or George.Satula@VistageChair.com.

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