Principles & Scope of Business Ethics

Ethics has become a buzzword in the corporate world. The reason for this is the globalization and the explosion in the communication in the organization. As a result, businesses are focusing more on the ethics part. The rules or the principles of the organization should be maintained.

Business ethics compromises of all these values and principles and helps in guiding the behavior in the organizations. Businesses should have a balance between the needs of the stakeholders and their desire to make profits.

While maintaining these balances, many times businesses require to do tradeoffs. To combat such scenarios, rules and principles are formed in the organization.

This ensures that businesses gain money without affecting the individuals or society as a whole. The ethics involved in the businesses reflect the philosophy of that organization.

One of these policies determines the fundamentals of that organization. As a result, businesses often have ethical principles. There is a list of ethical principles involved in the businesses.

Principles of Business Ethics

Loyalty

Remaining faithful to business partners, coworkers and clients demonstrates your commitment. When you prove your alliance and honor these agreements even when profits may suffer, you develop lasting partnerships and a firm foundation for future success. This can extend to maintaining relationships with suppliers, sharing a promotion opportunity with coworkers in your department or honoring financial commitments to the community.

Honesty

Honesty requires a commitment to telling the truth, regardless of the consequences. Honesty encourages trust among colleagues and between a business and the public.

Everyone in an organization’s sphere benefits from honesty. Employees want to work for honest leaders, business owners want honest employees, and clients want to do business with honest partners. This means sharing favorable and unfavorable news with the same candor and directness, leading to a reputation of reliability.

Compliance

The most basic level of ethical business practices is compliance with any laws related to your business. From international trading regulations, state tax codes and local building ordinances, companies must ensure all practices adhere to these guidelines. Often, legal regulations can serve as the beginning framework for an organization’s code of ethics. By starting at the macro level, companies can use these industry regulations as an outline to devise more specific policies and procedures.

Integrity

Having integrity means adhering to a set of moral standards at all times, even if no one is aware of your choices. Others notice when you live and work with integrity, which leads to respect and confidence in your decisions.

Fairness

Being fair in the workplace involves treating everyone the same, from assistants and interns to the CEO. Fairness also means avoiding preferential treatment and encouraging everyone to share their thoughts and ideas. The workplace should promote inclusion and equity in-house as well as to clients and customers. Fairness in the workplace creates a unified environment where employees feel comfortable, which increases engagement.

Fairness should encompass the following areas:

• Hiring new employees
• Promoting team members
• Delegating tasks
• Reviewing performance

Trustworthiness

Trustworthy workers keep their word to customers, colleagues and business partners. Honoring commitments proves that others can count on you, making you a trusted employee and coworker. Trustworthiness also involves being dependable and meeting your obligations.

Respect

Treating others with respect is a cornerstone of business ethics. Each team member deserves a voice and the ability to share opinions and ideas in a supportive environment. Workplaces that promote individual respect can experience enhanced collaboration and teamwork among employees.

Showing respect includes:

• Listening to clients and coworkers with an open mind
• Showing kindness and courtesy
• Remaining polite even during disagreements
• Refraining from personal attacks
• Monitoring your nonverbal communication, including body language and facial expressions

Scope of Business Ethics

Ethics in Compliance

Compliance is about obeying and adhering to rules and authority. The motivation for being compliant could be to do the right thing out of the fear of being caught rather than a desire to be abiding by the law. An ethical climate in an organization ensures that compliance with law is fuelled by a desire to abide by the laws. Organizations that value high ethics comply with the laws not only in letter but go beyond what is stipulated or expected of them.

Ethics in Finance

The ethical issues in finance that companies and employees are confronted with include:

• In accounting; window dressing, misleading financial analysis.
• Related party transactions not at arm’s length
• Insider trading, securities fraud leading to manipulation of the financial markets.
• Executive compensation.

Ethics in Marketing

Marketing ethics is the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing.

Ethics in Human Resources

Human resource management (HRM) plays a decisive role in introducing and implementing ethics. Ethics should be a pivotal issue for HR specialists. The ethics of human resource management (HRM) covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee.

Ethics of Production

This area of business ethics deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk.

• Defective, addictive and inherently dangerous products and
• Ethical relations between the company and the environment include pollution, environmental ethics, and carbon emissions trading.
• Ethical problems arising out of new technologies for eg. Genetically modified food
• Product testing ethics.