Business Ethics and its main components

Business Ethics and its main components

Business ethics has a significant influence in the corporate world. Not only does it change the way companies operate from day to day, but it also influences legislation on corporate regulation.

Find out what business ethics is, why it matters, and how ethical and unethical behavior can be detected in the workplace.

Business Ethics

Why is it important that your company has a code of ethics?

Business ethics are important for a variety of reasons.

First of all, it keeps the company working within the limits of the law, ensuring that they do not commit crimes against their employees, clients, consumers in general, or other parties. However, the business also has other advantages that will help them be successful if they know business ethics.

Businesses can also build trust between businesses and consumers. If consumers feel that they can trust a business, they are more likely to choose it over their competitors. Some companies choose to use certain aspects of business ethics as a marketing tool, especially if they highlight a widespread social issue. Leveraging business ethics can result in higher overall brand equity.

Being an ethical business is also very attractive to investors and shareholders. They are more likely to invest money in the company. Following standard ethical business practices and leveraging them can be a path to success for many companies.

Following business ethics can also be beneficial to employees and company operations. Attracting top talent is significantly easier for ethical companies. Employees not only appreciate a socially conscientious employer, but they will also perceive him as the type of business that will act for the betterment of their interests. It produces more dedicated employees and can also reduce recruiting costs.

Manual of good practices in business ethics

Companies that follow both the letter and spirit of the law by taking a “value-based” approach to ethics and compliance can have a distinct advantage in the marketplace. It is important to provide employees with a document that clearly and concisely establishes the expectations of the company, describes acceptable behaviors, and presents viable options for

It’s the correct operation; with this, there is a greater probability of meeting those expectations and will exhibit desired behaviors.

Manual basics

There is no standard wording for a code of business ethics. Each organization should develop one to meet the needs of its staff and define expected behaviors and address risks and challenges, as well as suit its specific industry and situation. However, there are some basic points to keep in mind when creating or modifying code.

. The language of the code should be simple, concise, and easy, understood by all employees.

It should not be legalistic, written as “must not” but rather indicate expected behaviors.

. It must apply to all employees and be global in scope. If the code addresses financial risk and applies to all personnel, a different code of financial ethics may not be necessary.

. It should be written, reviewed, and edited by a multidisciplinary team to be reasonably certain that it is consistent with other corporate policies and communications,

Addresses relevant risk areas is accepted throughout the organization and represents the organization’s culture. Consideration should include representatives from the following areas: risk management, Human Resources, Communications, Internal Audit, security, and relevant business units.

. It will be reviewed and updated as appropriate to reflect business and regulatory changes.

Recommended Items

The elements or sections within a code can vary, but here are some standard recommendations:

. A cover letter from the senior leadership team or CEO outlining the importance of ethics and compliance for each employee and the company

.  The statement of mission, vision, values ​​, and guidance of the company, principles that reflect the company’s commitment to ethics, integrity, and quality

. An ethical decision framework to help employees make decisions; For example, a code may ask employees to answer a few questions to guide them in making an ethical decision about a certain action. The goal is for employees to think before they act and seek guidance when they are unsure.

A list of resources available for guidance and for reporting suspected misconduct. For example:

         . A means of reporting problems anonymously, such as a helpline or postal address

         . How to contact the Ethics and Compliance Officer or Office

         . A definition of the reporting chain of command (e.g., supervisor, department head, etc.);

         . A list of any internal ethics and compliance websites

. A list of any additional ethics and compliance resources and identification of supplemental policies and procedures

. Enforcement and implementation mechanisms address the notion of responsibility and discipline for unethical behavior; for example, unethical behavior will be subject to disciplinary action.

. Generic examples of what constitutes acceptable and unacceptable. Could include behavior to explain risk areas better. Examples based on relevant company or industry experiences.

Risk areas

A code must cover relevant and important problems or risks. For example, a manufacturing company would emphasize environmental responsibilities more than professional services.

The content of the code and the depth of coverage on a specific topic may vary depending on the corporate objectives of the industry or previous corporate history. The content may also vary due to the regulatory environment and the questions and needs of the intended audience, local laws, customs, and culture.

Code topics can be arranged alphabetically or reflect groupings that make sense for your business. Topics can also be grouped according to company objectives, risk matrix, or related topics, such as employment practices, use of corporate assets, or relationships with third parties.

Potential Manual Topics

The following is a list of topics and risk areas that could address in a company manual:

. Accurate records, reports, and financial / management record keeping

Antitrust / Competitive Information / Fair Competition

Billing for services

. Customer Service / Relationships

. Relations with clients, suppliers, and suppliers

Client / Vendor / Vendor / Contractor Confidentiality

. Communications on behalf of the company (public relations, media, speeches, articles)

Communication systems

Community activities: civic activity

Compliance with professional norms and standards

. Confidential and proprietary information

. Consultation

. Hiring (approvals)

Conflicts of interest

. Copyright

. Corporate governance

Discrimination

Diversity and inclusion

Document retention

Electronic professional conduct

. Employment practices

Atmosphere

Expense reimbursement and time reports

External Inquiries / Public Disclosure and Reports

Family and personal relationships

Fraud

Gifts, entertainment, tips, favors, and other items of value to/from customers, vendors, vendors, or contractors

Contracting, transactions, and government relations

. Government reports, inquiries, investigations, and litigation.

. Harassment (sexual and otherwise)

Health and security

. Honesty and trust

. International and global business practices

Marketing, sales, advertising, and promotions

Money laundering

Outside employment and other activities

. Personal conduct

. Political contributions and activity

Privacy

. Purchase of acquisitions

. Professional competence and due care

Quality

. Trading in securities and inside information

Safety

Social responsibility

Relations with suppliers, vendors, and contractors

Use of company resources

. Work-life balance

Violence at work

Implementation

Assigns a central team, reporting to the Director of Ethics and Compliance, the role of writing the manual; Developing the code will require the successful completion of the following steps:

Appoint a multidisciplinary advisory team.

Draft an outline of the proposed code and submit it for review to the multidisciplinary team

Draft code based on approved code scheme

. Industry Policies, Procedures, Values, and Standards

. Update the code to reflect input from the advisory team

. Use focus groups and other methods to get feedback from all levels of staff in updating code based on their feedback

. Present the “final” version of the code to management and the board for approval

Communicate the final versions to the Communications and General Counsel offices

. Communicate the code to all employees.

Examples and cases in multinational companies regarding business ethics

While understanding the basic principles of business ethics is important, it is arguably more important to understand how these ideas apply to day-to-day business operations.

Here are some examples of how can practically apply ethical behaviors

A good application of codes

Put the customer’s needs first.

Companies that develop their work culture around prioritizing customer needs and hiring people who engage in this behavior engage in ethical behaviors.

For example, suppose a customer walks into a store looking for a product that meets very specific needs. In that case, it is important to provide them with the best product for the described situation rather than selling it or encouraging them to buy a product that does not meet their needs.

However, it is important to ensure that the “customer first” attitude does not inadvertently lead to unethical treatment of employees, such as encouraging them to work more overtime than is allowed, forcing them to endure customer abuse without a secure way. To escape the situation, and more;

Be transparent

Transparency and clear communication are paramount for ethical behavior in the workplace. Employees and consumers alike should never be lied to, as this breaks trust within the business.

For example, companies must call a meeting and address the issue directly with their employees when faced with a public relations crisis. It is important to describe the situation as it developed, present solutions honestly, and humbly accept criticism.

Prioritize diversity in the workplace

Being fair is giving everyone the same opportunities to work for the company. While there is much political debate on creating equity in the workplace, it is undeniable that providing equal employment opportunities to all applicants is an ethical standard.

For example, suppose someone notices that management tends to hire the same type of person. In that case, they may suggest that employees become more involved in the hiring process. It will introduce different perspectives to the hiring process and increase the chance that applicants will be selected for a position.

Respect customer information

Many companies collect their clients’ personal information, including payment information, health information, or similar. One of the priorities for any business should be to secure and protect this information.

For example, a hospital may create and enforce aggressive policies around staff sharing patient information on social media. Having an employee share this type of information on their accounts is not only disrespectful of patient privacy. Still, it could also put the hospital at risk of violating Data Protection regulations.

Provide resources to report unethical behavior

If an employee notices unethical behavior in the workplace, they should have an outlet to report these behaviors. The business is responsible for establishing this infrastructure and designing it to isolate the employee from harm.

For example, a research university should have a neutral compliance office that is organizationally separate from the research arm of the institution. It provides a neutral space where academics can report unethical studies or harmful practices without fear of workplace repercussions.

Poor application

Just as it is important to understand how to apply ethical behavior practically, it is equally important to understand what qualifies as unethical behavior. Here are some examples of how unethical cases can be in the workplace.

Take sides in an employee argument.

It is not uncommon for conflicts to arise between employees in the workplace. Ethically, the job of company leadership and management is to remain impartial during these conflicts.

For example, if two of a manager’s employees conflict, it is important for the manager to remain as neutral as possible. When a manager gives preference to a favorite or superior employee or provides a solution that only works in favor of one party, they engage in unethical behavior. They should allow both employees to speak their part and then develop a solution that works best for both parties and the business itself.

To lie

Lying to your employees or clients is the best way to break their trust. Trust is the best source of dedication and loyalty for any business. Once that trust is broken, it is extremely difficult to regain it.

For example, suppose a company has a high-performing employee requesting a promotion. In that case, it can say that there is no room in the budget for a promotion this year. A few months later, another employee can receive a promotion. Telling obvious lies isn’t just unethical – it will drive people away from your business.

Misuse of company time

It is a common ethical dilemma faced by many companies. Many employees abuse company time in various ways, whether it’s browsing the Internet during business hours, taking long breaks, altering timesheets, or the like.

The misuse of company time is unethical because the employee is paid wages for work that they did not complete or time that they did not dedicate to their work.

Cultivate a hostile workplace

While there is likely to be some conflict in the workplace, it is important to make the workplace a safe environment for everyone. Some companies unwittingly cultivate hostile or overly competitive company culture.

For example, employers can encourage an unhealthy competitive environment among employees to drive productivity and innovation. However, cultivating this environment can tax employees’ mental health and even encourage unethical and saboteur behavior among employees who want to get ahead at work.

Ignore conflicts of interest

Conflicts of interest encourage companies to act in ways that do not benefit their customers or employees.

For example, suppose a manager has a relative as his direct report. In that case, that manager may treat that employee differently from his other reports. The company must address this situation. Eliminating conflicts of interest can become more complex when a company is publicly traded, non-profit, or receives funds from a government entity.

Differences between business ethics and social responsibility

While business ethics and social responsibility go hand in hand, there is often confusion about the distinction between the two, especially since there are no widely accepted definitions for both terms. Corporate social responsibility (often called CSR) and business ethics are used in many different ways by many different groups.

Business ethics is a broad field of ethical decision-making in commercial contexts. In short, it refers not only to the social obligations of a company but also to the obligations to its employees, customers, suppliers, and competitors.

Business ethics is most commonly discussed in the following areas:

Fraud and manipulation

. Sustainability

Diversity and inclusion

. Exploitation

. Donations and contributions

Under the umbrella of business ethics, social responsibility focuses more closely on the social obligations of a company. Social responsibility refers to the extent to which companies owe something to “society in general” or feel a duty to give back, that is, to those who are not directly involved in the business.

Ethics must reflect the values ​​of an individual that are manifested in the behavior of the individual moral agent. Then, entrepreneurs undertake ethics in a given situation through a manifestation of behavior influenced by the culture and the moral anchor.

Responsibility is an obligation. The obligation can be self-induced (a mother assuming responsibility for her children) or induced by society. A moral agent can only assume responsibility.

Conclusions and summary

Companies often turn to managers and employees to report any incidents they observe or experience when it comes to preventing unethical behavior and fixing its negative side effects. However, barriers within the company’s culture (such as fear of retaliation for reporting misconduct) can prevent this from happening.

Published by the Ethics and Compliance Initiative (ECI), the 2019 Global Business Ethics Survey surveyed more than 18,000 employees in 18 countries about the different types of misconduct they observed in the workplace. Thirty percent of employees surveyed said they had observed misconduct, and 21% said they had observed behavior that they would classify as abusive, intimidating, or creating a hostile work environment. 75% of employees said they reported misconduct they observed. When asked if they had experienced retaliation for reporting, 40% said they had been retaliated against.

Fear of retaliation is one of the main reasons employees do not report unethical behavior in the workplace. Companies should improve their corporate culture by reinforcing that reporting suspected misconduct is beneficial to the company and recognizing and rewarding the employee’s courage in making the report.

In short, having a code of business ethics will help your company to generate a greater social reputation and greater trust, both among your employees and among your customers.