Ethics comes into play in the decisions you make every day. Have you ever received too much money back when you paid for something in a store, didn’t get charged for something you ordered at a restaurant, or called in sick to work when you just wanted a day off (College Confidential, 2009). Each of these is an ethical dilemma. You make your decision about which path to take based on your personal ethics; your actions reflect your own moral beliefs and moral conduct (Velasquez, Andre, Shanks, & Meyer, 2009). Your ethics are developed as a result of your family, church, school, culture, community, and other influences that help shape your personal beliefs—that which you believe to be right versus wrong (Velasquez, Andre, Shanks, & Meyer, 2009). Your strong sense of personal ethics can help guide you in your decisions. You might be surprised to find yourself with an ethical dilemma about something that is second nature to you. For example, imagine that you’re taking a class that has an assignment of a twenty-page paper and you’ve been so busy with your classes, family, and work that you really haven’t had the time to get started. You know you shouldn’t have waited so long and you’re really worried because the paper is due in only two days and you’ve never written a paper this long before. Now you have to decide what to do. You could knuckle down, go to the library, and visit the campus Writing Center, but you really don’t have the time to do all that and still write the entire twenty pages. You’ve heard about some people who have successfully bought papers from this one Web site. “I have a friend who writes essays and sells them,” says Danielle Delafuente, another Boston University freshman. “And my other friend buys them. He’s just like, ‘I can’t handle it. I have five papers at once. I need her to do two of them, and I’ll do the other three.’ It’s a time management thing.” (Smith. 2019, para 13). You’ve never done it before, but you are really desperate and out of time. “If I only do it this one time,” you think, “I’ll never do it again.” But compromising your ethics even just once is a slippery slope. The idea is that one thing leads naturally to allowing another until you find yourself sliding rapidly downhill. Ethics is all about the art of navigating the slippery slope: you have to draw a line for yourself, decide what you will and won’t do—and then stick to it. If you don’t have a strong set of ethics, you have nothing to use as a guidepost when you are in a situation that challenges you morally. A highly developed set of personal ethics should guide your actions. The only way to develop a strong sense of ethics is to do what you believe in, to take actions consistent with your values. principles , and purpose time and time again. So if you buy the paper and get caught, you will not only fail the class, but you may also find yourself expelled from school. Academic dishonesty is also considered fraud and can be a criminal offense in some countries (Visentin, 2014). If you’re tempted to consider buying a paper, take a minute to read your school’s academic dishonesty policy, as it is most likely very clear about what is right and wrong in situations like this.
Business Ethics: What Makes a Company Ethical?
Ethics apply to businesses as well as personal behavior. Business ethics began in the 1960’s when businesses noticed a growing interest by consumers around environmental social causes, and corporate responsibility—“the increases focus on social issues was a hallmark of the decade” (Twin, 2020, para 3). Today business ethics provides a level of trust between consumers around social and environmental corporate strategies and can be used as a competitive advantage (Twin 2020). For instance, a recent survey noted that 92% of millennials are more likely to buy products from ethical companies and 82% of consumers believe ethical brands outperform similar brands with less ethical brand strategies (Shewan, 2020). Brand authenticity and “companies that dedicate themselves to the greater good instead of solely to their bottom lines have seen a remarkable surge in support-and revenue.” (Twin 2020, para 4). Think of Level Ground Coffee, Dr. Bronner’s soap, Farmer Direct co-op, Sack and Cloth, or Patagonia for examples.
An ethical organization operates honestly and with fairness. Some characteristics of an ethical company include the following (An education in ethics, 2002):
- Respect and fair treatment of employees, customers, investors, vendors, community, and all who have a stake in and come in contact with the organization
- Honest communication to all stakeholders internally and externally
- Integrity in all dealings with all stakeholders
- High standards for personal accountability and ethical behavior
- Clear communication of internal and external policies to appropriate stakeholders
High-Profile Unethical Behavior in Business
While ethical behavior may seem as if it is the normal course of business, it’s unfortunate that some business people and some businesses do not operate ethically. “unethical business practices involves the tacit, if not explicit, cooperation of others and reflects the values, attitudes, beliefs, language, and behavioral patterns that define an organization’s operation culture” (Paine, 1994, para 2). Samsung, United Airlines, 21st Century Fox, Uber, and even Apple have been highlighted in the news recently. Samsung face bribery charges, United Airlines dragged a bloodied passenger off their plane, 21st Century fox and Uber have been plagued with sexual harassment reports, and Apple was noted to purposely slow down their older iPhones to compensate for decaying batteries (Shen, 2017). All of these unethical behaviors saw a reduction in consumer support and lagging sales as well as boycotts, social media nightmares, and lawsuits (Shen, 2017).
Ethical Dilemmas in Business
Not all behavior that is unethical is illegal. Companies frequently are faced with ethical dilemmas that are not necessarily illegal but are just as important to navigate. For example, if a travel company wants to attract a lot of new customers, it can honestly state the price of a trip to Disney World in its advertising and let customers decide if they want to purchase the trip. This would be ethical behavior. However, if the company advertises a free vacation in order to get customers to call, but the free vacation package includes a $500 booking fee, it is unethical. Or if an appliance store wants to get new customers by advertising a low-priced refrigerator, it is an ethical way to let customers know that the company has competitively priced appliances as well. However, if the store only has a higher-priced refrigerator in stock and tries to sell that one instead, it is unethical behavior.
Business ethics can also be challenged based on business practices. For example, in the 1990s Nike was accused of exploiting workers in third-world countries to manufacture their products. The low wages they were paying the workers made Nike’s profits higher ((Bernstein, 2004). While this is not illegal behavior— they were paying the workers—it was considered unethical because they were paying the workers less than what is reasonable. Another example of unethical behavior is not disclosing information. For example, if a salesperson has been required to sell all of the large toasters even though they know the large toasters are inferior products. To keep your job, you must violate your conscience and recommend that your customers buy the large toasters. Your boss is engaging in unethical behavior by forcing you to do something you know is wrong, and also risking the ire and potential loss of valuable customers to meet a product sales goal. (Duff, 2019). Bribing an executive, saying or promising things that are knowingly untrue, or treating employees unfairly are all examples of unethical behavior in business.
Corporate Social Responsibility
You may choose to shop at companies because of their business practices. For example, you might like The Body Shop because of its commitment to selling products that do not use animals for testing. This is a case of ethical behavior that is socially responsible. In fact, corporate social responsibility (CSR) is when companies operate in a way that balances the interests of all stakeholders including employees, customers, investors, vendors, the community, society, and any other parties that have a stake in the company. While corporate social responsibility may seem easy, it’s not always as easy as it looks. Keep in mind that in order to be socially responsible a company has to balance the social, economic, and environmental dimensions, which means generating a profit for investors while serving the best interest of all parties that have a stake in the operations of the company. When companies measure the impact of their performance along the three dimensions of social, economic, and environmental impact, it is called the triple bottom line. Examples of CSR policies include reducing your carbon footprint, improving charity giving, or labour policies, and volunteering in the community. Lego, for example, has committed to reduce its packaging and is testing environmentally friendly materials to use in its core products (corn based instead of oil); Salesforce has committed to a 1-1-1 model where it gives one percent of product, one percent of profit, and one percent of employees’ times to communities and nonprofit sectors ( Gavin, 2019).
Good Ethics = Good Business
The impact of ethical behavior by companies cannot be underestimated. It’s no surprise that companies that consistently demonstrate ethical behavior and social responsibility generate better results. In successful companies, ethics is so integrated into the organization that it defines how every employee from CEO to the lowest-level employee behaves. Ethics is not a separate topic but is incorporated into company strategy—it’s a philosophy. A recent study from the IO Sustainability firm in 2018 found that firms who incorporated CSR policies and ethical management saw:
- Enhance sales by as much as 20%
- Increase productivity by 13%
- Reduce employee turnover by half
- Protect against litigation risk at a value equivalent to the cost of insurance worth up to 4% of the company’s value
- Increase the company’s share price by up to 6%
- Create a “reputation dividend’ worth up to 11% of market capitalization
- Reduce financial risk, the cost of equity, and the cost of borrowing.
Companies can make profit, sometime more than a competitor, from practicing good CSR policies and ethical values and principles. This is the bottom line. Ben and Jerry’s ice-cream, for instance, have made CSR their core overall business strategy and they see year over year returns on investment. Nielsen notes that “55% of global online consumers across 60 counties say they’re willing to pay more for products or services from companies that are committed to positive and social-environmental impact” (Can you make a profit and be socially responsible?, 2020). These are global consumers and so CSR is not a by country or region philosophy.
Ethical Behavior in Sales
One of the most visible positions in any organization in terms of ethics is sales because it is the salesperson that comes in contact directly with the customer. What the salesperson says and does is a direct reflection of the organization and its ethics. Consider this ethical dilemma if you were a real estate agent. You have just landed a fantastic listing: a home that in the hot neighborhood that will surely sell quickly and yield a nice commission for you. The seller tells you that the home inspector suspects there is insect damage to the siding of the house, but the seller says they have never had any problems. Also, the seller feels so strongly about not disclosing this information to prospective buyers that they said they would rather go with a different agent if you insist on disclosing the possible insect damage. What would you do?
In a situation like this, it’s best to remember that doing the right thing can be a hard choice and might not be advantageous to you. Although you really don’t want to lose this listing, the right thing to do is to disclose anything that affects the value or desirability of the home as either withholding or falsifying information is lying and therefore unethical (Baldwin, 2008).
Imagine that you are a financial planner responsible for managing your clients’ assets. You make your income on commission, a percentage of the value of your clients’ portfolios; the more you increase their portfolio, the more money you make. One of your clients is a very conservative investor; right now you are not making much money from their account. You have an opportunity to sell them a high-return investment, but the risk is far greater than you think they7 would normally take. You think you can sell them on it if you leave out just a few details during your conversation. The investment will actually be good for them because they will get a significant return on their investment, and besides, you are tired of spending your time on the phone with them and not making any money. This could be a win-win situation. Should you give them your pitch with a few factual omissions or just make the investment and tell them after the money starts rolling in? After all, they don’t look at their account every day (Cusson, 2019). What should you do?
Even though the result of the investment could be a good one, it is your obligation to provide full disclosure of the risk and let the customer make the investment decision. You should never make assumptions and decisions on behalf of your customers without their consent. If you are frustrated about your lack of income on the account, you might not be the best financial planner for them. You should have an honest conversation with them and perhaps suggest a colleague or other planner that might be a better fit for their investment strategy.
What if you were a salesperson for a textbook company and you are only $1,000 away from your $1 million sales goal. If you make your goal, you will earn a $10,000 bonus, money you have been counting on to put a down payment on your first house but the deadline is only two days away, and none of your customers is ready to make a purchase. You really want the bonus, and you don’t want to wait until next year to earn it. Then you remember talking to one of the administrators, and they mentioned the need for donations. What if you made a $1,000 donation to the school? It would help the school during this challenging financial crisis and it would be more inclined to make a purchase quickly. After the donation, you would still have $9,000. This could be a good move for everyone. Would you make the donation to “buy” your bonus?
When you are in sales, you are not only representing yourself, but you are also representing your company. Although it appears that all parties will benefit from the donation, it is not ethical for the school, you, or your company to make an exchange like that. In this sense, you will understand how the decision might impact the organization, what would happen if everybody did this and that it would not be okay if this decision made the headlines in the news (Horowitz, 2009).
Imagine that you are a sales rep for a software company and you’ve just taken a customer to lunch. It was an expensive restaurant, and the two of you thoroughly enjoyed yourselves; you had steak, wine, and a chocolate dessert. Now you’re filling out an expense report, and you need to fill in the amount of tip you left. In fact, you left a twenty-dollar bill—but forty dollars wouldn’t have been an unreasonable amount to leave for outstanding service. You could fill in the higher amount and use the difference to take your girlfriend to the movies; you’ve been meaning to spend more time with her. After all, you make a lot of money for the company and have been working a lot of nights and weekends lately. You also didn’t submit your expense account for the mileage you traveled last week, so this should make up for it. Is it OK to submit the additional tip money on this expense report?
It’s no surprise that it’s never acceptable to falsify information on an expense report (or any report for that matter). If you have legitimate expenses, they should be submitted according to the company policy.
This can be another one of those slippery slope arguments; if you do it once, you might be tempted to do it again. Is falsifying your expense reports by $15-$20 worth your job? What is black and white is the “clear out-and-out fraud will always be just cause for termination of employment. If you intentionally submit an expense for money you didn’t spend to pad your wallet and get caught, you’re out. No severance.” (Fraudulent expenses submitting false claims can get you fired, 2018, para 2).
Is the Customer Always Right?
The customer is always right, except when they ask you to do something unethical. What should you do to uphold your ethics and maintain your relationship? SellingPower.com suggests the following four steps:
- Evaluate the situation with a clear head. Most unethical behavior is driven by emotions such as fear, greed, stress, and status. Identify what is causing the behavior but wait until you have some time to reflect.
- Don’t jump to conclusions; identify the circumstances. You might not know the entire story so determine what you know and what you don’t know.
- Identify the criteria you are using to make this judgment. Is the behavior against company policy? Is it against the law? Is it against your personal code of ethics?
- Seek counsel. Always ask a trusted colleague, supervisor, or human resources representative for advice. Chances are, they have experienced the same situation and can provide insight from the company’s perspective and policies.
Ethics are defined by moral principles; they are actions that are viewed by society as “right,” “just,” or “responsible.” (BNET, 2009). Values define what is important to you: they are your guiding principles and beliefs, they define how you live your life, and they inform your ethics. While certain values might be important to you, they may not be important to your best friends or even every member of your family. While family, friends, and your environment have a significant influence, you develop your own set of values. Consider the list below, which includes some examples of values (BNET, 2009):
- Open communication
- Helping others
- Social responsibility
- Impact on society
- Global focus
Values provide your personal compass and your direction in life. When something is not in line with your values, you feel unhappy and dissatisfied (BNET, 2009). Many people feel passionately about their values and want to have their environment align with their values. Examples of this are evident during political elections when people take sides on issues such as education, health care, and other social issues that reflect personal values. You might be surprised to learn that your values are not set in stone. Your personal values will evolve and may even change drastically based on your experiences (Values and morals clarification: value changes, 2015) and your age. Your working history will impact your value.
You have a set of values that inform your ethics, which in turn inform your decision-making. No one can tell you what your values are; that is something you’ll have to decide for yourself. John C. Maxwell, in his book There’s No Such Thing as “Business” Ethics, lists the values that he lives by, such as “put your family ahead of your work (having a strong and stable family creates a launching pad for many other successes during a career and provides a contented landing place at the end of it)” and “take responsibility for your actions (if you desire to be trusted by others and you want to achieve much, you must take responsibility for your actions).” (Maxwell, 2003).
Values of Organizations
Just like people, organizations have values, too. Values are “proven, enduring guidelines for human conduct” according to Stephen Covey in his book Principles (Ambler 2009). Many companies choose their values and communicate them to employees, customers, and vendors on the company Web site and other company communications. For example, Whole Foods includes the following values, among others: “selling the highest quality natural and organic products available” and “caring about communities and their environment.” Levi Strauss & Co. identifies four key values for their company: empathy, originality, integrity, and courage. Their values statement is also included on their Web site.
Company values and personal values are important because your values motivate you to work (BNET, 2009). You will enjoy and excel at your job if you choose a company whose values you share. For example, if the environment is one of your values, it is best to choose a company that includes a commitment to the environment as part of their values statement. Chances are you will not be happy working at a company that does not put a priority on the environment.