Module-1: Introduction to Ethics: Characteristics of Business Ethics

 The nature of business ethics refers to the standard characteristics of human behavior in its definition as its core concept. Characteristics of business ethics are the core of the crust of business objectives. Characteristics of business ethics have a close relationship among ethics, morals, and values,  that stick to laws with fairness, honesty, and openness of staff. The major characteristics ofbusiness ethics are as follows:

1.      1. Defines Code Of Conduct

An ethical business has a core value statement that describes its mission. Any business can create a value statement, but an ethical business lives by it. It communicates this mission to every employee within the structure and ensures that it is followed. The ethical business will institute a code of conduct that supports its mission. This code of conduct is the guideline for each employee to follow as he carries out the company's mission.

2.      Protects Social Group

Solid relationships are a cornerstone of an ethical business. Loyal relationships are mutually beneficial and both parties reap benefits. Employees who work for a loyal employer want to maintain the relationship and will work harder toward that end.

Vendors and customers will remain loyal to a business that is reliable and dependable in all situations. An ethical business stays loyal to its partnerships even in challenging times. The result is a stronger relationship when emerging from the challenge.

An ethical business has concern for anyone and anything impacted by the business. This includes customers, employees, vendors and the public. Every decision made by the business is based on the effect it may have on any one of these groups of people, or the environment surrounding it.

3.      Control Business Malpractices

Since code of ethics is accepted across the firm voluntarily, malpractices are kept to the minimum; this is resulting from a culture of adherence to better standards than that is prescribed by law.

4.      Related To Moral And Social Values

Integrity is an all-encompassing characteristic of an ethical business. The ethical business adheres to laws and regulations at the local, state and federal levels. It treats its employees fairly, communicating with them honestly and openly. It demonstrates fair dealings with customers and vendors including competitive pricing, timely payments and the highest quality standards in the manufacture of its products

5.      Requires Willingness To Accept

Business ethics is reflected in the common thinking and decision making of the firm voluntarily. Although the law approves various social decisions, it is not greater than the Business ethics. Law is related to the minimum control of social customs whereas ethics gives importance to individual and social welfare actions. Business ethics will be like self-discipline.

6.      Creates Good Image

The public image of a firm that is upholding business ethics in its dealings is found to be very high Eg:.. Companies at the top of the listing in Fortune 500

7.      Relative Term

Business ethics is a relative term in that its core component morals, values and customs vary across geographical regions, religious groups etc.. It differs from an individual to an individual, society to society, culture to culture, country to country. It helps to define the moral and immoral term of business ethics. Diversity, Inclusion, Bribery has different meaning in different part of the world.  

8.      Requires Education And Guidance

For a business to be ethical, its leaders must demonstrate ethical practices in any situation. The true test of this leadership is in the decision-making process when there is a choice between what is ethically responsible and what will result in profit or gain. Leaders who can consciously choose the path that is ethically correct, as opposed to one that is purely financially driven, have successfully created an ethical culture in the business. When the culture is solid at the top of the organization, it trickles down to all areas and employees

 

 

9.      Different from Social Responsibility

Social responsibility refers to the policies and functions of an enterprise, where as business ethics to the conduct and behavior of businessmen. But it is a fact that social responsibility of a business is influenced by business ethics

10.  Not against Profit Making

Businessethics is not in against real or fair profit making. However, it is totally against those profits which are earned by cheating and exploiting their customers, employees, and investors. It helps to support business activities but by accurate or fair means and not through illegal activities.

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According to a 1990 article in the Journal of Business Ethics, ‘Managing ethical behavior is one of the most pervasive and complex problems facing business organizations today’. Three Models of Management Ethics are observed in practice.

1. Immoral Management—A style devoid of ethical principles and active opposition to what is ethical.

2. Moral Management—Conforms to high standards of ethical behavior.

3. Amoral Management

·         Intentional - does not consider ethical factors

·         Unintentional - casual or careless about ethical considerations in business Environmental

 

The organizational characteristics under the three styles of management differs on aspects of Ethical Norms, Motives, Goals, Orientation towards Law and finally  Strategy , each of which is discussed below:

Ethical Norms

When the management is immoral, the management decisions, actions & behavior imply a positive and active opposition of what is moral(ethical); Most of the decisions are in discordant with ethically accepted principles. An active negation of what is moral , is implied with  such managements.

Amoral Management lies in between the immoral and moral style of management. But decisions lie outside the sphere to which moral judgements will apply. Management activity is outside or beyond the accepted code of behavior. This may be resulting from lack of ethical perception and moral awareness.

Moral Management style is concerned with a standard ethical or right behavior. They conform to accepted professional standards of conduct. Ethical leadership is commonplace on the part of the management.

Motives

The Immoral Management style seeks only its gains being very selfish in approach. Amoral Management style is well-intended, but  selfish in the sense that impact on others is not considered. The Moral management style has got good motives. These style followers wants to succeed  only within the confines of sound ethical percepts(fairness, justice, due process).

Goals

Profitability and organizational success at any rate os the goal under Immoral management style. Under the amoral management style profitability is considered, but not the others. The moral management style seeks profitability and business success within the confines of legal obedience and ethical standards.

Orientation towards Law

Followers of Immoral Management style find Laws as barriers to overcome for carrying out the business. The amoral management style takes Law as ethical guide in letter. Their central concern is what they do legally. The Moral Management style followers take the law in letter and spirit and want to keep legal requirement as the lowest standard and prefer to operate well above the prescriptions of the law.

The Relationship Between Law and Ethics

The law is an expression of the ethical beliefs of our society.

Law and ethics are not the same thing. The question, “Is an act legal?” is different from the question, “Is an act ethical?”

The law cannot codify all ethical requirements. Therefore, an action might be unethical, yet not necessarily illegal. For example, it might be unethical to lie to your family, but it is not necessary illegal.

Similarly, just because an act is illegal does not necessarily mean it is immoral.

 

Comparison of Ethics & Law

In simple terms, the law may be understood as the systematic set of universally accepted rules and regulation created by an appropriate authority such as government, which may be regional, national, international, etc. It is used to govern the action and behavior of the members and can be enforced, by imposing penalties.

Many times the term lawis juxtaposed with the term ethics, but there is a difference, as ethics are the principles that guide a person or society, created to decide what is good or bad, right or wrong, in a given situation. It regulates a person’s behavior or conduct and helps an individual in living a good life, by applying the moral rules and guidelines.

The law sets minimum standards of behaviour while ethics sets maximum standards.

The law is different from  morality in the strict sense of the word because, at least in democratic nations, it tries to create a private space where individuals can live according to their own ethical beliefs or morality. Instead, the law tries to create a basic, enforceable standard of behaviour necessary in order for a community to succeed and in which all people are treated equally.

 Strategy

Immoral Management style explore opportunities for corporate gain. Cut corners when it appears to be useful to the firm’s interests. The amoral Management style gives managers a free reign. Manager’s personal ethics may influence decision making at times. Such managements responds to legal issues only out of compulsion. Followers of Moral management style live by sound ethical standards. Assume leadership position when ethical dilemmas arise and enlightened self-interest displayed.