Ethics in Business Employees and Managers

Business Ethics

Erik Arenberg

Stevenson University

Table of Contents

Ethics        3

Personal Ethics        3

Business Ethics        4

Importance of Stakeholders        4

Corporate Governance        5

What are Ethics        6

An Ethical Dilemma        6

Example of an Ethical Dilemma        7

Steps in the Decision Making Process        8

Part 1        8

Part 2        8

Part 3        9

Ethical Issues        9

Whistleblowing        10

Insider Trading        10

Fraud        11

Example of Fraud        12

Big Data        12

Corporate Social Responsibility        13

Benefits        14

Risk        14

Recommendation        15

References        17

Ethics

Employees and managers consider ethics to be one of the most vital ways to help an individual or entity make meaningful decisions. This insight comes from how an entity governs themselves based on their values and beliefs when given a certain situation. These core values act as a reflection of an individual’s point of view, and can be good or bad. Ethics vary from person to person and business to business, therefore ethics are viewed differently in certain circumstances.  According to Cullen (2016), ethics can be an inherently challenging subject to comprehend due to the number of pre-existing discourses on what it is as a subject, we often experience and ‘do’ ethics at a very subjective level.” Ethics can be broken down into two parts; business and personal. It is important to understand that these two categories are dissimilar, but also very comparable at the same time.

Personal Ethics

        Personal ethics are primarily concerned with the governance of one individual. Due to experience and default, individuals formulate our own sets of guidelines, rules, and assumptions (Singer, 2012). In other words, it would be challenging to teach or change the ethics of a mid-aged person since they have a vast amount of personal experience with life already. When discussing personal ethics, it is important to study past experiences and events of a person’s life. By being in different settings and interacting with different humans, a person will soon come to realize what they are, and are not comfortable with as well as what they believe is right and wrong. This is a main reason personal ethics vary from individual to individual, every humans lives a different life and therefore will have a unique viewpoint compared to another human. The main difference between personal ethics and business ethics is the basis for what the ethics are created for. In personal ethics, a human basis their ethics with the focus on themselves where business ethics has to worry about their employees and shareholders.

Business Ethics

        Business ethics are much more in depth and formal than personal ethics. The main reason being is that all employees have to act as one since a business is considered an entity. As stated earlier, business ethics deal with many different groups of people. As one can imagine, it can be quite challenging to try to get a colossal amount of people to all have the same beliefs and point of views. For example, a company called Enron had an accounting fraud issue that led to the company ceasing in the end. According to Keller (2002), Enron accounted for deal that “never made a penny, but Enron counted the Canadian loan as a nice, fat profit.” This is an example of how companies can try to structure ethics good ethics, but yet some members of the organization will not cooperate. Although it is difficult, businesses put a lot of effort into incorporating general ethics into all their employees.

Citizens look at corporations or small businesses as one, not through the opinion of each individual employee. Business ethics also have much more responsibility involved in them compared to an individuals. Corporate scandals, globalization, deregulation, mergers, technology, and global terrorism have accelerated the rate of change and brought about a climate of uncertainty for all investors and shareholders ( Weiss, 2014). These are all things that test a business’s ethics since they require a business to take action in order to counteract the event.

Importance of Stakeholders

Furthermore, it is crucial to have a clear understanding of who a business structures their ethics around. To begin, the main groups a business must account for are its employees also all of its stake holders. A stake holder is anyone who has invested in the company therefore a company’s ethics must reflect their best interest too. There are numerous companies that rely heavily on raising funds through selling stock and other securities. It would make sense that if a company were to promise an investor to work hard to return a profit for them and fails to do so, the investor will likely want to sell their share in the company. This happens often in the stock market, one wrong move and the value of the business could decrease substantially. In situations when stakeholders and companies cannot agree or negotiate competing claims among themselves, the issues generally go to the courts” ( Weiss, 2014). Since stakeholders play such a vital role in a business, some company’s adopt what is known as the Stakeholder Theory. According the Weiss (2014), R. Edward Freeman is the modern founder of this theory and can be best described by Freeman as “My thesis is that I can revitalize the concept of managerial capitalism by replacing the notion that managers have a duty to stockholders with the concept that managers bear a fiduciary relationship to stakeholders.” This is one way a company can  keep their investors happy and a returning customer.

Corporate Governance

        In addition to structing business ethics around its investors, it also has to focus on its employees, and even sometimes on the environment. A business with unhappy, unmotivated, and unorganized employees will never lead to success. Managing ethics within a business would apply to operations, people, diversity, resources, organizational goals and more, and its primary intent would be, in general, to optimize the effectiveness and efficiency of the organization (Schoeman, 2014). This is the heart and soul of a company since these people are the daily workers and low level managers which are the ones who physically complete the transactions with customers. Having employees who do not follow the ethics of a company could have a big impact on the value of a business. According to Schoeman (2014), “the aim of an ethics management system should be to create an ethical culture via a dual focus on both increasing and promoting ethical conduct and reducing and discouraging unethical conduct.” If all employees buy into this system, the company should never have ethical issues arise. There is only so much managers can do to get employees to believe in what the company stands for, the rest is up to the employee themselves to want to display the values and beliefs of the company in their work life.