adminlegal transgression can cost a firm millions of dollars.
Bad publicity can have a profound impact on brand value and a company’s ability to attract and retain the best people, thus eroding its competitive edge.
Business ethics are a hot topic these days. With everything from insider trading to employee theft on the rise, it is no wonder that businesses are beginning to focus on the impact of ethical leadership.
Business ethics are ethics that refer to the moral rules and regulations governing the business world. This is a perception in the eyes of various companies of what they deem acceptable or not (right and wrong) in their respective lines of trading.
Corporate governance is the system by which companies are directed and controlled (Cadbury Committee, 1992). More specifically, it is the framework by which various stakeholder interests are balanced or the relationship among the management, board of directors, controlling shareholders, minority shareholders and other stakeholders.
Merging the two, when we are looking at ethics and corporate governance we are basically looking at how firms embrace morals in their day-to-day operations be it in terms of internal corporate affairs, the way they relate to the outside world, competitive strategies and so on. Some of the factors that affect business ethics include honesty, transparency, integrity and so on.
Business ethics can be primarily seen at three levels, namely: macro, corporate and individual levels. The individual level refers to how each and every individual within an organisation has a different personality. Things like peer pressure, the socio-political environment all influence the extent to which someone does business ethically.
“What kind of person are you when no one is looking?”
The corporate level refers to the handling of ethical behaviour within the firm’s boundaries that is within all its departments such as marketing, finance, operations, human resources and so on. The macro level refers to the role of business in the national and international organisation of society, the relative virtues of different political/social systems, such as free enterprise, centrally planned economies, international relationships and the role of business on an international scale.
Given all these, one realises how important it is to conduct business ethically. Failure to do so can prove to be fatal in the long run. Cheating customers through the distribution of sub-standard products can lead to business failure. Competition is increasing nowadays mainly because of the increase in interaction of the world markets. Due to this, businesses need to maintain a favourable position in the eyes of the consumers relative to their competitors so that they maintain or even gain their market share.
Ever had difficulties in choosing which choice is best when tackling a situation?
This is typical of an ethical dilemma. Ethical dilemmas are situations with which there are two choices to be made. These should be able to address or resolve the situation in an ethically acceptable manner. In most cases, societal and personal ethical principles can provide no satisfactory outcome for the person who is liable to make the decision.
Before one makes a decision, there should be a basis on which it is centred. Decisions are made basing on for example: religion, industry structure and so on.
Here is an example of an ethical dilemma. Let’s say the chief executive officer of a company found out that its competitor had come up with a brilliant idea that would cost or reduce profits for the organisation. He decides to hire a key employee of the competitor so as to learn more on the idea. Is it ethically acceptable for him to do such an action?
He has two choices either to learn more on the idea or to make it his own idea and make sure profits are not compromised. Food for thought.
Given all this, it is inevitable that companies should embrace and nurture ethical values. It indeed is a practice that will guarantee the long-term sustainability of a business.
Nowadays, the most prominent and successful corporates embrace ethical values which have seen to be a major attribute to their success. Ethical values can be seen to be “The Next Best Business Strategy” so the question we pose to corporates is “Where Do You Stand”?
l This article was written by five students at Africa University who are members of Entrepreneurial Action In Us, a non-profit youth organisation aimed at improving the lives of the people under the auspices of the the BOOST Fellowship. The team comprises Joseph Manyati, Sharon Chikanga, Jasmine Chakoma, Kudzai Bushu and Michael Washaya.
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