Definition: Business ethics is a concept that involves the application of moral standards within the workplace. Simply put, it identifies which attitudes and actions are considered right and wrong in the business environment.
What Does Business Ethics Mean?
Companies usually establish a set of standards, principles, and values their for leaders, managers, partners, employees, and staff members to instruct them on how they should behave under certain circumstances. You can think of it like a code of conduct. Most organizations and companies have their own ethics care program, which conveys corporate values they aspire to operate within.
Basically, these programs include codes and guidelines that usually come from an industry-related association, additional to regulations, and laws applicable to each particular sector of the economy. There are many business areas such as finance, human resources, sales and marketing, production, intellectual and material property that are regulated by ethical principles, ideals or values. The most common core values include fairness, honesty, transparency, respect, accountability, and integrity. These values serve as guidelines for all business’s decisions made on a daily basis.
Another form of business ethics revolves around what a business or company owes society at large. It tries to answer the question, do corporations have a greater responsibility than simply making profits for their shareholders?
Let’s look at an example.
PALE, LLC has been operating as a service company for three years. Its Human Resources Manager recruits employees through a selection process and requires them to sign a legal contract that demonstrates they are aware of all workplace conditions and ethical conduct guidelines expected by the company.
After a new set of employees was hired, a few clients complained about company prices. Mrs. Bone, one of the clients, explained that prices of her services have suddenly increased without any previous notification.
A few days later, the company’s director found that the new group of employees were lying and providing clients with misleading information in an effort to raise their total sales and commission rates. Also, they were promising more features than those offered by PALE’s original contract for additional fees.
This is a clear violation of the company’s ethics policy. The employees committing fraud were breaching the company’s ethical code and were quickly discharged in order to safeguard the company’s reputation.