In February, Elizabeth Holmes, the founder and former CEO of Theranos, was found guilty of four felony charges and one count of conspiring to defraud private investors in her multi-billion-dollar blood-testing company. She could face up to 20 years in prison. The story of her grandiose start-up and subsequent fall from grace is chronicled in the Hulu series, “The Dropout,” a cautionary tale that illustrates the dire consequences of not having business ethics in place to hold companies, their leaders, and employees accountable to a high standard of ethical behavior.
What is Ethics About?
Ethics comes from the Greek word, ethos, which means moral character. It should be noted that ethics is not based on religion, the law, or societal norms. While ethics may overlap these areas, the basis of ethics lies in a standard of right and wrong that prescribes what individuals should do within a humane society as it relates to fairness, rights, mutual respect, and overall benefits to our fellowman. Does that seem a little vague?
Ethical behavior can be a bit hard to pin down, but generally, ethics are guidelines that encompass virtues of honesty, compassion, safety, freedom, and other values deemed to be universal. For example, the U.S. Constitution outlines several inalienable rights that serve as a good guide for establishing a set of ethics that protects us against assault, fraud, murder, defamation, theft, exploitation, and more. The difficulty comes, of course, when our ethics are not in line with one another – when our moral compass puts us on a collision course with another individual, company, agency, or even a government. Clearly, the majority of countries in the world had a different set of ethics than did Hitler during WWII, for example. Or on a smaller scale, ethical issues with another individual could land you in civil court to settle a dispute.
What is Business Ethics?
The concept of business ethics is often seen in light of the law – legal guidelines that organizations must follow when conducting business, such as those regulating insider trading, discrimination, tax fraud, bribery, safety, or workplace sexual harassment. These guidelines are implemented and controlled by federal or state government and come with penalties for non-compliance.
Business ethics go beyond the law, however, and encompass best practices of what is right, wrong, and inappropriate in the workplace. These self-imposed guidelines for handling ethical issues promote integrity among company leaders and employees. They also serve as the basis for developing trust among the organization’s key stakeholders – whether investors, consumers, clients, or vendors. The guidelines are usually designed to ensure respect, fairness, and honesty throughout the company and can encompass such areas as employee relations, hiring practices, client and vendor relationships, social responsibility, board governance, communication/disclosure practices, and more. While most companies have implemented ethics guidelines or programs, they are not all created with the same quality or enforced with the same rigor. For example, while nepotism is not illegal, some companies are careful to avoid the appearance of impropriety when it comes to hiring relatives, while others have no qualms about the practice.
Business Ethics and Social Responsibility
Corporate social responsibility (CSR) refers to the policies and practices that businesses implement to positively impact the environment and/or the local community. For example, an organization may donate a portion of its resources or profits to local charities, utilize local vendors, coordinate an employee volunteer program, use recycled packaging, or help fund community infrastructure projects. The idea is that these businesses have a responsibility to their stakeholders that supersedes corporate profits.
So how do business ethics and social responsibility coincide? The actionable CSR of an organization is most often a direct result of its ethics code of conduct - the rules and principles set in place to guide its decisions and actions that create goodwill and trust among employees, consumers, investors, and the community. Ottawa University’s online MBA program develops students as competitive and ethical business leaders.
The Benefits of Business Ethics
When a business has a strong, well-defined, and consistently implemented code of ethics, and when it demonstrates social integrity by voluntarily engaging in CSR that is in line with its mission and vision, the organization often enjoys greater success in several areas:
- Employee behavior and loyalty – Companies that model and apply good business ethics will see their employees follow suit. Confident that ethics principles will be implemented fairly and consistently encourages employees to utilize the same practices. This creates trust in the company and management, which leads to stronger loyalty, better teamwork, and greater productivity.
- Expanded and loyal customer base – Actions speak louder, and customers respond. When the word gets out that your organization acts with the best interest of the community, its employees, and consumers in mind, you’ll see how hungry your target audience is for authenticity. They will come, and they will stay.
- Brand recognition – Your business ethics will set you apart from the competition and help you rise to the top of your industry in terms of brand recognition.
- Good reputation – Your CSR and reputation for business integrity will get you noticed and lead to respect among all of your stakeholders. This is worth its weight in gold and can impact your bottom line more than any marketing campaign.
- Fewer liabilities – By operating your organization with a strong moral compass and maintaining compliance, you reduce the risk of litigation and other liabilities that can hurt your reputation and bottom line.
- Top talent recruitment – With a reputation as a business with strong ethics, you’ll attract the best in the business who align themselves with the same values.
- More investors and greater profits – What investor isn’t going to be attracted to a company that demonstrates success in all of the above areas? That allows you to further grow your business and realize greater profits while remaining true to your business principles.
Business Ethics and Management
Management, at its core, must be grounded in ethics. But good business ethics cannot be assumed. They must be studied, learned, and applied. That’s why all of the courses in Ottawa University’s MBA program are taught within the framework of value systems and professional ethics, along with a thorough understanding of organizational behavior. The MBA’s study of ethics encompasses personal and corporate value systems and decision making; an investigation of personal beliefs, purposes, and attitudes, and their effects on self and others; and an examination of the ethical dimensions of organizational structures and practices. These insights are then applied to the major’s training in strategic marketing, managerial economics, managerial finance, management of information systems, and management accounting.
Together, they prepare Ottawa University’s MBA students for ethical leadership in the workplace.
Business Ethics and You
If your moral compass is a strong guide for you both personally and professionally and you would like to use it to lead others, Ottawa University’s accelerated, online MBA program will prepare you to make a difference in the corporate world – with integrity. Contact us today for more information.
Meriwether, E., Pope, K., Showalter, M., Mollick, J., Jarvis, R., Dunn, T., Thompson, V., Heldens, L., & Hannah, L. (Executive Producers). (2022). The dropout [TV Series]. Hulu. https://www.hulu.com/series/the-dropout-13988f84-f1c8-40dd-a73c-4e71ab4bbe63