Business Ethics – Encapsulated

Business Ethics – Encapsulated

Business ethics could be roughly defined as the proper business policies and practices to be followed, to handle potentially controversial issues and are guided by law to provide a basic framework that businesses may choose to follow in order to gain public acceptance. This article encapsulates the need to follow the business ethics, the challenges to face in doing so and ways to overcome those challenges.

Need for compliance:
The number of reasons for an organization to comply with business ethics has always remained so high. But three new reasons have come into play in recent times, which make ethical compliance, the most pressing need for an organization to comply to.

Increased scrutiny: Governments worldwide has become more prescriptive in terms of ethics and compliance standards. These enforcements demand for a very narrow or no gap between the ‘real’ and ‘paper’ ethics and compliance efforts.

Public expectations: Stake holders, investors, activist groups, consumers, business partners and employees are all well aware and are demanding transparency and accountability.
High visibility: The reach of every business across the globe, creating an environment for 24*7 operations along with social media and technology have made it impossible to hide anything.

Business ethics can broadly be classified into two categories.

Fundamental issues: The fundamental issues involve integrity and trust. Since the relationship between an organization and its customers is the key determinate of success, integrity and trust becomes the most essential issues to concentrate on.

Complex issues: The complex issues accounts of diversity issues, decision making issues and compliance & governance issues.

International issues:
When foreign markets offer a higher profit potential, it makes sense to expand internationally. Though the legal structures and ethical frameworks differ substantially for each country, it is an obligation to follow them to make your expansion a success.

Employment: Hiring overseas workers requires fulfilling all local legal requirements and arriving at an acceptable pay scale and working conditions. Your standards have to guarantee a living wage, protect the safety of your workers and establish a reasonable number of hours for the work week.

Corruption: Payments made, to secure the position of a company in a particular country, are mostly considered illegal under local laws. Doing so would encourage corruption in a local system through unethical behavior. However, smaller gifts, which do not influence the major business decisions, are considered legal in a few countries.

Human Rights: Most of the countries in the world are stressing more on the human rights in recent times, albeit a few countries which do not respect basic human rights. So an organization entering into a new country should always emphasize more on human rights, so that, irrespective of the local system, the organization will make its workers more loyal and productive.

Pollution: Every country has its own limits on environmental pollutions, which the organization should take care not to go beyond. An ethical organization ensures its operations don’t harm the surrounding population.

Normal Issues:
Now, every business does not have the need or scope to go international. So staying home needs, a few things to be taken care of, for the ethical functioning of an organization. Some of them are listed below.

Discrimination: Discriminations based on ethnicity, race or cultural orientation is forbidden in many countries around the world. Such discriminations may result in the breeding of ill feelings at work, as well as reduced productivity. The organization should put forth increased effort to curbing ethical discrimination.

Side deals: Since an employee are in an employment contract, he/she is not supposed to work solely for the employer. If the employee diverts any extra business elsewhere and takes the commission, it is supposed to be unethical and the employee is in breach of both contractual and ethical duties.

Partners: In case any one of the partners of the organization is not helping the management in any way, and the other partners decide to proceed forward without him/her, the proper way to do it is to buy out his/her interest in the business. Proper legal procedures and paper works must be done to prevent any problems in the future.

Gross negligence: Every decision taken by the management should take the employee welfare into account. Every board member has a duty to exercise utmost care respecting decisions that affect the corporation and its shareholders. Failing to investigate the problems affecting the employees and others in the organization could be considered as gross negligence, leading to a breach of ethical and legal duty.

Health & Safety: In every manufacturing plant and other workplaces where, dangerous machineries are involved, it will be a challenge to balance the expense control and safety interest of employees. But failing to do so will could be considered unethical and potentially damaging in the long run, if any major accidents occur.

Technology: Companies nowadays have to strike a balance between freedom of workers and the use of technology for legitimate business purposes. Allowing the employees to access social media sites at the workplace, is a topic under discussion almost everywhere in the world.

Transparency: Transparency is all about information. It is not just the information, the provider is willing to share, it is about the information the receiver is willing to access. From an employee’s point of view, transparency is all about physical, financial & emotional trust about the organization.

Fair Working Conditions: Fair pay, work benefits and non-discrimination is the most obvious elements of a fair workplace. This demands diversity management and training, which calls for higher labor costs and resource utilization.

Following Ethical Policies:
Enforcing the framed policies is again a challenge for the organization. But without implementing the policies, the organization is not going to attain proper growth. Execution of the policies could be made easy by ensuring a few steps.

Hiring Considerations: Even before hiring a person, the policies and the frameworks of the organization must be properly communicated and the requested approvals must be secured from the employee side. This would help in smooth operation, once the employee comes on board.

Maintaining records: Maintain all the necessary records would help with the proper flow of operation and saves a lot of time. Every update in the policies must be properly documented, so that the necessary changes could be made in the operations, accordingly.

Educating the employees: This plays a vital role in the execution of ethical policies. Only after educating an employee about the policies, the organization could expect the employee to follow them. An employee meeting should be conducted and the policies should be properly communicated, as and when the updates are made.

Legal Consultation: The organization should seek the advice of the legal team in each and every action. In the present scenario, however small or big the action, might be, it has a significant future implication. So, every step taken by the management should be backed up by proper legal justification.

The core objective of every ethical decision should be that of protecting employee and customer rights.