Business ethics is the study of proper business policies and
practices regarding potentially controversial issues, such
as corporate governance, insider trading, bribery,
discrimination, corporate social
responsibility and fiduciary responsibilities. Law often guides
business ethics, while other times business ethics provide a basic
framework that businesses may choose to follow to gain public
Business ethics ensure that a certain required level of trust exists
between consumers and various forms of market participants with
businesses. For example, a portfolio manager must give the same
consideration to the portfolios of family members and small
individual investors. Such practices ensure that the public receives
However, it is not always easy to create similar hard-and-
fast definitions of good ethical practice. A company must
make a competitive return for its shareholders and treat
its employees fairly. A company also has wider
responsibilities. It should minimize any harm to the
environment and work in ways that do not damage the
communities in which it operates. This is known as
corporate social responsibility.
The basic need of every human being is that they want to
be a part of the organization which they can respect and be
proud of, because they perceive it to be ethical. Everybody
likes to be associated with an organization which the
society respects as a honest and socially responsible
organization. The HR managers have to fulfill this basic
need of the employees as well as their own basic need that
they want to direct an ethical organization. The basic needs
of the employees as well as the managers compel the
organizations to be ethically oriented.
Ethical values of an organization create credibility in the
public eye. People will like to buy the product of a company
if they believe that the company is honest and is offering
value for money. The public issues of such companies are
bound to be a success. Because of this reason only the
cola companies are spending huge sums of money on the
advertisements now-a-days to convince the public that their
products are safe and free from pesticides of any kind.
When employees are convinced of the ethical values of the
organization they are working for, they hold the
organization in high esteem. It creates common goals,
values and language. The HR manager will have credibility
with the employees just because the organization has
creditability in the eyes of the public. Perceived social
uprightness and moral values can win the employees more
than any other incentive plans.
• Respect for ethics will force a management to take
various economic, social and ethical aspects into
consideration while taking the decisions. Decision making
will be better if the decisions are in the interest of the
public, employees and company’s own long term good.
• Being ethical does not mean not making any profits.
Every organisation has a responsibility towards itself also
i.e., to earn profits. Ethical companies are bound to be
successful and more profitable in the long run though in
the short run they can lose money.
Ethics can protect the society in a better way than even the
legal system of the country. Where law fails, ethics always
succeed. The government cannot regulate all the activities
that are harmful to the society. A HR manager, who is
ethically sound, can reach out to agitated employees, more
effectively than the police.
• HONESTY : Ethical executives are honest and truthful in all their
dealings and they do not deliberately mislead or deceive others
by misrepresentations, overstatements, partial truths, selective
omissions, or any other means.
• INTEGRITY : Ethical executives demonstrate personal integrity
and the courage of their convictions by doing what they think is
right even when there is great pressure to do otherwise; they are
principled, honorable and upright; they will fight for their beliefs.
They will not sacrifice principle for expediency, be hypocritical, or
• PROMISE-KEEPING & TRUSTWORTHINESS : Ethical
executives are worthy of trust. They are candid and forthcoming
in supplying relevant information and correcting
misapprehensions of fact, and they make every reasonable effort
to fulfill the letter and spirit of their promises and commitments.
They do not interpret agreements in an unreasonably technical
or legalistic manner in order to rationalize non-compliance or
create justifications for escaping their commitments.
• LOYALTY : Ethical executives are worthy of trust, demonstrate
fidelity and loyalty to persons and institutions by friendship in
adversity, support and devotion to duty; they do not use or
disclose information learned in confidence for personal
advantage. They safeguard the ability to make independent
professional judgments by scrupulously avoiding undue
influences and conflicts of interest. They are loyal to their
companies and colleagues and if they decide to accept other
employment, they provide reasonable notice, respect the
proprietary information of their former employer, and refuse to
engage in any activities that take undue advantage of their
• FAIRNESS : Ethical executives and fair and just in all
dealings; they do not exercise power arbitrarily, and do not use
overreaching nor indecent means to gain or maintain any
advantage nor take undue advantage of another’s mistakes or
difficulties. Fair persons manifest a commitment to justice, the
equal treatment of individuals, tolerance for and acceptance of
diversity, the they are open-minded; they are willing to admit
they are wrong and, where appropriate, change their positions
• CONCERN FOR OTHERS : Ethical executives are
caring, compassionate, benevolent and kind; they like
the Golden Rule, help those in need, and seek to
accomplish their business objectives in a manner that
causes the least harm and the greatest positive good.
• RESPECT FOR OTHERS : Ethical executives
demonstrate respect for the human dignity, autonomy,
privacy, rights, and interests of all those who have a
stake in their decisions; they are courteous and treat all
people with equal respect and dignity regardless of sex,
race or national origin.
• LAW ABIDING : Ethical executives abide by laws, rules
and regulations relating to their business activities.
• COMMITMENT TO EXCELLENCE : Ethical executives
pursue excellence in performing their duties, are well
informed and prepared, and constantly endeavor to
increase their proficiency in all areas of responsibility.
• LEADERSHIP : Ethical executives are conscious of the
responsibilities and opportunities of their position of
leadership and seek to be positive ethical role models by
their own conduct and by helping to create an
environment in which principled reasoning and ethical
decision making are highly prized.
• REPUTATION AND MORALE : Ethical executives seek
to protect and build the company’s good reputation and
the morale of its employees by engaging in no conduct
that might undermine respect and by taking whatever
actions are necessary to correct or prevent inappropriate
conduct of others.
• ACCOUNTABILITY : Ethical executives acknowledge
and accept personal accountability for the ethical quality
of their decisions and omissions to themselves, their
colleagues, their companies, and their communities.
• Financial honesty and transparency is a basic expectation
of shareholders, customers and employees.
• It serves no one when organizations “cook the books” –
whether it be intentional or accidental.
• Careless accounting practices limit an organization’s ability
to operate with good financial management.
• How can an organization’s budget be accurate when there
is not complete transparency in spending?
• When an organization markets a product or service, they are
obligated to deliver what was promised to the customer.
Whether it is a television ad or a print ad in the newspaper, the
product described should be what is delivered to the customer.
• For instance, we responded to a furniture ad one time and
when we went to the department store we discovered they
were out of that particular item and the sales person tried to
sell us a similar item that was more expensive.
• Needless to say we walked out of that store. Unfortunately the
sting of the “bait-and-switch” experience kept us from visiting
that department store again. Not a good way to grow a
• You owe it to your customers to deliver what is promised
• Management practices are the underlying foundation for
organizational integrity. Whether it is commitment to
good customer service or fair employment practices,
a businesses’ reputation can be tarnished by unresolved
service or product issues.
• Additionally, employees observe how leadership resolves
issues and follows up on promises made.
• For example, SAS ranked number 1 out of the top 100
employers to work for in 2010.
• In addition to a very generous benefit package, and an
industry low turnover of merely 2%, the architect of its culture
is based on “trust between our employees and the company”
according to Jim Goodnight, SAS CEO.
• Service after the sale is what service integrity is all about.
It is easy to make promises before a sale but following up
and ensuring a great customer experience is what makes
some organizations stand out.
• For example, we built a house a few years ago. The
customer experience was over the top – until we closed
on the house. Unfortunately it went from one of the best
service experiences I’d ever had to one of the worst –
after we closed the deal.
• Service after the sale is critical to providing a great
customer experience and growing a loyal customer base.
• Your business can benefit from a code of ethics created
by the entire organization. These ethics should be shared
with new employees on their first day of work. Set an
agenda for communicating the values that you want your
company and employees to represent.
• For example, use staff meetings and training programs to
include discussion of ethical scenarios and how you
expect employees to act in those situations. Draw
attention to the ethical values related to new projects or
problems the staff is facing. Employees should know your
position on current issues, including how to explain your
policies to customers.
• A business brings many opportunities for behaviors that
employees could misinterpret as unethical. Always follow
solid business rules, especially in financial matters. Use
standard practices to handle payments from customers,
don't take money out of the cash register for personal
expenses and pay for any supplies or products that you
take home. These practices help employees see that
you're committed to accounting honestly for monies and
supplies handled by your business.
• A big part of your business that is not related to financial
transparency is how you treat employees. From time to
time, they will have performance problems or disciplinary
issues. It's best to handle each situation in a confidential
manner. When an employee is not performing well, do
not discuss the plan for improving her performance with
• When an employee must be disciplined for violating the
code of ethics, you wouldn't discuss any circumstances
of the case with co-workers. Talking about confidential
employee issues makes it hard for other employees to
trust that you won't someday do the same to them.