Business Ethics and Law
All human practices are faced with ethical social and environmental dilemmas. The growing problems experienced in the corporate world contributes to a deepening crisis of the legitimacy of corporate functioning and requires that particular attention be paid to legal issues. It is out of this reason that institutions have come up with ways to guide their operations especially in the business environment. This guideline dictates ways on which certain actions can be judged to be good or bad. Institutions have carried research to in this filled in order to develop legal instruments specific for their line of operation.
The aim of such initiatives is to assist the corporation to and other businesses, to become more ethical and human. The agenda agreed in Business ethics considerations is whether the legal means performs the social responsibility of business and whether the policies laid ot in it are more effective and bene?cial to all stakeholders
It should be noted that the ethical guideline in any sub sector contributes much to the sustainability of the company and the legal means endorsed should be used in order to Make corporate accountability more realistic
Ethics is the study of what constitutes wrong or right behavior. It is a subject that forms a branch in philosophy and focuses entirely and the way in which moral principles are derived or the way in which a given set of moral principles applies to ones conduct in daily life. The Questions that the moral ethics tends to answer are those that relate to fairness, justness, rightness or wrongness of an action (Miller and cross, 1996).
Law is a term used to describe a body of rules of conduct inherent in human pasture in essential to or building to the human society. Laws dictate a society’s ability to function. Business law which falls under the civic law is a descriptive simplification of these laws involving the business and commercial components of society and allows a business to function (Mallow et al 1996).
This paper will describe the role of ethics versus law and what society experts with examples of specific ethical issues in business. We will discuss how businesses are responding to improve ethical decision making and we will conclude with ways and recommendations that would improve ethical decision making in the business.
Business ethics deals with moral issues of right and wrong in the business world. It focuses on how this moral and ethical principle is applied by a business people to situation that rise in their daily activities in the work environment. The general ethical standard that guides people applies equally to persons in the business workplace. Though more complex ethical issues and conflicts arise in the workplace, and need to be addressed that those which arise in our personal lives. Ethical behavior in a corporate world is influenced by factors such as cultural, organizational and external environment factors. (Miller and Cross, 1996)
Cultural influence on ethical behavior comes from friends, family, neighbors, education, religion and the media. Organizational influences results from ethical code, role models, policies and practices and punishment systems. The external environmental forces impact on political, legal, economic and international development.
The above factors work interdependently in shaping the ethical behavior of individuals and organizations e.g. the minimum wage bill on firms, which may lock people into an economic existence that prevents them from bettering their lives. The question here is that, if it is ethical to pay people only a minimum wage.
Important of business ethics
For business entrepreneurs understanding the business ethics is the single most important aspect to the long run viability of the enterprise. It is also important to the well being of the individual officers and directors of the business, as well as to welfare of the employees and other stakeholders.
It should be noted that decisions made at the cooperate level significantly affect not only those who own, work or operate in the business or company but also the community, suppliers and society as a whole. The ethics discussed under this context applies to all business regardless of their organizational forms e.g. in a partnership type of business all partners owes duty of trust and loyalty (fiduciary duty) to each other and to the firm. This might sometimes conflict to what each partner personally sees to his or her own best interest. Acting solely on ones owns interest in a business violates the duties to other partners and firm. The punitive damages that may arise as a result of such actions can be penalized under court of law. (Miller and Cross, 1996)
Creating ethical workplace
The major challenge facing managers and business owners is to create an ethical environment to deter unethical conduct. The attitude of the top management is an important factor in creating and maintaining this ethical workplace. The commitment of managers matters in creating such environments. The managers set examples to be followed by the employees and if they do not adhere to the obvious ethical norms in their business dealings, the employees will find no reason to do so by themselves.
A manager who cheats or looks the other way on unethical behavior of employees sets an example that ethical transgressions are acceptable. They need to show that such behaviors are unacceptable.
Business ethics and law
The aim of ethics and law is similar though not quite the same. They all aim at defining proper and improper behavior laws are societies attempts to formalize that is to reduce to written rules ideas about what is right and what is wrong in various walks of life (Sudan, 2003). Ethical concepts are however more complex the written rules. Ethics deals with human dilemma that frequently go beyond the formal language of law and meaning given to legal rules.
The legal compliance in today business language is regarded as the moral minimum which is standard ethical business behavior. However compliance to the law does not fulfill all business ethics obligations. For practical reasons it cannot satisfy all ethical requirements when preserving personal interest.
To determine whether a particular action is legal or not, is not a simple thing. This is one of the challenges that business people face as it might not be clear to them. Businesses are regulated by so many laws that it is impractical to follow all of them without violating even a single one without realizing.
Laws regulating business
Business laws apply in every country that firms are located. The government this regulates the operation of such firms. When a business starts operation to selling of products in the market place the statutory law set by each country plus other rules and regulations issues, regulates the business sector. These rules are changed or supplemented as the environment of business changes.
Decision makers use these laws to determine whether a planned action is valid as per the law. Large firms employ lawyers or Attorneys who assist them in making those decisions. It is also recommended that small firms seek legal advice before making business decisions as violation of a single of them is costly.
Ignorance does not pay in business. A manager or owner of a business cannot make an excuse from the liability for ignoring a statute or regulation. In some situations it is possible to predict with certainty whether a given action is legal e.g. firing an employee because of ones race or gender via clear violation of federal laws in USA which prohibits employment discrimination. In advertisement the law prohibits firms from engaging in deceptive advertisement. The federal law determines of an advertisement is deceptive if the claim presented deceives a ‘reasonable consumer’. (Jennings, 2005)
Decision makers in a firm have a big task of continuously evaluating an action and its consequences from an ethical perspective. A company can depend itself in court if it demonstrate that it acted in good faith and responsibility in the circumstances.
Business ethics study involves three levels; individual levels, cooperate level and society level. Ethical behavior not only increases long term earning; it also enables a business to anticipate and plan and social for social needs and cultural changes that requires the firms or its product to evolve in the community benefits involved concerns the goodwill that such good behaviors foster. (Miller, 2005)
A combination of legal framework, regulation and guidelines and standards for business are needed to provide guideline on business behaviors. These legal frameworks exists individuals corporate to adhere to and are a means of engendering public trust and integrity. They are administered by regulatory bodies or government authorities and these bodies ensure that the laws are not broken.
There are two categories of frameworks. The first is a legal binding and therefore is mandatory on all governed by them to comply the second is voluntary in nature and it is where individuals decide on what is good or best to practice in order to follow or adhere to the guidelines/standard (Mead & Sagar 2006)
The society expects that business adhere to the rules which it presumes to be ethical behavior. Though society expects such from firms, seldom does it occur, law breaking in business is common (Sudan, 2003). It is common for businesses to evade taxes, because hundred of employees to die because of occupational diseases, industrial accidents and others disabled.
Consumers may also suffer from those ills, as a result of poor quality and high prices, products supplied by businessmen. A business also causes misery to the society by damaging the environment, disregarding environment protection laws.
Managers are confronted with several ethical dilemmas. These ethical dilemmas are categories in the sources; face to face corporate policy and function area ethics (Sudan, 2003).
The face to face dilemma arise mainly because there is a human element in many business transactions e.g. it personal relationship between a sales representative and a purchasing agent may develop and this act as a boost in terms of keeping customer loyalty. Because of this human transactions face to face ethical dilemma always arise often. There is a likelihood that the quality officer in such a firm may winks at the minor effects and approves a lot delivered by a supplier because of the personal relationship the two enjoy between them. It is also unlikely that a supervisor over-rates the performance of an employee because of the similar relationship that exists between the two.
The cooperate policy ethics are dilemma, that affect companies operations across all departments and division e.g. interviewing a manager from a competitors company to hire him in the promise of being informed of the competitors plan for the coming years. The ethical burden in deciding corporate policy matters normally rest upon the top management; who have the responsibilities of forming policies and implementing them.
Functional Area ethics occurs in critical functional areas of a business. For example accounting of whose statements reveals the financial position of the company. Integrity honesty and accuracy are absolute accepted accounting standards whose purpose is to establish uniform standards for reporting accounting data. (Pg 63) Ethical dilemmas crops in when purchasing of materials and stock. The tendering system attracts bribes, kickbacks and discriminatory pricing arise between both supplies and the buyer. In marketing a firms ethical issues arises when pricing, advertising promotions product information are potential areas of ethical dilemma.
Business response to ethical behavior
There are a number of steps organizations are taking to improve ethical standards in their workplaces and if they are ignored how to deal with them. These initiatives include complying with current legal requirements. These proactive steps include. (A case on behavior change). (Fredrick, 1999).
- Taking the necessary initiatives to implement a meaningful program that addresses personal biases and values that foster discrimination against gender, age or nationality
- Securing commitment from top management since they are the ones to set examples and without them all efforts are doomed to fail.
- Developing and implementing a program that strives to change behavior, and not just attitudes in the short run.
- Creating a useful employee resource assistance program to develop a company regarding discrimination, harassment (sexual) with programs that have the ability to address such issues.
To improve ethical decisions making, first it is important to understand how others have approached the task. They managers need to improve their managerial performance; there is a special need for improved ethical decision making. The five reasons for the improvement are as a result of the following (Fredrick, 1999).
- The widespread erosion of integrity and exposure to ethical tasks.
- The cost of unethical workplace conduct
- The lack of awareness of ethically questionable, managerial, role-related acts.
- The global corruption pressures that threaten managerial and organizational reputations
- The benefits of increased profitability and intrinsically desirable organization order.
Business entrepreneurs should advocate the use models of ethical principles to guide organizational decision making. (Pg 149). To help in improving this decision business owners or managers should consider using the following guidelines systematical in their quest to make ethical decisions.
- Have you defined the problem accurately?
- How would you define the problem, if you stood on the other side of the fence?
- How did this situation occur in the first place?
- What is your intention in making this decision?
- How does this intention compare with the likely results?
- Whom could the decision injure?
- Are you confident that the decision made will be as valid over along period of times as it seems now
- Can you discuss without suspicions your decision or action to your boss, your CEO, the board of directors, your family or society as a whole?
- What is the symbolic potential of your action if understood? If misunderstood?
- Is it legal or will I be violating civil law or company policy
- Is it balanced, fair to all concerned in the short terms as well as in the long run?
- How will it make me feel about myself? Proud? Angered?
It is obvious that “wrong answers too the above questions should move the manager into considering his or her decision.
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Sudan, A.S. 2003.Organisation Effectiveness and Change, Anmol Publications PVT. LTD.
Wines, W.A.2006. Ethics, Law, and Business
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