Business ethics is a relative term, and can be looked at from various angles, all equally rational and valid. There are many economists, sociologists and philosophizers who’ve defined these ethics in their own way and from different perspectives. One of the most simple ways to explain business ethics is that business ethics are a code of ethical conduct. Adherence to which is expected out of organizations that work in a particular society, so as to not harm members of such a society or the society itself, in any manner. Earlier, the sole motive of all organizations was profit maximization. Today, profit maximization cannot be achieved if ethics or morals applied in that business are compromised on. Importance of business ethics in employment and in society is a key study for all of us who owns a business, or believes in being a thoughtful and informed customer.
In every business, there comes a time when profit maximization and social issues meet at a common junction. If at that time, the social issues are compromised on, there is a break of ethical code. To make this more simple, let’s assume that organizations are people. This is the case under most countries including the United States where companies are legally considered as persons. If that person, for his personal benefit, decides not to comply with the norms of society or doesn’t deliver as promised, he is guilty of his actions. This is where business ethics come in to the picture, to avoid a clash between personal gain and social benefit. Business ethics are a term of today, having been formed somewhere around the 1970s. The history of business ethics and its co-relation with other economic and commercial terms is discussed below with some examples. These will help give you a good understanding of the term.
More About Business Ethic
Now, if we see birth of the term business ethics, it’s pretty much contemporary. But, the whole idea has evolved through ages and can be traced back to quite a few decades if not centuries. In the olden times, slavery was allowed and finally it was banned. There was an entire era of colonialism, today we cannot even think of something on those terms. There have been wars and those wars have traditionally been out of one simple interest, more power which would only be done through a lot of profit. The businesses in olden times were seldom responsive to the communities where they flourished. There was monopoly on a massive scale and sometimes, there were likewise no ends in order to satisfy the needs. Eventually, we had economic laws that formed better ways for efficient co-existence. From 1970 to somewhere around the mid 80 ‘s, there were more than 500 courses that were started to cope with academic survey of the term business ethics. In 1980, emerged the Society for Business Ethics and about seven years later, business schools in Europe started with the European Business Ethics Network. With so much hype around the term, somewhere around the 1990s or perhaps a little before that, various companies and organizations started advertising how they’re morally bound to their business ethics. This was to respond to the various scandals arising out of not following the business ethics.
According to economist Milton Friedman, corporate executives’ responsibility… Generally will be to make as much money as possible, while conforming to their basic norms of the society, both those embodied in the act and those embodied in ethical custom’. Today business ethics are much more defined than they were before, and that too from different perspectives. Today, fiscal policies are made keeping in mind the ethics rather than only the law. The funds have to be maintained ethically and the use of these, again, needs to be made correctly. Human resource is another area that is directly linked to the business ethics. The business should in no manner hamper the sake of the workers. Policies have to be formed keeping in mind the say of the trade unions. Recruitment, selection and promotions have to be undertaken keeping in mind only the action of the individual. Marketing of a specific product or service needs to be done keeping in mind the society where these businesses function. Business firms shouldn’t market or advertise or promise anything that they cannot deliver. Every society has different set of standards and regulations which a business needs to understand to function efficiently and of course, ethically. A lot of companies and corporates were against the strict following of these business ethics earlier. However, today there is The International Business Development Institute that offers a Charter in Business Development (CBD). This charter states what exactly are, and are not, business standards and practices.
Let’s assume that there’s a company called A that deals into manufacturing of fairness creams. This company starts advertising that after using this cream, the customer would be in a position to achieve fairness in just 7 days. Most of the time, this is not true and the disclaimer is a test of these. These companies started advertising in terms of shades fairer than just fair after the whole hype about code of ethics in business. Business ethics in pharmaceutical industries are the best to study. First, the medicines have to be effective and deliver results as per promised. Second, they shouldn’t have any short or long term effects. Third, they shouldn’t be very expensive as the common man is the customer that we’ve to response in the end. Now, let us take an illustration of a service rather than a product. From time to time, there are offers that companies come up with for the benefit of the customers. One such commonly seen offer is the free delivery of certain food items, if not delivered in time. Here, the size of the provisional and the region where the order needs to reach should be properly explained so that the society isn’t mislead. If it does not reach on time, the order should be free in all terms.
A strong customer ethic must guide your business, even if it means losing money at times. A customer should feel special every time they’re serviced.
Employees come first to be in a position to serve the customer better. Once an employee feels they’re capable of helping the customer without limitations, the customer can be helped well.
Some academics argue that business ethics is but the want of drawing equilibrium between relativism and idealism. Business ethics also gave birth to corporate social responsibility (CSR) that dealt with the social responsibility of corporates towards communities and the wellbeing of society at large. I hope this information helped you understand what are business ethics, properly and clearly.