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In the corporate business world, ethics and morals play a fundamental role. Each day, employees encounter moral and ethical dilemmas, and their individual sets of morals guide their behavior. While many grasp the basics of ethics, leadership, morality, and social responsibility, the deeper understanding of values, ethics, and morality remains elusive for most. This essay aims to shed light on the true meanings of these concepts and their significance in the corporate realm. Additionally, it will explore the distinctions between ethical and moral issues and examine instances of organizations that have suffered due to unethical and immoral behavior in business.
Let's begin by defining our key terms.
According to Merriam Webster's Dictionary, ethics is "an area of study that deals with ideas about what is good and bad behavior" and "a branch of philosophy dealing with what is morally right or wrong" (Merriam-Webster). In our text, ethics is described in two ways. Firstly, it is portrayed as the principles of conduct governing individuals or groups, such as the rules guiding one's personal life (Text pg 8).
For example, consider a child deciding whether to break the rules of a game.
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This choice introduces a conflict between the child and their playmates. Conversely, a child who opts to abide by the rules fosters friendship and closeness with their playmates, reaping personal benefits. Nevertheless, our text distinguishes ethics from morality, emphasizing that while ethics may encompass morality, the two are not synonymous (Text pg 8).
Our text clarifies ethics as an investigative endeavor that encompasses both the act of investigation and its outcomes.
In contrast, morality is the subject matter under scrutiny by ethics (Text pg 8).
Now, turning to morality, the dictionary defines it as "beliefs about what is right behavior and what is wrong behavior" and "the degree to which something is right and good" (Merriam-Webster). For instance, consider correcting a financial error in your favor, knowing it would never be detected, or a co-worker pilfering food from the freezer. These actions are morally wrong, prompting a moral issue: should you report them? In the workplace, guidelines and standards exist for employees to follow should they choose to remain employed.
Ethical principles serve as a compass for decision-making, providing criteria against which decisions are evaluated by others. In the business world, judgment of one's character is pivotal, as it forms the basis of trust and credibility. Your reputation hinges on people's perceptions of your actions—whether they are honorable and ethical. Your character, on the other hand, is shaped by your actions and their alignment with the following 12 ethical principles:
Character and reputation are of paramount concern for successful executives, as both can be tarnished by actions perceived as unethical (Josephson Institute). A plethora of organizations have suffered due to unethical practices by their top executives. Notable cases include Enron and WorldCom, both of which were decimated, while others like AIG, Fannie Mae, and Freddie Mac were severely damaged by the unethical actions of their leaders.
One of the most infamous cases is the Ponzi scheme orchestrated by Bernie Madoff and other Enron executives. Madoff swindled thousands of investors, promising consistent profits and falsely inflating the company's revenues through dubious accounting practices. When the scheme unraveled, Enron filed for Chapter 11 bankruptcy in December 2001. Madoff, on the other hand, went undetected for years, conning his investors out of $65 billion. He was eventually sentenced to 150 years in prison (S. Yang 2014).
On a more local scale, an example comes from my daughter's experience working at the Marion Housing Authority. The Executive Director, Frederick Hunt, terminated her for refusing to participate in unethical practices. After a three-year investigation, Hunt was arrested on charges of forgery, corrupt business influence, and theft for misusing over $20,000 in authority funds. This case underscores the repercussions of unethical behavior in the workplace (C. Franks 2014).
Traditionally, the attribution of responsibility for corporate actions has been based on the collective responsibility of an organized group, such as a corporation. In this view, the actions of the group are ascribed to the corporation itself rather than its individual members. Therefore, all members who knowingly and willingly contribute to a corporate action bear moral responsibility for that act. However, the legal system attributes the actions of a corporation's managers to the corporation as a whole rather than holding the managers individually accountable (Text pg. 62).
While the majority of companies prioritize ethical decision-making, some still attempt to circumvent the system. This is where the Sarbanes-Oxley Act of 2002 comes into play. This Act dissuades corporate wrongdoers from engaging in noncompliance with security regulations through its criminal and civil penalties. It also encourages independent auditing by certified external auditors and demands heightened levels of corporate disclosure in areas such as executive salaries, financial reports, and insider trading.
While the Sarbanes-Oxley Act may be perceived as burdensome by some companies, it instills greater confidence in investment activities by enhancing compliance with its provisions.
In conclusion, ethics, morals, and corporate responsibility are intrinsic to the fabric of the business world. The definitions and distinctions between these concepts are essential for understanding the principles that guide individuals and organizations in making morally sound decisions. Ethics, as an investigative discipline, explores the principles that govern conduct and behavior, while morality addresses beliefs about right and wrong behavior.
Ethical principles, such as honesty, integrity, and accountability, serve as the guiding light for decision-making in both personal and corporate settings. These principles are not mere abstract ideals; they are the foundations upon which trust, credibility, and reputation are built. Executives and managers must recognize the profound impact their actions have on character and reputation, as unethical behavior can have devastating consequences for individuals and organizations alike.
The corporate landscape is replete with cautionary tales of companies that have crumbled due to unethical practices. The cases of Enron, WorldCom, and Bernie Madoff's Ponzi scheme illustrate the perils of prioritizing personal gain over ethical principles. Similarly, the local example of Frederick Hunt's actions at the Marion Housing Authority highlights the importance of upholding ethical standards in the workplace.
Corporate responsibility extends beyond the organization to its stakeholders and society at large. The Sarbanes-Oxley Act of 2002 serves as a crucial mechanism for maintaining accountability and transparency within corporations. While it may impose regulatory burdens, its provisions are indispensable in fostering investor confidence and preventing corporate malfeasance.
Ethics, Morals, and Corporate Responsibility. (2016, Aug 22). Retrieved from https://studymoose.com/corporate-business-world-ethics-and-morality-essay
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