Wednesday, May 25, 2011

A Word About Corporate Ethics

Ethics can be described as principles that distinguish between right and wrong. Companies usually pronounce their ethics in value statements, in new employee training, and in employee manuals. Sometimes organizations post their ethical stances on their websites, while some just use them as internal guiding principles. In any event, ethics are important for all sorts of organizations and individuals. Ethical business practices and behaviors can affect not only customer trust, but also one's legal standing.

Most people would agree on many ethical issues. Practices such as stealing, lying, or murder are quick to be condemned. However, people disagree over profit margins, environmental impacts, and disclosure. The reasons are too numerous to state here in detail, because they involve more than actions. People's sensibilities, company reputation, and misinformation all play a part in how people view certain ethical issues.

So, as an organization or individual, how do you clarify your values and ethics?

Think about ethics in this manner. Let's say someone builds a road for vehicles. It's a smooth two-lane road. One going one direction, while the other going in the opposite direction. This type of road may require a speed limit of 35 miles per hour because of the exits and school crossings. And the road is not designed for heavy traffic. By setting the parameters and usage instructions for the road, the best practices that will match the road's intended purpose are also set.

What becomes ethical behavior on this road will be whatever matches the road's intended purpose. In other words, since the road is suppose to be a safe passage for a moderate amount of car traffic, anything deviating from that purpose is less than ideal at best.

For instance, a pothole is a deviation. And ethically, it needs to be fixed, because it is not intended for this road (or the safety of vehicles). Or let's say people use it as a 50 mile per hour freeway. That is unethical, because the road was built for safe passage, not only for vehicles, but for school children. And let's say the traffic more than triples it's intended volume. It needs to be addressed because it no longer serves it's purpose as passage for a moderate amount of vehicles.

For organizations, discussions about corporate ethics must start with the purpose of business, it's role in society, and then to the specific organization's role and purpose. Ethical principles need to be defined, at the very least, by these before dealing with more complicated moral issues. Other values, like moral character, need to be defined by timeless truths and a more philosophical approach to the nature of mankind.

All this is oversimplified for sure, because I'm not addressing human nature, and levels of infractions and consequences. (For example, we intuitively know that corporate stealing is a worse infraction than bad customer service.) And there are issues of character that can only be addressed by discussing the purpose of humanity. But just like finding the edges of a puzzle, starting with the tangible consequences of an organization's existence, and it's role in the history of business and society, it's a good strategy for clarifying values and ethics.

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