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Asked by: Layla Kozey Jr. Factors affecting business ethics 1. The individual's personal code of behavior: The personal Code of Behavior is the result of the complex environment that influences one's life. 2. ... The policies of the company also influence the determination of ethical conduct.Which of the following factors affect business ethics?There are three major factors that can affect your ethical behavior: Individual factors, such as knowledge, values, personal goals, morals and personality. Social factors, such as cultural norms, the Internet and friends and family. What are the factors affecting business?There are many forces influencing how a business performs in the marketplace. When considering strategic business decisions, businesses analyze the six general environmental forces: political, economic, sociocultural, technology, environment and legal factors. Which of the following are factor influencing ethics?Factors influencing ethical behaviour? School/ Education Desire to preserve/ enhance status Loyalty to Family/ Friends/ Company Company Ethos Professional Ethics … Cultural/ societal values Media influences/ coverage Legal constraints (Government) Enforcement (Legal/ Professional/ Religious) … … How does business ethics affect the business?Ethics Improves Your Business Reputation When you have a reputation for consistently being ethical in how you source and build products, and treat employees, customers and the community, more people will want to do business with you. Even social media ethics is important for your reputation. 41 related questions found
Ethical Issues in Business
In this article, we explain what business ethics are with examples of common professional codes of conduct....
Three of the important components of ethical decision making are individual factors, organizational relationships, and opportunity.
It generally covers areas such as fundamental honesty and adherence to laws; product safety and quality; health and safety in the workplace; conflicts of interest; fairness in selling/marketing practices; and financial reporting.
Individual, social, and opportunity factors all affect the level of ethical behavior in an organization. Individual factors include knowledge level, moral values and attitudes, and personal goals. Social factors include cultural norms and the actions and values of coworkers and significant others.
Internal factors are factors within a business that can be controlled by the organisation.... The main internal factors are:
Factors of Business Environment and its Influence
Examples of environmental factors affecting business include:
Business Ethics for Executives
Business ethics is the study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.
Eight Elements of an Ethical Organization
Individual factors, such as knowledge, values, personal goals, morals and personality. Social factors, such as cultural norms, the Internet and friends and family.
There are three important factors that can influence ethical decision making, which are individual, organizational, and opportunity factors. All three of these factors can weigh heavily on a person during the decision making process, especially in the work place.
During the decision making process, there are four behavioral factors that influence the decisions we make. These behavioral factors are our values, our personality, the propensity for risk, and the potential for dissonance of the decision.
The following are examples of a few of the most common personal ethics shared by many professionals:
Ethics essentially involves people and the way people treat others. Ethics means the set of rules or principles that the organization should follow. ... Business ethics refers to a law of behavior that organizations are required to ensure while doing business.
Many or even most ethical codes cover the following areas:
The 5 Biggest Ethical Issues Facing Businesses
Top Ten Problems Faced by Business
Environmental factors include temperature, food, pollutants, population density, sound, light, and parasites.
Business ethics is the written and unwritten principles and values that govern decisions and actions within companies.
Recall the three disciplines of business ethics Key TakeawaysKey Points
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Ethics is the branch of philosophy concerned with the meaning of all aspects of human behavior. Theoretical ethics, sometimes called normative ethics, is about delineating right from wrong. It is supremely intellectual and, as a branch of philosophy, rational in nature. It is the reflection on and definition of what is right, what is wrong, what is just, what is unjust, what is good, and what is bad in terms of human behavior. It helps us develop the rules and principles (norms) by which we judge and guide meaningful decision-making. Business ethics, also called corporate ethics, is a form of applied ethics or professional ethics that examines the ethical and moral principles and problems that arise in a business environment. It can also be defined as the written and unwritten codes of principles and values, determined by an organization’s culture, that govern decisions and actions within that organization. It applies to all aspects of business conduct on behalf of both individuals and the entire company. In the most basic terms, a definition for business ethics boils down to knowing the difference between right and wrong and choosing to do what is right. There are three parts to the discipline of business ethics: personal (on a micro scale), professional (on an intermediate scale), and corporate (on a macro scale). All three are intricately related. It is helpful to distinguish among them because each rests on a slightly different set of assumptions and requires a slightly different focus in order to be understood.
Ethics are of critical importance to organizations, as they can potentially have enormous impacts on their communities.
Outline the various ethical philosophies over time, and integrate them into a meaningful understanding of ethical behavior Key TakeawaysKey Points
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Ethics are a central concern for businesses, organizations, and individuals alike. Behaving in a way that adds value without inappropriate conduct or negative consequences for any other group or individual, organizational leaders in particular must be completely aware of the consequences of certain decisions and organizational trajectories, and ensure alignment with societal interests. There are many examples of ethical mistakes in which organizational decision makers pursued interests that benefited them at the cost of society. The 2008 economic collapse saw a great deal of poor decision-making on behalf of the banks. The Enron scandal is another example of individuals choosing personal rewards at the cost of society at large. These types of situations are extremes, but they highlight just how serious the consequences can be when ethics are ignored. How to Frame Issues EthicallyOne complexity of building a strong ethical foundation into an organization is the simple fact that there are many schools of thought. Ethics are in some ways a branch of philosophy, in which the idealized perspective is both malleable and uncertain. However, some powerful examples of ethical frames are available to us from many different time periods. There are four schools of thought that are useful for framing future strategic decisions to ensure ethical behavior. These perspectives are utilitarian, deontological, virtuous, and communitarian approaches. Utilitarian ApproachPerhaps the cleanest and simplest perspective on ethical behavior, a utilitarian will always ask one question: what is the ideal outcome for the highest number of people? This approach simply considers the impact of ones actions on others, and tries to ensure that the best outcome for the most people is what ultimately occurs. While this outcome-based reasoning is quite useful, it has one fatal flaw. The definition of ‘best’ when discussing what’s best for the most people can become quite subjective. As a result, when utilizing this ethical reasoning to make decisions, it is important to set terms and create definitions that enable the reasoning to have applicable and measurable logic. Simply put, one must ensure they define their terms, and what they mean by good, when pursuing this ethical line of reasoning. Deontological ApproachPopularized by Emmanual Kant, the central term in this point of view is duty. Kant disliked the concept of utilitarianism for one simple reason: the ends should not justify the means. Indeed, Kant’s ethical argument is that moral maxims of respect for one another and appropriate behavior serve as a groundwork for all ethical reasoning. It is these core concepts which can never be sacrificed for the greater good. Virtue EthicsPopularized by Greek philosophers such as Aristotle, this point of view assumes that virtue is a central benchmark for all ethical behavior. What is meant by virtue in this context is a desire to perform a certain act as a result of deep contemplation on the value of that act. To make this act virtuous is to perform it with excellence. As a result, we have a deep contemplation of the value of a certain behavior or decisions, which we apply great practice and consideration. Following this, we can approach the perfect execution of that act or behavior through our rational minds. In this school of ethical thought, it is similarly important to discard the justification of a means by the ends of that means. Which is to say this an act should be performed because it is desirable in and of itself, and not for the sake of something else. Each behavior is therefore considered carefully, rationally and virtuously to ensure it is valid, beneficial, and valuable. Communitarian EthicsFinally we have communitarian ethics. In this perspective, the individual decision-maker should ask about the duties owed to the communities in which they participate. This is a relatively simple frame of reference, where the individual decision maker will recognize the expectations and consequences of a given decision relative to the needs, demands and impacts of a certain preferred community. Ethical behavior requires careful consideration of all frames, and a thorough understanding of the impacts of a given decision.
Integrating Ethics: This video provides some overview of ethical perspectives.
A critical function of organizational management is empowering a positive sense of values and ethos at the individual level.
Understand the interaction between individual ethics and organizational management Key TakeawaysKey Points
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Ethical behavior, be it at the organizational, professional or individual level, is a direct representation of the principles and values that govern the individual and the organization they represent. Organizations create an internal culture, which is reflected externally as organizational values. These values impact the relationships within the organization, productivity, reputation, employee morale and retention, legalities, and the broader community in which they operate. As a result, most organizations generate a statement of organizational values and codes of conduct for all employees to understand and adhere to. Motivating and reinforcing positive behavior while creating an environment that avoids unethical behavior is a critical responsibility of both managers and employees. How To Empower EthicsStructureAt the individual level, organizations must focus on developing and empowering each employee to understand and adhere to ethical standards. There are four basic elements organizations can build to empower individual ethics:
Equipping organizations with these four components can alleviate much of the burden on the individual, and enable each employee to learn what is appropriate (and what isn’t). MotivationAs with most facets of management, there is also a critical motivational component to individual ethics. Intrinsic and extrinsic motivations can reinforce positive behavior and/or eliminate negative behavior in the workplace. Whistleblowing, for example, is a practice that gets quite a bit of both positive and negative media attention. Whistleblowers are individuals who identify unethical practices in organizations and report the behavior to management or the authorities. A whistleblower who behaves honestly, reporting a problem accurately, should be rewarded for their bravery and honesty, as opposed to punished and ostracized. If an employee is blowing the whistle, it is likely that the organization itself has failed to empower and positively reinforce honest and ethical discussions internally. Another example is rewarding employees for admitting mistakes. An employee who makes a mistake on the assembly line, and accidentally produces a batch of defective goods, could react in a number of ways. If the organization punishes employees for mistakes, the employee is quite likely to be motivated to keep quiet and not mention it to avoid punishment. However, if the organizational is ethical and clever, they will empower employees to take responsibility for their mistakes and even reward them for coming forward, apologizing, and ensuring that no consumer receives a defective product. It seems at first counter-intuitive to reward an employee for a mistake, but ultimately it provides the best outcome for everyone. ProfessionalismFinally, some aspects of individual ethics are rooted in the individual. Attaining a strong sense of professionalism, and recognizing the ethical implications of certain professional decisions, is a key component of education, individual reflection, and experience. For some professions it is even more critical and relevant than others. Journalists, for example, could easily attain higher notoriety for making up false stories about celebrities to gain traffic to their news website. But an ethical journalist recognizes the repercussions of slander for the individual being discussed, and maintains an honest ethical code of reporting only what they know to be true (and not what they speculate). Psychologists will maintain patient privacy, understanding the repercussions of leaking personal information about their patients. There are many potential examples, but the primary point is that professionals understand the their field deeply, including the repercussions of making ethical mistakes.
Organizational ethics express the values of an organization to its employees and affect all functional areas in a business.
Evaluate ethical issues that face organizations in the fields finance, human resource management, sales and marketing, and production Key TakeawaysKey Points
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Organizational Ethics is how an organization ethically responds to an internal or external stimulus. Organizational ethics express the values of an organization to its employees and other entities, irrespective of governmental and/or regulatory laws. There are at least four elements that make ethical behavior conducive within an organization:
Ethical Issues in FinanceThe 2008 financial crisis caused critics to challenge the ethics of the executives in charge of U.S. and European financial institutions and regulatory bodies. Previously, finance ethics was somewhat overlooked because issues in finance are often addressed as matters of law rather than ethics. Fairness in trading practices, trading conditions, financial contracting, sales practices, consultancy services, tax payments, internal audits, external audits, and executive compensation also fall under the umbrella of finance and accounting. Specific corporate ethical/legal abuses include creative accounting, earnings management, misleading financial analysis, insider trading, securities fraud, bribery/kickbacks, and facilitation payments. Ethical Issues in Human Resource ManagementHuman resource (HR) management involves recruitment selection, orientation, performance appraisal, training and development, industrial relations and health and safety issues. Discrimination by age (preferring the young or the old), gender, sexual orientation, race, religion, disability, weight, and attractiveness are all ethical issues that the HR manager must deal with. Ethical Issues in Sales and MarketingEthics in marketing deals with the principles, values, and/or ideals by which marketers and marketing institutions ought to act. Ethical marketing issues include marketing redundant or dangerous products /services; transparency about environmental risks, product ingredients (genetically modified organisms), possible health risks, or financial risks; respect for consumer privacy and autonomy; advertising truthfulness; and fairness in pricing and distribution. Some argue that marketing can influence individuals’ perceptions of and interactions with other people, implying an ethical responsibility to avoid distorting those perceptions and interactions. Marketing ethics involves pricing practices, including illegal actions such as price fixing and legal actions including price discrimination and price skimming. Certain promotional activities have drawn fire, including greenwashing, bait-and-switch, shilling, viral marketing, spam (electronic), pyramid schemes, and multi-level marketing. Advertising has raised objections about attack ads, subliminal messages, sex in advertising, and marketing in schools. Ethical Issues in ProductionBusiness ethics usually deals with the duties of a company to ensure that products and production processes do not needlessly cause harm. Few goods and services can be produced and consumed with zero risk, so determining the ethical course can be problematic. In some cases, consumers demand products that harm them, such as tobacco products. Production may have environmental impacts, including pollution, habitat destruction, and urban sprawl. The downstream effects of technologies such as nuclear power, genetically modified food, and mobile phones may not be well understood. While the precautionary principle may prohibit introducing new technology whose consequences are not fully understood, that principle would have prohibited most of the new technology introduced since the industrial revolution. Product testing protocols have been attacked for violating the rights of both humans and animals.
Treating employees equitably enables substantial organizational benefits while avoiding unethical operations and the corresponding consequences.
Understand the importance of an employee’s perception of an organization’s decisions, and the impact this can have on performance. Key TakeawaysKey Points
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Equitable treatment of all employees and stakeholders is critical to organizational success and the proper execution of business ethics. Awareness of potential fairness pitfalls, and ensuring that all employees feel valued and equitably treated, can avoid a wide variety of ethical and operational problems, while maximizing employee performance through providing a healthy environment for people to flourish and grow. Organizational JusticeTo ensure an organization is fair, one must consider the concept of justice as a central pillar of what creates a fair environment (and what does not). The question is simple: how do employees perceive the behavior of the organization, and how does this impact both employee and organizational outcomes ? In answering these questions, there are three useful perspectives one can adopt in considering fairness in the organization:
Implications of FairnessThere are many overt and subtle outcomes of treating employees equitably. The simplest examples of positive results due to a strong sense of ethical fairness in an organization include:
While there are many more examples of consequences avoided and benefits achieved from an ethical operational approach, this paints a clear picture of why it is important and how to frame manager’s perspectives to ensure equitable behavior.
Transparency consists of operating in such a way that it is easy for others to see what actions are being performed.
Explain how a company uses transparency to open communication and why this is crucial to building connections and a sense of community Key TakeawaysKey Points
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Transparency, as used in science, engineering, business, the humanities and in a social context more generally, implies openness, communication, and accountability. Transparency means operating in such a way that it is easy for others to see what actions are performed. For example, a cashier making change at a point of sale by segregating a customer’s large bills, counting up from the sale amount, and placing the change on the counter in such a way as to invite the customer to verify the amount of change demonstrates transparency. Radical transparency is a management method where nearly all decision making is carried out publicly. All draft documents, all arguments for and against a proposal, all final decisions, and the decision making process itself are made public and remain publicly archived. Corporate transparency, a form of radical transparency, is the concept of removing all barriers to—and the facilitation of—free and easy public access to corporate information. This includes the laws, rules, and processes that facilitate and protect those individuals and corporations that freely join, develop, and improve the process. Companies should make a commitment to open communication because communication is crucial to building connections and a sense of community. If we cannot communicate our thoughts, opinions and ideas, we remain isolated and cut off from each other. Open communication also allows for the possibility of self correction and group problem solving. Open communication leads to better decision-making and faster error correction. The transparency that occurs as a result of open communication protects against potential abuses of power and makes for a safer environment overall.
A situation in which someone in a position of trust has competing professional or personal interests is known as a conflict of interest.
Outline how self-dealing, outside employment, family interests, pump and dumps, and gifts exemplify conflicts of interest, and differentiate that from an impropriety Key TakeawaysKey Points
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A conflict of interest (COI) occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other. The presence of a conflict of interest is independent from the execution of impropriety. Therefore, it can be discovered and voluntarily defused before any corruption occurs. In fact, for many professionals, it is virtually impossible to avoid having conflicts of interest from time to time. It can, however, become a legal matter for example when an individual tries (and/or succeeds in) influencing the outcome of a decision, for personal benefit. A director or executive of a corporation will be subject to legal liability if a conflict of interest breaches his/her Duty of Loyalty. Conflict of Interest vs. ImproprietyThere often is confusion over these two situations. Someone accused of a conflict of interest may deny that a conflict exists because he/she did not act improperly. In fact, a conflict of interest can exist even if there are no improper acts as a result of it. One way to understand this is to use the term “conflict of roles”. As an example, in the sphere of business and control, according to the Institute of Internal Auditors:
An organizational conflict of interest (OCI) may exist in the same way (as described above) in the realm of the private sector providing services to the government, where a corporation provides two types of services to the government that have conflicting interest or appear objectionable (i.e.: manufacturing parts, and then participating on a selection committee for parts manufacturers). Corporations may develop simple or complex systems to mitigate the risk, or perceived risk, of a conflict of interest. These are typically evaluated by a governmental office (e.g., in a US Government RFP) to determine whether the risks pose a substantial advantage to the private organization over the competition or will decrease the overall competitiveness in the bidding process. Types of Conflicts of InterestsThese are some of the most common forms:
Other improper acts that are sometimes classified as conflicts of interests may be better classified elsewhere: e.g., accepting bribes is corruption; the use of government or corporate property or assets for personal use is fraud; not conflict of interest. Codes of EthicsThese help to minimize problems with conflicts of interest because they spell out the extent to which such conflicts should be avoided, and what the parties should do where such conflicts are permitted (disclosure, recusal, etc.). Thus, professionals cannot claim that they were unaware that their improper behavior was unethical. As importantly, the threat of disciplinary action (for example, a lawyer being disbarred) helps to minimize unacceptable conflicts or improper acts when a conflict is unavoidable. As codes of ethics cannot cover all situations, some governments have established an office of the ethics commissioner, who should both be appointed by and report to the legislature. |