A Practical Guide to Evaluating Professional Business Ethics
Business has created wealth that has given numerous individuals financial
freedom, yet at the same time, it has widened the gap between the rich and the poor. The philosophy of business considers the primary principles that underlie the operations of an enterprise. Developing a balanced business ethic between profit-taking and honesty is perhaps one of the most difficult tasks for a corporation. In the wake of post-communism, we are now living in triumphant times of global capitalism; but the inevitability of corporate greed and deception in this system can create devastating results like Enron, WorldCom and Arthur Anderson.8 These corporations failed because of the people that work there; a series of deceptive operational decisions left these billion-dollar corporations and their millions of investors in demise. And there are many other examples of smaller companies undergoing “corporate restructuring” in an effort to save themselves. What business ethics involves is the plundering of natural resources, exploitation of labor in lesser-developed nations, unfair competition, impacts on the environment, treatment of employees and social responsibility.1 Business managers must keep all of these points in mind when making decisions on behalf of their organizations. This paper will look at the different factors a manager ought to look at when making informed decisions, with consideration of the stakeholders – the manager him/herself, the corporation and greater society. Through the use of the role-differentiated model, the utilitarian model and the professional contract model, I contend that a business manager has moral right but not the moral obligation to act up to the limits of law in any situation; in other words, the manager will be considered amoral only if he/she has broken the law.
First we must understand that all business is anchored in the subjective viewpoints of the manager, of the corporation and of society. Each of these distinct and interconnected entities hold their own beliefs on what businesses ought and ought not to do, and these beliefs often conflict with one another. What we need is a practical method of resolving morality in business dilemmas, and I feel the best way to do it is by reducing business ethics to the law. Legal reduction gives us a more practical way of resolving black and white issues, whereby the grey area is significantly reduced in size. The law gives managers a clear view of the limits of a corporate decision.
An opponent of this view might step in and argue that many business situations cannot be resolved to law. For example, if a business is giving customer ABC a favorable discount but not to customer XYZ, although not legally wrong some opponents would suggest that this is ethically wrong because all customers ought to be treated equally. However, we must recognize that this is part of regular business deals. Capitalism and wealth is created by imbalances of assets between countries, businesses and peoples. There is a certain amount of wealth in this world created by the perception of value by different groups of people. The imbalance of perceived value has made countries like USA and Canada richer than countries like Uganda and India. In addition, most business managers are smart people, they know how to develop relationships and how to make money for their organizations or they would not be where they are. Their decision to treat a specific customer favorably is calculated risk that they have decided to take on behalf of their organizations. Hence, giving one customer a favorable discount is simply a part of doing business in the global economy. According to the definition discussed in this paper, the above situation is not morally wrong because the business has not violated any legal rules.
I will limit my discussion to business managers within corporations in North America because these seem to be the highest group of people that are scrutinized when the issue of business ethics arises. In addition, different cultures have different business practices that we may not completely agree with (bribery in countries like China and India are common); limiting our discussion to what we know will make the topic more applicable to the North American business culture. However, do keep in mind that the concepts covered are more or less applicable to all businesses regardless of size, location and authority. I will also assume that all business managers make decisions based on the best interest of the organization.
Before going into the details, I will
discuss some background basics of business ethics. A corporation is “an association of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members.”6 Hence, a business is distinct from the individual; it has different social, legal and ethical rules from any human being. Many large corporations have a “corporate code of conduct” which is a set of company policies that define ethical standards for their conduct. This code is normally a reflection of a company’s culture, values and a representation of the law. It is completely voluntary, and can take a number of formats and address any issue. Fundamentally, the code is dependent on its credibility taken by industry, unions, consumers and governments.2 In most organizations, business managers make decisions based on this code because it’s simply the easiest thing to do, and it is likely to be what is best for the corporation. In some cases however, managers will choose to violate the code to gain a favorable position; this often results in moral dilemmas.
Role differentiation is a concept often employed by professionals of law, medicine and business. Role morality is based on the idea that there are certain moral responsibilities that change as we move between roles within society. These duties may conflict with those acceptable by reference to ordinary citizenry morality. For example, a defense lawyer because of her role must defend her client wholeheartedly even knowing that her client has committed the crime and is capable of repeating the crime if released. Similarly in business, decisions ought to be made based on the professional role of managers, and not the individual managers themselves. A corporation is owned by shareholders; managers are professionals representing the company who have special business acumen that majority of the population do not have. As a result, similar to how doctors are professionals of the medical system; an executive should practice in the interest of the business with the end-goal of benefiting the shareholders. A manager acting on behalf of the business may feel morally obligated one way toward a decision, but because she is acting on behalf of the business, the decision she makes is by no means an immoral one. If the manager does not take action because his personal morals overpower the professional morals, then he is not a good manager, which means that he may be penalized by the system – i. e. fired by management, decreased salary & bonus etc.
Albert Carr is a supporter of role morality. Carr’s game theory suggests that business is much like a poker game whereby bluffing is a sort of business strategy used by businesses to win the game. Carr’s theory is that if a business does not take advantage of a legal opportunity, then others will; hence, it is in the interest of the business manager to take the advantage up to the limits of law. For example, let us say that you are in the middle of a deal that if goes through would boost the company’s earnings significantly. Yet the deal is very tough to make because your buyer has five other vendors competing for the same contract. You know the buyer likes to watch the Los Angeles Lakers and you are confident that if you are able to accommodate his wishes - fly him down for the game with court-side seats, you will have a great shot at closing the deal. However, one of your personal values is to never bribe for anything, and to always earn it with hard work. What should you do?
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