VeBridge News: 3-23-07

Business Lexington Article - Ethics in Business

By Dave Anderson
Guest Commentary

There is an old proverb that says “As iron sharpens iron, so one man sharpens another.” I believe it is time for us to sharpen iron, because businesses may be losing the public trust. Recent days have brought us big stories concerning corporate business ethics. Few will argue that businesses today are being held to a higher standard. Some of these standards are instituted by government. Others are being mandated from higher powers: customers, employees and the public. Furthermore, a study entitled The Ethics of American Youth distributed by the Josephson Institute of Ethics indicates the future will be just as demanding. Ninety-eight percent of the high school students surveyed, those who will become the workforce of tomorrow, indicated “honesty and trust are essential in personal relationships.” When asked about ethics in the workplace, 94 percent answered, “In business and the workplace, trust and honesty are essential.” In Press Release 2000, based upon a random sampling of American workers from across the nation, the Ethics Resource Center (ERC) found, “American workers say they expect their employers to do what is right, not just what is profitable.” Regardless of who is authoring these standards, businesses are now under a microscope and must consider the ethical standards they choose to apply to operations.

So, what are “ethics”? According to Webster’s Dictionary, ethics are “principals of right, or good conduct.” They are “a system of moral values.” But what does this mean for your business? Do ethics help you gain new business, repeat business or the best and brightest employees? Some say, “No, our employees are already honest.” Others believe ethics have no place in the workplace because they are a matter of religion. Nothing could be further from the truth. Ethical practices, or the lack thereof, impact your business, arguably at every level. Michael Daigneault, president of ERC, the oldest nonprofit in the United States devoted to organizational ethics, said of Press Release 2000, “This is one of the largest, most in-depth and rigorous recent studies on the attitudes of American workers towards workplace ethics. Ethics matter to employees across the country. In fact, employees state that their organization’s concern for ethics is a key reason why they remain in their jobs.”

Realistically, we all exercise ethics everyday. They are the rules we apply to our actions, the basis of our decisions. Typically, we employ one of four fundamental approaches to making decisions. First is that of utilitarianism. In this approach we make our decisions based upon the result yielding the greatest good for the greatest number of people. Second is that of cost-benefit, in which our decisions are made based upon the costs and benefits of making a particular decision, versus the costs and lack of specific benefits from not making the decision. A third approach is through the application of the Golden Rule. This concept requires us to treat others, through the decision-making process, as we would treat ourselves. Finally, the moral basis approach requires decisions be made based on being either right or wrong, according to our individual moral standard. This approach assumes a moral standard can be applied by which all decisions can be measured and determined to be right or wrong.

Today, many businesses prefer to base decisions on the utilitarian approach, the cost-benefit approach, the Golden Rule approach or a combination of the three. Unfortunately, incorporating all of these approaches leads to situational ethics resulting in inconsistent application of company policy and confused employees. Situational ethics forces management to make all decisions or mandate a strict script that must be adhered to by all non-decision making employees. It removes the employee from the decision equation because the employee has no true standard to follow. This idea appears to be supported by the findings in Press Release 2000, indicating in many cases employers that have ethics programs and whose leaders model ethical behavior benefit by having employees who follow their lead and mimic those behaviors. This is important because the study also indicated that one in eight employees are pressured to compromise their organization’s ethical standards, and nearly two-thirds of those employees being pressured are pressured from top management.

Therefore, it is the responsibility of top management to set the example, to develop the standard and to communicate regularly and often the expectation that employees are expected to be honest, truthful, reliable and dependable. Additionally, management must communicate employees are to use ethical judgment in their jobs and that judgment should be consistent with principals, ethics if you will, placing integrity, honesty and truth above the bottom line and the individual sale. But most importantly, it is top management’s responsibility to illustrate these principals through words, actions and deeds. Company policy cannot contradict. There is no teaching as strong as a good example, and as the old saying goes, “As iron sharpens iron, so one man sharpens another.” By setting the standard and communicating it both in word and deed, management holds the employee accountable for their actions and creates an environment where the employee is freely encouraged to hold management accountable, too. In that environment everyone wins — the employee, management, and the company, but most importantly, the customer. As business professionals, we all can contribute to rebuilding the public trust.

Dave Anderson is COO of VeBridge. He can be reached at (859) 255-5222 or by e-mail at dave.anderson@vebridge.com.