Business ethics set the standard for how your business is conducted. They define the value system of how you operate in the marketplace and within your business. With legal scandals concerning insider trading and employee theft making the news, it is no wonder that businesses are increasingly giving attention to the ethical basis of their business and how to lead in an ethical way. While the examples above seem to be clear-cut breaches of ethics, many ethical dilemmas that are not so clear-cut are faced on a daily basis in business. In fact, there may not even be a “right” or “wrong” answer to the dilemma, but how you deal with it will says much about you and your business.
These decisions are often referred to as being in the “gray” area. They are not black-or-white, but could be argued appropriately either way.
Importance of Business Ethics in your company
There are definite advantages to owning your own business when you want to establish an ethics policy. Basically ethics come from the top. Without setting an example at the top, it is often difficult, if not impossible, to convince your employees that they too should be ethical in their business dealings. A well-defined ethics policy along with an outline of related standards of conduct provides the framework for ethical, moral behavior within your company.
What is the benefit of developing such a policy, you may be wondering. The benefit is higher employee morale and commitment that in most cases leads to higher profits. But higher profits should not be your motivating factor in defining your ethics policy.
An ethics policy should look at the bigger picture of how we relate to society as a whole and what our responsibility is to the greater good. Of course, in these days of downsizing and increasing change, some may argue that these ideals are unrealistic. However, it is important to note that most of the opponents of good ethics are focusing on short-term versus long-term results.
Many organisations, which have participated in the downsizing mania, are beginning to realise that they have traded long-term employee morale and productivity for short-term profit margins.
The bottom line is “what goes around, comes around”. If you treat your employees with disrespect and distrust, chances are they will do the same toward you. When you are developing your ethics policy, you must decide what it is you want your company to stand for, put it in writing and enforce it.
How to develop an ethics policy for your company
Consider 5 P’s before you draft the ethics policy for your company.
- Purpose
- Pride
- Patience
- Persistence
- Perspective
Implications of not following ethical policy for your company
To give a live example for this, Satyam scandal raises serious questions about the business ethics. Ramalingam Raju (Chairman, Satyam), being a MBA from Ohio and a course in the Harvard Business School, how it is that people with such elite education are involved in such unethical conduct?
Two things come to mind while answering this question
- Unethical practices of auditing and accounting.
- Despite of having the above mentioned qualification, this didn’t help him in his transition from the mode of governance suitable for a Small Entrepreneur, which he was before starting satyam, to the kind needed to run a public limited company, where one deals with other people’s money.
As Edward Freeman, who suggested the stakeholder theory, says, “it’s not useful anymore to separate questions of business and questions of ethics.” An integrated way of thinking about business and ethics is via responsibility of action. That is, “businesses and executives are responsible for the effects of their action. They are responsible precisely to those groups and individuals that they can affect or be affected by...”
Importance of ethics for Small and Medium Enterprises
SMEs are characterized by informal understandings and shared expectations among the workforce of how business is done. Any values and ethical principles will usually be implicit rather than formally expressed through ethics policies, codes and programs that are familiar in large companies. The ethics of a small organization is typically influenced by the owner-manager or managing director. Through their very visible presence, their personal attitudes and behaviors will set the tone of the business and have the potential to signal to employees how seriously ethical behavior is to be taken in the organization. SMEs are not typically able to devote as many resources to building an ethical workplace culture as larger organizations.
Ethics in Milagrow
At Milagrow, our values are mainly based on 4 dimensions:
Ethics- Integrity, Honesty and Transparency in what we do
Trust- Believe in people
Respect- For all stakeholders
Commitment- Own everything we do
Rajeev Karwal, Founder, Milagrow Business and Knowledge Solutions strongly believes that “values are something which have to be lived from day one. At Milagrow I have always made sure that we follow ethics and integrity with a 360 approach. You can't be corrupt on one day and then say that you will be ethical the other. We have not only lived a corruption free life ourselves but have made many clients who approached us change their unclean ways. We have never manipulated profits to save taxes or manipulated revenues or costs. We have also adopted sustainability as part of our ethical value system”. He firmly believes long-term success occur only if an organization constantly aligns to/shapes the consumer needs/expectation. In an ethical business the essential thrust is on social values. Business is conducted in consonance with broader social values and the stakeholders' long-term interests. This ranges from concepts of nation-building and trusteeship that are demonstrated in the business practices of the Tatas and Birlas, and new generation enterprises such as Infosys, Wipro, Dr. Reddy's and Ranbaxy, where less emphasis is on minimising negative impacts and more on maximising the positive spill-over effects of corporate development. Thus, it is the need of the hour that business houses become more careful and know their responsibilities towards the society as hurting the sentiments of the consumers can really be hard on their finances, profits, share prices and their mental peace.
References:
http://www.smallbusinessjourney.com/
http://www.smallbusinessnotes.com/operating/leadership/ethics.html
http://www.goodcorporation.com/
White paper from Institute of Business Ethics
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