There is a fine line between these two concepts.
We often here the term corporate ethics used especially in recent decades with the many corporate scandals occurring. The call for increased ethics and oversight in business is urgent but often this call is blurred in situations which are not ethical in nature but rather moral. This blurring of ethics and morality is further confused by the confusion between professional, personal, and business ethics. Disambiguation of these concepts gives a clearer picture of business ethics and can help critical discussions of the corporate decision making.
Ethics & Morals
Ethics and morals are both concepts that deal with judging and deciding on actions which are right and wrong. There is a fine line between these two concepts which is often crossed in usage due to their similar meanings. This difference is important due to its practical usage and application in professional and business fields.
Moral issues and concepts deal with human behavior from the standpoint of what humans believe. Within this framework human behavior is the result of beliefs concerning right and wrong. Morality can also be seen as the difference in good and evil. “In a sense, morals is the study of what is thought to be right and what is generally done by a group, society, or a culture. In general, morals correspond to what actually is done in a society (Lander University, 2001).” For instance, the act of murder is considered morally wrong by society.
Ethical issues and concepts also deal with moral problems, “which seeks to discover how one ought to act, not how one does in fact act or how one thinks one should act (Lander University, 2001).” An example of ethical questioning would be, if a find a bag of money with no identification in it; is wrong to keep it?
Ethics is a broad range of moral understanding which is differentiated by personal and professional ethics. These two areas of study attempt to provide moral reasoning for decision making within their respective areas. The major difference between personal and professional ethics is that personal ethics deals with individual moral decision making whereas professional ethics concerns itself with moral decision making as it pertains to the profession and members within it (Chadwick, 1998).
Business, Professional, & Personal Ethics
Professional ethics encompasses a variety of areas including business, law, healthcare, etc… Professional ethics attempts to provide a moral framework for making decisions within professions. Professional ethics of medicine guide behavior with rules intended to create the greatest benefit to the patient, they are also limiting in their application. “Normatively, care ethics seeks to maintain relationships by contextualizing and promoting the well-being of care-givers and care-receivers in a network of social relations” (Sander-Staudt, 2014). For this reason, any behavior of a physician that is harmful to the patient may be considered unethical but this is too simplistic as there are cases where treatments are harmful such as invasive procedures that may provide some larger benefit such as amputation of a limb.
In contrast to professional ethics, business ethics are concerned with decisions dealing with ideas such as fair practice i.e., should a car dealer inform a customer that the car they are purchasing has been involved in an accident?
Business ethics also differ from personal ethics because what one personally believes to be right or wrong is not always the best measure of how to act professionally or in a business environment. Because morality varies between groups and cultures, individual ethical decision making is not enough to determine the best practices of a business since the business is composed of various groups of people (Chadwick, 1998). Without business and professional ethics, decisions would be made in a way that could be contradictory and ineffective for the organization.
The focus of business ethics is also different than personal ethics. Business ethics is concerned only with what it right and wrong within the context of behavior relating to the organization or business. People working in business are constantly faced with dilemmas resulting from discrepancies between personal and business ethics.
For instance, there are cases of pharmacists who refuse to fill a prescription for a morning-after pill, because they believe the pill would end a human life. However, the pharmacist is wrong. As a professional you are expected to fulfill your responsibilities as long as you are not breaking the law (Barbato, 2011).
It is these types of dilemmas which require the use of professional ethics in order to make consistent and equitable choices for businesses. The distinguishing between professional and personal ethics allows society to operate in manner which is consistent and fair to all members. For these reasons, it is vital that business members understand the codes of ethics which govern their behavior and actions.
Specific to business ethics, behaviors such as corruption, stealing, fraud and other illegal activities generally fall under business ethics. This large area of ethics encompasses many activities which one could consider to be universal to ethical business behavior such as not embezzling. It is in this arena of business ethics that corporate ethics can be found which is focused on leadership of a business.
Common Corporate Ethical Issues
CEO’s and executives make up a small percentage of an organization. However, they maintain 99% of the power within the organization. Because these persons know each other and tend to have personal relationships there is a temptation to use their positions for personal gain. One of the major problems that contributed to recent failures of organizations is the fact that CEO’s and executives would do things like take loans against the company which used the company’s assets as collateral. These loans are then used to fund debts that the company needs to pay. For instance, in the case of WorldCom the CEO Bernie Ebbers borrowed $341 million dollars to cover margin calls and propped the value of the company stock. This was a problem because Ebbers used the value of the stock as collateral to pay the margin calls on the stock. This might have worked had the stock continued to gain equity but instead it fell in value and created multibillion dollar disaster.
These types of situations are becoming more and more common to read about as corporate ethics becomes a focus of debate. The problem is that primary responsibility of conducting an ethical organization rests with the executive because the executives maintain the authority over the organization. Although individual ethical behavior resides in the determination of the individual members of an organization, the standards of conduct and enforcement of ethical rules lies squarely on the shoulders of the executives. This placement of responsibility is a function of professionalism which states that the person with superior knowledge or authority becomes the one ethically responsible. Such an example can be seen in doctors. A doctor because of his or her superior knowledge of medicine is bound by professional ethics to act in accordance with specific professional codes of conduct. This makes the doctor responsible for ethical behavior.
If we take this same example and apply it to business the comparison becomes clear. The executive of an organization supposedly has the superior knowledge and that is why he or she is running and making decisions for the organization. (We would not ask the mail room personnel to set an ethical standard and decide a course of business strategy for the company.) So by virtue of this authority the executives become responsible for the ethical development of the organization.
If an executive has few ethics then the corporation is at risk because this person cannot make decisions that are in the best interest of members and the sustainability of the organization. By the time an individual reaches the point where they have become an executive they either have ethics or they do not. These individuals certainly should not need to learn ethical decision making.
All businesses have the obligation to build an ethical culture and balance their desires for profits and ethical responsibilities to their employees, customers, society and the environment as well. As our text by Cheeseman (2010) states, “it is a business’s duty to behave in an ethical manor in all their business dealings and ensure that the choices made by the business do not harm society.”
Understanding the difference between ethical and moral issues provides a a more focused and critical examination of the issues and perhaps a different view of ethics within business. If morality guides ethics than perhaps business ethics must try to fulfill an obligation to the stakeholders, employees, customers, and the environment as a whole. The ethical responsibilities are top-down passing of values intended to promote a culture of ethical awareness and proper behavior. This approach allows all stakeholders to be partners in building and ethical workplace. The behavior of employees speaks on behalf of the company and this representation provides a clear practical view of why corporate ethics must be held as an obligation. However, compliance with ethical standards, rules and regulations is a top-down approach and to expect anyone to comply with business ethics, leadership must set the example.
Barbato, P. (2011, June 2). Personal vs professional ethics. Retrieved from http://centers.scb.rit.edu/ethics/2011/06/personal-vs-professional-ethics/
Cheeseman, H. (2006) Business Law: Legal Environment, Online Commerce, Business Ethics, And International Law Retrieved from University Phoenix Library
Lander University. (2001). Morals, ethics, and metaethics. Retrieved from http://philosophy.lander.edu/ethics/types.html
Ruth Chadwick (1998). Professional Ethics. In E. Craig (Ed.), Routledge Encyclopedia of Philosophy. London: Routledge. Retrieved November 12, 2012
Solomon, D., & Sandberg, J. (2002). Leading the News. Wall Street Journal (November 6). A-3.