Understanding Business Ethics

Questions: Your manager is debating whether or not to introduce a code of ethics alongside the company values. She has been advised by some of her more cynical staff that it is a waste of time, but you disagree. Write a short proposal to the manager outlining the following: What business ethics actually means How ethical policies work in terms of rationalisation and psychological distance How they can be implemented and actually enforced in an effective way. Answers: 1. Understanding Business Ethics Business ethics can be defined as application of the moral code of conduct in operational and strategic management of business. In simple terms, they are the moral principles that guides the behavior of a business (Ferrell, 2016). The need for business ethics is driven by the need of businesses to make profits. In a world, where returns and profitability play a major role on how a company behaves, many organizations tend to achieve these goals by hook or crook. In some cases, even if the organization as a whole behaves ethically, employees of the organization may tend to used use unethical means due to pressure of performance. One example for this could be the target based salary environment, where the employee has to reach a set target to earn certain amount. The employee may up-sell the product or make sales final without giving the customer time to try out the product. 2. Effects of Business Ethics on rationalization and psychological distance Rationalization is a defense mechanism by which one tries to use seeming ethical and logical reasoning to justify unethical behaviors (Cherepanov, 2013). Physiological distance on the other hand is the gap between where a person is now and the where he perceives to be in dimension of time, location, social distance or experience. Business ethics plays a significant role with both of these dimensions. Situations with smaller psychological distance have a positive effect on the employees and business ethics helps create the same. Every employee would want to earn honor and income in a respectful way and business ethics guide the employee to do the same. Business ethics lays down some of the ground rules as to what is right and wrong. Performing the right action would be ethically correct. Several situations in workplace arise where the employee uses rationalization to defend their unethical behavior (Eastman, 2013). Some of the situations are denial of responsibility where one employee blames the other for an issue, appeal to higher managers using personal relationships, claim that a decision are right since everyone else is doing and so on which would cause differences between employees. Business ethics defines how one should behave in situations as such and decrease the negative impacts of rationalization. 3. Implementing Business Ethics Below listed are the steps to implement business ethics in an organization effectively. Develop a clear list of business ethics and assign a team to help employee review situations that are not part of the list (Stanwick, 2013) Develop communication and awareness programs to help employees understand the ethics program and the need for it Develop training programs and quizzes that helps in analyzing the understanding of ethics by an employee Incorporate ethics into mission and vision of the organization Have a dedicated board that would review ethically challenging situations References Cherepanov, V., Feddersen, T., Sandroni, A. (2013). Rationalization. Theoretical Economics, 8(3), 775-800. Eastman, W. (2013). Ideology as rationalization and as self-righteousness: Psychology and law as paths to critical business ethics. Business Ethics Quarterly, 23(04), 527-560. Ferrell, O. C., Fraedrich, J. (2016). Business ethics: Ethical decision making cases. Nelson Education. Stanwick, P., Stanwick, S. D. (2013). Understanding business ethics. Sage.