Ethical Issues in Business

1. Fundamental Issues
The most fundamental or essential ethical issues that businesses must face are integrity and trust. A basic understanding of integrity includes the idea of conducting your business affairs with honesty and a commitment to treating every customer fairly. When customers perceive that a company is e hibiting an unwavering commitment to ethical business practices! a high level of trust can develop between the business and the people it see"s to serve. A relationship of trust between you and your customers may be a "ey determinate to your company#s success.

$. %iversity Issues
According to the &'B( )roup! *the world is a rich and diverse place full of interesting cultures and people! who should be treated with respect and from whom there is a great deal to learn.* An ethical response to diversity begins with recruiting a diverse wor"force! enforces e+ual opportunity in all training programs and is fulfilled when every employee is able to en,oy a respectful wor"place environment that values their contributions. -a imi.ing the value of each employees# contribution is a "ey element in your business#s success.

/. %ecision0-a"ing Issues
According to 'anta (lara 1niversity! the following framewor" for ethical decision0ma"ing is a useful method for e ploring ethical dilemmas and identifying ethical courses of action2 *recogni.es an ethical issue! gets the facts! evaluates alternative actions! ma"es a decision and tests it and reflects on the outcome.* Ethical decision0ma"ing processes should center on protecting employee and customer rights! ma"ing sure all business operations are fair and ,ust! protecting the common good and ma"ing sure individual values and beliefs of wor"ers are protected.

3. (ompliance and )overnance Issues

Businesses are e pected to fully comply with environmental laws! federal and state safety regulations! fiscal and monetary reporting statutes and all applicable civil rights laws. The Aluminum (ompany of America#s approach to compliance issues states! *no one may as" any employee to brea" the law! or go against company values! policies and procedures.* A4(5A#s commitment to compliance is underpinned by the company#s approach to corporate governance6 *we e pect all directors! officers and other Alcoans to conduct business in compliance with our Business (onduct 7olicies.*

Ethics as Luxury
Business ethics are implemented in order to ensure that a certain re+uired level of trust e ists between consumers and various forms of mar"et participants with businesses. For e ample! a portfolio manager must give the same consideration to the portfolios of family members and small individual investors. Firms started highlighting their ethical stature in the late 189:s and early 188:s! possibly trying to distance themselves from the business scandals of the day! such as the savings and loan. The idea of business ethics caught the attention of academics! media and business firms by the end of the cold war. &owever! legitimate criticism of business practices was attac"ed for infringing the ;freedom< of entrepreneures and critics were accused of supporting community The current international economic crisis has! not surprisingly! resulted in trust in the business community being at an all time low2 a BB( debate at the World Economic Forum in %avos in early $::8 noted that this e tends to (E5s who are also not regarded as trustworthy. Unethical behaviour a failure of values or rules )iven that values and rules =which include laws! rules! regulations! systems and procedures> are two of the primary drivers of ethics! a particularly relevant +uestion from an ethical perspective is whether this was a failure of values or of rules.If you compare these two drivers of ethical behaviour! it is clear that values and rules are neither focused on the same intended outcome! nor do they achieve the same results. ?ules aim primarily to achieve compliance! while values aim primarily for commitment @ which represents a big difference! not least as regards sustainability. The tendency of most organi.ations to favour rules as a mechanism to shape behaviour represents an apparently easier option than a value0based approached.

Aet! while rules are necessary! they are not sufficient to achieve ethical behaviour. Aou also need values. And! you need values more! because ethical behaviour can be achieved with sound values and very few rules! but not vice versa. Therefore in theory! if you have good moral values and good! comprehensive rules which are fair to all your sta"eholders! you should achieve ethical behaviour from your employees and! conse+uently! achieve a positive ethical status for your organi.ation. In practice! however! you will mostly need to provide a bit more detail about how to do this. Improving ethical behaviour 5ne approach is to reduce unethical behaviour. This can be achieved to a large e tent by the more effective application of laws! rules! regulations! systems and procedures. The other approach is to improve ethical behaviour. Two concepts are relevant in this regard2 ethical maturity and ethical boundaries. 1) Ethical Maturity Ethical maturity reflects whether behaviour is shaped by rules or values. 4ow ethical maturity reflects compliance with rules! whereas high ethical maturity reflects a commitment to values 2) Ethical Boundaries A third approach focuses on ethical boundaries. a crucial! often neglected! facet of ethics which addresses the nature and impact of behaviour andBor decisions. ?ather! this is a dangerous .one where self interest dominates. By reducing unethical behaviour! increasing ethical maturity and e panding inclusive ethical boundaries! ethical behaviour @ and an organi.ationCs ethical status @ can be improved. 4eadership is the most effective tool to achieve this. 4eaders! whether formal or informal! e ert the most influence in building a commitment to shared values and building compliance with rules! and good leaders are role models who lead not ,ust for self! but for others. The bigger +uestion is whether ethics in your organi.ation is considered an illusion! a lu ury or a necessityD It it is an absolute necessity! not only from a moral perspective because ;itCs the right thing to do<! but also from a business perspective because ethics ma"es really great business sense. This derives from ethics being an increasingly important focus area for sta"eholders @ from the press to customers! suppliers! local communities! etc. Evidence of unethical behaviour! complements of global communication systems! is effectively shared very widely with numerous negative conse+uences! not least the erosion of corporate reputations and declines in sales. 'o! if ethics matters to you and you regard ethics as a necessity! the final +uestion is simply2 ;What you are going to do to ma"e a differenceD< First of all! lu ury consumption is associated with the signal of wealth! power! status! and ;group membership<! which is essential for consumers whose desire for lu ury derives from social orientation. 'econdly! @ for more rational consumers @ lu ury goods serve the purpose of a financial investment or satisfaction of superior standards of +uality. And thirdly! some consumers use lu ury to e press themselves based on hedonistic or The biggest obstacle hindering lu ury consumers in caring about ethics is without a doubt the above mentioned purpose of lu ury goods itself. Both! the traditional notion of buying lu ury to impress others! as well as personally oriented intentions =self0directed pleasure! self0gift0giving! congruity with the internal self! +uality assurance> fulfil

the function of generating satisfaction for the individual ! rather than the larger society. When it comes to lu ury consumption personal goals! li"e the ones mentioned above! are prioritised over group goals such as saving the environment or protecting animals. Business ethics are no longer a luxury for corporates but a necessity The study of proper business policies and practices regarding potentially controversial issues! such as corporate governance! insider trading! bribery! discrimination! corporate social responsibility and fiduciary responsibilities. Business ethics are often guided by law! while other times provide a basic framewor" that businesses may choose to follow in order to gain public acceptance.