Business ethics has come under scrutiny since the Enron scandal in 2001. Companies now have formalized ethical guidelines, and corporate social responsibility requires safe working conditions and environmentally friendly practices. Universities offer courses on ethics, and professional organizations have codes of conduct and training events.
While most people have taken the time to define their personal morals, the concept of business ethics has only recently begun to come under close scrutiny. After Enron was at the center of a scandal involving its erratic accounting practices in 2001, it seemed a high-profile executive was in the news almost every day accused of greed, deception and corruption. In response to public outrage, the business community at large has begun to focus more on encouraging ethical behavior. Now, it’s common for businesses large and small to have a formalized list of ethical guidelines that employees must follow.
Of course, any successful business needs to stay focused on making money. Without profit, the company loses value and eventually employees lose their jobs. However, business ethics don’t allow a company to do whatever it takes to make money. Corporate social responsibility dictates that companies must provide safe working conditions and use manufacturing practices that do not unnecessarily harm the environment. Ethics also require that companies provide accurate financials to shareholders and avoid advertising their products and services to consumers under false pretenses.
The study of business ethics is sometimes referred to as applied ethics because it attempts to translate utilitarianism, social contract theory, deontology, and other theoretical principles into acceptable rules for conduct in various real-world situations. At the university level, many schools now have programs to encourage students to develop an awareness of ethics. These classes typically use case studies as a basis for discussions of what constitutes ethical behavior. Lower-level classes are sometimes required for a business degree, while students working toward an MBA may major in leadership and business ethics. While many people find lessons that discuss ethics to be beneficial, others say it’s hard to predict how students will behave once they get out of school and into the workforce.
To some extent, the government can regulate ethical behavior by passing laws that require businesses to take certain actions. In many ways, however, professional organizations may be best equipped to convey a sense of business ethics to a particular industry. Organizations such as the Public Relations Society of America, the National Independent Automobile Dealers Association, the Chartered Property Casualty Underwriters Society and the National Association of Realtors have codes of conduct that members are expected to follow and offer regular training events that help encourage opening discussions on business ethics.
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