Ethics and morality in business

You probably have read much about
the basics of ethics, leadership, stew-ardship, morality and social responsibility. Many people, however, do not really
take the time to understand the true meaning of those terms (most of which are
deeply rooted in philosophical issues).

“You have most likely formed a good
understanding of those terms based on
your experiences and thoughts,” says
Bahaudin Mujtaba, D.B.A., an assistant
professor and the director of institutional
relations, planning and accreditation for
Nova Southeastern University’s School of
Business. “The willingness to add ethical
principles to the decision-making structure
indicates a desire to promote fairness, as
well as prevent potential ethical problems
from occurring.”

Smart Business spoke with Mujtaba
about how to distinguish various philosophical virtues from each other, and how
to apply them to our daily lives.

What are values?

Values are core beliefs or desires that
guide or motivate our attitude and
actions. What a person values drives his
or her behavior. Some people value honesty or truthfulness in all situations; others value loyalty to a higher degree in certain situations.

What are ethics?

Ethics is the branch of philosophy that
theoretically, logically and rationally determines right from wrong, good from bad,
moral from immoral and just from unjust
actions, conducts and behavior. Some people define ethics simply as doing what you
say you will do or walking the walk.

Overall, ethics establishes the rules and
standards that govern the moral behavior
of individuals and groups. It also distinguishes between right and wrong conduct.
It involves honest consideration to underlying motive, to possible potential harm,
and to congruency with established values
and rules.

Applied ethics refers to moral conclusions based on rules, standards, codes of ethics, and models that help guide decisions. There are many subdivisions in the
field of ethics; some of the common ones
are descriptive, normative and comparative ethics. Business ethics, more specifically, deals with the creation and application of moral standards in the business

What are morals?

Morals are judgments, standards and
rules of good conduct in the society. They
guide people toward permissible behavior
with regard to basic values.

How do they differ?

Consider the following dilemma.

A thief named Zar guarantees that you
will receive the agreed-upon confidential
information from your competitor in five
days. Zar is professing a value — he will
deal with you honestly because you, as the
customer, are very important to his business. When Zar has delivered the proper
documents within the agreed-upon time
(five days), you can say that Zar has
behaved ethically because he was consistent with his professed values.

The following year, you ask Dar, who is a
competitor to Zar, to do the same thing. He
makes the same promise as Zar by professing the same values. Five days later,
Dar only delivers part of the information,
which is not totally accurate, and at the
same time, blackmails you for more
money. Dar says that if he does not get
more money, he will go to the authorities
and the competitor to report this business

You can say that Dar has behaved unethically because his actions were not consistent with his professed values. And you can
conclude that all three parties involved in
stealing insider information have acted
immorally as judged by a majority of the

Overall, values are professed statements
of one’s beliefs; ethics is delivering on one’s
professed values; and morals are actions of
good conduct as judged by the society that
enhance the welfare of human beings.

And how does knowing the difference help
business managers?

Corporate ethics programs are part of
organizational life, and organizations can
use such sessions to further discuss the
meaning of values, ethics and morals in the
context of their businesses. Organizational
codes of ethics should protect individuals
and address the moral values of the firm in
the decision-making processes.

Corporate codes of ethics are not merely
manuals for how to solve problems; they
are tools that can empower everyone in the
organization to say, ‘I am sorry, that is
against our policy,’ or ‘That would violate
our company’s code of ethics.’

Doing so will increase the personal commitment of employees to their companies,
because people take pride in the integrity
of their corporate culture.

BAHAUDIN MUJTABA, D.B.A., is an assistant professor and
director of institutional relations, planning and accreditation for
Nova Southeastern University at the School of Business. He is a
former senior training specialist and manager of Publix Super
Markets. Bahaudin has co-authored a business ethics textbook
published by Pearson Custom Publications. Reach him at
[email protected] or (954) 262-5045.