Ethics and morality in business Featured

7:00pm EDT November 24, 2006

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 environment.

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 dealing.

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 population.

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 Mujtaba@nova.edu or (954) 262-5045.