Running head: PROJECT AND BUSINESS ETHICS

Project and Business Ethics

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Introduction

Issues pertaining to business ethics have been drawing considerable popularity in the

recent times. This underlines the importance of ethics in the business arena especially with the

increased importance of other aspects such as corporate social responsibility. However, there is

considerable discrepancy as to the varied aspects ethics or even what it entails or even what the

standards of ethics are. Ethics entails two aspects. First, the term underlines well rounded

standards pertaining to what is right or wrong that prescribe the manner in which individuals

should conduct themselves, often with regard to obligations, rights, fairness, specific virtues and

benefits to the society (Trevino & Nelson, 2011). It underlines the standards that impose

reasonable obligations to refrain from harmful behavior. It is worth noting that such standards

come as sufficient ethical standards as they are supported by well-founded and consistent

reasons. Second, the term ethics underlines the examination and development an individuals

ethical standards (Trevino & Nelson, 2011). As much as there are instances where ethics

converge with laws, social norms and feelings, these three may deviate from what may be termed

as ethical (Crane & Matten, 2007). In essence, it is imperative that an individual undertake

constant examination of his or her standards so as to ensure that they are well founded and

reasonable. It, therefore, entails a continuous examination of ones own beliefs, as well as moral

conduct, while striving to ensure that he and the institution that he assists in shaping, are up to

solidly-based and reasonable standards (Shaw, 2008). Business ethics, therefore, focuses on the

examination of policies and conduct, as well as the promotion of appropriate policies and

conduct in the context of the business or commercial enterprise at the organizational and

individual level.

Characteristics of an ethical person

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Needless to say, the discrepancy between ethics and laws, norms and feelings, also

introduce discrepancies to the characteristics of an ethical person. Nevertheless, certain

characteristics have been identified as agreeable or uniform for any ethical individual. It is worth

noting that all their characteristics are interwoven or interconnected, with each to them propping

the other (Crane & Matten, 2007).

First, an ethical person is honest. This underlines the fact that an ethical individual would

remain honest even in instances where being honest does not make the easiest of options. For

instance, in cases where an employee has made a mistake, he or she would not lie about it in an

effort to reduce his level of culpability (Shaw, 2008). This allows other individuals in the

company or the entity within which they live to trust the individual. Scholars note that honesty,

both in the case of leaders and employees allows other people to consider them reliable, as well

as dependable, thereby earning the trust and respect of other individuals (Shaw, 2008). Honest

individuals would present circumstances and facts as completely, accurately and truly as possible

irrespective of the risk that is involved.

In addition, ethical individuals take responsibility seriously and strive to accomplish all

that is within their jurisdiction or tasks with which they are charged. Ethical individuals do not

shirk from responsibility rather they embrace opportunities while taking the leadership role. On

the same note, ethical individuals are highly reliable at all times and would be trusted to carry out

specific tasks and follow them through to the end (Crane & Matten, 2007). This means that

ethical individuals follow through their words, which often makes them the go-to individuals in

the society, as well as the workplace.

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On the same note, ethical individuals or workers are usually goal-oriented and have the

capacity to dedicate themselves and their resources entirely to the completion of their tasks and

the attainment of their goals (Shaw, 2008). This is in line with their dependability and taking

responsibilities seriously. These people acknowledge the importance of striving to better

themselves, as well as the performance of the companies or business entities within which they

work, in which case they are always willing to undertake all effort to accomplish goals that seem

potentially challenging (Shaw, 2008). This is also in line with being focused to ones job, duties

and responsibilities without allowing oneself to be distracted as such a thing would pull them

away from their responsibilities (Crane & Matten, 2007). This ensures that the resources within

their disposal including time, finances and others are spent on job-related tasks and goals.

Moreover, ethical individuals are set apart by their respectfulness and dignity. This

involves respecting the values, decisions and feelings of other people whether they are their

seniors or juniors (Ferrell et al, 2010). This means that they would be effectively listening to

them, not to mention the aspect of being liberal with regard to hearing and paying attention to

opposing views or perspectives. This, essentially, means treating their workers, colleagues,

seniors and juniors in a way that would authenticate their beliefs and values (Ferrell et al, 2010).

Another characteristic of ethical individuals is being fair and just. Ethical individuals

would treat the individuals with whom they interact in an equal manner with no personal bias

whatsoever. As much as there may be some differences with regard to the treatment that they

accord different individuals, the grounds or basis for such differential treatment should be clear,

fair, as well as founded of morality (Ferrell et al, 2010). Evidently, these are not the only traits of

an ethical individual rather they give an idea as to exactly what would be expected of such a

person irrespective of his standing in the society.

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Benefits of ethical behavior to self and the organization

Needless to say, ethical behavior comes with a number of benefits both to the individual

and to the organization. This is especially considering that being ethical revolves around the

positive traits identified earlier, which have a bearing on the sustainability and profitability of the

organization and self-actualization of the individual both in the short and the long term.

First, ethical behavior comes as the surest way of building customer loyalty. Customers

may allow individuals or business entities to exploit and take advantage of them for one time, but

once they get the impression that they are getting an unfair treatment such as being overcharged,

it goes without saying that they will not become repeat customers (Ferrell et al, 2010). Needless

to say, the incorporation of a loyal customer base is one of the fundamental pillars for the success

of a business entity both in the short-term and the long-term. This is especially considering that

serving existing customers would not involve as much marketing costs as would the acquisition

of a new one (Crane & Matten, 2007). The ethical behavior of individuals in any organization or

entity would go a long way in creating a positive image of the company in the industry. This

would bring in new customers especially through referrals, while a contrary reputation would

hurt its chances of getting new customers especially in this age of internet and social networking

when a dissatisfied customer would have the capacity to disseminate information pertaining to

the negative experience through which he or she underwent in a particular organization (Ferrell

et al, 2010).

In addition, being ethical comes as one of the surest ways of creating a positive work

environment. Individuals working in any organization have a duty to be ethical right from the

time of their first interview. It is imperative that they give honest answers pertaining to their
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experience and capabilities, as well as any weaknesses that they have. Scholars note that the

ethical individuals are usually seen as team players rather than self seekers or individuals just out

to satisfy themselves. This, therefore results in a positive relationship based on trust and respect

both from their coworkers and their seniors. In essence, they would be trusted with confidential

information and are likely to be autonomous in their operations. Needless to say, employees that

engage in cheating or lying would be unlikely to have such autonomy.

In addition, workers get more job satisfaction from the being ethical. This is in line with

the independence or autonomy that an individual is accorded in the knowledge that he or she is

dependable as to complete his duties or follow through with his promise to the end. This means

that an individual employee would have higher chances of self actualization. Independent or

autonomous employees are likely to be highly motivated due to the conducive environment

within which they work (Ferrell et al, 2010).

Moreover, organizations benefit from ethics as they have the capacity to retain good or

talented employees. This is especially considering that talented employees irrespective of the

level that they work in at the organization would like to have a fair compensation for their

dedication and work. They crave to have their career advancement opportunities in the

organization based on the talent, dedication, credentials, as well as the quality of work that they

do rather than favoritism. They undoubtedly would want to be a part of an organization whose

management is clear about what is happening in the organization, including issues such as

contemplation of layoffs in any level of the organization (Ferrell et al, 2010). Scholars note that

companies or business entities that are open and fair in the manner in which they deal with the

employees often have better chances of retaining their employees, especially the most talented

ones (Crane & Matten, 2007). This is especially considering that employees who get the
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impression that the methodology or technique used in giving promotions or compensation is

unfair would not be as dedicated to their duties as they can be.

Consequences of lack of ethics to self and to the organization

Organizations that fail to promote ethical behavior in their workforce often learn the hard way.

This is especially considering the high importance that has been accorded this aspect of an

organization, which has resulted in intense attention on the same.

One of the consequences of lack of ethics is legal issues both to the individual and to the

organization. There have been varied instances where employees caught engaging in unethical

behavior are interdicted or even taken to court. The case is even worse for corporations and

business entities as the state and federal governments in the United States has laid out certain

procedures and rules as to the manner in which any business entity should be operating. In most

cases, business entities whose operations are not in line with the state and federal guidelines face

enormous fines alongside other penalties, legal fees or even sanctions from governmental

agencies (Ellis, 2007). However, there are instances where larger business entities decide that

failing to follow the laid out laws and regulations and paying these fines is a lower cost

compared to the financial gains emanating from breaking the laws (Ellis, 2007). Nevertheless,

the consistent breakage of laws can result in costly legal battles that would eventually outweigh

the initial gain. In fact, the criminal charges may be extended to the executives and employees of

companies or business entities that break laws or engage in unethical behavior especially when

such unethical behavior results in harmful episodes for customers and employees (Ferrell et al,

2010).
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In addition, a deficiency of ethics in the organization has a negative and undesirable

effect on the performance of employees. Scholars note that many are the times when employees

are purely concerned about moving forward and getting ahead or making more money that

protocol and procedures are relegated to the periphery. This may result in additional paperwork,

as well careless that also result in time wastage especially in instances where tasks would have to

be done all over again. Scholars also note that in instances where employees feel that acting in an

ethical manner and following the laws and procedures of the organization would not get them

anywhere would be likely to feel demotivated, which, more often than not, results in a decrease

in their performance.

In addition, unethical behavior often has a negative impact on employee relations. It is

worth noting that in instances where a head of business entity or a business executive is deficient

of ethical behavior, he would be likely to lose the respect that is accorded to him by the

employees (Ferrell et al, 2010). Needless to say, it would be difficult for a business to be

successful unless its leaders are well respected. In addition, a deficiency of ethics would also be

likely to result in tension among the employees, which would result in some employees resenting

their colleagues who do not seem to respect the rules and regulations of the organization and still

manage to move ahead. This deficiency of ethics in the workplace would also potentially result

in a deficiency of trust among the employees, which comes as detrimental to business entities

that often depend on collaboration, as well as a sense of community among the employees.

Still in line with the previous consequences, the productivity of the business entity would

be severely decreased. This is often as a result of the deficiency of trust among the employees,

which negatively impacts on the level of collaboration and the capacity of individuals to work as

teams (Shaw, 2008). It is worth noting that teams have become extremely crucial in the business
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world as a means of propagating higher performance and eliminating the weaknesses. However,

the capacity of these teams to operate effectively is highly dependent on collaboration and

goodwill of the workers (Shaw, 2008). In instances where employees in the business entity are

dogged by lack of trust, the employees would be unlikely to put their best foot forward that is if

they, in fact, continue working there in the first place (Ferrell et al, 2010). This means that the

lack of ethics in an organization would result in loss of faith in the company.

In addition, the credibility of the company would be severely injured by the lack of

ethics. This is especially in instances where the deficiency of ethics in the business entity

becomes public knowledge, which is quite a likelihood in this age of social media. As much as

some business entities may survive such public knowledge pertaining to the deficiency of ethics

via advertising campaigns and reimaging, it goes without saying that they would lose a

considerable customer base (Crane & Matten, 2007). In fact, while the organization may recover

from news of its deficiency of ethics, a lot of money and time would be required to restore the

customer confidence, as well as the companys image. This is in addition to the fines, penalties

and sanctions among other legal actions. Many are the times when such companies end up

becoming bankrupt and even fold up.

As stated earlier, ethical behavior comes as the surest way of retaining talented individual

in the workforce. Conversely, it follows that the lack of ethics would result in high turnover. In

fact, it would go beyond simple retention of good talent and extends to the attraction of good

talent. Business organizations would not only lose valuable and good employees but it would

also have problems finding new employees. This is especially considering that no individual

would want to work in an organization that has a tattered reputation (Crane & Matten, 2007). A

large number of people would choose to work in an organization simply because of the good
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reputation of the company. Even in instances where the company does find new employees, it

would be incurring high costs in training the employees especially considering the high turnover

rate. The costs are not only in terms of money but also in valuable time that would be dedicated

to enhancing production in the company. On the same note, the business entity would incur quite

a lot in the time of low productivity as the lack of employees would have a negative impact on its

capacity to uphold its productivity, not only in the revenue and quantity but also the quality of

the products, which would result in decreased customer satisfaction and decreased sales (Ellis,

2007).

Personal versus Business ethics

As much as there is an element of uniformity as to the things that would be considered

ethical, there is always a conflict between personal and business ethics. Business ethics are a set

of behaviors, as well as discipline that is followed by a business entity in the course of its

activities. Of course, businesses are expected to do what is ethical or right. However, this is not

always possible as businesses are profit making entities that are driven by the need to achieve

more. This may result in compromising of the ethical standards. Personal ethics, on the other

hand, are the things that an individual considers as right (Crane & Matten, 2007). It goes without

saying that there are variations in what different individuals consider as right, especially

considering that personal ethics are influenced by experience, culture, religion, law and beliefs.

As much as personal ethics may influence business ethics, some actions that are in line with

business ethics may conflict with personal ethics (Ellis, 2007). For example, an individual may

believe in transparency and honesty, while the business may believe in supporting its reputation
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by withholding some information. While there may be a difference between business ethics and

personal ethics, this gap should be closed so as to enhance the work environment. In fact, a

conflict between personal ethics and business ethics would result in lack of motivation of

employees, which would eventually reduce their performance and overall productivity of the

organization (Trevino & Nelson, 2011). However, this often differs in terms of the context. This

is especially when one considers the consequences of certain ethics both in the long-term and the

short-term. For instance, witnesses in a court of law are required to give the truth and nothing but

the truth. This, however, may not be the case for barristers as they can withhold some

information, still within the law, in an effort to administer justice (Trevino & Nelson, 2011). This

also underlines the existence of a noble lie, which essentially is a lie that would be likely to result

in discord if it is discovered but comes with some reprieve to the liar and helps in safeguarding

orderliness in the society or the business entity. This lie is usually told to as to maintain law,

safety and order (Trevino & Nelson, 2011). An example of a noble lie is in instances where the

business entity aims at laying off some workers or even folding within a period of, for example,

3 months. Of course, the ethical thing would be to tell the truth to the employees. However, such

an action would be likely to cause discord and panic among the employees, thereby resulting in

immense losses to the organization due to the decreased performance. In essence, the

management may feel obliged to tell the employees that the company or business entity will be

stable for the foreseeable future, thereby giving an impression about its stability and allowing

the company to rectify the things that may be hindering its growth.

This, however, does not mean that cheating or telling noble lies is allowed by law. This is

especially with regard to lies in the financial accounts, which often result in losses to the

investors (Crane & Matten, 2007). Many are the times when business executives doctor the
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financial information of the organizations so as to create a better impression than the real one.

This often results in enormous losses to the investors, prompting the United States Congress to

make legislations. One of these legislations is the Sarbanes-Oxley Act (or SOX) passed in 2002

by the United States Congress in an effort to protect investors from incurring losses from the

likelihood of fraudulent accounting practices by business entities. This act mandated strict

reforms aimed at enhancing financial disclosures from business entities, as well as preventing

accounting fraud (Crane & Matten, 2007). The enactment of this Act was in response to the

varied accounting scandals occurring in the early 2000s including Tyco, WorldCom and Enron,

all of which shook the confidence of investors in financial statements and necessitated an

complete overhaul of the regulatory standards (Ellis, 2007). The two fundamental provisions in

the Act include Section 302, which requires that senior management certifies the financial

statements accuracy and Section 404, which requires that auditors and the management put in

place internal controls, as well as reporting techniques pertaining to the sufficiency of the

controls(Ellis, 2007).
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References

Crane, A., & Matten, D. (2007). Business ethics: Managing corporate citizenship and

sustainability in the age of globalization. Oxford: Oxford Univ. Press.

Ellis, C. (2007). Telling secrets, revealing lives: Relational ethics in research with intimate

others. Qualitative Inquiry, 13, 3-29.

Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2010). Business ethics: Ethical decision making and

cases : 2009 update. Mason, OH: South-Western Cengage Learning.

Shaw, W. H. (2008). Business ethics. Belmont: Wadsworth.

Trevino, L. K., & Nelson, K. A. (2011). Managing business ethics: Straight talk about how to do

it right. New York: John Wiley.