The Ethical Enterprise

"Throughout human history, there have always been ideas about right and wrong. To function, any culture needs to define proper and improper behaviors. There are rules and laws in any complex society, but underlying these is always a set of moral values." 

Throughout human history, there have always been ideas about right and wrong. To function, any culture needs to define proper and improper behaviors. There are rules and laws in any complex society, but underlying these is always a set of moral values. These values are the roots of what we call “ethics,” which has been defined as “the discipline of dealing with what is good and bad and with moral duty and obligation” (Merriam- Webster, 1996).

For centuries, ethics has been among the great, deep subjects of philosophical study and debate, but only in the 20th century did the modern idea of what we now call “business ethics” truly emerge. Private enterprises have become powerful creators of wealth in today’s world, but this power has, at times, been abused. So, there’s a clear social need to investigate and influence the ethical foundations of these enterprises.

It’s no wonder, then, that ethics has become a critical business issue. The Human Resource Institute’s 2003-2004 Major Issues Survey found that, among North American companies ranking 120 different issues, “ethics in business” was among the top three most important in terms of its impact on workforce management. The CANADIAN MANAGEMENT CENTRE/HRI Business Ethics Survey 2005 clearly illustrates that businesses view ethics as having a big impact on their brands and reputations as well as on customer trust and investor confidence. In other words, business ethics isn’t only about “doing the right thing” or even avoiding the kind of scandals that can utterly devastate a company. It’s about good business.

In this paper, we take an in-depth look at the subject of business ethics, including its history, what is influencing ethics in today’s organizations, what best-in-class ethics programs and practices look like, and how business ethics may evolve over the course of the next 10 years. Below is a quick review of some of our findings:

• The number one reason for running an ethical business, today and in the future, is protecting a company’s reputation.
• Maintaining an ethical business environment has become more important and more challenging in today’s fast-changing global marketplace.
• The pressure to meet unrealistic business deadlines or objectives is the factor most likely to cause people to compromise ethical standards in companies.
• Business scandals have had a major impact on business ethics issues in recent years but, in the future, globalization and competition will be the top business drivers of ethics.
• Laws and regulations are, and will remain, the most influential external drivers of corporate ethics, but issues related to the environment are expected to become considerably more important in the next 10 years.
• As technologies grow ever more powerful and pervasive, they will raise difficult ethical questions with which companies will have to deal.
• Globalization brings many ethical challenges, especially in developing nations where issues related to forced labour, child labour, and working conditions are top concerns. Corporate culture is crucial to creating and maintaining an ethical environment, but culture is notoriously difficult to shape and change. Doing so requires a systems framework approach.
• Leaders who support and model ethical behavior and communicate such In this paper, we take an in-depth look at the subject of business ethics, including its history, what is influencing ethics in today’s organizations, what best-in-class ethics programs and practices look like, and how business ethics may evolve over the course of the next 10 years.

Below is a quick review of some of our findings:

• The number one reason for running an ethical business, today and in the future, is protecting a company’s reputation.
• Maintaining an ethical business environment has become more important and more challenging in today’s fast-changing global marketplace.
• The pressure to meet unrealistic business deadlines or objectives is the factor most likely to cause people to compromise ethical standards in companies.
• Business scandals have had a major impact on business ethics issues in recent years but, in the future, globalization and competition will be the top business drivers of ethics.
• Laws and regulations are, and will remain, the most influential external drivers of corporate ethics, but issues related to the environment are expected to become considerably more important in the next 10 years.
• As technologies grow ever more powerful and pervasive, they will raise difficult ethical questions with which companies will have to deal.
• Globalization brings many ethical challenges, especially in developing nations where issues related to forced labour, child labour, and working conditions are top concerns. Corporate culture is crucial to creating and maintaining an ethical environment, but culture is notoriously difficult to shape and change. Doing so requires a systems framework approach.
• Leaders who support and model ethical behavior and communicate such values are critical to a company’s ethics.
• Establishing codes of conduct and training programs are seen as the most important corporate practices for contributing toward an ethical culture. Also important are ombudsmen to provide confidential and informal guidance and help lines to officially report malfeasance.
• Having the right measurements and indicators is necessary to gauge the corporate ethics environment.
• The companies with best-in-class ethics practices will increasingly gear their strategies toward “external” stakeholders, such as customers, suppliers, business partners, investors, and communities.
• In terms of serving customers and investors, ensuring transparency is key.
• The best way of encouraging ethical conduct among suppliers is through codes of conduct and audits.
• In the near future, companies will seek ways to become more proactive in terms of dealing with problems that pose, or may soon pose, ethical challenges.