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Business ethics vs. profit

Is there really a conflict between business ethics and profit?  To answer this question, I think first we should define what business ethics means.  According to John Donaldson, business ethics can be described as “the systematic study of moral [ethical] matters pertaining to business, industry or related activities, institutions, or practices and beliefs. It is the systematic handling of values in business and industry.”

As a professional working in the business world, what business ethics basically means for me is doing business in a morally right way.  Morals can be a very broad and subjective term and may mean different things for different people, culture and society. Thus, bases of business of ethical systems can stem from legal, organizational codes, religion, philosophy and culture.

Setting the tone

It is imperative that a business or company define its code of ethics on how it would conduct its business. A company’s framework, I believe, is defined by management’s values.  Management should set the tone from the top to establish a code of ethics to be followed and observed by the employees.

Ethics when applied in a situational basis puts management’s values into test especially when business profit is at stake.  It puts pressure on management when they decide whether ethics should come before profit or profit before ethics.  Sometimes, decision makers feel that ethical violations are justified because it is the way to maximize the owner’s profitability.  There is much pressure when success is measured solely in terms of financial terms or when measured only on how it will affect earnings of the company.

A new way of measuring success

Previously, business success was defined by financial success. However, more businesses now realize success is not only measured in financial terms. For Marcus Lemonis, chairman and chief executive of Camping World and Good Sam Enterprises, business success is about the three Ps: people, process and product.

Also, businesses today understand stakeholders are not limited to investors, managers or employees but they also comprise of customers, suppliers, society, media, government and even the environment. Moreover, they’ve seen the value of having moral ethical standards.  When faced with difficult decisions, choosing to remain ethical preserves the company’s image and reputation.  In many situations, this decision results in more profit and greater market share because people value a company that does not only do the right thing, but also cares for all stakeholders.

I believe the Golden Rule brings a good point; to do unto others what you want others do to you.  I like that this rule is in a positive tone because it implies being proactive in “doing unto others.”  It is a good guide because naturally we want what is good for ourselves so we must also in turn proactively do it unto others.  Thus a food company, for example, should ensure that they provide quality and safe products to their customers.

Analyzing the Ford Pinto case

In class, we discussed the Ford Pinto case.  I realized, after reading and analyzing this case from different viewpoints, the costs and benefits also vary.  From a consumer’s viewpoint, I sympathize with the victims of the gas tank explosions because the manufacturer apparently disregarded to put in the safety feature.  From the company’s viewpoint, the costs of putting in the safety feature exceed the benefits (in terms of financial profit). The government’s point of view is for the benefit of the common good which caused them to enact safety and quality control laws and standards for the auto industry.  Although Ford initially decided to do nothing, this decision eventually took a toll not only to the company but also to the entire American auto industry because the consumers lost faith in these auto companies.

Going hand in hand

I believe that business ethics and profit can go hand in hand. But it takes people with high regard for morally good standards and ethical values to set the tone on top on how things should be done in the company.  Someday, I hope more leaders will lead by example, choosing and committing to stay on the ethical route in the achievement of company’s goals.

 

The author is an MBA student at the Ramon V. del Rosario College of Business, De La Salle University.  Her column is part of the journal she keeps as a requirement of her Lasallian Business Leadership with Ethics and CSR class.  Visit her blog at http://karcalva12.tumblr.com/.

The views expressed above are the author’s and do not necessarily reflect the official position of De La Salle University, its faculty, and its administrators.

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