Business Ethics:
Defining and Identifying Ethical Issues in Retail
Business Ethics
Business ethics has come under such heavy attack in recent years that the phrase
might be considered an oxymoron, but the application of ethics in business is actually
increasingly prominent across the globe. In its simplest form, business ethics can be
defined as the execution of moral obligation in the corporate world. It is important to
realize, though, that although business ethics is an applied branch of ethics, there are
strong normative principles involved which influence public perception. The best way to
understand business ethics then, may be to identify the stakeholders, the contexts, and
common examples of ethical issues.
Business ethics involves individuals, groups and entire companies as well as the
interactions of multiple companies. The key measure of ethical or unethical behavior in
business is the effect of these actions and interactions on stakeholders, including
employees, customers, vendors, affiliates, investors, and society (International Business
Ethics Institute, 2007). For each stakeholder there are areas of ethical expectations, often
created through a combination of governmental and internal policy. Some of these areas
include environmental stewardship, social responsibility, fair labor practices, and fiscal
accountability. Traits that are typically associated with a strong ethical framework in
business include honesty, fairness, responsibility, transparency and discretion.
Unfortunately, there are numerous available examples of ethical violations, from
the individual to the conglomerate, from discrimination to 'cooked books.' In the retail
industry, ethical lapses of all types occur. One ethical issue which impacts the
organization and community is discrimination. The retailer I last worked for, Nordstrom,
had been the subject of a class action lawsuit alleging that African American employees
were disproportionately disciplined, passed over for promotions and paid substandard
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wages. Although the company had a sterling reputation for employee satisfaction overall,
the unequal treatment accorded to many African American employers was deemed to be
consistent and conspicuous enough that the company paid out a multimillion dollar
settlement. Fortunately, Nordstrom learned quickly from its ethical shortcomings and has
become a leader in diversity issues. The company has a comprehensive diversity training
program, features major exhibits of artist works for Black and Hispanic history months,
and maintains a workforce which includes over 40% people of color, all orchestrated
through a well funded diversity affairs department ("Three Companies Show," 2006).
Another issue in the application of ethics in retail involves the sale of fur-based
products such as mink coats, and to a lesser extent leather shoes, jackets, and handbags.
Animal rights activists such as PETA decry the killing of animals for their fur and skin as
cruel and unnecessary. Retailers have bowed to the pressure, in some cases removing fur
from certain locations, or in the case of Nordstrom, halting the production of
Nordstrom-brand fur products. However, Nordstrom still carries fur in some locations,
citing a desire to please consumers. This issue is a controversial one as the majority of
Americans do not find the use of leather to be morally objectionable, but an increasing
awareness of the sometimes inhumane process used to harvest fur is contributing to
public outcry at the practice reflected in regular protests such as "Fur Free Fridays
(Anderson, 2004).”
A final example of a pervasive ethical issue in retail is commission fraud and
theft. In this case, where employees manipulate sales figures to grow or protect their
income and steal merchandise for personal use or resale, it is the individual violating their
ethical obligation to the corporation. This individual lack of integrity has prompted
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companies to spend millions to prevent and prosecute tens of millions or more in annual
losses. Even consumers feel the repercussions of this crime as prices rise to cover losses
and high turnover affects the shopping experience.
Each of the ethical issues examined here is poses complex ethical questions and
requires complex solutions. Further complicating these issues is that business ethics often
involves activities that may be considered either illegal or immoral or both: still, the
significant though ill-gotten gains of unethical business practices often seem to outweigh
the risks. However, businesses are making progress in defining and mitigating ethical
violations and there is hope that organizations will realize the long terms rewards of
ethical corporate operations.
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References
International Business Ethics Institute. (2007, November 12). Business ethics primer.
Retrieved May 26, 2009 from http://www.business-ethics.org/primer1.html
Three companies show why they are best-in-class for diversity. (2006, March 16).
Retrieved May 26, 2009 from the Wharton School at the University of
Pennsylvania website at http://knowledge.wharton.upenn.edu/article.cfm?
articleid=1407
Andersen, B. (2004). Bringing business ethics to life: Achieving corporate social
responsibility. Milwaukee, WI: ASQ Quality Press. Retrieved May 26, 2009 from
http://books.google.com/books?id=BseLWTK-iLIC&pg=PA203&lpg=
PA203&dq=business+ethics+fur+coat&source=bl&ots=zOhQnpgrpO&sig=BCaz
XxCs4LdpvMExiJBKAqEXnRQ&hl=en&ei=AS4cSur7KY2KtAOrg8mSDw&sa
=X&oi=book_result&ct=result&resnum=7