How do professional ethics interact with
business ethics and morals?
In this factsheet we look at how professional ethics interacts with business ethics and morals.
The difference between morals and ethics
Morals relate to what is considered to be right or wrong, normally at the level of the individual.
Our upbringing and the environment in which we live usually influence our morals, although
some morals may be common to all. For example most of us are likely to believe that murder
is morally wrong but may take a different moral stance on other issues such as vegetarianism.
Moral codes are complex. An individual might have some principles which they are never
prepared to violate such as not condoning the use of violence but the same individual may
support other behaviour because “the ends justify the means” – the famous example of Robin
Hood stealing from the rich to feed the poor. So opinion may be divided over the morality of a
German surgeon recently accused of manipulating his patient’s records to make them appear
sicker than they actually were, in order to get them to the top of a liver transplant list.
Ethics are about the social system in which morals are applied. The beliefs and value
systems of a particular culture or society will govern the standards of behaviour and principles
of right and wrong that are socially acceptable within a particular group. The recent case of
the Chinese badminton players expelled from the Olympics because they openly tried to lose
a qualifying match to ensure an all Chinese ladies final, highlighted the pressure to win
medals and differing views about the acceptable methods of doing so.
Professional vs Business ethics
Professional ethics as we have already seen are the personal and corporate standards of
behaviour expected of the members of a particular profession. Business ethics are about how
any organisation conducts its business. This may include the way in which staff are treated
and paid; relationships with suppliers and the consumption of resources.
Business ethics will be influenced by the moral standards that a particular society expects
businesses to adopt. For example, payments by a business to a political party are permitted
in the UK if declared in a company’s accounts but are forbidden in the USA.
Society’s expectations drive business ethics at 3 levels:
(i)
social responsibility
(ii)
business
(iii)
individual
Corporate Social responsibility
The first level is about Social responsibility (the macro level) this considers the role of
business nationally and internationally and its responsibility to wider society.
Unethical behaviour here would include pollution (such as the BP oil spill in the Gulf of
Mexico), the promotion and sale of unsafe products (such as tobacco) and the overconsumption of the world’s resources.
Over the past decade there has been an increasing drive for sustainability to encourage
businesses to meet the needs of the present without compromising the needs and ability of
future generations. The more socially responsible organisations recognize this and use it as a
source of competitive advantage. So banks like Triodos and the Co-op bank are the ethical
trailblazers of the banking industry. Multinational business, Unilever, ran an educational
marketing campaign in rural India to educate people about the benefits of good health and
hygiene practices including regular hand-washing. As well as benefitting society by improving
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education this also helped raise awareness of Unilever’s Lifebuoy soap brand thereby
creating more users of its product.
For more information about corporate social responsibility, look at the downloads section of
the AAT ethics site.
Ethics at the business level
The second level of business ethics concerns the way a firm as a whole behaves (company
or business level). This looks at the issues facing individual companies when deciding on
objectives and strategy. Inappropriate conduct here might include the use of underage labour,
the paying of bribes for contracts, the manipulation of financial statements and the
exploitation of suppliers - several large supermarkets have come under fire for the abuse of
their power in dictating terms and prices to farmers and other smaller suppliers.
Many business level transactions have moral dimensions, exacerbated by the fact that ethics
varies from one country to another. Is it ethical to adopt practices that are legally permissible
in one country that you would not adopt in your own and where do you draw the line?
Perhaps paying workers significantly lower wages than would be reasonable in the UK is
acceptable if the wage is still higher than the going rate in that country but is it reasonable to
employ child workers because there are different local regulations regarding the minimum age
of employment? Such are the dilemmas that have faced many of the world’s biggest brands.
In the 1990s there was a global boycott of Nike when it refused to take responsibility for the
behaviour of some of its subcontractors who were using child labour. Move to 2011 and after
Greenpeace highlighted that its suppliers were dumping toxic waste into the world’s
waterways, Nike responded by producing a plan to go toxic free by 2020.
Individual ethics
The third level of business ethics is that of the individual and addresses the actions and
values of individuals within an organisation. Bad behaviour here might include discrimination,
bullying, lying and stealing. In 2012 investment manager Bernie Madoff, a former NASDAQ
chairman, was sentenced to 150 years in prison after using his reputation and experience to
dupe investors, industry regulators and Wall St banks into investing $billions in his Ponzi
scheme.
The tone at the top
In addition to any professional or industry codes that apply, many businesses will have their
own code of business ethics to communicate the values and conduct that are expected of the
individuals within that organisation and to reduce the risk of unethical actions and behaviour.
This is only successful however if the business’ leadership team create the right tone at the
top. The Goldman Sachs banker whose resignation letter was printed in the New York Times
alleged that within the firm managers routinely referred to clients as muppets and openly
discussed in meetings how to rip them off.
Conclusion
So as we can see, businesses can take a wide range of ethical stances. At worst, ethically
challenged organisations may take the view that behaviour is acceptable “provided they will
never get found out” or “because everyone does it”. However as the world changes, the
widespread use of social media increases the likelihood of being caught. A recent example
here might be the ethical culture and practices of the media which came under scrutiny in the
Leveson inquiry into phone hacking. Today’s customers, employees and even shareholders
expect businesses and their leaders to stand for more than just profitability. Those
professions and businesses that put ethics at the heart of everything they do, will be the
success stories of the future.
All of the information that we’ve covered in this factsheet is available as a podcast in the
podcast section of the AAT ethics site.
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