Business Ethics
“it’s nothing personal, it’s just
business”
Collect the following sheet from the
wiki
• Business Ethics Worksheet
What do businesses need from:
• Other businesses
• Customers
• The Government
What do businesses need from:
• Other businesses – respect and honesty
• Customers - respect and honesty
• The Government – protection, respect and
honesty
Australian Competition & Consumer
Commission
• Promotes competition and fair trade to
benefit consumers, businesses and the
community.
• To ensure individuals and businesses comply
with the competition, fair trade and consumer
protection laws.
What do businesses owe:
• Other businesses
• Customers
• The Government
What do businesses owe:
• Other businesses - respect and honesty
• Customers - respect and honesty
• The Government - respect and honesty
What is ethics?
Ethics
• Can be defined as a “system of right and
wrong”
• Assists individuals decide whether an act is:
– Moral or immoral
– Socially desirable or undesirable
Where do ethics come from?
Ethics
• Many sources:
– Religious beliefs
– National and ethnic beliefs
– Community standards
– Family practices
– Educational experiences
– Friends
What is meant by business ethics?
Business ethics
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Principles and standards which guide
behaviour in the world of business.
“Right” or “wrong”, “acceptable” or
“unacceptable” behaviour within the
organisation.
Determined by key stakeholders – the
people affected by any decision.
Business ethics
• Behaving ethically in business is widely
regarded as good business practice.
Ethical versus lawful
• An important distinction to remember is that
behaving ethically is not quite the same thing
as behaving lawfully:
• Ethics are about what is right and what is
wrong
• Law is about what is lawful and what is
unlawful. Lawful is obeying the laws.
• An ethical decision is one that is both legal
and meets the shared ethical standards of the
community
Some myths about business ethics
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It’s easy to be ethical
Unethical behaviour is part of business
There are no rewards for being ethical
Ethical behaviour will prevent me from being
successful
• Business is like sport – push the rules and try not
to get caught
• Business ethics is about character education and
teaching moral philosophy
Ethical issues for business
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Product safety standards
Advertising contents
Working environment
Unauthorised payments
Employee privacy
Environmental issues
Common unethical acts
(reported by employees)
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Lying to supervisors
Falsifying records
Alcohol and drug abuse
Conflict of interest
Stealing
Receiving a gift/entertainment in violation of company
policy
Improper accounting procedures
Sexual harassment
Discrimination
Violation of environmental laws
Ethical decisions
• Should businesses profit from problem
gambling?
• Should supermarkets sell beer cheaper than
bottled water?
• Is ethical shopping a luxury we can’t afford?
• Should businesses buy good made by cheap
foreign workers over long standing Australian
workers?
Ethical decisions
• Should Australian mines be sold to foreign
Governments?
• Should pollution be covered-up?
• Is insider trading ethical?
• Should local Government councillors take
bribes to approve developments that are not
in the interests of the communities they
represent?
Ethical decisions
• Should businesses be allowed to double the
prices of goods just before Christmas?
• Should telemarketers be allowed to ring just
on meal time?
Why do people behave unethically?
• Meeting overly aggressive financial or
business objectives
• Meeting schedule pressures (“deadlines”)
• Helping the organisation survive
• Rationalising that others do it
• Resisting competitive threats
• Saving jobs
What stops unethical behaviour?
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Personal values
Supervisor influence
Senior management influence
Internal drive to succeed
Friends/co-worker influence (peer pressure)
Why misconduct is not reported
• Fear of not being considered a team player
• Did not think that corrective action would be
taken
• Fear of retribution – from management
• “No-one else cares – why should I?”
• Did not trust the organisation to keep the
report confidential
Conflict of interest
• Exists when an individual must choose
whether to advance his/her own interests, the
organisation’s or others’
– Examples: Bribes/personal payments, gifts, or
special favours intended to influence decision
making
– Do auditor actual or alleged conflicts of interest
represent unethical behaviour?
Honesty and fairness
• Following applicable laws and regulations and
not knowingly harming stakeholders
– Is advertising cigarettes at the cricket
fair? Why was it phased out?
– Are mobile phone ads that ‘mask’ the
effective cost of the call, especially if the
limit is exceeded, fair?
Communications
• Refers to the transmission of information and
the sharing of meaning
– e.g.: deceptive advertising, product safety
information, product composition
– Financial Statements – is this not simply a
means of communication to stakeholders?
– Continuous disclosure obligations for ASX
companies?
So what does this mean to
you and me?
• We have a personal obligation to ourselves to
act ethically in our business dealings
– The risk to our personal reputation
– The risk to our businesses reputation
What is good business ethics?
What is bad business ethics?
Why should businesses behave
ethically?
References
• University of Notre Dame
• Chartered Accountants
• http://business-ethics.com/2012/10/05/1036arbitrage-when-there-is-never-enough/
• www.accc.gov.au
• http://business-ethics.com/2012/10/05/1036arbitrage-when-there-is-never-enough/
• http://www.tutor2u.net/business/strategy/busin
ess-ethics-introduction.html
• http://toolkit.smallbiz.nsw.gov.au/chapter/17/85