Business Ethics: Ethical Dilemmas and Decisions

A Much-Talked About Topic! But What Exactly Do We Mean?

“Business ethics” is portrayed as a matter of resolving conflicts in which one option appears to be the clear choice. For example, an employee is faced with whether to lie, steal, cheat, abuse another, break terms of a contract, etc. However, ethical dilemmas faced by managers are often complex with no clear guidelines. Ethics are moral principles that guide one’s actions, while “business ethics” are ethics applied to business practices and decisions. Often the ethical choices are so obvious that we don’t think about them at all. We simply do what seems to be right. But sometimes competing or conflicting priorities may make the line of what is ethical and what is unethical very fuzzy.

Imagine you work at a company and a friend of yours is applying for a job there. How much help can you give to your friend before you cross the line? Certainly it wouldn’t be a problem if you could put a good word for them. Furthermore, you might tell your friend a little bit about the company policy and culture before they go for the first interview. However, how would you feel if you told your friend information about the Hiring Manager that is not publicly available to the other candidates? What if you told them about their favourite team or their red lines when it comes to how they would react in certain business scenarios? Even more, what if you had a strong “say” in the hiring process? Would that cross an ethical line? Needless to say that lying for your friend’s benefit would definitely cross a line. But, when does flattery actually become exaggeration and when does exaggeration actually become a lie?

As you can see “right or wrong” is not always “black or white”.

An ethical dilemma exists when one is faced with having to make a choice among alternatives. A significant ethical conflict arises when faced with a situation of conflicts of significant value among differing interests, have real alternatives that are equally justifiable, but with significant consequences on “stakeholders”.

According to the Journal of Business Ethics “Managing ethical behaviour is one of the most pervasive and complex problems facing business organisations today“.

Ethical Dilemma vs. Ethical Decision

When it comes to an “ethical dilemma”, a decision must be made between two or more ethically responsible courses of action, all of them being considered ethically appropriate, but each of them leading to a different outcome. This usually leads to weighing priorities against one another.

An example might be when a company whose sales are down needs to lay off some employees. But what’s the right way to go about it? The employees will probably want to get an early notice of termination and severance pay. This however, would come as an added expense to the company, when in fact it is already in an adverse financial situation. So, the company’s investors would reasonably prefer a more cost-effective solution. If the company did not already have an established employee termination policy for handling such a situation, it could easily face an ethical dilemma.

An ethical decision on the other hand involves choosing between ethically right and wrong options. Such decisions may seem to be easy to make. However, this may not be the case if for example there are strong incentives to make the wrong choice and there are perceived hardships in making the right one. It should be noted that sometimes people may have strong psychological ways and reasons for justifying their actions and these decisions can become powerful tests of one’s ethical integrity.

For example imagine that you are handling the online marketing for a small company and your boss wants you to get more customer positive reviews. He suggests that you should start writing your own reviews on popular message boards. Say you object, but he insists, telling you that it’s common practice for small businesses to do this sort of thing. You fear you might lose your job if you don’t comply, and you think to yourself that you are not really lying. You are just writing reviews for customers who didn’t have the time to do it themselves. And if it is common practice, what it the harm in doing it too… In this situation, the right ethical choice is clear, but other factors get in the way of following through on it. When a normally ethically responsible person makes a poor ethical choice like this, it’s called an ethical lapse.

Ethical Principles for Business Executives

“Ethical principles” are ethical values, establishing standards or rules that describe the kind of behaviour an ethical person should and should not engage in.

The following list of Ethical Principles incorporates the characteristics that most people associate with ethical behaviour.

HONESTY: Ethical executives are honest and truthful in all their dealings and they do not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means.
INTEGRITY: Ethical executives demonstrate personal integrity and the courage of their convictions by doing what they think is right even when there is great pressure to do otherwise; they are principled, honourable and upright; they will fight for their beliefs.
PROMISE-KEEPING & TRUSTWORTHINESS: Ethical executives are worthy of trust. They are candid and forthcoming in supplying relevant information and correcting misapprehensions of fact. They make every reasonable effort to fulfil the letter and spirit of their promises and commitments.
LOYALTY: Ethical executives are loyal to their companies and colleagues. They are devoted to duty. They do not use or disclose information learned in confidence for personal advantage. They safeguard the ability to make independent professional judgments by scrupulously avoiding undue influences and conflicts of interest.
FAIRNESS: Ethical executives are fair in all their dealings. They do not exercise power arbitrarily, and do not use overreaching or indecent means to gain or maintain any advantage. Fair persons manifest a commitment to justice, the equal treatment of individuals, as well as tolerance for and acceptance of diversity. They are open-minded and willing to admit they are wrong, and, where appropriate, change their positions and beliefs.
CONCERN FOR OTHERS: Ethical executives are caring, compassionate, benevolent and kind; they like the Golden Rule “Help Those In Need”, and seek to accomplish their business objectives in a manner that causes the least harm and the greatest positive good.
RESPECT FOR OTHERS: Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat all people with equal respect and dignity regardless of sex, race or national origin.
LAW ABIDING: Ethical executives abide by laws, rules and regulations relating to their business activities.
COMMITMENT TO EXCELLENCE: Ethical executives pursue excellence in performing their duties, are well-informed and prepared, and constantly endeavour to increase their proficiency in all areas of responsibility.
LEADERSHIP: Ethical executives are conscious of the responsibilities and opportunities of their position of leadership and seek to be positive ethical role models.
REPUTATION AND MORALE: Ethical executives seek to protect and build the company’s good reputation and the morale of its employees, by not engaging in conduct that might undermine respect and by taking whatever actions are necessary to correct or prevent inappropriate conduct of others.
ACCOUNTABILITY: Ethical executives acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, their colleagues, their companies, and their communities. Organisations can manage ethics in their workplaces by establishing an ethics management programme. Brian Schrag, Executive Secretary of the Association for Practical and Professional Ethics, clarifies. “Typically, ethics programmes convey corporate values, often using codes and policies to guide decisions and behaviour, and can include extensive training and evaluating, depending on the organisation. They provide guidance in ethical dilemmas.” Rarely are two programmes alike.

Law vs. Ethics

So, ethics is in a lot of cases about individual choices. However, companies can encourage their people to act ethically by establishing the right culture and making sure that company policies place a high value on good ethics through say, a “Code of Conduct” or a written “Code of Ethics”. When managers and supervisors have the ethical integrity to lead by example, then ethical and good decision-making spreads throughout the entire organisation.

Businesses obviously exist to make money. But companies following an ethical corporate strategy understand that their responsibility is more than the bottom line. Their owners, employees and suppliers, customers and communities may all have differing and often opposing interests. So, sometimes, it is hard to tell what the best decision is. Companies are behaving as good corporate citizens when they consider their responsibilities to all stakeholders and act in ways that balance conflicting concerns.

On a final note, corporations and professional organisations, particularly licensing boards, will generally have a written “Code of Ethics” that governs standards of professional conduct expected of all in the field. It is important to note that “law” and “ethics” are not synonymous, nor are the “legal” and “ethical” courses of action in a given situation necessarily the same. Statutes and regulations passed by legislative bodies and administrative boards set forth the “law.”