Building Ethics Builds Your Business

In cartoons, people with an ethical dilemma have little advisors pop up on their shoulders: one good and one bad. It’s not that easy in business. Society no longer has just one ethical framework. There are dozens, so which do you choose?

Greg Moran, Executive-in-Residence, Former Sr. Executive at Ford, Chase, Nationwide, and more, says choosing your organization’s principles is the first thing to do when launching a business—even before you create your pitch deck! From Enron to OpenAI, Greg reviews the vagaries of business ethics…and how you can navigate through them.

About a month ago, I ended up sitting at the bar in a ramen place while Apple replaced the battery in my iPhone. It is a singular thing these days to be unexpectedly cut off from the world for 90 minutes, so the ramen lunch was simply the best way I could come up with to spend an hour without spending a lot of money (I was at a mall). I was the only one at the bar, so the bartender started chatting with me. He asked what I did, and when he learned that I did advisory work, he asked me what the most important advice I could give on leadership might be. Without giving it much thought, I said, “Have a clear ethical framework that you adhere to, and within that, be nice. ˮ I have thought about it a lot since and decided that my intuition was right, and I would not change my answer.

Ethical conduct is not merely a choice but a foundational element that underpins the long-term viability and positive impact of people and organizations. Ethical leadership, accountability, fairness, transparency, and lawfulness are essential in shaping a culture of trust and respect within businesses.

Case studies such as the Wells Fargo fake accounts scandal, the Volkswagen emissions scandal, and the Purdue Pharma controversy vividly illustrate the substantial costs and repercussions of unethical behavior in the corporate world. These consequences encompassed the erosion of consumer trust, legal ramifications, reputational damage, and adverse effects on society at large. There are also personal ramifications of ethical failures, including financial penalties, legal entanglements, loss of trust, and enduring impacts on one’s personal legacy.

There are various ethical frameworks like Utilitarianism, Kantian Ethics, Virtue Ethics, Judeo-Christian Ethics, and Stakeholder Theory. These frameworks can serve as guiding principles for ethical decision-making, emphasizing the importance of aligning actions with moral values and considering the broader impact on stakeholders and society. Integrating key ethical principles such as integrity, accountability, fairness, transparency, and respect into professional conduct is essential for navigating ethical dilemmas and fostering a culture of integrity within organizations.

While not exhaustive, these vital ethical principles in business help shape organizational conduct and foster a positive culture:

Integrity

Definition: Integrity entails being truthful, fair, and adhering to moral and ethical principles in all actions and decisions.

Importance: Integrity involves consistently aligning words with actions, even without oversight, to build trust and inspire excellence within the organization.

Application: Demonstrating integrity involves honoring commitments, telling the truth, following through on promises to customers, addressing employee concerns sincerely, and conducting operations transparently.

Accountability

Definition: Accountability refers to accepting responsibility for one’s actions and decisions, including the outcomes and consequences that ensue.

Importance: Accountability cultivates a culture of trust and respect within the organization, assuring stakeholders that individuals and the organization will stand behind their actions.

Application: Businesses showcase accountability by acknowledging and addressing mistakes and learning from them rather than concealing or ignoring errors when they occur.

Fairness

Definition: Fairness involves objectively balancing competing interests and making just, equitable, and impartial judgments and decisions.

Importance: Fairness ensures that all stakeholders are treated equally, without discrimination or favoritism, in terms of opportunities, rewards, and penalties.

Application: Practicing fairness entails establishing transparent criteria for hiring, promotions, and rewards, conducting business dealings openly and equitably, and avoiding bias in decision-making processes.

Transparency

Definition: Transparency denotes the openness and clarity with which a company conducts its business operations, sharing relevant information in a straightforward and accessible manner.

Importance: Transparency builds trust by enabling stakeholders to make informed decisions and judgments about the organization, signaling a commitment to ethical standards.

Application: Businesses can promote transparency by consistently sharing critical business information with stakeholders, maintaining predictable practices for information disclosure, and ensuring accessibility of information.

Lawfulness

Definition: Lawfulness involves compliance with legal and regulatory obligations and adhering to laws and regulations without seeking loopholes or compromising ethical standards.

Importance: Law-abiding behavior ensures that employees are not placed in ethically compromising situations and that the organization operates within the bounds of the law.

Application: Upholding lawfulness requires investing in understanding relevant laws, regulations, and regulatory agencies, establishing frameworks for compliance, and monitoring adherence to legal requirements.

Respect

Definition: Respect in a business context entails valuing the contributions of all individuals associated with the organization, including employees, customers, and communities.

Importance: Respect fosters an inclusive environment that embraces diversity, encourages open communication, and nurtures mutual respect among stakeholders.

Application: Demonstrating respect involves creating inclusive workplaces, engaging with community stakeholders meaningfully, welcoming diversity, and ensuring products and services benefit a broad range of customers.

By integrating these principles into the professional ethos, individuals and organizations can navigate ethical challenges effectively, uphold integrity, and build a reputation based on values and principles.

Ethical behavior is not just a moral imperative but a strategic necessity for businesses seeking sustained success. Aspiring leaders should internalize ethical values and commit to developing and upholding a clear ethical framework in their professional endeavors. By cultivating ethical cultures and adhering to core ethical principles, businesses can not only mitigate the risks associated with unethical conduct but also contribute positively to society, enhance their long-term prospects, and safeguard their reputation in an increasingly interconnected and demanding business landscape.

This article was written by Greg Moran as a companion to our podcast episode Forming Your Firm’s Ethics.

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