Business Ethics Part I


What exactly makes a decision ethical? The problem with ethics is that what may seem morally right (or ethical) to one person can be appalling to another. This is because everyone sees right and wrong in different ways. For example, in North America, it is considered wrong to treat women differently from men, but in other cultures, this is perfectly acceptable and even expected. You would think having everybody on the same page when it comes to ethics would be at the top of a companies workplace to-do list, but the truth is, many companies don't see the financial benefits of ethical practices and procedures.

Here are a few ways of how ethical behavior can make companies money.

  1. Customers choose ethics. Customers will base their decision whether or not to shop with you partially on ethics.
    • Example: If you had a choice between two car salespeople, one who has a reputation for selling stolen vehicles and one who has a reputation for ensuring that the customer gets all the information about the vehicles past, which would you choose?
  2. Customers appreciate ethics. Customers reward ethical companies with loyalty.
    • Example: Let's say you've purchased a television from a local electronics store. The company calls you back the next day to let you know that you actually overpaid for the TV and that a check for the overcharged amount is in the mail. You'd probably be stupefied that they admitted to their mistake, especially one that costs them money. But the next time you wanted to purchase electronics you'd probably remember the companies honesty and return to the store.
  3. Employees are more loyal to ethical companies.
    • If you're working for a company that lies, cheats, and steals, you're apt to think that the company will do the same to you, and you'll probably be less loyal to them as a result.
  4. Ethical companies are more productive. Studies have shown that employees in ethical offices take less time off and are more productive when they're in the office.
    • Example: At one time or another, most of us have taken a sick day when we're not actually sick. This is, in essence, lying to and stealing from the company. Yes, sick days are a benefit of being an employee, but they do cost the company money and must be used wisely.
  5. An ethical office means lower legal costs. Taking care of unethical behavior before it starts can reduce a companies or individuals chances of being sued.
    • If your employees are in the habit of lying, cheating, and stealing, someone is going to get caught eventually and it will likely mean a big legal headache (and bill) for the company.

Now that we've shown you the benefits of ethical behavior, we will introduce and provide a brief overview of Dr. Lawrence Kohlberg's Six Stages and Three Levels as taken from Moral Development: A Guide to Piaget and Kohlberg by Ronald Duska and Mariellen Whelen.

Dr. Kohlberg was a psychologist in the early 1950s and had been studying moral development. His studies led him to conclude that there are six main stages to moral development and that these stages fall under three levels.

  1. Level 1 - Pre-Conventional Morality: During these two stages of moral development, the person sees rules as something imposed on them. Moral decisions are often self-centered and based on the possible consequence of an action. Fear is the main motive in determining actions.
    • Stage 1: Punishment-Obedience Orientation
    • Stage 2: Instrumental Relativist Orientation
  2. Level 2 - Conventional Morality: During these two stages, the person sees rules as something to be valued in and of themselves. The norms of their family, friends, and peers override the individual's motivations.
    • Stage 3: Good Boy - Nice Girl Orientation
    • Stage 4: Law and Order Orientation
  3. Level 3 - Post Conventional Morality: During the final two stages, the person becomes capable of reflecting on and evaluating the norms and value of their society.
    • Stage 5: Social Contract Orientation
    • Stage 6: Universal Ethical Principle Orientation

This is just an overview of a few topics we discuss in our Business Ethics course. We'll cover two more topics in our next post, Business Ethics Part II. Be sure to like and share this post with your friends, family, boss, co-workers, and anybody else you think would benefit from a crash course on Business Ethics. Stay tuned for more posts, this is just the beginning.