President Obama & Business Ethics

President Obama & Business Ethics  

Some of you may recall that, along with this humble blogger, President Barack Obama (back then he was merely "President Elect") was included on Ethisphere Magazine's list of the 100 Most Influential People in Business Ethics (2008), earlier this month. 

The rationale provided by Ethisphere:

Obama has made ethics a cornerstone of his administration, which in turn has already caused a priority on ethics to trickle down into public and private companies. Many businesses have already responded directly or indirectly by shifting their overall business strategy.

It's not clear how much influence Obama could have had in 2008, when he was merely a presidential candidate. It's clearer that he has a chance to exert a fair bit of influence in 2009, and beyond. Just how much influence he can have on the way business is conducted, and the mechanisms by which he can do so, is an interesting question, one I'm not sure I'm qualified to answer.

But I'll point out that we could begin to answer the question by noting that the there are two categories of ways in which the President (be it Obama or anyone else) can influence business ethics.
1) Leadership. The President, in a very real way, gets to set the tone for other leaders, including leaders in commerce. He gets to lead by example, and, in Obama's case, lead through the persuasive force of his very considerable oratory skills. Just how potent such example-setting and persuasion are or can be is an open question.
2) Legislation. Now, I've been at pains before to point out that law & ethics are not the same thing. But ethical constraint often (and perhaps most critically) comes into play in what HLA Hart called "the penumbra of the law" — the grey zone along the law's edges. Change the law, and you change the penumbra, the area within which companies and executives have to exercise ethical judgment.

Time will tell whether Obama exerts the kind of positive influence on business ethics with which Ethisphere has already credited him. Americans of all political leanings, and people around the world, should wish him luck.

Ethics are considered the moral standards by which people judge behavior. Ethics are often summed up in what is considered the “golden rule”—do unto others as you would have them do unto you. While this makes sense as a general rule of thumb, it is not entirely useful when looking to define business ethics. In business, there are many different people you have to answer to: customers, shareholders and clients. Determining what to do when an ethical dilemma arises among these different interests can be extremely tricky, and as such business ethics as a field is complex and multi-faceted.

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Define Business Ethics

Business ethics are ethics that refer to the moral rules and regulations governing the business world. In other words, they are the moral values that guide the way corporations or other business make decisions. Some business ethics are imposed by law. For example, the Securities and Exchange Commission governs the way investment bankers and stock brokers do business, and court rules dealing with attorney client privilege dictate some ethical decisions for attorneys. However, there are also business decisions that do not fall within the guidelines of the law, in which ethical or moral judgments must be made.

Factors that Affect Business Ethics

Ethical codes that govern businesses often address certain main areas. These areas, as compiled by the NIEHS branch of the U.S. National Institutes of Health include:

·                    Honesty

·                    Objectivity

·                    Integrity

·                    Carefulness

·                    Openness

·                    Respect for intellectual property

·                    Confidentiality

·                    Responsible publication

·                    Responsible mentoring

·                    Respect for colleagues

·                    Social responsibility

·                    Non-discrimination

·                    Competence

·                    Legality

·                    Human subjects protection

These principles apply more in some fields of business than others. For example, accountingethics- especially for accountants of publicly held corporations- depends upon complete honesty and transparency. When accountants do not behave ethically, or violate these principles of ethics, shareholders can be harmed. For example, the accountants at Arthur Anderson did not behave with honesty, openness and responsible publication when auditing Enron. As a result, shareholders were harmed, the company collapsed, and some Arthur Anderson accountants were held legally liable for their breach of business ethics.

On the other hand, confidentiality is most important when it comes to attorney ethics. The law recognizes that attorneys have such a high moral obligation to keep their clients secrets confidential, that if an attorney violates this ethical duty, he can lose his license to practice law.

Human subjects protection, on the other hand, is most important when it comes to those in medicine or those conducting experiments on others such as psychologists. Peer review boards and other such institutions govern experiments designed to be conducted on human subjects to ensure that business ethics are followed and that experimenters make the best moral and ethical decisions.

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Setting Business Ethics

While the law imposes some ethical rules, legislation cannot possibly define business ethics as a whole and cannot address every situation in which ethical dilemmas may arise.

Companies and professional societies such as the American Medical Association or the American Bar Association also set their own ethical standards in an attempt to provide guidance for difficult choices. These ethical rules are often referred to as a code of conduct or rules of conduct, by which those in the group abide. Each group determines their ethical stance based upon different guidelines, whether it is established principals, religious book, or group agreement.

While members of the group may follow the ethical guidelines as a principle by which they believe everyone should act, they might also have a set of personal ethics which also governs their own behaviors.

Sometimes, however, business ethics and personal ethics may conflict. This dilemma occurs commonly in attorney ethics. For example, an attorney may represent a client who commits murder, and that client may tell the attorney where the body is buried. In every other situation, a person would likely have a strong ethical and moral obligation to go to the police. However, attorney ethics dictates that the lawyer keep the client's secret. In fact, it would be unethical to do so. In this case, the attorney must put business ethics first in order to protect the structure of the American justice system.

If the attorney did not act under these special rules of business ethics, people would be deprived of their constitutional right to a fair trial and competent defense in the court systems. Therefore, business ethics changes the rules of normal ethics in order to serve a higher purpose.

Why Honesty is Important in Business & Examples of Bad Business Ethics

Step 7: Practice the "Golden Rule"

"Not only can a man be honest and grow rich, but it is almost impossible for a man to grow rich unless he is honest." J. J. Corn

Short cuts and sharp dealings to quick success make great fodder for novels and movies, but are not smart practices on which to build a successful business. The role models of "greed is good" and "have I got a deal for you," can lead you to failure.

If you insist that all the marbles belong to you, you will wind up playing by yourself. If you cheat your family, your employees or your customers, eventually you will find the price high. Success in business is more dependent on the "Golden Rule" than many realize. Step 7 is simple: If you want to make it and leave the business to your children, watch out for the temptation of greed and dishonesty.

Dishonesty

To be dishonest is to deny reality, to be impatient, to look for shortcuts, to seek instant gratification, and eventually to be self- destructive. Our dishonesty can be with ourselves as well as with others. We can deny our limitations and our motives, setting us up for failure. With others, we seek to serve only our interests, with little regard to anyone else's welfare.