Strategic Management: Formulation and Implementation

Ethical-moral Considerations

Closely related to legal compliance are moral and ethical standards. Legal behavior includes ethical behavior, however ethical conduct goes beyond legality and is more comprehensive.

Jerry Anderson gave a quick dictionary definition of the following words: "ethics," "moral," "ethical,":

Ethics: The system or code of human conduct, with the emphasis on the determination of what is right and wrong.
Moral: Relating to, dealing with, or capable of making the distinction between right and wrong in conduct, good or right in conduct or character.
Ethical: Conforming to right principles of conduct as generally accepted by a specific profession or group, a given system of ethics, and so on

An ethical company doesn't exist in a vacuum. To make ethical decisions, companies must consider the impact on the larger society of which their are part.

However, ethical corporate conduct is not easy and can be costly. Consideration must be given to existing and proposed laws, Jude-Christian values, family norms, society and industry as a whole, the firm, and the background and desires of owners, managers, and other employees.

There are many honest, moral, highly ethical businesses and businessmen; however, when stories come about illegal payments by Lockheed to Japan for business contracts, Audi blaming its car problems on the public, and the graft and corruption in the federal government and the financial world, it is no wonder that the public perceives business and those who run it as amoral at best.

Therefore, government action and intervention, public concern and outcry, and stakeholder pressure are forcing business to take another look at its honest and ethical policies and attitudes. However, surveys show that ethics is good business. The study found that successful companies in the long term tend to be ethical companies.

Loyalty and trust of employees, shareholders, and business partners are probably the greatest assets a company can have. But, loyalty and trust are built on a base of everyday ethical conduct. Therefore, ethical leaders should create an ethical corporate culture that brings out the best in people.

Richard Bartlett, vice chairman of Mary Kay Corporation in Dallas, recommends the following "bits" from his "mosaic of ethics":

1. Don't let problems fester.
2. Pay attention to the detail.
3. Be intolerant of the lack of ethics on the part of anyone in your organization.
4. Never knock the competition.
5. Don't just do the legal thing; do the right thing.
6. Don't take ethics for granted.
7. Your need to have a code of ethics, but you also need the competence and guts to follow it.

Further, some firms have specific procedure for enforcing the code and handling violations.

In addition to setting examples by their behaviour and conduct, top management should also:

  1. Establish clear policies that encourage moral and ethical behavior. Establish minimum permissible and nonpermissible acts. Set realistic goals and objectives for employees so that they are not pressured into using unethical tactics to meet these goals and objectives.
  2. Put the code of ethics in writing and make certain that all are aware of its contents. Make certain new potential employees read it prior to being hired, with the knowledge that noncompliance with the code is ground for dismissal. Make all employees read the code and sign that they have read it and will comply. This should be done at least once each year.
  3. Be willing to assume responsibility for immediately disciplining wrongdoers. In action on the part of management will set bad examples and only encourage others to try and get away with the same or worse things. Cooperate 100 percent with all plant, local, state and national enforcement officers in all cases where their services are required. This will not guarantee 100 percent compliance with all ethical and moral standards, but it will certainly go a long away in improving them.
  4. Give serious consideration to establishing a specific organizational position where people who feel that ethical and moral practices have been violated can go to report it and have it discussed. A few companies have ombudsmen who hear such cases and act the ears for top management. If handled properly, this could eliminate, or at least minimize, the potential for "whistle blowing."

In general, growing concern over ethics and morality is reflected in new approaches to social responsibility and increased demand for ethical codes of behavior.