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Is there such a thing as business ethics?--Part 1

Follow the link to the interview or read the text below. 



Would your business behavior pass these three ethical tests?


In a long-running show on PBS called “Ethics in America,” a moderator presented hypothetical ethical dilemmas to a panel of prominent individuals from a variety of disciplines (medicine, law, industry, politics, the military and so on). The participants assumed the roles of the players in the dilemmas, making a series of decisions that would bring the scenarios to their often surprising conclusions. Throughout each show the moderator would interject ethical twists and turns, adding layer after layer of complexity and ambiguity. And by the end of the hour, viewers were reminded that ethical decisions are rarely, if ever, black and white, but are instead steeped in myriad shades of gray.

Business, like life, is a series of decisions. Many of those decisions are made without the need for deep thought, but others require us to sort out ethics-related “shades of gray.” And like ethics in everyday life, business ethics is often steeped in apparent contradictions.

“The point of business is to make a profit, and there’s nothing wrong with that,” says Kyle Scott, lecturer and author of three books, including the just-released Federalism: From Normative Theory to Practical Relevance. He adds, however, that at face value this perfectly acceptable goal may seem to conflict with what might be termed ethical behavior.

Of course, ethical dilemmas in business are nothing new. From the appalling working conditions of the pre-OSHA era to the modern-day Enron and Bernie Madoff scandals (to name just a few), ethicists have more than enough material with which to make their points. And while economic ups and downs tend to have a transient impact on our decision-making, Scott, who teaches American politics and political theory at the University of Houston, notes that the broader ethical environment tends to remain somewhat constant.

“When times are hard, people may be willing to take bigger risks, with ethics often taking a back seat to the need to survive,” he says. “We’re more likely to bend the rules when we’re hungry, and there’s an argument to be made that doing so for such reasons is more excusable than bending the rules in the interest of greed.”

Interestingly, however, Scott also notes that better economic conditions can give rise to both ethical and non-ethical decisions and behavior. “Knowing that our families are fed and our businesses and employees are doing well can make it easier to go the extra mile to do what’s right. It can, however, also give rise to a sense of invincibility, making it easier for greed to take over.”

What has changed is the degree of transparency with which our personal and business decisions are made. Today, it is virtually impossible to make a move, ethical or not, behind closed doors. This, says Scott, may be a good thing.

Nowhere to Hide: Everyone is Watching
The advent of social media has indeed changed the playing field for those who would act in an unethical manner. Today, reports of breaches in ethics saturate the media with lightening speed, and are instantaneously passed along to everyone with a computer or cell phone.

“One of the foundations of ethical behavior is our willingness to do the right thing whether or not anyone else would ever know,” says Scott. He equates this with the development of a conscience in children, who first do what’s right to avoid the external consequences (i.e., punishment) of poor choices. Gradually, however, children internalize the concept of right and wrong, making the right choices simply because they’re the right choices.

Realistically, however, knowing that every move we make is essentially being watched by those close to us and by the public at-large serves as an effective motivator for doing the right thing.

“Today, nearly every move of every business person is scrutinized,” says Scott. “In this sense, social media and the unprecedented dissemination of information may indeed serve as the watchdog we need to curb ethical violations.”

Should You or Shouldn’t You? Weighing the Relative Ethics of your Decisions 
But even in this new era of unprecedented transparency, everyone makes decisions that are less than 100% ethical. “It’s a fact of life,” Scott observes. “No one can be expected to live their lives as Socrates would suggest, doing only what is ethical, moral and just at every moment of every day.”

This reality notwithstanding, we should of course try our best to lead our lives, both business and personal, in as ethical a manner as possible. To that end, Scott puts forth three “tests” intended not as strict standards but instead as guidelines with which to weigh the relative ethical component of our decisions. These tests also can help to make us fully aware of the implications of such decisions.

The Kid Test: Is your Explanation One You Would Accept from your Children? 
April 15th is fast approaching and the previous year has been a tough one. As a small business owner you’ve taken in some cash revenue that wouldn’t be terribly difficult to hide. Should you declare it or hide it?

At one time or another, nearly every taxpayer in America has struggled with this issue, often justifying the “hide it” option with the “everyone does it” rationale. After all, who hasn’t fudged or outright cheated on their taxes at one time or another? Stated differently, that’s the way the world works and this is what you need to do to compete, right?


Part 2 will appear tomorrow.