Business ethics exist to ensure a firm does not undermine the integrity and longevity of its industry. Consequently, ethics also represent an attempt to address factors which cannot be fully measured or understood, to ensure success now and in the future. Although the need for ethics may appear to be a moral issue wrapped in subjective reasoning, ethics are actually a major concern for any business viewed as an enduring entity designed to last. In developing business ethics, factors stemming from this sentiment, are most important.
One of the principle reasons for an ethics code in a business is to protect that business from the actions of employees. When employees interact with clients, other employees, or new employers, a business must guard against any perceivable damage an employee could cause. By scripting responses to consumers and the Public, limiting workplace relationships, or instituting nondisclosure agreements, employers are attempting to control long-term costs as well as sculpt the business culture within the firm and beyond.
Ethics policies may require employees to follow certain procedures, such as the previously mentioned examples, but ethical considerations go beyond employee behavior. A firm lacking ethics can only build a supposed ethics policy through a superficial attempt to ensure legal penalties exist for employees who violate company policy. As such, unethical firms can only address preconceived threats as employees will not be bound by actual ethics. The Baby Boomers and their children’s generation learned most businesses are not necessarily loyal or ethical, thus they act solely on what they immediately perceive to be in their best interests. Employees have learned to do the same.
As a consequence, a firm looking to instill ethics into their employees needs to also lead by example. Ethics go beyond punitive action. A company, which treats its employees poorly, rips off consumers, and/or undercuts other firms with unhealthy competition, is going to teach employees to behave unethically. This means business ethics extend beyond employee relations to include how a firm treats its competitors across its entire industry as well as the quality of products and services at what cost the firm provides its consumers; this includes hidden or displaced costs. In all, business ethics must factor every aspect of business, because ethics are part of a culture that a long-term business and industry must instill in their employees.
The second half of the twentieth century was marked by a shift in business philosophy that pushed for massive short-term profits and short-sighted cost cutting measures without taking into account ethics. Business ethics exist to help promote top quality products and/or services at the best possible price, healthy competition, and strong community relations. Without ethics, employers cannot expect employees to respect their firm, nor can they expect customer loyalty. An industry without ethics, in any aspect of business, is one that earns the spurn of its consumers and eventually causes pain across the entire economy when failure is eminent.