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Business Ethics

What are Business Ethics?

March 22, 2013 by Dr. Jon Warner in Business Ethics

What are Business Ethics?

The author Howard Gardner says of great leaders that they embody the message they advocate; they teach, not just through words, but through actions. If we accept this view to be accurate, an ethical culture or good business ethics will not emerge unless leaders play their full part in the process in bringing it into being and sustaining it. Ethical leadership should consequently be effective, and efficient at implanting both a solid corporate governance model as well as in providing an ethical approach and in consistently setting an example to people at all levels. However, it is not enough to be ethical in one’s individual actions to be an ethical leader. In order to achieve substantive success, four components of ethical leadership should ideally be understood and developed. These are purpose, choice, responsibility, and trust.

The relationship between these four interrelated components can be described individually as follows:

  1. Purpose-The ethical leader reasons and acts with wider organizational purposes firmly in mind (reconciling its many stakeholders). This provides focus and consistency.
  2. Choice-The ethical leader has the knowledge to judge and act prudently. This knowledge is found throughout the organization and its environment, but must be shared by those who have the power to make decisions.
  3. Responsibility-The ethical leader has the responsibility to make decisions and act, but also recognizes that all those involved and affected must have the authority to contribute what they have to offer toward shared purposes.
  4. Trust and Growth-The ethical leader inspires-and is the beneficiary of-trust throughout the organization and its environment. Without trust and knowledge, people will be nervous about exercising their authority.

These four concepts are useful for leaders to test whether a general ethical perspective has been properly articulated and communicated to others. For example, almost everyone values honesty, or would urge that people be, as often as possible, as honest as they can be. However, these components allow us to add specificity to the general in the following ways:

Purpose and honesty. Purpose gives meaning to our life (personal or corporate). If those we deal with are not honest with themselves and others, we can never be sure that our purposes are shared. If purposes are not shared, we will often find, over time, that we are working at cross-purposes and that our efforts have been for nothing. Virtually any decision or action can be accurately guided by simply asking, “If I do this, will I be contributing to achieving my/our purpose (and if not, we compromise honesty)?”

Choice and honesty. Choice is the essential activity that defines us as human beings. If those we deal with have not been honest with themselves and others, we may be making choices based upon bad information, or worse, our choices may have been made for us through the dishonesty of others. We are unlikely to achieve our purpose where the stakeholders in achieving a goal or a target are not fundamentally honest.

Responsibility and honesty. We have responsibility to the extent we are the drivers or decision-makers of our own situation or even our lives as a whole. If we are the drivers of our own situation, we are the cause of the actions we take, and responsible for them. If those we deal with have not been honest with themselves and others, they will be unable to exercise their authority prudently, and we will be unable to fix responsibility for the actions and consequences that affect us. Where authority is not exercised prudently, and we are unable to fix responsibility, we find ourselves in a world of grey where we can count on neither individuals nor groups.

Trust/growth and honesty. Trust and growth are typically how individuals evolve (in life and in the workplace). If those we deal with have not been honest with themselves and others, they cannot have a base level of trust in the relationships they enter into and the capacity to learn and grow will be inhibited. In other words, trust between people is a fundamental needed for development and growth (individually and collectively) to occur.

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About Dr. Jon Warner

Dr. Jon Warner is a prolific author, management consultant and executive coach with over 25 years experience. He has an MBA and a PhD in Organizational Psychology. Jon can be reached at OptimalJon@gmail.com

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About the Editor and Primary Author

Jon Warner

Jon Warner is an executive coach and management consultant and in the past has been a CEO in three very different companies. Read more

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