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Ethics and business: the right mix.

How do you define business ethics? When I asked a number of business people this question I heard widely varied answers, like: "You have to understand it's a jungle out there"; "Hey man, I'm a survivor"; "Profits--that's the name of the game. You do what you have to do"; "I live by the Golden Rule--at home and in business."

If you are asked about ethics, you should be able to respond quickly to the following questions. If you don't have prompt and complete answers, you need to read the rest of this article.

* Do you know what constitutes ethical behavior?

* How important are ethics and ethical actions to you?

* How much in terms of time, energy, position and money are you willing to sacrifice in order to act ethically?

What is the definition of ethics? "It is the critical analysis of human acts to determine if they are right or wrong in terms of two major criteria--truth and justice. It is a standard of conduct and code of morals in a person, group or profession. Business ethics extends basic ethics into reactions to specific events that happen only in a business climate."

Laws don't do this. They only set a minimum standard to comply with, and unfortunately too many people set their morality at this level when it should be much higher.

But some basic facts of life make it difficult for people to always act in the most ethical fashion. Three examples:

* In his marvelous books, "The Story of Civilization," Will Durant said, "Man is still an animal and the deepest things in his nature are the survival and hunting in stincts. Recognize therefore the enormous difficulty in making an animal and a hunter into a citizen and civilized man."

* The United States has been a huge success by being dedicated to two great, but somewhat opposite causes--democracy and free enterprise. Democracy is dedicated to the most good for the most people, while free enterprise allows individuals to get as much for themselves as they can.

* The existence of corporations complicates the business situation. It is assumed that most transactions are the responsibility of these legal entities, not its employees. Yet they are often run by managers who have little or no investment in the enterprise. Ethics at Work

To make sure that you understand what we are talking about, consider the following series of questions and situations in which personal and business ethics come into play. By coming to your own conclusions on the statements you can tell something about where you stand on the ethics scale. Personal Conduct:

When you turn in your expense account, is it honest and proper?

Would you falsify your records to save taxes?

Will you take samples without paying for them?

Are you willing to use inside information for your personal gain? (Recent studies show that common stocks of companies targeted for tender offers rise more than 20% in value in the two weeks prior to the tender offer.)

Is a lawsuit the logical solution to almost any problem?

Are your ethics in the office the same as those you use at home or does peer pressure and competition make them different? People Relations:

Would you hurt others to achieve advancement?

Will you put on the "pressure to perform" and load it with incentives and fear forcing your people to forgo their ethics in the chase for the profit objective?

Are you willing to steal people in order to obtain trade secrets of their prior employer?

As boss, are you willing to accept more than your share of responsibility for errors in your department? Supplier Relations:

Will your company intentionally pay a bill late and still take the cash discount?

When you are hung up with overstocks, will you make returns on the pretense that the goods are imperfect or not according to samples sent?

Does your company willingly cheat in the handling of coupons? Competitor Relations:

In your search for profits, will you get involved in price fixing--as was the case in our industry some time ago in Cleveland?

Are you willing to use predatory pricing, selling goods below cost which might injure, destroy or prevent competition?

Are you willing to join a cartel as existed with huge companies such as G.E. and Westinghouse in the bidding on heavy electrical equipment? Customer Relations:

Are you willing to cut corners--sell overripe produce; outdated products; too much fat in the ground beef; or use the wrong tare weight in meat packaging?

Will your company print dishonest statements in advertisements concerning quality, comparative prices, etc?

Has your company used bribes to obtain business?

Does your business accept foreign countries' customs even though some of them are considered totally dishonest in the United States?

These questions are a small sampling of the ethical situations that confront a businessman. To delve deeper, I recommend reading "An Honest Profit; What Businessmen Say About Ethics in Business" by Raymond Baumhart.

Here are some suggestions on what you can do to better your ethical stance along with that of your people and company and what management can do to keep unethical actions from happening.

* Be sure of your ethical position. If you feel unsure, read a few books on the subject, discuss ethics with your peers, superiors and friends. You don't have to be a philosopher, but you should be able to answer the three questions at the start of this article with confidence.

* The Golden Rule is a fine, solid start, but the complexity and constant changes in today's world make it necessary to have broader positions.

* Establish a company creed or code of ethics. Consider starting with a very broad statement. Rotary International asks four questions in judging ethical behavior: "Is it truthful; Is it fair to all concerned; Will it build good will and better friendships; and, Will it be beneficial to all."

* Detailed rules and standards should be concentrated on those areas where a person's honesty is put to the greatest test. This includes areas where the proper cost is hard to determine, quality is judgmental and non-repetitive transactions occur. Included here are buyers of perishables, soft goods, import merchandise and real estate, and maintenance and construction personnel.

* Rules and standards should be given to your own people and to all involved suppliers for their information. For example, send an annual Christmas letter to suppliers stating your company's policy on gifts to employees.

* Periodically discuss business ethics in your management meetings. Your team must know that as leaders their actions will be scrutinized and analyzed. Their posture will set the standards for the rest of the employees. You must demand that they avoid any action that would not be easily understood, explained or justified.

* You must deal with fairness, but in cases of unethical and unauthorized actions you must move rapidly and decisively. People must realize that your company khas standards and ignoring them will bring a quick, tough response.

* Your company must be open, fair and honest with all of its constituencies. Must Your Ethics Be Absolute?

Sanford McDonnell, chairman of McDonnell Douglas Corp., once told a story about ethical principles. A farmer, plowing a field, noted that except for a perfectly flat field a furrow will necessarily curve and bend with the terrain. But he knew he must always do his best to keep it to a straight line as otherwise a chaotic situation would result. Translated to ethics and the real world it means that you have to set very high standards if you are to be sure of reaching even moderately high ethics. Try for the bull's-eye, but accept arrows that hit within the boundaries of the target. Don't be too dogmatic and remember almost all business deals are the result of a mutually agreeable compromise.

In the creed of Quaker Oats was a sentence that read, "A reasonable and practical standard of ethical behavior in business decisions and actions is that which would not be embarrassing to you, your family or company if it were revealed."

There are two other simple means of testing your actions:

* Above all you must satisfy your own conscience. When you go to bed, ask yourself: "Did I spend the day the way I know I should?"

* If you are struggling with the propriety of a certain decision or action, consider how you would describe your action in detail to the annual shareholders' meeting if you were chairman of the board. If you hesitate at that thought, don't do it.
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Author:Fisher, Wayne H. 'Bud'
Publication:Progressive Grocer
Date:Aug 1, 1984
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