Week 5
Week 5
Challenges
Business is perceived as inherently unethical.
Unfortunately, business is perceived as inherently unethical. The public
often sees the pursuit of profit as unethical itself. This results in harm
to the business and hampers growth in global communities, which is a
failure in business without the company even behaving unethically.
Some businesses truly are unethical.
Elizabeth Holmes had a great idea in mind with her "Edison Machine,"
which would enable people to check small blood samples at home to
catch any signs of harmful diseases early. But the product was never fully
ready for public use, and Holmes lied, saying it was ready in order to
increase company profits. This significantly harmed consumers. Likewise,
the over-prescription of opioids caused an epidemic.
Purdue Pharma lied to doctors and civilians about the benefits of their
painkillers, increasing the firm’s profits while causing addiction, despair,
and death.
The structure of businesses promotes unethical behavior.
A third challenge to the relationship between unethical decision-
making and business failure is that the
hierarchical structure of most businesses encourages unethical practice
s.
Employees can defer to a supervisor’s unethical orders, not even
questioning whether what they are told to do is right.
Some companies and executives have even made radical moves to show their
ethicality. Unhappy with the negative connotation of being named a billionaire,
Patagonia CEO Yvon Chouinard transferred ownership of his company (worth an
estimated $3 billion) to a specially-designed trust and non-profit organization to
ensure all of Patagonia’s profits are used to fight climate change and protect
undeveloped land. While this may be an extreme example, it is one way to show
cynical consumers that businesses aim to be a force for good in the world.
Businesses are motivated to work together to create positive change.
By sharing their individual skills and expertise, companies can help other
businesses thrive, which benefits everyone and reduces business failure. For
instance, since non-profit organizations and charities generally do not have
access to the same resources and personnel that major companies do, they
are typically less efficient. Established companies can alleviate this by sharing
their successful business models.
Businesses’ assets span far beyond simply money. When businesses are
motivated to share their strengths and expertise, they are able to drastically
improve the lives of those in their communities.
Good companies can inspire and cultivate strong morals in their
employees.
Finally, in a system known for perpetuating unethical behavior
(whether or not just in exceptional cases), there is an opportunity for
good companies to inspire and cultivate strong morals in their
employees. Although the hierarchical structure of most businesses can
foster an environment in which employees fear doing the right thing if
it conflicts with the directions of a superior, it is possible through
ethical leadership to overcome this challenge. When companies
measure success in positive impact rather than in profits, they often do
a better job of fulfilling the purpose of business–to create value and
promote progress in society–than companies focused solely on
financial growth. Ideally, more profit translates to more positive impact.
So Here We Are
Over time, big businesses have evolved to a global scale with many outside
pressures to become supreme and the most profitable. These companies
have inspired people not only to distribute their goods and services, but also
to work together to be successful.
However, certain companies may not consider the ethical nature of their
decisions and often find it easier to avoid failure by either lying to their
customers or incentivizing their employees to be dishonorable. Despite the
potential short-term benefit of such decisions, companies will often face
backlash and a permanent blemish on their reputation and the reputation of
business itself. It is important for companies to instead prove their ethical
practices to their customers, prove that they are working toward the greater
good, and encourage strong principles in their employees. Large corporations
can become exceptionally powerful, so it is essential to society that they
practice ethical decision-making to showcase the good in business.
Leaders Set the Ethical Tone
• Act as positive role models
• Signal what matters by their behavior
• Focus on employees, customers, and the greater good
• Not paying attention to gaining benefits themselves
• Honest with employees, partners, customers, vendors, and
shareholders
• Strive for fairness and honor agreements
• Share the credit for successes and accept the blame when things go
wrong
• Speak up against acts they believe are wrong
Acting Like a Moral Leader
• Business is about values and not just economic performance
• The single most important factor in ethical decision-making in
organizations is whether leaders show a commitment to ethics in their
words and especially their behavior
Moral Leadership