Ethics are the shared attitudes and principles held by a businesses employees
Moral code – what is ‘right’ and what is ‘wrong’?
- They are highly subjective in nature
- An ethical code of practice states how businesses believe its workers should respond to situations which challenge business values
- There are conflicts that arise regarding ethics, these mainly stem from conflicting stakeholder requirements,
- e.g. Profits (shareholders) vs. higher wages (employees)
- e.g. Production (shareholders) vs .pollution (local community, environmental)
How to create an ethical culture
There are a number of steps which allow a business to create an ethical culture:
- Find a champion
- Discover ethical issues
- Benchmark
- Test the idea
- Develop a code of conduct
- Make it work
Social Responsibilities
Business should operate as good citizens who have duties towards their stakeholders
Stakeholders are all individuals or groups that have a direct interest in an organisations performance
These include employees, shareholders, the local community and the government
Businesses have the following responsibilities to different stakeholders:
- Shareholders – to generate profits and pay healthy dividends
- Customers – to provide good quality products at reasonable prices, to look after interests of customers
- Employees – to ensure health and safety at work, to provide job security and to pay them fairly, to provide training to develop employees skills
- Suppliers – to pay them on time and to pay a fair price for their goods, to place regular orders and offer long term contracts
- Local Community – to provide employment, to provide safe working environment, to minimise pollution and negative externalities, to use local suppliers where possible
- Government – to ensure that no laws are broken, to pay taxes
- Environment – to keep levels of pollution to a minimum, to try and ensure that the environment is protected
Social Auditing
Where a business assesses its social impacts and ethical behaviour in relation to its and the stakeholders aims.
E.g. recyclable packaging, avoiding the use of child labour and sweat shops, free trade products, brown field sites
