Frequently asked questions
Ethics and business
- What is ethics?
- Why is ethics important?
- What is business ethics?
- Why is business ethics important?
- Whose responsibility is business ethics?
- Do ethics codes work?
- What values should be implemented?
- What makes an ethics code effective?
- What sustains an ethics code?
- What are the 10 myths of ethics?
- What is Josephson Institute?
- What is Josephson Institute’s approach to business ethics?
- What programs and services does Josephson Institute offer?
Ethics refers to standards governing the conduct of a person or members of a profession. There are three aspects to ethics:
- Discerning right from wrong
- Committing to do what is right
- Doing what is right
- There is an inner benefit (virtue is its own reward).
- There is a personal benefit (virtue is personally and professionally prudent).
- There is an appreciation benefit (virtue enhances self-esteem and the admiration and respect of others).
In today’s corporate world, firms must understand and comply with a wide range of laws and regulations regarding consumer protection, investor communications, fraud, and fair business practices. But rules can lead to a narrow view of compliance (“if it’s legal, it’s proper”). Misconduct exacts enormous costs to an organization’s reputation, morale, hiring, retention, and energy spent by top management on damage control rather than business development.
Studies have found that unethical workplace behavior can:
- Harm sales (80 percent of people in one study said they decide to buy a firm’s goods or services partly on their perception of its ethics).
- Harm stock price (74 percent said their perception of a firm’s honesty directly affects their decision about whether to buy its stock).
- Worsen the risks of scandal (judges can reduce fines and jail time if a firm has an ethics program in place).
- Worsen employee fraud (which has grown by 50 percent since 1996, costing commerce $600 billion a year or 6 percent of the GDP).
- Worsen productivity (companies with an ethics program have up to three times greater market value- added than companies lacking one).
- Worsen performance of the highly skilled (those who contribute the most to a company’s revenues and reputation show the greatest drop in productivity because of others’ unethical behavior).
- Worsen efficiency (71 percent of employees who said honesty applies rarely or never in their organization have seen misconduct in the past year compared to 25 percent who reported honesty is common).
- Worsen communication (78 percent of workers in firms with an ethics program said they report misconduct when they see it compared to 39 percent of employees at firms with no ethics program).
- Worsen retention and recruiting (79 percent of employees said their firm’s concern for ethics is a key reason they remain).
- Worsen absenteeism (41 percent of low-morale organizations feel absenteeism is a serious issue, while just 20 percent of high-morale firms feel the same).
Everyone’s, but it starts at the top. Senior management should walk the talk by modeling, communicating, and enforcing its expectations and commitment to ethical decision-making – not only to its employees but to its clients, customers, shareholders, and community.
“The single measure that would most improve corporate governance is the establishment by senior management of an ethical business culture.”
– 2003 survey of corporate directors and general counsel
Ethics codes don’t make people ethical, make bad people good, or make people with poor judgment wise (Enron had more than 60 pages of standards). But they can help define what’s right, instill an ethical culture, and establish standards of conduct in areas not governed by law.
In 1992, Josephson Institute convened a summit conference in Aspen, Colorado, of the nation’s foremost educators, youth leaders, and ethicists. The gathering developed the Six Pillars of Character (trustworthiness, respect, responsibility, fairness, caring, and citizenship), a set of clear, consistent, nonpartisan, nonsectarian principles of conduct designed to resonate across society.
- It must be inclusive (everyone participates, from senior management on down).
- It must be valid (content is consistent with standard ethical principles).
- It must be authentic (policies are enforced and values are reinforced in both word and deed).
- It’s specific. Guidelines are explained clearly using common scenarios.
- It’s thought-provoking. Employees are taught how to analyze situations and make good choices.
- It’s clear. Legalese, vagueness, jargon, and platitudes are absent. Instead of saying “Avoid improper use of equipment,” explain precisely what is meant with examples and unambiguous language.
- It’s readable. One should not need a user’s guide to wade through its provisions. Improve readability with wide margins, large type, breakout quotes, tight editing, and accurate proofreading.
- It’s concise. The entire U.S. Constitution is shorter than many ethics codes. Avoid complex sentences. Translate dense, multifaceted paragraphs into bulleted or numbered lists.
- It’s realistic. “Absolutely no personal phone calls” is unreasonable. “Accept no gifts or gratuities” is vague.
- It’s enforceable. All provisions should adhere to union agreements, city or government mandates, departmental regulations, Constitutional rights, etc. Implement a process for receiving complaints and investigating charges.
- It’s flexible. Codes should be regularly put to the test. Make changes as needed.
- It’s a process. Most employee cynicism stems from senior management flouting ethical rules. A code’s value is not its prose but the commitment of those who implement it.
- It’s ethical if it’s legal and permissible. Loopholes, lax enforcement, and/or personal moral judgment do not outweigh what’s right.
- It’s ethical if it’s part of the job. Separating personal ethics from work ethics can cause decent people to justify doing things at work that they would never do at home. Everyone’s first job is to be a good person.
- It’s ethical if it’s for a good cause. People can be vulnerable to rationalizations when advancing a noble aim. This can lead to deception, concealment, conflicts of interest, favoritism, or other departmental violations.
- It’s ethical if no one’s hurt. Ethical values are not factors to be considered in decision-making; they are ground rules.
- It’s ethical if everyone does it. Treating questionable behaviors as ethical norms under the guise of “safety in numbers” is a false rationale.
- It’s ethical if I don’t gain personally. Improper conduct done for others or for institutional purposes is wrong. Personal gain is not the only test of impropriety.
- It’s ethical if I’ve got it coming. Being overworked or underpaid does not justify accepting favors, discounts, or gratuities. Nor is abusing sick time, insurance claims, or personal use of office equipment. These are not fair compensation for one’s services or underappreciated efforts.
- It’s ethical if I’m objective. By definition, if you’ve lost your objectivity, you don’t know you’ve lost it. Gratitude, friendship, or anticipation of future favors can subtly affect one’s judgment.
- It’s ethical if I fight fire with fire. Promise-breaking, lying, or other misconduct is unacceptable even if others routinely engage in it.
- It’s ethical if I do it for you. Committing white lies or withholding information in professional relationships (such as performance reviews) disregards the fact that most people would rather know unpleasant information than soothing falsehoods.
Founded in 1987 by Michael Josephson, the Institute is a nonpartisan, nonsectarian, nonprofit organization dedicated to improving the ethical quality of society by changing personal and organizational decision-making and behavior. It offers training programs and consulting services to influential leaders across the country in the areas of business ethics, public administration, policing, character education, and sportsmanship.
“Across the country, business and government leaders are brushing up on right and wrong by attending Josephson’s seminars to re-educate themselves about ethics.”
The mission of our Center for Business Ethics is to help companies shape, enhance, and fortify their corporate ethical culture and to prevent misconduct from tainting their reputation and eroding confidence in their products or services. By adhering to higher standards than normally expected or required, firms can build trust with their employees, customers, clients, advertisers, the public, and the media and distance themselves from competitors who cannot or will not live up to those same standards.
The Center for Business Ethics offers a variety of ethics-training approaches. Services include:
- Keynote addresses to company leaders and conferences
- Staff-meeting modules on how to reinforce ethical responsibilities
- Orientation modules to introduce new staff to a firm’s values and expectations
- Ethical-integration trainings on how to weave values into all departmental programs
- Half-day working sessions to address issues/crises that have arisen
- Half-day or one-day forums on ethical decision-making
- One-day trainings on how to employ business ethics concepts
- One-day advanced decision-making trainings for senior management
- Two-day train-the-trainer sessions on how to develop an ethics program
The Center also offers customized support. Services include:
- Plan and develop an ethics initiative.
- Assess and audit an overall ethical culture (code of conduct, compliance, training, discipline, etc.).
- Conduct focus groups on ethical strengths and vulnerabilities.
- Customize a code of ethics.
- Review existing procedures and practices regarding recruiting, hiring, screening, retaining, promoting, terminating, or disciplining.
- Design a communication and awareness campaign to reinforce values (posters, table tents, screen savers, e-mail messages, website materials, etc.).
- Examine internal complaint and investigation procedures and recommend improvements.
- Provide ongoing consultation and continuing education for management and staff.
- Pillar logo goldtone lapel pins
- CHARACTER COUNTS! enamel lapel pins
- CC! shirts (T-shirts, polos, oxfords)
- CC! tote bags
- Good Ideas for Creating a More Ethical and Effective Workplace (softcover, 114 pages). Successful ethics-program strategies for businesses.
- Making Ethical Decisions (softcover, 33 pages). Blueprint on vital ethical decision-making principles.
- The Power of Character (softcover, 387 pages). Forty essays by influential Americans.
- Commentary e-newsletter. Weekly essays and maxims on ethics and character from Michael Josephson.
Find out how we can help you manage risk and create a more effective business.