Ethics the Framework for Success: While Some Ethical Decisions Are Simply a Matter of Right vs. Wrong, the Tough Ethical Decisions Are Right vs. Right

By Hunter, Steve | Strategic Finance, April 2008 | Go to article overview

Ethics the Framework for Success: While Some Ethical Decisions Are Simply a Matter of Right vs. Wrong, the Tough Ethical Decisions Are Right vs. Right


Hunter, Steve, Strategic Finance


The widespread attention given to the fall of companies such as Tyco,WorldCom, and Enron has led to an increased focus on ethics in the business world. Because of the enormous pressure to produce higher and better returns, some individuals at corporations have adopted the philosophy, "the ends justify the means." They fall into the trap of setting unrealistic budgets, improbable expectations, and unlikely goals. Not surprisingly, investor confidence has been low due to the many corporate scandals. Despite these results, however, firms continue to allow external sources, such as outside analysts, to define success.

Instead, companies must ask the following question: "Have we replaced our underlying business theme of 'succeeding at all costs' with 'succeeding only the right way'?" An ethical culture can ensure success by establishing appropriate expectations using proper guidelines, thus preventing the need or desire to be involved in any questionable business practices. Ultimately, success is about keeping your word, and companies that live up to their promises are successful.

While it's true that some businesses hold themselves to a higher ethical standard, not all companies operate in an ethical environment. Financial decisions often are made without considering the ethical implications.When companies don't hold themselves to high ethical standards, the impact reverberates throughout the financial markets. Companies are destroyed, jobs are lost, and retirement savings are decimated. One of the government's reactions to corporate wrongdoing was enactment of the Sarbanes-Oxley Act of 2002 (SOX). But as Gary Smith, CEO of CIENA, characterized it in the October 20, 2003, edition of USA Today, SOX was "'chemotherapy' to prevent the cancer from recurring after cutting out corporate tumors at Enron,WorldCom, and elsewhere."

Ensuring that an effective ethical culture exists in an organization isn't only a key factor in preventing the kinds of losses brought about by corporate frauds and avoiding the need for costly, burdensome legislation, but it can also enhance a company's reputation, improve morale, and even increase sales. This article examines top management's role in building an ethically minded culture, steps for making sound choices, and examples of ethical issues.

FROM THE TOP DOWN

Establishing ethical standards for a business should be the primary goal of executive management. Companies must design an environment that not only encourages high ethical standards but also produces ethically minded management, employees, suppliers, and customers.

To establish an ethical culture, top management must accept responsibility for the ethical climate within their organizations. In reality, the actions of top executives define a company's culture because employees emulate their boss's behavior.Michael Hackworth, author of "Only the Ethical Survive" in the Fall 1999 Issues in Ethics, believes top leadership is ultimately responsible for the culture of their organization, including the ethical culture.

To establish an ethical environment, top management needs to use five key elements to build trust: integrity, competence, consistency, loyalty, and openness with employees, vendors, and stakeholders. Stakeholder is a better word than stockholder because it represents the significant effect that business has on the community as a whole. Companies that operate under high ethical values don't have to spend any negative energy hiding wrongdoings if they make all decisions while considering the ethical implications. Most financial analysts agree that no single variable affects the climate of an organization more than the beliefs, practices, and ideas of its top management.

THE GOOD AND THE BAD

One company that provides a prime example of making good ethical decisions is Johnson & Johnson. In 1982, James Burke, then CEO, faced an ethical dilemma. The company experienced a major crisis when some of its Extra-Strength Tylenol capsules were found laced with cyanide. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Ethics the Framework for Success: While Some Ethical Decisions Are Simply a Matter of Right vs. Wrong, the Tough Ethical Decisions Are Right vs. Right
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.