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by Jackie Lohrey

A code of ethics can help a business follow its ethical obligations.

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Ethical obligations are a set of “ought to” standards that define a moral course of action and draw a line between right and wrong. Although ethical obligations in business share similarities with legal rules and regulations in determining how a business conducts itself while striving to make a profit and achieve strategic company goals, ethical obligations are really more about discretionary decisions and value-guided behavior.

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Identification

Ethical obligations exist in almost every facet of a business environment. Policy and decision-making in areas such as sales, pricing and advertising all involve ethical obligations, as do dealings with staff members, contractors and suppliers. Each has benefits for carrying out an ethical obligation as well as consequences that can cause ethical dilemmas. For example, a business may realize they have an ethical obligation to instruct the sales stall to conduct needs-based selling and not to “oversell.” During a month when sales are slow, however, living up to that obligation by not pressuring the staff to “sell” can mean the difference between turning a profit or not.

Ethical Obligations

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Some of the most common internal ethical obligations in business relate to recruiting and hiring staff, maintaining a safe and healthy work environment, using business resources wisely and avoiding situations that have the potential to create a conflict of interest, such as accepting gifts from suppliers or making a hiring decision not because the applicant has the best qualifications, but because the applicant is a relative of the business owner. Common supplier-side ethical obligations include considering how and where suppliers get their products and whether to sell products that are detrimental to the health of customers, such as cigarettes and fatty foods.

Responsibilities

Business owners are ultimately responsible for whether a business fulfills its ethical obligations. Accomplish ethical obligation objectives by leading by example. Work with staff members to create ethics standards and a code of ethical conduct. Not only do these actions set clear expectations but may also encourage open communication and discussion regarding ethical dilemmas – and how to solve them – among the ethics team. Conduct ethics training that sets clear expectations and shows staff members how their decisions and attitude towards ethical behavior impacts long-term business.

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Decision-Making Framework

Suncoo Coral Coral CERENA Coral Suncoo CERENA Suncoo CERENA Developing an ethical decision-making framework can reduce the chance for ethical dilemmas that result in ignoring ethical obligations. The Institute of Business Ethics suggests using a seven step decision-making framework originally developed by Linda K. Trevino and Katherine A. Nelson in 2007. These steps start with gathering the facts, defining the ethical issue or issues and by identifying the parties involved, the consequences and ethical obligations. From there, fully consider your personal character and integrity, get creative with possible actions and always “check your gut.”

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About the Author

Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

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  • Hemera Technologies/AbleStock.com/Getty Images
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