The Importance of Business Ethics

What Would You Do in an Ethical Dilemma?

Hey guys, Travis Stewart here and welcome back to the Business Mindset. Today, we’re diving into ethical dilemmas, which are something we face almost daily. Some individuals unfortunately don't adhere to the moral code of doing what is right, often prioritizing personal benefits over ethical considerations.

Let’s illustrate this with an example: Imagine you’re in a store paying for an item. The cashier accidentally gives you back more change than you should have received. Would you walk away, happy about your unexpected windfall, or would you correct the cashier and return the extra money? What if I told you that the cashier might have to personally make up the difference when cashing out at the end of their shift, or worse, risk losing their job because of this mistake? Would that change your decision?

The Classic Train Tracks Dilemma

Now, let’s explore another classic example of an ethical dilemma. You control a switch on a set of train tracks. A train is headed toward five people who are bound to be killed if nothing is done. However, if you pull the switch, it will divert the train to another track, where only one person will die. Herein lies the dilemma: you will be responsible for the death of that one person. What's your choice? Most of you might instinctively decide to save the five lives at the expense of one. But consider this: what if that one life was someone you loved—your mother, spouse, or child? Does your answer remain unchanged?

The Scope of Corporate Fraud

Statistics show that each year, approximately one in seven large corporations engages in some form of fraud, prioritizing personal gains over the impacts of their unethical actions on others. We’ve seen serious implications of this in various industries:

• The banking sector with Wells Fargo, which created unauthorized savings accounts.
• Automobile manufacturers like Volkswagen, who falsified emissions results.
• Companies like Enron, who hid billions in debt from shareholders.
• And tech giants such as Facebook, who shared personal data without user consent.

These examples illustrate the pressing reality of unethical business practices and the impacts they have across all levels of an organization, not merely at the executive tier.

The Ripple Effects of Unethical Behavior

A lack of ethics can significantly impact employee performance. Sometimes, employees prioritize getting ahead over following procedures, which can lead to preventable errors. Others may feel demotivated when they see unethical acts being rewarded, resulting in decreased performance.

This culture of mistrust can breed tension among employees, especially if some disregard rules to get ahead, creating a toxic work environment. Furthermore, if a manager displays unethical behavior, it can erode their team’s respect. Success in business heavily relies on the cooperation and collaboration of departments, making ethical leadership indispensable.

The Consequences of Dishonesty

Trust is easily broken in professional relationships. A staggering one in five employees report that their manager has lied to them in the past year. Though some may classify these lies as harmless “white lies”, the erosion of trust is often irreversible. Once a business's unethical conduct becomes public knowledge, rebuilding its reputation can be a monumental task.

Noteworthy instances, such as Nike facing backlash over child labor, or Starbucks breaching fair trade protocols, illustrate how negative perceptions can linger in consumers’ minds, despite efforts to correct the issues.

Why Some Companies Choose the Ethical Path

While one in seven companies may engage in unethical practices, what drives the remaining six to uphold ethical standards? According to economist Alexander Wagner, the concept of protected values plays a crucial role. These deeply-rooted values prevent individuals from succumbing to unethical temptations, compelling them to act morally.

In a revealing experiment, participants who could easily misreport their success did not do so—indicating that stronger ethical values overruled the temptation for easy gains. This finding emphasizes that when management leads ethically, employees are more likely to align with those values, resulting in improved decision-making and workplace morale.

The Positive Impact of Business Ethics

When organizations embody high ethical standards, the benefits are manifold. Companies with strong ethical cultures experience:

• Higher employee morale and loyalty.
• Improved productivity.
• Enhanced public reputation, which attracts investors.

Ultimately, businesses perceived as ethical can expect better profitability and sustainable success in both the short and long term.

Wrap-Up: The Importance of Ethics in Business

I hope this discussion on ethical decisions gave you plenty to ponder regarding their implications on employee welfare, customer relationships, and overall reputation. If you found value in this video, please hit the like button and subscribe for more content. Share your thoughts or experiences regarding ethics in your workplace in the comments below. That’s all for today—see you in the next video!