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Reading 2/2:
Passage 4
What is Business Ethics?
By definition, business ethics refers to the standards for morally right and wrong conduct in business. Law partially defines the conduct, but "legal" and "ethical" aren't necessarily the same.
Business ethics enhances the law by outlining acceptable behaviors beyond government control.
Corporations establish business ethics to promote integrity among their employees and gain trust from key stakeholders, such as investors and consumers. While corporate ethics programs
have become common, the quality varies. According to the 2018 Global Business Ethics Survey (GBES). less than one in four U.S. workers think their company has a "well-implemented
ethics program.
Business ethics is an essential skill.
Almost every company now has a business ethics program. In part, that's because technology and digital communication have made it easier to identify and publicize ethical missteps. To
avoid the negative implications, companies are devoting more resources to business ethics. In one survey of accountants, for example, 55 percent said they believe the importance of
business ethics will continue to grow in the next three years. In addition to establishing formal programs, companies are creating ethical workplaces by hiring the right talent. "High integrity
and honesty" is the second-most important skill for business leaders, according to a recent survey. Today's business professionals must understand the link between business ethics and
business success.
Business ethics drives employee behavior.
According to the 2018 Global Business Ethics survey, employees are more likely to apply ethical reasoning when their company clearly demonstrates why business ethics is important.
Ninety-nine percent of U.S. employees who experience a strong ethics culture said they're prepared to handle ethical issues. Companies that advocate for business ethics motivate their
employees to perform their roles with integrity.
The first step in building this kind of ethical culture is to create an ethics program. According to the U.S. Department of Commerce, a complete ethics program should touch on all of the
business functions. "That" includes operations, human resources, and marketing, to name a few. The global research company Gartner advises companies to integrate their ethics program
with business operations.
Doing so can maximize the program's impact by making ethical processes part of employees' workflow. According to Gartner, an ethics program should:
Define the program mandate
"Mitigate and monitor risk
Establish policies and procedures
Oversee allegations of misconduct
Provide training and communications
Reinforce behavioral expectations
Manage the function of behavior ethics
Business ethics benefits the bottom line.
Another reason why business ethics is important is that it can improve profitability. Honorees on this year's list of the World's Most Ethical Companies outperformed the Large Cap Index by
10.5 percent over three years. A well-implemented ethics program can also reduce losses. Twenty-two percent of cases examined in the 2018 Global Study on Occupational Fraud and
Abuse cost the victim organization $1 million or more. Companies that practice questionable ethics may also experience a decrease in stock price and severed business partnerships, which
can affect profitability. In addition, business ethics is linked to customer loyalty. Over half of U.S. consumers said they no longer buy from companies they perceive as unethical. On the flip
side, 3 in 10 consumers will express support for ethical companies on social media. Business ethics cultivates trust, which strengthens branding and sales.
1) According to the text, what distinguishes business ethics from the law?
A. They are identical concepts.
B. Business ethics promotes behaviors outside legal requirements.
C. Business ethics is enforced by the government.
D. Business ethics is legally binding.
