Legal and ethical issues in professional practice

¶ … Business leadership and ethics should be joined at the hip, should be effectively partnering in every company and organization, but unfortunately for some companies, for their employees, their stakeholders and customers, ethics plays only a secondary role. This paper points to themes and issues regarding the importance of ethical business practices, and to themes vis-a-vis corporate social responsibility.

Ethical Business / Leadership Themes in Peer-Reviewed Articles

"Addressing Possible Conflicts of Ethical Management" -- this article by John Bringinshaw posits that businesses should provide updates to the public and stakeholders not just on the profits, but on the impact that the company's economic performance has had on the environment and on society (Bringinshaw, 2006). The author calls it the "triple bottom line" (social performance; environmental performance; and profit performance); and in the past few years a great deal of attention has been paid to the literature on corporate social responsibility (CSR), which entails environmental and social activities and actions.

Business schools are promoting CSR, and the message from the Pepperdine University's Graziadio School of Business and Management -- as a theme for truly ethical stewardship -- is that the "…exclusive pursuit of shareholder wealth" is not the highest purpose of business practice (Bringinshaw, 1). In fact the highest purpose today for a business that wishes to be contemporary and ethical is to achieve success in the CSR aspect of business (Bringinshaw, 1).

That is the good news, and there is a bit of bad news in Bringinshaw's article in that some companies go on with their usual business and create the impression that they care about CSR, just to seem to be up to speed with ethics. Those that fake a CSR approach are engaging in "greenwashing," Bringinshaw explains (2). One can't say anything bad about Google when it comes to corporate responsibility to their employees; not every company will be able to afford to offer employees "free food three times a day" and free childcare. But this extra expense provided by Google workers may take away some profit from shareholders, Bringinshaw explains (3). Still, when leadership puts workers and the environment at a high level of importance the chances are that those choices will have a positive ripple effect on profit, as well.

"The Link Between Management Behavior and Ethical Philosophy in the Wake of the Enron Convictions." Author Shane Premeaux posits that while the high-visibility scandals in business (notably Enron's messiness) did not "really impact actual ethical behavior much," but the jail sentences handed down to Enron's executives seemed to make enough of an impression to begin to change attitudes (Premeaux, 2009, 13). Premeaux makes the point several times that notwithstanding the public humiliation -- that results in the incarceration of top executives -- of companies like WorldCom and Enron, and the updated ethical codes being developed, there remains the perception "…that American business executives are not very ethical" (14).

That said, Premeaux offers good information as he suggests that "rule utilitarianism" -- as opposed to "act utilitarianism" -- if adopted as an ethical code by companies, offers the most benefits to the most people through fairness. Rule utilitarianism follows not just the rules, but the law, and if Enron's executives had followed the law, they might still be in business.

Premeaux's investigation into ethics and business behavior resulted in four categories that can lead to ethical problems: a) coercion and control (the use of threats or extortion to force a manager to make a certain decision); b) conflict of interest (a manager has more than one interest and if he pursues both, harm may come to the company); c) physical environment (this relates to conflict of interest that can harm the environment); and d) personal integrity (making a decision based on one's own needs can raise a red flag in terms of right and wrong even if the law doesn't specifically spell out a guideline to follow) (16).

In a survey of managers, Premeaux received 413 questionnaires to test ethical responses. The results of those surveys (there is not enough room in this paper to report appropriate data) showed that managers have "…a heightened sense of ethical awareness with most rationales being either rule utilitarian or rights bases," which shows more ethical concern than a similar survey conducted by Premeaux in 2003 (23). Interestingly, those managers that were 5 years or less from retirement were "much more likely" to play by the ethical rules; they apparently realize that short-term gains are easily outweighed by long-term ethically-based gains; plus it would seem that those about to retire do not want to get caught up in an ethical scandal (Premeaux, 24).