Business People Study Ethics What Are the Essay

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business people study ethics. What are the possible benefits to companies, individuals, society and the world of business?

According to a gallop poll administered by the Better Business Bureau in 2008, consumer trust in business professionals is on the decline. Of the consumer populous polled, only 42% expressed trust in banks and financial institutions, representing a 6% decline in trust since 2007, while only 24% responded positively toward contractors and service professionals, representing a decline in trust of 4%. Of the 14 industries polled, trust was lowest in real estate brokers and auto dealers, with a positive trust response of only 13%, representing a 3% decline in trust (Farrell, Fraedrich and Farrell, 2009). In particular, trust levels declined rapidly as a result of public scandals which "cost many companies their emotional appeal, the strongest driver of reputation" (Ferrell et al., 2009).

According to ethics professor Rick Garlikov, the reputation of businessmen as a group is overwhelmingly negative, and that "Businessmen do not help their cause any when they point out that their practices are 'not a matter of ethics, but of business', or when they point out that they are only doing their job, as if a 'hit man' would not have the same lame excuse" (Garlikov, 2010). Rather than attempt to separate ethics from business, Garlikov suggests that incorporating ethical frameworks into business will increase consumer trust, which in turn supports business. For example, a person is more likely to buy a car from a dealer or salesperson they trust than from one they suspect of being untruthful. The good business person is therefore advised to practice within an ethical framework, as ethical practices promote trust, which in turn promotes business.

Ferrell, O.C., Fraedrich, J. & Ferrell, L. (2009). Business ethics: ethical decision making and cases. (7th ed.) Mason: South-Western Cenage Learning. (2010). The point of studying ethics (moral philosophy). Retrieved Jan. 30, 2011 from

2. List three business problems, situations, or opportunities that you believe are ethical issues. Please give possible solutions and explain your responses in some detail.

The vast majority of ethical issues occurring in business are financial. Three of the most prevalent of these issues include:

Accounting Fraud

Insider Trading


An example of accounting fraud occurred within Satyam Computer Services, a firm that outsources to India. According to the Satyam chairman, over $1 in cash and assets were fabricated by company accountants in an effort to make the company appear more profitable. While slight discrepancies in numbers and actual value could be possibly be understood -- if not excused -- such an inflated amount indicates purposeful fraud on the part of the accountants. Meanwhile, a former Goldman-Sachs executive accused, convicted, and sentenced to five years in prison for insider trading, and James Traficant, a former Ohio Congressmen, "was expelled from Congress and sent to jail after being convicted of accepting bribes while serving in the U.S. House of Representatives (Ferrell et al., 2009).

The problem is that many business people are not taught to think critically about the ethical ramifications of their decisions, believing business success to be independent of ethics. As discussed in answer to the first question regarding the importance of studying ethics, Better Business Bureau polling suggests a connection between ethical practices and business success, as ethical practices encourage consumer trust and consumer expenditure. The first step to making ethical business decisions is to ask the following questions:

Are you being asked to do something that you think might be wrong?

Are you aware of potentially illegal or unethical conduct on the part of others at PwC or a Are you trying to make a decision and are unsure about the ethical course of action? (PwC, 2011)

The purpose of asking these questions is to consciously identify the nature of the situation and the options available to you, to include options of varying ethical degrees.

Ferrell, O.C., Fraedrich, J. & Ferrell, L. (2009). Business ethics: ethical decision making and cases. (7th ed.) Mason: South-Western Cenage Learning.

PwC. (2011). Framework for ethical decision making. Retrieved Jan. 30, 2011 from

3. Describe the three criteria that must be met in order to define a hostile work environment. What is the key ethical issue within sexual harassment?

In order for a work environment to be considered "hostile" the following criteria must be met:

The conduct is unwelcome.

The conduct is "severe, pervasive, and regarded by the claimant as so hostile or offensive as to alter his or her conditions of employment."

The conduct is such that any reasonable person would consider it offensive or hostile. (Ferrell et al., 2009)

While many sexual harassment cases meet these criteria, the key ethical issue regarding sexual harassment is that of "dual relationships" or "unethically intimate relationships." A dual relationship is essentially a personal, often physically intimate relationship with a colleague or supervisor; this relationship becomes unethical when it causes a direct or indirect conflict of interest impairing the professional judgment of one or both parties. Says Ferrell et al. On the subject of dual relationships, "The problem is that, unless the employee or employer gets something in writing before the romantic action, consent can always be questioned, and when it comes to sexual harassment, the alleged perpetrator must prove mutual consent" (Ferrell et al., 2009). In other words, the alleged perpetrator must prove that the situation does not meet the criteria of "hostile" in order to prove his or her innocence.

Ferrell, O.C., Fraedrich, J. & Ferrell, L. (2009). Business ethics: ethical decision making and cases. (7th ed.) Mason: South-Western Cenage Learning. (2008). Hostile work environment. Retrieved Jan. 30, 2011 from

4. What is the significance of the Sarbanes-Oxley Act? List and describe at least three (3) duties of the oversight board.

The purpose of the Sarbanes-Oxley Act, passed in 2002, is to "establish a system of federal oversight of corporate accounting practices" (Ferrell et al., 2009). The Sarbanes-Oxley Act made accounting fraud a criminal offense, and requires corporations to establish a code of ethics for corporate finance representatives. In essence, the Act is designed to discourage the "culture of deception" among financial professionals, to include corporate accountants, executives, lawyers and boards of directors. Towards this objective, Congress formed an oversight board responsible for the following duties:

Public accounting firm registration.

Public accounting firm inspection.

Enforcement of accounting rules/professional standards compliance.

In essence, the above duties involve the registration and regular inspection of public accounting firm practices, towards the objective of ensuring compliance with ethical business practices as determined by the board. Says Ferrell et al. Of the Sarbanes-Oxley Act:

The acts uniqueness from past legislation is its perspective to mandate accountability from the many players in the "game of business," creating more explicit rules in playing fair. The act creates a foundation to strongly discourage wrongdoing and sets ethical standards of what's expected of American business. (Ferrell et al., 2009)

Ferrell, O.C., Fraedrich, J. & Ferrell, L. (2009). Business ethics: ethical decision making and cases. (7th ed.) Mason: South-Western Cenage Learning.

Sarbanes-Oxley Act 2002. (2011). A guide to the Sarbanes-Oxley Act. Retrieved Jan. 30, 2011 from

5. Discuss at least 5 of the 7 habits of strong ethical leaders. Use examples to support your answer.

According to the Center for Ethical Leadership Online, "ethical leadership is knowing your core values and having the courage to live them in all parts of your life in service of the common good" (Center for Ethical Leadership, 2007). According to Ferrell et al., "ethical leadership is based on holistic thinking that embraces the complex and challenging issues that companies face on a daily basis" (Ferrell et al., 2009). Thinking holistically is one of the habits/characteristics of ethical leaders as outlined by Ferrell et al., to include:

Possessing a strong ethical character.

Having a passion to do right.

Proactively developing programs that support ethical decision-making.

Acting in accordance with the company's values. (Ferrell et al., 2009)

According to Thomas I. White, a character development specialist, having a strong ethical character has more to do with focusing on ethical reasoning than merely being a "good person," which is related to the proactive aspect of ethical leadership. For example, Lawrence C. Benjamin, acting President of U.S. Food service, reasoned that the development of an ethics and compliance program would supply employees with a set of standards for ethical decision-making, thereby promoting ethical business practices. This aspect of ethical leaders also relates to the "passion to do right" insofar as "teaching individuals who want to do the right thing regarding corporate values and ethical codes, and equipping them with the intellectual skills to address the complexities of ethical issues" is informed by the passion to do right and also to encourage others do right (Ferrell et al., 2009).

Meanwhile, by acting in accordance with a company's values, ethical leaders embody these values in a visual way, essentially leading by example. For instance, New Belgium Brewing Co. founders Kim Jordan and Jeff Lebesch developed a set of…

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