Applying Ethics in Life and Business

We are all encouraged to make ethical choices and apply ethics in all areas of our lives. But what does ethics mean, and why do ethics matter for business?

We can think of ethics as the principles that guide our behavior toward making the best choices that contribute to the common good of all. Ethics is what guides us to tell the truth, keep our promises, or help someone in need. There is a framework of ethics underlying our lives on a daily basis, helping us make decisions that create positive impacts and steering us away from unjust outcomes. Ethics guides us to make the world a better place through the choices we make.

Ethics in business is just as important as ethics in personal life. Business leaders have a unique role and a great responsibility in shaping the ethical culture of their businesses, and thereby influence their broader communities as well.

Business leaders may not set out to define the ethical culture of their businesses but they inevitably do. Here are a few key questions to consider to bring ethics into your business mindset:

• How do I define the common good for my business? What does it mean for my customers, my employees, the community where my business is located, my investors, and my supporters?

• How do I make good ethical decisions? How do I analyze a situation and make a decision that positively contributes to the common good?

• How can I influence the character of my business?

• What kinds of structural conditions or company policies do I need to put in place to create an ethical culture?

• How will I monitor the ethical culture of my business?

• How will I address or correct unethical behavior in my business?

There are different approaches to establishing and maintaining an ethical culture in your business. One simple way to foster an ethical culture is by implementing a code of conduct that emphasizes respect, honesty, and fairness. Employees should be encouraged to provide input on how to create and contribute to this ethical culture. They should also feel safe reporting unethical behavior without fear of retaliation. This helps build a culture of collaboration and integrity. The code of conduct is communicated to all employees and reinforced through the actions and activities of all members of the organization.

Business leaders, and entrepreneurs especially, are under tremendous pressure and can face very significant ethical challenges. Here are a few examples of how unethical decisions arise for entrepreneurs:

• If I exaggerate the number of customers or orders I have, I could attract more investors and get better funding.

• If I tell customers all the features on our product roadmap are available now, I could close more deals.

• I can save some money if I choose a production facility that does not abide by environmental laws.

Example:

Theranos, a healthcare technology company founded by Elizabeth Homes, claimed to have developed revolutionary blood testing technology that could conduct comprehensive tests using a small amount of blood. Theranos exaggerated the capabilities of its blood testing technology, falsely claiming it was reliable and accurate for medical diagnostics. The company misled investors, patients, and medical professionals, leading to financial losses, potential health risks, and damaged trust in the healthcare technology industry. Elizabeth Holmes and former Theranos president Ramesh "Sunny" Balwani faced criminal charges of fraud and conspiracy. Theranos ceased operations in 2018, and its downfall highlighted the importance of transparency, accuracy in medical technology, and ethical conduct in business.

Social responsibility is the idea that an individual (or organization) has an obligation to act for the benefit of society at large. Today, social responsibility has become an important part of culture at businesses of all sizes. TOMS Shoes is an excellent example of a business that prioritizes social responsibility. TOMS was founded with the commitment to provide a new pair of shoes for a child in need for every pair of shoes purchased. The company has now expanded to support other causes such as safe water, mental health, and equality. TOMS Shoes’ inspirational tagline “Stand for Tomorrow” communicates its dedication to social responsibility in just three words.

Social responsibility can be practiced in big or small ways every day. Businesses can volunteer with local organizations, donate funds to a chosen cause, sponsor a neighborhood group or sports team, and much more. Even planting flowers, applying a fresh coat of paint, or picking up trash in front of your store has a positive impact on the community surrounding your business. When businesses give back, they not only contribute to the common good, they engage with their communities in meaningful ways, build morale among employees, and create positive regard for the business.

It is not easy to handle a business crisis, but avoiding it or postponing a response could make it worse. Businesses should think ethically when coming up with a plan to handle an ethical crisis. In other words, act in a way that promotes the greatest common good and encourages trust rather than diminishing it.

Some situations may warrant the advice of a lawyer and a crisis expert. Here are some general practices that could be followed:

• Be open and transparent

• Prioritize those impacted by the situation

• Apologize

• Fix the problem

Example:

In 1982, Johnson & Johnson faced a major ethical crisis when cyanide-laced Tylenol capsules led to multiple deaths. The company responded swiftly by recalling 31 million bottles of Tylenol, cooperating with law enforcement, and implementing new tamper-proof packaging. This transparent and proactive response prioritized public safety over profit and is often cited as a model for crisis management.

Ethics has influence over the decisions we make and the actions we take, from our personal lives to our professional careers and beyond. We are all a part of an interconnected global community. Our contributions to the common good, no matter how big or how small, can have a lasting impact. Choosing an ethical lifestyle will ensure our impact is positive. Business leaders have a unique opportunity to create and influence the ethical culture of their businesses and among their stakeholders. Even bringing ethics into your business mindset will help you approach situations in a more ethical way. And if you are unsure how to create an ethical culture in your business, leading by example is a great way to start. It's as simple as be good, do good.

Example:

Warren Buffett, the CEO of Berkshire Hathaway, is known for his ethical lifestyle choices, particularly in philanthropy. Despite being one of the wealthiest individuals globally, Buffett lives modestly and has pledged to give away the majority of his wealth to charitable causes through the Giving Pledge initiative. His commitment to giving back and living frugally exemplifies ethical behavior beyond business decisions.

This session discusses the importance of ethics in both personal and business contexts, including its role in guiding decision-making and fostering a positive impact on society. Key points include defining an ethical culture for your business, making ethical decisions, and fostering social responsibility. When handling ethical challenges and crises, businesses should think ethically to come up with a plan, prioritizing the greatest common good and encouraging trust through transparency and accountability. Ethics is integral to daily life and business practices, where business owners can lead by example.

THE TOP 10 DO'S

1. Use ethics as a guide to make the world a better place through the choices you make.
2. Remember ethics in business is just as important as ethics in personal life.
3. Ask questions like “How do I define the common good for my business, and what does it mean for my customers, my employees, the community where my business is located, my investors, and my supporters” when thinking about the ethical culture of your business.
4. Consider how you will address or correct unethical behavior in your business.
5. Create a code of conduct that emphasizes respect, honesty, and fairness.
6. Encourage employees to provide input toward creating and contributing to the ethical culture of your business.
7. Build a culture of collaboration, trust, and integrity where employees feel safe reporting unethical behavior without fear of retaliation.
8. Consider embracing social responsibility as part of your business culture. Social responsibility can be practiced by businesses of all sizes in big or small ways every day.
9. Think ethically when faced with a business crisis; act in a way that promotes the greatest common good and encourages trust rather than diminishing it.
10. Lead by example.

THE TOP 10 DON'TS

1. Don’t underestimate the power of ethics in guiding choices and behavior that can make a significant positive impact.
2. Don’t forget business owners have a unique role and responsibility in shaping the culture of their businesses, and in influencing their broader community.
3. Don’t overlook key questions that can help you define the ethical culture of your business. For example, spend time to consider how you can influence, establish, and monitor the culture of your business.
4. Don’t assume your employees will all adopt the same ethical culture for your business without any guidance or a code of conduct.
5. Don’t make it difficult or risky for employees to report unethical behavior.
6. Don’t lie about the capabilities of your product or service to close an important customer sale or to attract investors.
7. Don’t assume your business is too small to adopt social responsibility as part of your ethical culture.
8. Don’t try to hide a business crisis. Instead, respond with transparency, accountability, and focusing on the greatest common good.
9. Don’t forget we are all part of an interconnected global community. Our contributions to the common good, no matter how big or small, can have a lasting impact.
10. Don’t underestimate the impact and importance of leading by example.

If you are currently writing or have developed a business plan, consider taking a moment now to include any information about your business related to this session. As a reminder, MOBI’s free Business Plan Template and other worksheets, checklists, and templates are available for you to download. Just visit the list of MOBI Resource Documents on the Resources & Tools page of our website.