Choosing between Ethics and profit: A Concern of value choices

 

Stella Marie Andrea R. Llacuna

Divine Word College of Laoag

Abstract

Business has been an avenue for people in making and gaining money for their necessities or for their own desires as well as an instrument to contribute to the economy. In business industry, ethics, and business may not always be connected to each other, thus, creating a gap leading people to unfollow their moral standards because of profit maximization and economic and personal interests. However, there are circumstances wherein maximizing profit can still make people stick to their moral principles and standards i.e. business ethics in leadership wherein code of ethics is being exercised by the employees and to flourish personal moral principles in order for him or her to distinguish what is morally right and wrong in the business industry even when there is or there is nobody watching them. In addition, managers become the model and definition of good and as an outcome, employees follow the lead and example of their head. Employees are known for their hardworking and contribution to profit maximization to accompany, thus, when the company satisfies its employees, they will remain loyal and will always respect the company. The service profit chain explains how an employee and customer contribute to the revenue growth of a company. Because of the employees’ satisfaction, loyalty, productivity, service quality, and capability, they give service value to the customers which is one of the keys to customers’ satisfaction and loyalty.

Keywords: Ethics, business ethics, leadership, morale

I.                   Introduction

Conflict of interest continues to be the underlying challenge in the decision-making of the business. This dilemma has arisen between the two apparently inherently conflicting terms in business, ethics, and economic interests. By dissecting the two terms, business often deals with self-interest, while, on the other hand, ethics takes into account the views and ideas of others. Therefore, self-interest and interest for other people differ from one another, giving the conclusion that they will come up with a different outcome. Hence, ethics and business contradict one way or another.

In today’s modern era, people nowadays have excessive desire and needs and one of them is making money that can be a source out from whatever method that is possible or somewhat people called “by hook or by crook”.  Morality gives no importance in business because man is naturally greedy, rarely content in what they have achieved and they still eagerly want more power and more money (Hamilton & Mickletwait). As the pressure goes on in the business world, managers often ignore ethics.

Maximizing profit without a double is the main objective within the business world. A recent report from Ed Miliband stating that Britain’s bosses are prioritizing profits over principles. However, there are also studies that business is considered to be successful if it earns profits, but profit is just one objective that a business seeks to achieve; other pressing objectives that may emerge over time. These objectives may include growth, response to changes in the environment, or societal responsibilities (Leahy, 2010)

There are also important factors that contribute to maximizing profits in the business, such as specialized management teams, efficient and effective workforce, and consistent demand of consumers, valuable stockholders, and the overall users over the financial statements and its relation to business ethics.

Business Ethics in Leadership

The leadership and values of management hold the company’s framework. Management should set the tone from the top to establish a code of ethics to be followed and observed by the employees. According to Linda Trevino and her colleagues, a combination of being a moral person and a moral manager creates ethical leadership. Being a moral person innate trait such as integrity, honesty, and trustworthiness. To elaborate, integrity demonstrates sound moral and ethical principles and does the right thing, no matter who's watching or under any situational circumstances especially when the profit is at stake. Integrity is an ingredient in which co-workers build relationships and trust. In addition, in order to be able to make good decisions ethically, an individual needs to carefully develop his or her personal set of standards or values, a personal code of conduct, or integrity. Personal standards enable an individual to think through a decision with a clear rationale in mind.

All of the abovementioned traits will be melded to create a moral leader in a business. Being a moral leader leads employee by example and guide them in making decisions that are not only beneficial to them as individuals, but also to the organization as a whole. It also means providing rewards and discipline for the ethical and unethical choices made by others, so that a clear message is sent as to what behaviors are and are not acceptable in an organization or situation. In addition, moral management means the communication of ethics and values openly, explicitly, and frequently.

In conclusion, when all of this is well implemented and carried out with a resounding theme of business ethics from the top-down, each facet has a greater potential for a long-lasting positive effect in the company whether short or long term and further stability.

Business Ethics and Employee Morale

When the business ethics are encouraged by management and the managers lead by example, their employees will follow in their footsteps. Employees tend to make better and relevant decisions along with business ethics as their guiding principle, this increases their efficiency and effectiveness in the company also with focusing on their work exponentially.

According to Dalal, that if employees were satisfied with the fairness of the work environment, they would want to reward the company in the form of the Organizational Citizenship Behavior (OCB). OCBs are essentially "discretionary behaviors which are not part of the formal role requirements of the employee, but which nevertheless, promote the effective functioning of the organization" (Organ, 1988, p. 4).

When the employees work with integrity and fairness to their responsibilities and duties, the whole organization benefits. With a great environment, the employee’s productivity increases when fewer distractions are present and morale is high, and this leads to greater profit levels for the company. In addition, employee happiness has a great impact on turnover and retention having a greater chance that employees will respect their organization that they are affiliated with and stay loyal with the organization.

Successful companies stay on top because they manage their service profit chain well. Based on the concept of the service-profit chain, a company should establish a link between employees and customer experience on the one hand and create profit and growth on the other. Chain links are as follows: profits and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of the satisfaction of the customer. Satisfaction is largely affected by the value of the services provided to customers. Value is created by employees who are satisfied, loyal and productive. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.

II.                Conclusion

Most company uses the formula of maximizing profit by reducing costs and increasing sales. It is somewhat true but only for short term. When a company only focuses on maximizing profits without taking any considerations on how they earned them even if it is done unethically, it will result to a ripple effect to its stakeholders as well as the productivity level of employees will decline for having minimum benefits. However, when a company focuses on its corporate social responsibility, they focused on long term goals rather than short term goals. Rather than concentrating on how to maximize profits in any possible way they are more likely focused on the welfare and happiness of their employees, customers, and stakeholders and have a positive impact and good reputation for the company.

Therefore, there is no trade-off between ethics and profits. When ethics is being well maintained in a company, the profits and benefits will follow. Balancing ethics and profits give a company a strong foundation and sustainable growth.

III.             References

Dalal, R. S. (2005). A meta-analysis of the relationship between organizational citizenship behavior and counterproductive work behavior. Journal of Applied Psychology, 90(6), 1241-1255.

Groom, B. (2011, October 4). Bosses put profit before ethics, says survey. Financial Times.

Hamilton, S., & Micklethawait A. (2006). Greed and Corporate Failure: The lessons from recent disasters. Houndmills, Basingstoke: Palgrave Macmillan.

Heskett, J. L., Sasser, E.  Jr., & Schlesinger, L.A. (1997). The Service Profit Chain. New York, NY: The Free Press.

Leahy, C. (2010). Corporate Responsibility. World Congress of Accountants.

Organ, D. W., (1988). Organizational citizenship behavior: The good soldier syndrome. Lexington, MA: Lexington.

Treviño, L. K., Hartman, L. P., & Brown, M. (200) Moral person and moral managers: How executives develop a reputation for ethical leadership. California Management Review, 42 (4),128–142.