Business Ethics 101 in 2013

NEW YORK (MainStreet) — In decades past, bad business ethics might have been defined as stealing a stapler from the office, taking a nap at your desk after lunch or, for executives, skimming off the top.

And though business ethics today involve the same examination of moral and social responsibility, what has changed is the introduction of the many ethical breaches connected with new technology and how ethics are recognized and handled in the workplace.

Diane Swanson, chair of the business ethics education initiative at Kansas State University in Manhattan, Kan., says business ethics, as an industry, has been an evolutionary process. While there were ethical practices before, the business ethics consulting business really began in the 1980s during the savings and loan scandals and widespread greed and corruption personified by Gordon Gekko from the movie Wall Street.

“This led to longer federal sentencing guidelines, which led to the creation of the ethics consulting industry,” Swanson says. “Companies created a code of ethics, which helped in the sentencing. If you had a code of ethics, the sentences were shorter.”

The industry was created with compliance as a focus and has morphed into what most companies recognize today as a more proactive approach in risk management, she says.

“That has led us to the consideration of what is an ethical culture in organizations today,” Swanson says. “Companies are finding if a company has strong ethics at its core, the risk is diminished by that alone.”

Abbot Martin, research director for CEB, a research advisory firm in Washington, D.C., that focuses on risk and compliance, says the company has surveyed more than 900,000 employees around the world from 2007 to the present and found that overall, companies that had higher internal ethical standards also realized higher returns.

The company looked at many different types of violations, including alcohol and drug use in the workplace, misappropriation of time, conflict of interest, fraud, harassment, discrimination and data privacy violations.