Principles of Business Ethics
Different organizations have different codes, but universal principles exist. These are often summarized by frameworks like CIMA or AICPA.
The Core Principles
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1. Integrity
The foundation. It means "Walking the Talk".
- Being honest even when it hurts.
- Not manipulating financial statements to look good.
2. Objectivity & Fairness
Treating everyone equally.
- Hiring: Selecting the best candidate, not the boss's nephew (Nepotism).
- Suppliers: Awarding contracts based on merit, not kickbacks (Bribery).
3. Transparency
Being open about company operations (where possible).
- Disclosing risks to shareholders.
- Not hiding "fine print" from customers.
4. Accountability
Taking responsibility for actions.
- If a product is defective, admitting it and recalling it (e.g., Johnson & Johnson Tylenol case).
- Blaming others ("The intern did it") violates this principle.
5. Respect for Stakeholders
Recognizing that a business serves more than just shareholders.
- Respecting employee rights (Fair wages, safe environment).
- Respecting the environment (Sustainability).
Note
The 3 Tests of Ethics:
- Transparency Test: Would I be comfortable if this action was published on the front page of the newspaper tomorrow?
- Effect Test: Who does this hurt?
- Fairness Test: Would I want this done to me? (The Golden Rule).
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