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Q What
is IBE?
A IBE was established in 1986 to encourage high standards
of corporate and business behaviour and the sharing of good
practice. IBE is a registered charity, funded by corporate,
association and individual subscribers. IBE's work is based
on a programme of research, publications and events covering
national and international issues of business conduct. We assist
organisations wishing to encourage a culture based on ethical
values and provide a forum for the exchange of problems and
solutions. This web site contains further information about
the Institute and its subscribers.
The Institute also has numerous links with similar bodies overseas.
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Q What is
business ethics?
A Business ethics is the application of ethical values to
business behaviour. It applies to any and all aspects of business
conduct, from boardroom strategies and how companies treat their
employees and suppliers to sales techniques and accounting practices.
Ethics goes beyond the legal requirements for a company and
is, therefore, about discretionary decisions and behaviour guided
by values. Business ethics is relevant both to the conduct of
individuals and to the conduct of the organisation as a whole.
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Q What
is IBE's approach to business ethics?
A The Institute of Business Ethics aims to demystify the
topic of business ethics and to make it practical and tangible.
IBE focuses on how ethical values and standards apply to the
world of business. It takes a practical rather than an academic
or philosophical approach to helping with ethical dilemmas that
organisations and their employees face. |
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Q What is
the difference between business ethics and an ethical business?
A Business ethics relates to how any organisation
conducts its business in order to make profit or achieve other
goals. Any organisation can seek to do business in a way that
is guided by ethical values. Whether an organisation is judged
to be an ethical business however, may involve a subjective
assessment of any of the following: the products and services
it offers, its founding priorities, goals and values, its philanthropy,
its reputation among its stakeholders, the way it treats customers
and staff etc. |
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| How does business
ethics relate to Corporate Responsibility (CR)? |
If business ethics is about the
application of ethical values, CR is the expression of those
values both within core business strategies and as a set of
commitmentsand obligations made to its stakeholders.
CR is about an organisation's approach to what it is responsible
for, to whom it is responsible, and why, and this will be underpinned
by its ethical values and by the policies and programmes in
place to make those values operational.
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Q How does
business ethics relate to Corporate Social Responsibility (CSR)?
A An organisation's core ethical values and standards should
underpin everything that it does and the way its employees conduct
their everyday business. Business ethics is about "doing
things ethically".
How an organisation approaches the social and environmental
impacts of its business operations and its voluntary contribution
to the wellbeing of the global and local communities in which
it operates, is often known as Corporate Social Responsibility
(CSR); it is often about "doing ethical things".
The IBE believes that an organisation cannot be genuinely responsible
without an embedded and inherent culture that isbased on ethical
values such as trust, openness, respect and integrity. This
is why the IBE prefers to talk about Corporate Responsibility
(CR) as a wider, concern, rather than using the more limiting
'social' tag.
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Q What is professional
ethics?
A Professional ethics relates to how people behave in relation
to their chosen career. Doctors, lawyers, accountants, engineers
and other professionals are expected to behave a certain way
or follow specific codes of conduct. This helps to guard against
their actions bringing their profession into disrepute. Living
up to professional ethics can lead to dilemmas in the workplace.
An example might be where a professional duty to 'whistleblow'
conflicts with a sense of loyalty to a company. Professional
ethical standards should always be followed. |
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Q What is corporate
ethics?
A This term refers narrowly to the application of ethical
values internally to business practices ie within a corporation.
The term business ethics often embraces considerations of the
role that business has to play in society as a whole and its
wider, external responsibilities.
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Q What are some
examples of business ethics issues?
A Some of the key issues addressed in current codes of
business ethics are bribery & corruption; gifts & hospitality;
conflicts of interest; diversity; health and safety, environmental
stewardship and political donations & lobbying. According
to IBE/MORI research published in October 2006, the three major
areas of public concern are speaking out/whistleblowing (32
%), environmental responsibility (32 %) and discrimination in
treatment of people (31 %). Executive pay (27 %) and harassment
and bullying in the workplace (25 %) also cause the public concern.
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Q
What are some of the newer business ethics concerns?
A Supply chain management is becoming an increasingly important
issue for companies, as consumers learn more about the potential
environmental and social impact of the products they purchase.
Other, recent concerns include customer data protection, work-home
balance and the responsible treatment of suppliers. As well
as being asked to identify and address their wider impacts on
society, companies have been under pressure to consider "product
responsibility": for example regarding fast food companies
and the nutritional value of their products and alcohol companies
regarding 'binge drinking' by young people. |
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Q What are ethical
dilemmas?
A AAn ethical dilemma involves a situation that makes a
person question what is the 'right' or 'wrong' thing to do.
Ethical dilemmas make individuals think about their obligations,
duties or responsibilities. These dilemmas can be highly complex
and difficult to resolve. Easier dilemmas involve a 'right'
versus 'wrong' answer. A majority of people will agree, for
example, that it is morally unacceptable to pretend that someone
else's work is their own. However, complex ethical dilemmas
involve a decision between right and right. An example might
be where you uncover a friend's misdemeanour: You have a duty
to your employer to report it, but also a duty to be loyal to
your friend in a situation that could lead to his or her dismissal.
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Q How do you
know you have made the right ethical decision?
A Some companies provide employees with 'ethical
tests' to help them to make decisions. These might involve
a series of questions to ask yourself, such as: is it legal?
Is it consistent with the company's code of business ethics?
What would my mother think? How would I feel about it being
on the front page of tomorrow's newspapers? IBE's 2003 publication
Developing a Code of Business Ethics
contains examples of corporate ethical tests. |
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Q
Who are a company's stakeholders?
A Stakeholders are those groups "who can affect or
[are] affected by the achievement of the firm's objectives"
(Freeman, 1984). There are a number of ways of categorising
stakeholder groups. The IBE distinguishes between 'stakeholders'
and 'other interested/influential parties'.
Stakeholders are defined as those groups with whom the organisation
has a financial relationship within its day-to-day business.
Stakeholders are typically the organisation's employees, customers,
suppliers, shareholders and government (regional and national
and regulators).
'Interested parties' are those often very influential groups
with whom the
organisation may have dealings but where no direct financial
relationship exists. Examples of interested parties are the
media, non-governmental and campaigning organisations, competitors
and local communities in which businesses operate.
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Q
What relevance do ethics have to business?
A Ethical values play an increasingly important role in
business today. Firstly, companies do not operate in a vacuum,
but are part of a society which expects a certain standard of
behaviour from businesses. According to IPSOS- MORI research
in September 2006, 83% of the British public say that a company's
social responsibility is an important factor when deciding which
product or service to purchase. At the same time, 67% believe
that industry and commerce do not pay enough attention to their
social responsibilities. Companies require what is often called
'a license to operate'. In other words, they need the approval
of society in order to continue doing business. People expect
companies to look after their staff and tell customers the truth.
They also increasingly expect companies to address their environmental
impacts and make sure that the people who make their products
are treated fairly, wherever the company operates.
Secondly, ethical values are relevant in providing guidance
to staff in situations where the right thing to do is unclear.
Employers can not take for granted that their staff understand
what ethical standards are expected of them in carrying out
their work on behalf of the company. Provision of guidance
is therefore essential.
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Q
What factors are encouraging companies to address ethics?
A A series of external and internal factors are putting
pressure on companies and other organisations to address their
ethics. These include the increasing influence of Non-Governmental
Organisations (NGOs); a pervasive media in search of stories;
the knock-on effect of corporate accountancy scandals such as
Enron and WorldCom; increasing legislation and the growth of
Socially Responsible Investment (SRI), as well as changing consumer
and employee expectations. Recent legislation such as the revised
Companies Act (2006) and the Sarbanes-Oxley Act (2002) also
have an impact. |
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Q Is ethics just
another burden on companies or does it pay to be ethical?
A There are a number of commonsense arguments that ethical
business practice positively affects company performance. For
example, if employees are being treated well. it is likely that
workplace productivity will increase. Similarly, the provision
of a responsive customer service may result in increased customer
loyalty. A 2003 IBE report found
that during 1997-2001 those companies with a code of ethics
for at least five years outperformed a similar sized group who
said they did not have a code, on financial performance measures.
A 2007 IBE report suggests that companies
that provide training on business ethics outperform those that
have a code but provide no training.
Furthermore, having an ethics policy is seen to be good governance
practice; it is one of the hallmarks of a well-run business.
It can reassure investors and other stakeholders about the
company's approach to its non-financial risks. It can also
help to protect and enhance corporate reputation; it can motivate
and encourage loyalty in staff and can be useful in terms
of risk management.
Having an Ethics policy is also an important factor in Socially
Responsible Investment criteria. Inclusion in indices such
as the FTSE4Good or the Dow Jones Sustainability Index helps
SRI preference.
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Q Do small and
medium sized companies (SMEs) need codes?
A Ethical standards are just as important to SMEs as to
larger companies, but the key issues and concerns can be very
different. In 2000, the IBE published Priorities, Practice
and Ethics in Small Firm: a guide to ethical issues facing SMEs.
The Codes section of this
website also provides some guidance for
SMEs on how to tackle ethical issues. Today's multinational
corporations were yesterday's SMEs, and IBE suggests that SMEs
address ethical concerns as early as possible. Many companies
make the mistake of only tackling ethical behaviour when problems
arise. A reputation takes years to build, but can be lost overnight.
In addition, SMEs are finding that having ethical policies are
a condition of tendering for contracts as larger businesses
extend their ethical standards to companies in their supply
chains. SMEs that are familiar with these demands can have a
competitive advantage.
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