Moreover, well-minded people often exhibit major differences in opinions about what constitutes ethical behavior and how these ethical decisions need to be made, further compounding the complex nature of the subject. A lot of evidence that we discuss in this paper shows that the advantages gained in taking an ethical stance are well worth the efforts taken in this often tricky path. This paper identifies the inherent long term benefits of actively managing the business ethics process in organizations and explores the value in ethical leadership especially in the air travel industry using relevant examples.
The ethical issues that have afflicted companies like Enron, WorldCom and Tyco have brought the impact of ethics violations to the popular attention in the United States. Parmalat, Adecco, Ahoid and Skandia have grabbed the media focus in Europe. In all these scandals involving breach of corporate ethics, revelations have been followed by investigations, accusations, claims and counter claims. Legal wrangling involving formal investigations, testimony, evidence trials, verdicts and punishments have gained relentless media coverage. The resulting damage done to the reputation of these businesses is enormous. As a result, the employee morale becomes very low in this worrisome, suspicious and discouraging environment. May International, a management consultation firm, recently conducted a survey of businesses in US and in Italy to determine how business owners viewed corporate ethics. Concern for business and personal reputation was the reason most often (54% of respondents) stated by Italian business owners for concern about ethics. The most common reason (43%) noted by U.S. business owners for their ethics concern was the basic belief that acting ethically is the right thing to do. Frank Navran, principal consultant and director of training at the Ethics Resource Center, a nonprofit educational organization in Washington, D.C., identifies five types of imperatives that seem to drive organizational values initiatives:
* moral (the one, notes Navran, that every organization will claim)
* legal, or risk avoidance
* reputation management
* response to change
* pragmatic--good ethics is good business.
Advantages of an ethical stance:
Good business ethics can gain competitive advantage that is two-fold.
Employee benefits: Values create an organizational culture that in turn engenders a higher level of trust. That trust leads to more open communication. Increased communication enables and empowers employees, particularly managers and professionals, to make better decisions. Also companies with sound business practices and established values report improve employee morale, reduced employee turnover and increased productivity. This builds employee loyalty and reduces hiring and training costs.
Business Benefits: There are three that we have identified below.
1. A Marketplace Advantage:
Customers and investors take into consideration corporate practices and values as primary considerations in their decision-making. Sound company ethics maintains loyal vendor relationships and reduces loss of suppliers and