Ethical practices make good business sense, because ethical companies suffer less resentment, less litigation, and less regulatory oversight. Furthermore, ethical managers and ethical businesses tend to be more trusted and better treated by employees, suppliers, stockholders, and consumers.
Organizations are a reflection of society; they are the method by which individuals unite to form a network of common interest. And each organization is a fluid enterprise. At its center are the managers and executives responsible for directing the resources of the company. Shareholders own the capital and expect a return on their investment. Workers produce the goods and expect a decent wage and safe working conditions. To have a successful enterprise, each group must be responsive to the others and balance its interest against the interests of the others. When the balance is upset or when the interests pull too hard against each other, the ethical system is damaged. For an enterprise to continually give value to human effort and to encourage creative achievements, a balance of all interests is required ( Parry, 2001).
Administrative actions are shaped by three domains: legality, free choice, and integrity. The law defines and constrains the limits of potential actions, specifying the bounds of lawful behavior. What is legal is not necessarily moral; what is not prohibited by law is not necessarily ethical; and what minimally meets the law is not necessarily proper. While the law codifies customs, ideals, beliefs, and moral values of a society, it cannot possibly cover all possible human actions (Beauchamp, Bowie, 2002).
The rightness of actions is constrained by the third domain, integrity, which is obedience to the unenforceable. This represents unwritten, often unspoken, guidelines for behavior for which no legal mandates or prohibitions exist. It is the grey area where neither law nor free choice prevail. This is the realm of integrity, the necessary foundation for ethical decision making.
Ethics is different from law because it involves no formal sanctions. It is different from etiquette because it goes beyond mere social convention. It is different from religion because it makes no theological assumptions. It is different from aesthetics because it is aimed at conduct and character rather than objects. It is different from prudence because it goes beyond self-interest to include the interests of others. It is different from finance and marketing and governing and parenting and carpentry, in that it does not involve a special purpose or special role as its point of departure. Ethics is both a process of inquiry and a code of conduct. Ethical inquiry consists of asking the questions of what is good and what is evil, what is right and what is wrong. As a code of conduct, it is a sort of inner eye that enables people to see the rightness or wrongness of their actions.
Values are core beliefs about what is intrinsically desirable. They underly the choices made in work decisions just as they underlie the choices made in one's private life. They give rise to ideals that are called ethics or morals. The two terms are sometimes confused. Actually, ethics and morals are synonymous. While ethics is derived from Greek, morals is derived from Latin. They are interchangeable terms referring to ideals of character and conduct. These