Business leaders
must view things from a higher perspective
Moral leadership, guided by clearly defined business ethics, is essential for the modern commercial environment. Business leaders have multiple spheres of responsibility, and a code of ethics allows them to navigate between the often-competing demands of shareholders, consumers and employees. Leaders need ethics in order to properly address the larger contexts in which they conduct business, including the demands of the physical environment and social causes.
Responsibility to Shareholders
First and foremost, a business leader's responsibility is to the shareholders or stakeholders: The CEO must deliver on the mission statement of the organization, whether it is measured in terms of profit or in terms of service delivery. This responsibility requires business leaders to maintain ethical standards regarding conflicts of interest, fiscal reporting and all legal regulations of the operation of the business. Failure to uphold these standards jeopardize the fiscal stability of the enterprise and possibly even its continued existence.
Responsibility to Consumers
Business ethics help a leader make informed decisions about where to draw the line between maximizing profit on the one hand and providing high-quality goods or services on the other. A strong code of conduct sets standards for issues such as truth in advertising, manufacturing quality control and consumer relations protocols. Misleading advertising of a product, for example, may initially improve sales, but the longer term implications of this breach of ethical standards might easily translate into a permanent stain on the company's brand and is an unethical act.
Responsibility to Employees
Employee salaries and benefits are typically the largest single cost of any business, and a stable, experienced workforce is a great asset to any commercial venture. Business leaders who do not treat their employees ethically in areas of hiring and promotion, or who discriminate, run the risk of alienating their employees and exposing the business to legal action. Compensation must be based on objective, clearly defined standards that can withstand the scrutiny of an ethics board, free from factors such as race, gender, religion and so on.
Responsibility to Society
Businesses operate in the larger social environment, and have an impact on local, region and sometimes even global economies. Business leaders must consider the ethical implications of outsourcing labor to third-world countries, which may involve exploitation of workers abroad as well as unfairly taking away the jobs of employees at home. Circumventing regulatory intent, while possibly within legal limits, may also result in major environmental disasters, either from poor quality control or limited oversight of operations.
Whistleblowing
Moral leadership is not restricted to the CEO and other high-ranking officers of a business. Employees at various levels on the organizational chart may be required by law to act as "whistleblowers," and to inform legal and regulatory bodies about unethical behavior on the part of business leaders. Any employee in an organization who is aware of a serious lapse of ethical standards on the part of business leaders bears some responsibility for that behavior, and may be required by law to report it to senior management, or even to regulatory authorities.
