Learn about the most common business-ethics violations, then take a quiz to see how ethical you really are.
In light of current ethics problems involving the country's top corporations, now seems a good time to take stock of our own ethics. Where do we stand both professionally and personally? First, let's look at what the experts are saying about our culture in general, then at what we know occurs in industries closely related to ours. Finally, let's consider where we, as individuals, stand on the basic issue of ethics, including what is honest and legal. I've included a short quiz to help define what is honest, ethical, and legal. Findings presented in the "Josephson Institute of Ethics Survey," published several years ago in USA Today, pointed to "an absolute erosion of the American character." The survey showed that 47% of adults claimed they would try to include unrelated damages in an insurance claim for auto body repairs, 37% of high school students admitted they stole from a store in the past 12 months, and 65% said they cheated on an exam. Several books have been written about the decline of the American character, and numerous articles have cited examples of attitudes and actions that lead to the erosion of ethics. Common violations in business The five most common violations in business include misrepresentation, stealing ideas, soliciting business directly from a client after agreeing to use an agent, failure to maintain proper licenses and insurance, and finally, taking or offering kickbacks. We'll look at each violation in more detail in the following sections. Misrepresenting products and/or services This violation occurs most often when a salesman or other company representative overstates what the company can and will do, or what the company's product will do. While poor communication can be used as an excuse for most misunderstandings, often there is a deliberate intention to stretch the truth for one's own advantage. That's where the question of ethics comes in. As owners of a china-decorating plant, my husband and I recall several occasions in which customers made promises, then neglected to follow through. They always used some reason to justify the misrepresentation of their action, or lack of action, but it always resulted in our losing on the project in some way. Sometimes our loss was minor, and sometimes it was not so minor. Stealing ideas Idea theft is another common ethical violation, especially in the design business. Sometimes, the theft is obvious, and there is no apology or even acknowledgement from the person or company that stole the design. In one case, a competitor of ours--a designer who marketed his product in our industry--stole one of our china patterns. When we talked to others in our industry about suing him, someone from another well-known china company said, "You'll have to get in line. He has stolen several of our designs, and we can get no satisfaction in the courts. It's too costly and time consuming." We also learned that one of the world's largest china producers sued someone for stealing some of their designs, and after paying the legal fees, realized nothing for all their trouble. This doesn't include the time the staff and others involved took to prepare their case and testify. Only the attorneys who represented both sides made money. We also learned that if even one aspect of a design or idea is changed, it is not considered the same and is therefore considered original and not stolen. Closely related to stealing ideas is not giving credit to someone for the work they have done. This often results in the credit being given to someone else. I talked about this in a presentation I once gave, pointing out that one of the characteristics of a bad manager is to neglect giving credit to a person who has come up with a great idea. Sometimes the idea is credited to someone else, and the manager will not bother to set the record straight. Whether or not the oversight was deliberate, the result is the same for the person who came up with the idea. At one trade show where I presented this speech, several people in the audience said that the reason they left their former companies was because they were not given credit for their ideas. A vice president of design for a world-famous jewelry store complained that he had never been given credit for his design that became a best seller for the jewelry company and is still in their product line. While there may not be a legal contract protecting individual ideas and designs, neglecting to give credit where it is due is unethical and dishonest. Stealing business Vendors sometimes solicit business directly from a client after agreeing to work through an agent. This ethical conflict is equivalent to going behind someone's back to steal business from them. Some companies insist on a contract to protect themselves from unethical solicitations. When we worked without a contract, we suffered the consequences. In one instance, a large china company to whom we used to subcontract large orders went directly to the client without our knowledge and offered to deal directly with them for all future orders. Luckily, the client was so put off by their unethical offer that he informed us about it and said he had no intention of working directly with them. In another case, this same large china company took most of the decals that we had sent them to use for decorating another product line of ours and decorated extra sets of china that they sold without our permission. We would never have known had we not visited their facility and their sales outlet unannounced. Needless to say, we never used their services after that incident. Operating without proper licenses and insurance Doing business with people or companies that fail to maintain proper licenses and insurance can be costly. If you have products stored in warehouses, product that is in transit, or services that require strict adherence to industry standards, and those standards are not maintained by the company, you may become entangled in their problems when they are caught, even though you are innocent. Offering or receiving kickbacks Kickbacks are perhaps the most common and rampant ethics violations in any business or industry. Some industries consider it a standard part of doing business--a way to establish "ownership" of a client. After our company was approached several times with kickback offers, we made it a policy that prior to doing business with anyone, we informed them we accepted no gifts. We even refused Christmas gifts from vendors and other business acquaintances. The business owner needs to be on alert for kickbacks offered as innocent, friendly gestures to employees from vendors or service providers. Our first experience with this occurred when our shipping clerk exclaimed, "How nice it was that [the shipping company] has given me a radio to thank me for calling him to pick up our shipment." We immediately told her she was to return the radio and tell him our policy of not accepting gifts from anyone. How ethical are your business practices? Small-business owners face many situations where they have to make decisions regarding ethics simply because they are involved in the daily operation of the business. Prof. Hosmer of the University of Michigan School of Business suggests that you ask yourself four basic questions when trying to gauge the ethics of your decisions and actions. * Do your decisions and actions result in the greatest good for the greatest number? * Do they result in a better distribution of justice? * Do they result in greater rights for the individuals involved? * Would you want someone in the same situation to take the same action? What it boils down to is the golden rule: Do unto others as you would have them do unto you. Test your honesty by taking this quiz. For each question, indicate one of the following three answers: a) agree, b) agree sometimes, or c) disagree. Add up your score at the end. 1. You can decide for yourself what is right or wrong behavior as long as it doesn't harm anyone, despite society's standards. 2. Would you take a set of towels from a hotel where you stayed? 3. Would you falsify information to make your résumé look better? 4. Would you take home extra office supplies or software to use at home? 5. Would you falsify an insurance claim for car or fire damage? 6. Would you keep quiet about items a clerk forgot to add to your bill? 7. Would you neglect declaring a cash payment to save taxes? 8. Would you agree with your child who wanted to buy answers for an exam? 9. Would you move without paying rent or utilities? 10. Would you burn down an old shed on your property to collect insurance? Give yourself 0 points for each (a) answer, 1 point for each (b) answer, and 2 points for each (c) answer. If your score is 18-20, then you are thoroughly honest. A score of 10-17 means that you are fairly honest, with signs of weakening honesty standards. And if your score falls between 0-9, then you are dishonest with few twinges of conscience. Aristotle said the best measure of ethicality is to "be open, be honest, and be proud of everything you do." In other words, before you take action, consider whether you would like to see it published in the next industry newsletter.
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