Global Leadership Bulletin

A journal of leaders, by leaders, and for leaders

12 Ethical Principles for Business Executives

by Michael Josephson, JOSEPHSON INSTITUTE

Ethical_principlesIf recent history teaches us anything is that ethics and character count, especially in business. Huge organizations like Enron, Arthur Andersen and Health South have been destroyed and others were seriously damaged (AIG, Fannie Mae, Freddie Mac) by  executives with massive ambition and intelligence but no moral compass.  In today’s ultra competitive, high tech, interdependent business world, charisma without conscience and cleverness without character  are a recipe for economic and personal failure of epic proportions.  As President Theodore Roosevelt said, “To educate the mind without the morals is to educate a menace to society.”

Competitiveness, ambition and innovation will always be important to success but they must be regulated by core  ethical principles like the ones described below.

Let’s start with a basic definition: ethical principles are universal standards of right and wrong prescribing the kind of behavior an ethical company or person should and should not engage in. These principles  provide a guide to making decisions but they also establish the criteria by which your decisions will be judged by others.

In business, how people judge your character is critical to sustainable success because it is the basis of trust and credibility. Both of these essential assets can be destroyed by actions which are, or are perceived to be unethical. Thus, successful executives must be concerned with both their character and their reputation.

Abraham Lincoln described character as the tree and reputation as the shadow. Your character is what you really are; your reputation is what people think of you. Thus, your reputation is purely a function of perceptions (i.e., do people think your intentions and actions are honorable and ethical) .while your character is determined and defined by your actions (i.e., whether your actions are honorable and ethical according to the 12 ethical principles:

1. HONESTY. Be honest in all communications and actions. Ethical executives are, above all, worthy of trust and honesty is the cornerstone of trust.  They are not only truthful, they are candid and forthright. Ethical executives do not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means and when trust requires it they supply relevant information and correct misapprehensions of fact.

2. INTEGRITY. Maintain personal integrity. Ethical executives earn the trust of others through personal integrity. Integrity refers to a wholeness of character demonstrated by consistency between thoughts, words and actions. Maintaining integrity often requires moral courage, the inner strength to do the right thing  even when it may cost more than they want to pay. The live by ethical principles despite great pressure to do otherwise. Ethical executives are principled, honorable, upright and scrupulous. They fight for their beliefs and do not sacrifice principle for expediency.

3. PROMISE-KEEPING. Keep promises and fulfill commitments. Ethical executives can be trusted because they make every reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping their commitments.

4. LOYALTY. Be loyal within the framework of other ethical principles. Ethical executives justify trust by being loyal to their organization and the people they work with. Ethical executives place a high value on protecting and advancing the lawful and legitimate interests of their companies and their colleagues. They do not, however, put their loyalty above other ethical principles or use loyalty to others as an excuse for unprincipled conduct.  Ethical executives demonstrate loyalty by safeguarding their ability to make independent professional judgments. They avoid conflicts of interest and they do not use or disclose information learned in confidence for personal advantage.  If they decide to accept other employment, ethical executives provide reasonable notice, respect the proprietary information of their former employer, and refuse to engage in any activities that take undue advantage of their previous positions.

5. FAIRNESS. Strive to be fair and just in all dealings. Ethical executives are fundamentally committed to fairness.  They do not exercise power arbitrarily nor do they use overreaching or indecent means to gain or maintain any advantage nor take undue advantage of another’s mistakes or difficulties. Ethical executives manifest a commitment to justice, the equal treatment of individuals, tolerance for and acceptance of diversity. They are open-minded; willing to admit they are wrong and, where appropriate, they change their positions and beliefs.

6. CARING. Demonstrate compassion and a genuine concern for the well-being  of others. Ethical executives are caring, compassionate, benevolent and kind. They understand the concept of stakeholders (those who have a stake in a decision because they are affected by it) and they  always consider the business, financial and emotional consequences of their actions on all stakeholders. Ethical executives seek to accomplish their business objectives in a manner that causes the least harm and the greatest positive good.

7. RESPECT FOR OTHERS. Treat everyone with respect. Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat all people with equal respect and dignity regardless of sex, race or national origin. Ethical executives adhere to the Golden Rule, striving to treat others the way they would like to be treated.

8. LAW ABIDING. Obey the law. Ethical executives abide by laws, rules and regulations relating to their business activities.

9. COMMITMENT TO EXCELLENCE. Pursue excellence all the time in all things. Ethical executives pursue excellence in performing their duties, are well-informed and prepared, and constantly endeavor to increase their proficiency in all areas of responsibility.

10. LEADERSHIP. Exemplify honor and ethics. Ethical executives are conscious of the responsibilities and opportunities of their position of leadership and seek to be positive ethical role models by their own conduct and by helping to create an environment in which principled reasoning and ethical decision making are highly prized.

11. REPUTATION AND MORALE. Build and protect and build the company’s good reputation and the morale of it’s employees.  Ethical executives understand the importance of their own and their company’s reputation as well as the importance of the pride and good morale of employees. Thus, they avoid words or actions that that might undermine respect and they take affirmative steps  to correct or prevent inappropriate conduct of others.

12. ACCOUNTABILITY. Be accountable. Ethical executives acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, their colleagues, their companies, and their communities.

Michael Josephson is the founder and president of the nonprofit Joseph & Edna Josephson Institute of Ethics. Through his programs and commentary, Mr. Josephson has become one of the most sought-after teachers and speakers on ethics and character. His commentaries air daily on radio stations throughout the United States and around the world over the American Forces Network. A former law professor and successful businessman, he has provided consultation services and programs to thousands of leaders in business, government, journalism, law and the nonprofit community. Through the Institute, which is based in Marina del Rey, California, Mr. Josephson founded the CHARACTER COUNTS! Coalition, a partnership of hundreds of communities and educational and youth-service organizations that together reach millions of young people. The Coalition provides character-building materials and programs based on core ethical values called the “Six Pillars of Character.”

Josephson Institute develops and delivers services and materials to increase ethical commitment, competence, and practice in all segments of society. A nonpartisan and nonsectarian 501(c)(3) nonprofit organization, the Institute is funded by individual donations, foundation and corporate grants, fees and contributions for services, and sales of educational resources. The Institute also works collaboratively with influential organizations and individuals in a variety of fields.

Free Ethical Certificate


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