Ethical Standards in Entrepreneurship

ETHICS IN ENTREPRENEURSHIP DEFINING “ETHICS” - THE DISCIPLINE DEALING WITH WHAT IS GOOD & BAD WITH MORAL DUTY & OBLIGATION MORAL PRINCIPLES THAT WERE DERIVED FROM BELIEFS ABOUT RIGHT & WRONG THAT WE TO JUDGE CONCRETE ACTIONS ETHICS ARE THE MORAL VALUES & BEHAVIORAL STANDARDS BUSINESSES & PEOPLE DRAW ON AS T DECISIONS & SOLVE PROBLEMS. IT PROVIDES THE BASIC RULES OR PARAMETERS FOR CONDUC ACTIVITY IN AN “ACCEPTABLE” MANNER. BUSINESSES DEVELOP THEIR OWN CODES OF ETHICS OR CONDUCT OF CONDUCT. THESE OUTLIN EMPLOYEES ARE TO DO IN ORDER TO CARRY OUT WHAT THE COMPANY SEES AS THE “RIGHT THING T VARIOUS CIRCUMSTANCES. MORAL VIRTUE & GOOD CHARACTER To act effectively, one must possess both moral virtue and good character. For entrepreneurs, effective action helps resists self-centered approaches, defines the importance of stakeholders in the entrepreneurial process, and emphasizes the social nature of the person's relationship with others. Ethical action should be practiced by the entrepreneur in all his dealing with community within the enterprise and the community surrounding the enterprise including the market, government agencies and other stakeholders. ETHICAL CHALLENGES Facing today’s entrepreneurs are decades of erosion of general ethical standards in the society. Entrepreneurs work under many pressures, especially time pressure, which leaves little time for reflection to check the ethical standards of their actions & make rectifications when necessary. Entrepreneurs are constantly bombarded with the idea that they are the driving force in the economy & thus must act fast in managing, overcoming risks, & creating novelty all the time. A deliberate effort should be made by the entrepreneur to develop & actively promulgate a code of ethics. Code of ethics is the basis for the company to define what is moral, ethical, & fair. It spells out the norms to be followed in transacting business honestly. Moreover, entrepreneurs have to define the values they will consider when aiming for their entrepreneurial success. Examples of ethical values to be considered are: (1) improved quality & quantity of old or new products/services, (2) increase in market share, (3) growth in profits, & (4) contribution to the community. APPLICATION OF ETHICAL PRINCIPLES & VALUES TECHNICAL COMPETENCE Technical competencies are behaviors directly related to the nature of training and the technical proficiency required to exercise effective control. An ethical entrepreneur knows what his business is all about & meets the required standards set by the industry. For example, a hotel concierge's knowledge of local events, venues, & services is a technical competency in the hospitality industry. Different fields of work emphasize different skills & thus require different technical competencies. Mastering the technical competencies of a field and occupation is important for a worker to become a skilled employee. SEARCH FOR NEW & IMPROVED WAYS TO WORK An ethical entrepreneur constantly seeks new & better ways to improve his business process. He should search some new trends that could help his business be more trending & catch the attention of the buyers. COMPLETE RESPONSIBILITY An ethical entrepreneur accepts & practices full responsibility over everything that goes on in the business; he does not point his fingers at others or at circumstances to blame for negative incidents & failure. RESPECT FOR THE NEEDS OF THOSE AROUND HIM An ethical entrepreneur makes sure that customers, employees, investors, suppliers, business associates, & other stakeholders receive what is due to them. FAIR PRICING This is the touchstone of entrepreneurship. An ethical entrepreneur always establishes revenue forecasts that are based on fair pricing. REWARDS FOR GOOD ACTION An ethical entrepreneur encourages his employees to do good by giving both intrinsic & extrinsic awards. Example of this is giving of incentives to an employee who had an exemplary performance at work. CORRECTION FOR THOSE DOING WRONG An ethical entrepreneur follows a set of disciplinary actions & sanctions that are known to his employees & which are calibrated according to the degree of the wrongdoing. SOUND FINANCIAL MANAGEMENT An ethical entrepreneur manages finances effectively to allow stable employment for everyone in the business even during times of crisis of temporary slowdown. EFFICIENT & RIGOROUS BUSINESS MONITORING & REPORTING An ethical entrepreneur is open & honest. He develops a sound & rigorous financial monitoring & reporting system that provides full & accurate information leading to realistic forecasts. He is always active on checking the finances whether it is increasing or decreasing so that he can immediately take action towards it. SHARING FINANCIAL SUCCESS An ethical entrepreneur gives credit to the staff and every member of the business when it succeeds on something. He shares the company’s financial success with everyone who helped create & run the business. SOCIAL RESPONSIBILITY An ethical entrepreneur gives back to the community by contributing to its welfare. ENVIRONMENTAL AWARENESS An ethical entrepreneur makes sure that the environment is not degraded or further destroyed by his negligence & irresponsibility. POSITIVE RESULTS OF ETHICAL PRACTICE The practice of ethics within and outside the company projects the reputation of the entrepreneur as a good partner in business. The entrepreneur's ethical decisions will make others trust him and the business he runs. And suppliers are very happy when they are paid promptly for goods ordered or money owed. Positive and healthy community relations also result from ethical entrepreneurship. CREATING ETHICAL STANDARDS FOR THE ENTERPRISE Setting ethical standards is the first step in creating an ethical organization. The ethical values of the entrepreneur & the enterprise should be clear to everyone. Here are the steps the entrepreneur could take when creating a code of ethics for the enterprise: (1) Identify the general principles that would lead the enterprise to fair business practices. (2) Check with pertinent government agencies, industry associations, & business chambers for ethical standards to review & use as pattern. (3) Allow for the fact that ethical questions do not always have a unique, perfect answer. (4) Write out specific statements that will assist everyone including the entrepreneur, & all the stakeholders, in making day-to-day ethical decisions. (5) Meet with groups of stakeholders according to the interest, role, or function & present the draft of the Code of Ethics. (6) Ask for opinions, suggestions, & recommendations for improvement from the stakeholders. (7) Make a final draft of the Code of Ethics taking into consideration all the gathered suggestions & recommendations. (8) Apply the accepted Code of Ethics throughout the enterprise through written policies & procedures. (9) Train everyone involved to make ethical decisions. SUGGESTED COVERAGE OF A CODE OF ETHICS THE CODE OF ETHICS SHOULD COVER THE FOLLOWING ASPECTS: • • • • • • • • • • • • • • • • • • • ENVIRONMENT-FRIENDLY BUSINESS PRACTICES SUPPORTING ADVERTISING PROMISES TELLING CUSTOMERS THE TRUTH INSURANCE COVERAGE ADEQUATE TO PROTECT THE BUSINESS & EMPLOYEES HANDLING CASH & CHECKS FROM CUSTOMERS SPECIAL PRICES FOR SELECTED PERSONS ACCEPTING GIFTS FROM SUPPLIERS & BUSINESS ASSOCIATES SELLING DAMAGES MERCHANDISE WARRANTIES ON PRODUCTS MERCHANDISE-RETURN POLICIES FOR CUSTOMERS RETURNING MERCHANDISE TO SUPPLIERS HANDLING SHOPLIFTERS ACCOUNTING PROCEDURES FOR CASH SALES THEFT OR PILFERING BY EMPLOYEES CHECKING IN MERCHANDISE WHEN RECEIVED FROM SUPPLIERS KEEPING THE PREMISES CLEAM & FREE FROM HARMFUL SUBSTANCES HANDLING EMPLOYEE PERFORMANCE PROBLEMS SAFETY & SECURITY ISSUES MEDIA RELATIONS (PRINT & DIGITAL MEDIA)