A Common Sense Approach to Business Can Constitute an Ethical Framework

Take the Ethical Frame Work Test--5 Simple Questions

The complex ethical guidelines laid down in the recent Sarbanes-Oxley Act can assist in regulating business ethics. But how can businesses implement these guidelines? How practical are these guidelines for most businesses? How can these regulations be converted to daily business practice? One solution is to adopt the common-sense approach advocated by the author, a former successful CEO, using a combination of four basic business principles and five simple questions to guide ethical decision-making at all levels of business.

Four Basic Business Principles

Business principles and practices that contribute to the basics of becoming and sustaining an ethical socially responsible business are the following:

1. Institutionalization

By sharing control, there is a better chance of transparency, real oversight, and accountability. Institutionalization means sharing control by establishing a professional board of directors, instead of a rubber-stamp board. A truly professional board will include men and women who are respected, competent, enthusiastic and willing to roll up their sleeves and work hard. And most important of all, for a professional board, disagreement should be welcomed as a virtue, not a vice.

2. Solid business practices

A CSR business must have solid business practices embedded into its entire operations, including a real mission statement, code of ethics, strategy, business plan and effective leaders that are ethical.

3. A company of citizens

A CSR business must cultivate "a company of citizens" where all employees are welcomed into the corporation as morally competent agents, seen as specially qualified for intelligent work, rather than as mere units of labor.

4. Legal checks and balances

Only a system with legal checks and balances will effectively encourage and enforce corporate responsibility.

Ethical Framework Test: The 5 SQ's or Simple Questions

Federal and state governmental regulations like the Sarbanes-Oxley Act can assist in encouraging ethical business practices. Following time-proven, common-sense business principles can ensure effective and efficient operations, as well as ethical practices.

But in every business problematic situations arise that don't seem to fall within any categories or guidelines established by law or traditional practices to address ethical dilemmas How can decision-makers resolve these issues? The author recommends utilizing the Ethical Framework Test, a series of five simple questions that he developed to assist business professionals and leaders in areas not clearly covered by legal statutes and standard practices. When used in combination with the basic principles outlined above, these can offer an overall ethical framework for business operations.

The Ethical Framework Test: The 5 SQ's or Simple Questions:

1. Who are all the people affected by the business decision, considering the full scope of all stakeholders?

2. Does this decision cause harm or injury to any of those affected and are there reasonable actions you can do to mitigate it?

3. Is my behavior deceptive? Would I regard it that way if I were in the other party's position?

4. Are there any disguised conflicts between myself, the shareholders and those affected by the business decision? Transparency can help reinforce ethical behavior.

5. What would happen if every party in the transaction were to behave in the same way toward each other? This is like the case where every driver at an intersection decides to jump the traffic lights.

In general, if you can answer "yes" to questions 2, 3, and 4, or articulate that harm may arise to any or all stakeholders--including clients, "counter-parties," whistle-blowers, and shareholders--then the recommended course of action is clear: you should refrain from carrying out the action under consideration.

Both the set of basic business principles and five simple questions are designed to guide any person, whether business owner or employer, in making the right ethical decisions throughout her or his career. Their simplicity and practicality make them indispensible as general measures for the smooth operation of a business or professional position.

HCS readers may wish to view other articles and releases in our permanent, extensive archives at the URL http://www.helleniccomserve.com/contents.html.

For more information about Mr. Christos Papoutsy, his schedule of free lectures, or to read his other articles on corporate social responsibility and business ethics, visit the About Us, Business, or Business Ethics sections of the Hellenic Communications Service (HCS) website, http://www.helleniccomserve.com or the web pages of the Christos and Mary Papoutsy Distinguished Chair in Ethics at Southern New Hampshire University at the URL http://www.snhu.edu/papoutsy.html. HCS readers who enjoy this article may wish to read "Corporate Social Responsibility: Is Moral Capitalism Possible?" and "Business Institutionalization Promotes Excellence, Combats Corruption." Mr. Papoutsy welcomes comments and can be reached via e-mail at the address papcoholding@papcoholdings.org.


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