The term “business ethics” in its formal sense is fairly new and can be traced back to the early 1970’s. However, ethics in business goes all the way back to pre-biblical times when Greek philosophers like Plato and Aristotle discussed the place of justice in economic relations. Although business ethics have always been essential, it’s perhaps never been more important for employers than it is today.
An Increase in Ethics-Related Firings
There’s an interesting phenomenon occurring in the U.S. as well as other economic powerhouses such as the BRIC countries (Brazil, Russia, India and China). We’re seeing a significant increase in firings due to ethical lapses. A study by Success&, a part of the PwC network, found, “Successions in the U.S. and Canada attributable to ethical lapses more than doubled from 1.6 percent in 2007 to 3.3 percent in 2012-16.”
However, this number is actually much lower than the number of firings during the same period in Western Europe, which was 5.9 percent and 8.8 percent in the BRIC countries.
Violations Aren’t Any More Frequent
By examining this data, the first thing you may assume is that CEOs are being more mischievous than ever. Surely the dramatic increase in ethics-related firings must be the result of nefarious activity and underhanded business practices.
What’s interesting is that there has not been an increase in the number of violations cases. There’s absolutely no data to suggest that this is the case. The reason for this upswing is simply because the world is changing.
The technological revolution throughout the 21st century has brought about many changes. One of the biggest is the prevalence and widespread use of digital communication such as smartphones, social media and email. Not only does this enable people to conveniently capture digital footage of ethical misconduct, it can spread like wildfire.
You could also make the argument that people are more skeptical than ever of big business. After the Great Recession, there’s an underlying wariness for many consumers. If someone spots any wrongdoing, you can almost bet that it’s going to be brought out in the open. Combine this with 24/7 media coverage, and a CEO’s reputation can go from spotless to tainted within a matter of hours.
Given the current business climate we’re in as it relates to ethics, company leaders need to be more conscious than ever of their decision-making. When you get right down to it, it’s up to your HR team to create a set of rules and procedures to ensure that leaders don’t find themselves in a compromising situation.
There should be clear policies that dictate what’s considered proper behavior and to specify any actions that won’t be tolerated. You’ll also want to have an effective way to handle complaints and investigate any questionable behaviors that may arise.
Business ethics have always been important. When analyzing recent research and the increased number of ethics-related firings, it’s obvious that this is an area that should receive top priority in 2017. Addressing this issue and implementing effective policies is your best bet for keeping your company’s reputation clean and avoiding unwanted attention.