WHY STUDY BUSINESS ETHICS?
A Crisis in Business Ethics As we’ve already mentioned, ethical misconduct has become a major concern in business today. The Ethics Resource Center conducted the National Business Ethics Survey (NBES) of about 3,000 U.S. employees to gather reliable data on key ethics and compliance outcomes and to help identify and better understand the ethics issues that are important to employees. The NBES found that observed misconduct is higher in large organizations—those with more than 500 employees—than in smaller ones and that there are also differences in observed misconduct across employee levels. Reporting of misconduct is most likely to come from upper-level management, as compared to lower-level supervisors and nonmanagement employees. Employees in lower-level positions have more of a tendency to not understand misconduct or be complacent about what misconduct they observe. Figure 1–1 shows the percentage of respondents who say that they trust a variety of business categories. Notice that the levels of consumer trust in most industries is declining. Among senior managers, 77 percent of employees report observed misconduct, while among nonmanagement, only 48 percent of employees report observed misconduct.8
Specific Issues Abusive behavior, harassment, accounting fraud, conflicts of interest, defective products, bribery, and employee theft are all problems cited as evidence of declining ethical standards. For example, Satyam Computer Services, an outsourcing firm in India, worked with more than one-third of the Fortune 500 companies. The chairman of the company disclosed that $1.04 billion in cash and assets did not exist and that earnings and assets were inflated for years. The scandal was compared to Enron.9 A survey by Harris Interactive shows that corporate reputation is at its lowest point in the past decade of their annual “Reputation Quotient” polls. Eighty-eight percent rated the reputation of corporate America today as “not good” or “terrible.”