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Core Ethical Values Should Guide Decision-Making

A company philosophy is “The way we do things around here.” In a conventional sense, company philosophy stands for the basic beliefs that people in the business are expected to hold and be guided by – informal unwritten guidelines on how people should perform and conduct themselves. Once such a philosophy takes hold, if one person tells another “That’s not the way we do things here,” the advice had better be heeded.

From an ethical perspective, a company philosophy begins with a set of core values. For example, IBM’s Leadership Principles state: “Our basic belief is respect for the individuals, for his rights and dignity.” An example of a more product-oriented philosophy is Oracle’s statement that: “Oracle’s employees make excellence and quality a part of day-to-day work processes and seek continuous improvement in all that they do.” The common element is a commitment to individuals that should guide the company in better serving their customers.

McKinsey & Company identify certain beliefs that serve as guidelines to action:

1. Maintenance of high ethical standards in external and internal relationships is essential to maximum success.
2. Decisions should be based on facts, objectively considered, or the thought-through approach to decision making.
3. The business should be kept in adjustment with the forces at work in its environment.
4. People should be judged based on their performance, not on personality, education, or personal traits and skills.
5. The business should be administered with a sense of competitive urgency.

So, what are the “high ethical standards” referred to? Here are my thoughts:

• Employees should understand that there is a right and wrong way to do things in the company; ethical behavior requires a commitment to the “right way” in all decision-making;
• A business built on high ethical standards attracts a higher caliber of employee, thereby gaining a basic competitive and profit edge;
• A business of high principle develops better relationships with the stakeholders: employees, customers, suppliers, and the public.
• Corporate management embraces the standards, relies on them for decision-making, and is committed to meet its corporate social responsibilities.
• A business of high principles establishes a code of conduct and other prescriptive guidelines that strengthen corporate culture: anonymous reporting when an employee believes something is not being done “The way things are done around here.”
• Top management commits to set an ethical tone at the top and serve as ethical leaders for employees who come to believe that management “walks the talk” of ethics.

What can a business expect to gain by committing to high ethical standards? Basically, it is that better decisions are made: Facts are identified and evaluated with respect to ethical principles thereby stimulating a thoughtful process that weighs the costs and benefits of alternative actions; respects the rights of stakeholders; and commits to acting in accordance with the company’s philosophy.

How does Company Philosophy differ from other guidelines? It’s not a mission statement that should succinctly summarize what you do or what are your aims. For example, Google’s stated mission is “to organize the world’s information and make it universally accessible and useful.” A philosophy should flesh out the mission statement. Google’s philosophy includes such principles as “fast is better than slow,” “democracy on the Web works,” and “you can be serious without a suit.” Certainly, Google’s mission statement is unique, but it is one that characterizes the basic beliefs of Google.

A Company Philosophy is not the same as a code of ethics. A code of ethics or code of conduct goes beyond the basic philosophy that guides decision-making and incorporates specific activities and relationships, and the behaviors expected of employees and management in these situations.

Steve Jobs is quoted as saying: “Great things in business are never done by one person. They’re done by a team of people.” This sums up the true meaning of a company philosophy. It provides a roadmap to get from point “A” to point “B” and to do so in a way that honors the core values of the company, is consistent with its mission, adheres to the provisions in the code of ethics, and all of which is internalized by top management.

If you or your organization is interested in creating a stronger ethical environment and/or other workplace issues, I now offer programs to do so through “Geniecast.” The website address is: https://www.geniecast.com/browse-all-genies/steven-mintz.

Blog posted by Steven Mintz, aka Ethics Sage, on December 8, 2016. Dr. Mintz is Professor Emeritus from Cal Poly San Luis Obispo. He also blogs at www.ethicssage.com.