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Business ethics is a broad topic and can be difficult to understand. It’s important to have a basic understanding so that you know how to navigate the often- treacherous business world. This article will help you get started with understanding business ethics and the eight stages of ethical behavior. Businesses operate in a competitive environment where other companies are trying to land the same deals as yours, too. It’s important that businesses operate at their peak performance every day by staying committed to their brand values, as well as having solid internal processes in place. It’s also essential that businesses grow through each stage of ethical behavior so they avoid going off track and become an unethical organization. Here is an overview of what the different stages mean, along with some examples of organizations that successfully navigated through each one.
What is Business Ethics?
Ethics are the principles governing right and wrong behavior.
A business’s ethical code is what sets the foundation for how it operates and how it interacts with consumers and employees. Ethics-based decisions can impact the bottom line by increasing profits or decreasing costs, or both.
Ethical decisions are not just about the law. They are about the right thing to do and how to do it. This can be difficult to navigate, because it requires a deeper level of analysis than for the simple decision of whether to break a law or not.
What are the Stages of Ethical Behavior in a Company?
An organization starts out with a strong commitment to ethical behavior and grows to an era where it is making ethical decisions regularly, but not becoming unethical or breaking the law. In this stage, companies are still acting ethically, but not making the most of their resources.
When an organization is about to shift to the decline stage, it starts behaving in an unethical manner and theoretically could potentially become an unethical organization.
Companies that successfully traverse the stages of ethical behavior follow a similar pattern of growth and decline, but they are not necessarily in the same order as they were in their earlier stages.
The 8 Stages of Ethical Behavior
These eight stages of ethical behavior are based on the work of John Elkington, who was an expert on the topic of sustainable business. The stages are as follows:
- Stage 1: Consciousness - This is the initial stage of ethical behavior when companies recognize the importance of ethics in their decision-making. Companies in this stage believe in ethics and are committed to ethical behavior.
- Stage 2: Awareness - Companies in this stage are aware of the importance of ethics and are making an effort to incorporate ethics into their decision-making.
- Stage 3: Application - Companies in this stage are applying their knowledge of ethics. They are learning how to make sound decisions and are being honest with customers, employees, and other businesses.
- Stage 4: Integration - Companies in this stage are integrating ethics into their business processes by creating policies and procedures. They are also building an ethical culture that everyone in the company understands.
- Stage 5: Expansion - Companies in this stage are expanding their business through new markets and products. They are also becoming more sophisticated by collecting information about customers, investing, and using technology.
- Stage 6: Caution - Companies in this stage are cautious about making decisions by gathering information from all angles. They are also using the lessons learned from the past to prevent unethical behavior in the future.
- Stage 7: Crisis - When companies move into the crisis stage, they are at a crossroads.
They may be transitioning from one stage to another, or they may be in the decline stage. There are a number of possible triggers that could lead a company into the crisis stage.
- Stage 8: Restoration - This is the final stage of ethical behavior in which organizations acknowledge their faults, learn from them, and emerge stronger than before.
Which companies successfully navigate through each stage?
There are countless businesses that have successfully navigated through each stage of ethical behavior, but here are seven that represent each one.
- Stage 1: Consciousness: Apple
- Stage 2: Awareness: Google
- Stage 3: Application: Amazon
- Stage 4: Integration: Wal-Mart
- Stage 5: Expansion: Starbucks
- Stage 6: Caution: Apple
- Stage 7: Crisis: Facebook
- Stage 8: Restoration: Disney
How to know if your company is on track for growth or decline
There are some key indicators that you can use to see if your company is in good ethical shape.
One is if you are committed to ethical behavior, which can be measured through a company’s Code of Ethics.
Another is if your company’s culture is ethical, which can be measured through employee surveys, employee satisfaction, and communication between management and employees.
You can also keep an eye out for signs of a decline, such as a persistently high turnover rate, a lack of growth from investments, or a decline in profitability.
The good news is that most ethical issues can be fixed. If you notice a decline in the first few stages of ethical behavior, take action to turn things around. If you see signs of a crisis, it’s time to get help and fix the problem.
Conclusion
Business ethics is a tricky topic that can be difficult to navigate. There are key indicators you can use to see if your company is making ethical decisions, as well as signs of a decline that you can look out for to identify when things have gone off track.
When issues do arise, it’s best to get them sorted out quickly so you can move on to the next stage of ethical behavior.
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