Although ethics in business has been an issue for centuries, today there are numerous examples of corporations and individuals who have run into legal and financial trouble due to their questionable ethics. Martha Stewart is an example of an individual whose ethics have been called into question. The accusation that she lied when asked if she participated in insider trading, a violation of Securities and Exchange Commission (SEC) regulations, brought her to court and made her the center of a negatively charged media frenzy. While she is accused of committing the violation with her personal investments, the question of character has already cast a shadow on her business. She stepped down from her role as CEO of her company, Martha Stewart Living Omnimedia, Inc., and Kmart, which carried her brand-name products, is bringing a lawsuit against her. This is a clear situation where ethical standards, whether it is the individual representing the company or the company itself, are tied to the company’s bottom line.
ENRON
An example of a company that committed serious ethical violations was Enron, the energy trading company. In 15 years Enron grew to be one of the largest companies in the United States, with more than 20,000 employees in over 40 countries. But by December of 2001 it became clear that Enron was involved in a huge accounting scandal, the ramifications of which were the largest Chapter 11 bankruptcy filings in U.S. history and subsequent government hearings were conducted to evaluate just how severe the wrongdoing was.
As a result of Enron’s deceptive accounting practices, thousands of Enron employees lost their retirement savings, while several Enron executives received multimillion-dollar bonuses.
WORLDCOM
The largest financial fraud in U.S. history began to unravel WorldCom in 2002. WorldCom had overstated its income by more than $9 billion by means of its misleading accounting practices, and the CEO at the time was granted $400 million in loans with the approval of the company’s board of directors. By July 2002, WorldCom was forced into bankruptcy and laid off thousands of workers.
WorldCom changed its name to MCI and hired a chief ethics officer in 2003. The company now requires that all 55,000 remaining employees take an online ethics course, and more than 2,000 MCI employees have participated in a full-day ethics training seminar. MCI is being closely watched by the government and by competitors for any future ethical errors, and the company is not willing to take any chances.
ETHICS—A DEFINITION
Ethics are the moral standards used to judge right from wrong. In the business setting, ethics are the standards of moral values and conduct that govern decisions made and actions carried out in the work environment.
Unethical decisions are often made for the benefit of the decision maker as opposed to the organization’s stakeholders. Some examples of unethical behavior in business practice are:
. Saying things that you know not to be true.
. Taking something that doesn’t belong to you.
. Buying influence.
. Hiding or divulging information.
CORPORATE GOVERNANCE
Often thought of as the system by which organizations are directed and controlled, corporate governance has come to take on more of an ethical slant over the past decade. According to World Bank president James Wolfenson, “Corporate governance is about promoting corporate fairness, transparency, and accountability.”
ENRON
An example of a company that committed serious ethical violations was Enron, the energy trading company. In 15 years Enron grew to be one of the largest companies in the United States, with more than 20,000 employees in over 40 countries. But by December of 2001 it became clear that Enron was involved in a huge accounting scandal, the ramifications of which were the largest Chapter 11 bankruptcy filings in U.S. history and subsequent government hearings were conducted to evaluate just how severe the wrongdoing was.
As a result of Enron’s deceptive accounting practices, thousands of Enron employees lost their retirement savings, while several Enron executives received multimillion-dollar bonuses.
WORLDCOM
The largest financial fraud in U.S. history began to unravel WorldCom in 2002. WorldCom had overstated its income by more than $9 billion by means of its misleading accounting practices, and the CEO at the time was granted $400 million in loans with the approval of the company’s board of directors. By July 2002, WorldCom was forced into bankruptcy and laid off thousands of workers.
WorldCom changed its name to MCI and hired a chief ethics officer in 2003. The company now requires that all 55,000 remaining employees take an online ethics course, and more than 2,000 MCI employees have participated in a full-day ethics training seminar. MCI is being closely watched by the government and by competitors for any future ethical errors, and the company is not willing to take any chances.
ETHICS—A DEFINITION
Ethics are the moral standards used to judge right from wrong. In the business setting, ethics are the standards of moral values and conduct that govern decisions made and actions carried out in the work environment.
Unethical decisions are often made for the benefit of the decision maker as opposed to the organization’s stakeholders. Some examples of unethical behavior in business practice are:
. Saying things that you know not to be true.
. Taking something that doesn’t belong to you.
. Buying influence.
. Hiding or divulging information.
CORPORATE GOVERNANCE
Often thought of as the system by which organizations are directed and controlled, corporate governance has come to take on more of an ethical slant over the past decade. According to World Bank president James Wolfenson, “Corporate governance is about promoting corporate fairness, transparency, and accountability.”
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