Ethics
What are Values?
A value can be defined as “an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.”[1] In other words, a value represents a judgment by an individual that certain things are “good” or “bad,” “important” or “unimportant,” and so forth. As such, values serve a useful function in providing guidelines or standards for choosing one’s own behavior and for evaluating the behavior of others.
The values people have tend to be relatively stable over time. The reason for this lies in the manner in which values are acquired in the first place. That is, when we first learn a value (usually at a young age), we are generally taught that certain behaviors are always good or always bad. For instance, we may be taught that lying or stealing is always unacceptable. Few people are taught that such behavior is acceptable in some circumstances but not in others. Hence, this definitive quality of learned values tends to secure them firmly in our belief systems.
Two fundamental types of values have been identified: instrumental and terminal.[2] Instrumental values represent those values concerning the way we approach end-states. That is, do we believe in ambition, honesty, or obedience? What factors guide your everyday behavior? Terminal values, on the other hand, are those end-state goals that we prize. Included here are such things as a comfortable life, a sense of accomplishment, equality among all people, and so forth.
Standards of Behavior
One of the most significant ways values—both instrumental and terminal—impact organizations is in helping individuals determine appropriate standards of behavior, also referred to as ethical behavior. Employees at all levels of organizations have to make decisions concerning what to them is right or wrong, proper or improper. For example, how would you respond to theft on the part of a supervisor or coworker in the office? Would you conceal information about a hazardous product made by your company, or would you feel obliged to tell someone?
To some extent, ethical behavior is influenced by societal values. Societal norms tell us it is wrong to engage in certain behaviors. In addition, however, individuals must often determine for themselves what is proper and what is not. This is particularly true when people find themselves in situations where ethical standards are ambiguous or unclear. At other times, individuals may have a clear sense of how they should act, but face obstacles in acting on their values. The remainder of this chapter largely focuses on this second area—acting on one’s values.
What is Business Ethics?
Ethics consists of principles or standards of behavior to which we hold ourselves (Video 1). In our professional lives, ethics guides our interactions with customers, clients, colleagues, employees, and other stakeholders affected by our business practices.
Many people confuse ethics with legal compliance. These concepts, however, are not interchangeable. Legal compliance generally refers to the extent to which a company conducts its business operations in accordance with applicable regulations, statutes, and laws. Yet this represents only a baseline minimum. Ethical behavior builds on this baseline and reveals the principles of an individual employee or a specific organization.
As described by ethics researchers at the University of Virginia,
Ethics is more than an individual’s view of things; it is also tied to a larger communal context—an organization, an industry, a community, a nation, or the globe. Ethics is about how one should live as an individual as well as how to get along with others. Ethics assumes that people are accountable for their actions, both to themselves and others. Every day, managers make decisions that can affect customers, employees, financiers, partners, the community, and the world in powerful ways. Since managers are accountable to these groups, they should have good reasons for their actions that go beyond mere intuition and be able to explain why they make the choices they do.[4]
It is generally understood that the more ethical an organization is, the better it is positioned for long-term success. Thus, it is in the best interest of a company to hire and retain ethical employees and to foster a culture in which ethical behavior is modeled, reinforced, and valued.
Watch Video 1: Ethics. Closed captioning is available.
Behaving Ethically
Many ethical challenges arise in business because companies, especially large ones, have multiple stakeholders who sometimes make competing demands. Making decisions that affect multiple stakeholders isn’t easy even for seasoned managers; for new entrants to the business world, the task can be especially daunting.
Regardless of an individual’s experience or position, ethical violations in business often involve three factors: pressure, opportunity, and rationalization. (Video 2). Together, these three factors make up what is known as the fraud triangle, which has relevance to many other types of ethical violations beyond just fraud.
Video 2: How People Rationalize Fraud. This video describes more about the factors that contribute to ethical violations. Closed captioning is available. Click HERE to read a transcript.
Giving Voice to Values
You can prepare for the ethical dilemmas you will inevitably face in the business world by understanding the nature of values conflicts and by developing, in advance, strategies to navigate these dilemmas (Videos 3 and 4). To this end, the remaining portion of this chapter will introduce you to Giving Voice to Values (GVV), a powerful method to enable you to effectively act on your values in your professional life.
Video 3: The Client Who Fell Through the Cracks. This video presents an example of the type of values conflict you might encounter in the workplace. Closed captioning is available. Click HERE to read a transcript.
Before watching Video 4, take a moment to consider the following question:
Put yourself in Susan’s shoes and assume that there is a way that she can be effective, even if you’re not sure there is. What could she say and do at this point to change the outcome for the client and for the meeting?
Video 4: The Client Who Fell Through the Cracks: What Happened. Closed captioning is available. Click HERE to read a transcript.
Developed by Dr. Mary C. Gentile, GVV takes an action-oriented approach to values-driven leadership. Unlike most approaches to business ethics, GVV is not about persuading people to be more ethical. Rather, it starts from the premise that most people want to act on their values, but they also want their actions to be successful and effective.
Traditional approaches to business ethics seek to provide guidance for questions including the following:
- What is the right thing to do in my particular situation?
- Which model of ethical reasoning is the most appropriate to use in my situation?
- What evidence do I need to gather to support my ethical viewpoint?
In contrast, GVV seeks to answer the following question:
- Once I know what the right thing to do is, how do I get it done effectively?
The seven pillars of the Giving Voice to Values (GVV) approach to ethics capture the ways of thinking that make it easier for people to act effectively on their values (Video 5). Click the interactive image below to learn more about the seven pillars and the specific questions each seeks to answer:
Giving Voice to Values: The Seven Pillars
Video 5: Giving Voice to Values. This video describes the GVV seven pillars in greater detail. To view a larger version of this video, click HERE. Click HERE to read a transcript.
Optional Resources to Learn More
 |
Articles |
| UVA Darden Ideas to Action: Is Profit the Purpose of Business? by R. Edward Freeman | |
| Values Conflicts and How to Respond by Cindy Moehring | |
 |
Books |
| Giving Voice to Values by Mary Gentile | |
| The Power of And by R. Edward Freeman, Kirsten E. Martin, and Bidhan L. Parmar | |
 |
Podcasts |
| The Stakeholder Podcast Apple Spotify | |
 |
Videos |
| Business Ethics Pioneers: R. Edward Freeman | |
| Ethics Unwrapped (series) | |
 |
Websites |
| Ethics Unwrapped: Giving Voice to Values | |
| Ethics Unwrapped: Glossary | |
| Violations Tracker |
Chapter Attribution
This chapter incorporates materials from the following sources:
Chapter 2 of Black, J. S. & Bright, D. S. (2019). Organizational behavior. OpenStax. https://openstax.org/books/organizational-behavior/pages/2-6-personal-values-and-ethics. Licensed with CC BY 4.0.
Online Ethics Center. (n.d.). Giving voice to values (GVV) for engineering ethics. https://onlineethics.org/gvv-engineering-ethics. Licensed with CC BY 2.0.
Chapter 4 of Skripak, S. J. & Poff, R. (2023). Fundamentals of business (4th ed.). VT Publishing. https://pressbooks.lib.vt.edu/fundamentalsofbusiness4e/chapter/chapter-4-ethics-new/. Licensed with CC BY-NC-SA 4.0.
Media Attributions
Video 1: McCombs School of Business. (2018, December 18). Ethics [Video]. YouTube. https://youtu.be/4vWXpzlL7Mo
Video 2: TED-Ed. (2015, June 8). How people rationalize fraud [Video]. YouTube. https://youtu.be/Tb6QX9Yy1GM
Video 3: Online Ethics Center at UVA. (2022, April 14). The client who fell through the cracks [Video]. https://youtu.be/UcXF_KhGZ2c
Video 4: Online Ethics Center at UVA. (2022, April 14). The client who fell through the cracks – what happened? [Video]. YouTube. https://youtu.be/_qztHqUITRs
Video 5: CFA Institute. Giving voice to values [Video]. CFA Institute.https://www.cfainstitute.org/en/ethics-standards/ethics/giving-voice-to-values
- M. Rokeach, The Nature of Human Values (New York: Free Press, 1973), p. 5. ↵
- M. Rokeach, The Nature of Human Values (New York: Free Press, 1973). ↵
- Gostick, A. & Telford, D. (2003). The integrity advantage. Gibbs Smith. pp. 3-4 ↵
- Wicks, A. C., Parmar, B. L., Freeman, R. E., Harris, J. D., & Mead, J. (2009). An introduction to ethics: Framing and key themes in business ethics. Darden Business Publishing. ↵
An enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.
Values concerning the way we approach end-states.
End-state goals that we prize.
Principles or standards of behavior to which we hold ourselves.
The extent to which a company conducts its business operations in accordance with applicable regulations, statutes, and laws.
The three factors that increase the likelihood of an individual committing fraud, as well as other forms of ethical violations; these factors are pressure, opportunity, and rationalization.
The act of intentionally deceiving a person or organization or misrepresenting a relationship in order to secure some type of benefit, either financial or nonfinancial.
An approach to values-driven leadership development that helps you learn how to effectively act on your values and ethical principles in the context of your professional responsibilities.
