The importance of business ethics

One of the classic tests for business ethics is to ask yourself, “Would I be embarrassed if my actions were reported on the front page of the newspaper?” Unfortunately, in today’s hyper-connected world, the real test is digital.  

However, in the same way that technology has disrupted the newspaper industry, business ethics is experiencing greater challenges in the digital world. A more appropriate ethics test these days would be to ask yourself, “Would I be embarrassed if my actions were the first result in any internet search related to me, my business or my colleagues?”  

The advantage of network effects is that your search results would appear in even more search results – and live forever on the internet. So, it’s fair to say that robust and transparent business ethics are more important than ever.  

Today, leaders and analysts can’t rely on gut feeling alone. Modern business ethics also means using advanced analytics and real-time data to monitor risks, detect wrongdoing, and measure the impact of ethical decision-making in real time.  

Let’s look at the key business areas that highlight the importance of what ethics are in business. 

Ethics in leadership

We are experiencing an increased focus on ethics in leadership, which escalates with every industrial disaster, data breach, and whistle-blower leak.  

The final report of the Digital Platform Services Inquiry by the Australian Competition and Consumer Commission (ACCC) shines a spotlight on how powerful tech platforms shape our information and society – and why business leaders must act ethically in the age of big data and Ai. 

When releasing the report, the ACCC highlighted that the business models of global giants like Google and Facebook create huge economic value but often shirk responsibility for what happens on their platforms. Cases like this prove that regulators, investors, and the public demand higher ethical standards, especially in how organisations use data and Ai.  

While the focus on ethics by regulators and the media has increased in recent years, it’s always existed in organisations – although it’s usually been unspoken and unrecognised.  

It’s the focus of employees who look at the examples set by managers, whether consciously or unconsciously. If managers cheat, lie, steal, take advantage of situations or mistreat people, they give implicit approval for their employees to do the same. But when leaders set high ethical standards and back them with data-driven transparency, they lift everyone’s behaviour.  

One company that has significantly benefited from ethical leadership is Microsoft. In the 1990s, the company almost monopolised personal computers and was the subject of antitrust proceedings. Today, while Google, Facebook, Amazon and Apple face accusations of abusing power, Microsoft is avoiding the Big Tech backlash.  

Since 2014, President Brad Smith and CEO Satya Nadella have rebuilt trust by engaging with governments on privacy, responsible Ai, and ethical innovation. This shift is a powerful reminder that Ai governance is now a board-level responsibility and professionals with expertise in business analytics and AI strategy are uniquely positioned to help companies lead ethically, responsibly, and transparently.  

Employee ethics

Employees are not a blank canvas on which organisations and leaders can print their ethics. They are human beings with ethical beliefs influenced by their background, community, and education. While these ethical beliefs are not set in stone, they can take time and effort to align with the organisation’s ethics. They can also be negatively influenced by an environment that lacks business ethics.  

Discrimination, bias, and unsafe workplaces damage trust – McKinsey reveals that nearly 40 per cent of employees cite toxic culture as the top reason they don’t feel safe at work. Personal aspects on which this discrimination is based include age, race, political views, and sexual orientation.  

While these aspects of what are ethical responsibilities in business were once confined to the businesses concerned or a de-identified research statistic, they are now more likely to attract attention online.  

Reddit, a popular platform for community discussions, once fired up with an airing of grievances highlighting how employers and employees don’t always see eye-to-eye on the same ethical questions. Reading the comment threads on Reddit may be a cautionary tale for managers, but it’s also a heads-up for organisations on the importance of business ethics and getting it right from the start.  

Modern HR and business leaders increasingly turn to people's analytics to track workplace sentiment, monitor risk factors like misconduct or bias, and proactively shape a culture of trust and accountability.  

Corporate social responsibility

Business and corporate social responsibility is a measure of an organisation’s efforts and actions to exceed the minimum standards of compliance or implied social contracts. It’s one of the more challenging aspects of ethics because the onus appears to be on business, rather than an individual.  

But the tide has been turning in recent years, and individuals are more likely to be held accountable for the corporate social responsibility of their organisation.   

In 2017, Uber was a startup unicorn that had disrupted transport systems globally and inspired the verb ‘Uber’ – every startup hoped to be the ‘Uber’ of their industry. As the year progressed, it emerged that Uber’s workplace culture tolerated sexual harassment and discrimination. 

It was also revealed that the company had been less than forthcoming in dealings with law enforcement and trading partners. Uber founder and CEO, Travis Kalanick, was held personally responsible for setting the culture of the organisation with his aggressive approach to business. Uber’s investors stepped up and demanded Kalanick’s resignation.  

Business and corporate social responsibility has traditionally been seen to sit uncomfortably with boards who consider their primary obligation to make as much money for shareholders as possible. However, a survey of shareholders in 2019 revealed that they will accept lower dividends if companies are more honest, transparent, and socially responsible.  

This is why demand is rising for professionals who can integrate ethics into core business analytics and governance frameworks – using data to measure, report and improve ESG (environmental, social and governance) performance across global operations.  

Benefits of ethics

Would it surprise you to learn that the only Australian honouree on the World’s Most Ethical Companies list is a bank? Teachers Mutual Bank Limited is a 50-year-old institution that reflects on its past six years with pride – unlike the Big 4 featured in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Since 2014, Teachers Mutual Bank Limited has been named one of the World’s Most Ethical Companies for ten years in a row.  

The bank’s website points out that they participate in rigorous ethical testing every year, answering 190 questions across five categories:  

- Ethics and compliance program  

- Corporate citizenship and responsibility  

- Culture of ethics  

- Governance; and  

- Leadership, innovation, and reputation.  

The secret to mastering what ethics are in business, like Teachers Mutual Bank Limited, lies in education. The rapid advance in technology is having an enormous impact on the business world. While the principles of ethics haven’t changed, the nature and complexity of ethical challenges have, and it takes a deep understanding of business ethics to apply them effectively. 

Today’s leaders need more than theory – they need practical skills in data-driven decision making, Ai strategy and people analytics to build trust and transparency from the inside out. RMIT Online’s Master of Business Analytics and Ai Strategy, and Graduate Certificate in Business Analytics or Graduate Certificate in Data Science are designed to help future leaders navigate complex ethical challenges in a connected, high-tech business world.  

RMIT Online’s Master of Business Analytics and AI Strategy and Graduate Certificate in Business Analytics or Graduate Certificate in Data Science are designed for exactly that – giving professionals the tools to lead with integrity in a high-tech, connected business world.  

To learn more about how you can build your ethical leadership credentials while mastering the latest technology, speak with one of our Student Enrolment Advisors today on 1300 701 171.