Business is a complicated game with numerous players and a variety of possible scenarios. However, it should be pointed that rules should exist in any game. Otherwise, this game will end with fiasco. Business ethics as a set of rules and norms regulates the fundamentals of doing business. This paper investigates the theoretical backgrounds of this issue and its practical realization on the example of Southwest Airlines. It is crucial to understand that respect for the interests of a business entity, its customers, employees, suppliers, and community as a whole is a fundamental principle of business ethics. It is guided by the perception that business is not just a blind and reckless of consequences method of money earning, but also the responsibility before above-mentioned categories.
Ferrell, Fraedrich and Ferrell underlined that business ethics rules and regulations were the basis of decision-making process. The authors argued, “it is not just an isolated personal issue; policies and informal communications for responsible conduct are embedded in an organization’s operations” (Ferrell, Fraedrich and Ferrell 5). Disclosure of the nonpublic information about the company to the third parties, using the power of occupied position for the personal benefit, bribery and fraud, using company’s tangible and intangible sources in non-target needs, conflict of interests is evidence of unethical behavior given by the authors. It is highlighted that a false advertising, illegal contracting, violation of property rights, cybercrime and intellectual property theft, commercial espionage complemented the above-mentioned issues recently (Ferrell, Fraedrich and Ferrell 11).
DeGeorge states that business ethics covers the regulation in the field of respect for the rule of law, business confidence and ensuring equal opportunity in competition, multilateral trade, prohibition of illegal activities such as money laundering and bribery (18). The author underlines that the company is responsible before the following categories that are the participants of its operating activity:
- customers (fairness in advertising and high quality goods and services);
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- employees (decent working conditions, ensuring of equal rights);
- stakeholders (accurate recordkeeping with the aim to guarantee the correctness of their incomes recording, access to trustful information)
- suppliers (fair relationships based on respect from price setting, information sharing to licensing, unnecessary litigation);
- competitors (respect for property rights, mutual respect, supporting operations on the open markets, refusal from illegal means of decision making like any payment to the government officials);
- community (no infringement of the human rights) (32).
Bazerman and Tenbrunsel (n.p.) provided an example of unethical procedures in business caused by the establishing of the ill-conceived goals set by the top management, for instance, “pressure to maximize billable hours in accounting, consulting and law firms leads to unconscious padding”. It is a challenging task for the company to communicate clear values to its leaders and employees at all corporate levels through the development of the strict Code of ethics with the aim to establish ethical culture.
Crane and Matten argued that the differences in developing of business ethics principles existed between Europe, Asia and USA. The authors underlined that in the United States the corporations are the most influential players in the field of business ethics. Code of conduct or Code of ethics is the set of rules and principles that regulates this area. The authors underlined that in the United States immorality and misconduct were the core of business ethics, while social concerns in business conducting were in the focus of business regulation in Europe. In Asia, the emphasis was made on the corporate governance and accountability (32). It should be pointed that a social responsibility and business ethics are closely combined. It includes requirements for conducting business in terms of sustainability, environmental issues, consumers’ safety providing by the quality of products.
It is crucial to understand that business ethics is not a grandiloquent word, it is a real practice. Southwest Airlines’ ethics code of business ethics is one of the brightest examples of the effective implementation of the business ethics and rules into the Company’s daily operations. Southwest Airlines is a leading airlines company operating in the United States. This Company is famous for the unique corporate culture, ability to provide relatively low fares and specialization in short-haul point-to-point flights. Southwest’s highly committed and engaged employees provide great customer service supported by trust, respect and positive attitude. Southwest Airlines also proves to have perfect reputation for high standards of doing business within initial structure and with external partners. According to the Southwest Airlines One Report (n.p.) the Company states “being a good corporate citizen means operating with the highest standards of ethics and integrity”. Respectful corporate governance is an obligatory foundation for establishing long-term relationships with Shareholders, Customers and Employees. At Southwest Airlines the main standards and requirements are communicated through clear code of ethics, blackout and pre-clearance procedures, insider trading policy and compliance with the Foreign Corrupt Practices Act. Southwest’s code of ethics establishes requirements that each employee, Board members, and Company’s business associates should follow. These norms required compliance with the law valid on the territory where the company conducts its operations, both in letter and in spirit. It addresses such crucial issues such as confidentiality, competition rules, insider trading, fair dealing, conflicts of interest, recordkeeping, payments to government personnel, and Company’s property safeguarding.
As it is stated in the Southwest Airlines One Report (n.p.) there is a prohibition in the insider trading policy for Company’s Board members, employees and related persons to sell or purchase Southwest Airlines securities in case the person possesses nonpublic information about Southwest Airlines. The same restriction extends to operations with the securities of other companies-partners in case nonpublic information about these business entities became known to the representatives of Southwest Airlines. Moreover, it is prohibited to disclose any nonpublic information about the Company or Company’s business partners to the third parties.
Priority of privacy and interests of Southwest’s Clients and Employees and the protection of these rights are the core responsibilities of all persons representing the Company. It is considered unethical to disclose, solicit or use for a personal benefit any information about Company’s financial and operational records, databases in particular Passenger Name Records or
Rapid Rewards Member information, card transactions, personal information revealed in the correspondence between the customer and employee.
Regarding the fair business conducting in the competition realm, the Company states in its Code of ethics that the victory in the financial records or increase in the market share issues are got through efficient costs regulation, excellent customer service, but such indicators are never reached through illegal or unethical business decisions. The Company does not use anti- advertising compromising any competitor. On the contrary advertising campaigns of Southwest are direct, simple and completely compliant with the law. Compliance with the antitrust laws and other legislative acts regulating competition is obligatory. It is strictly prohibited to sign any agreements with the suppliers or competitors that undermine the existence of fair competition. Illegal payments to the government representatives are considered unethical. Any offer, promise or delivery of any material gift or immaterial favor for federal, state or local authorities is impermissible and can be judged as a criminal offense.
It is highlighted that employees and Board of directors should not use Company property, information, or other data relating to the taken position for the personal benefit. It means that personal interests have not to be out ahead of the Company’s interests. Legislative interests of the Southwest and their protection from abuse are the duty of Southwest’s employees, members of Boards of directors, and business partners. Being a member of a Southwest team and conducting business with the Company is possible only through following the rules of integrity, honesty, and personal responsibility. Violation of Code of Ethics is a subject to discipline, including the threat of the employment termination.
Moreover, all Company’s transactions should be recorded correctly and fully to display the real financial state of Southwest. It means that Southwest’s accounting, financial, and other reports must be prepared fairly and accurately. All reasonable details should be disclosed in accordance with the existing accounting principles and regulations, conterminous with the internal control procedures. Information disclosed in the Southwest’s reports must be accurate and honest.
Southwest Airlines requires all Employees, members of Boards of Directors and its business partners to follow the established rules of business ethics strictly. Each employee annually certifies understanding and receipt of insider trading policies and norms of code of ethics. To control the compliance with established rules, Southwest Airlines “employs robust auditing procedures to analyze and monitor business activities, which further enhance our ability to maintain high ethical standards” (Southwest Airlines One Report, n.p.). Transparency and accountability are the milestones of Southwest’s way of conducting business.
Unfortunately, such an example of Southwest follows not all market players. However, they should remember that the desire to make a profit by means of bribery, financial fraud, speculation with the initial company’s information, false advertising and property rights violation undermine the justice, trustworthiness, and respect to the interests and legal rights of others. It is a challenging task for the business leaders to grasp that in the future such an unethical behavior will cause the total corruption and destruction of the market-based mechanisms and confidence in business relationships.