Business Ethics in Australian Bank Industry

This essay explores the business ethics of the Australian Bank Industry, including its definition, types, significance, and proposed solutions for ethical issues.

Running head: BUSINESS ETHICS
BUSINESS ETHICS
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The respective paper is an essay which deals with business ethics of Australian Bank
Industry which has come across a number of scandals. The essay deals with the definition of
business ethics, different types of business ethics, their significance and importance, the reasons
due to which business enterprises face ethical issues and proposed solutions for such cases.
Business ethics is a framework of professional or occupational ethics, which keeps a
restriction and check on the moral and ethical problems (or dilemmas) that can arise in a business
environment (Crane and Matten 2016). Business ethics is a way by which an organization or an
entrepreneur examines typical as well as indirect ethical issues that can arise in an enterprise.
Business ethics is applied to all the employees, professionals, stakeholders, shareholders and
owners of a business and all other aspects of a business and entrepreneurship conducts. The
business ethics generally and customarily revolve around the organizational statements (which
include mission and vision), individuals (according to their job position, designation, duties,
responsibilities and accountability) and statutory or legal system on which the business is
standing. The ethics of a business plays a significant role in the functioning and development of
the respective business. It is the framework of ethics that determines the code of conduct of the
individuals and communities working under the organization and is directly as well as indirectly
responsible and accountable to the prestige and reputation of the business in the market.
Business ethics can be viewed as a set of or a structure of present-day organizational standards,
set of values, code of conduct, principles and norms that examines and keeps surveillance over
the behavior, manners and actions of an individual inside as well as outside the organization.
Business ethics can be broadly classified into two spheres, namely, Normative and Descriptive
business ethics (Audi 2012). The Normative ethics in business is widely based on the actions of
an individual in an organization and the judgment of the action in terms of its righteousness or

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sinfulness. To simplify, it can be said that Normative ethics in business judges the actions of an
individual based on whether the action was morally correct or not. Descriptive ethics in business
which is also called comparative ethics is largely based on the empirical (pragmatic) researches
carried out on the individuals or a community. However, it has to be remembered that business
ethics are significantly responsible for maintaining discipline, law and order in the organization.
An organization, no matter how significant or trivial it may be, is expected to act and
behave in an ethical manner. To survive and thrive in the competitive world, an organization
needs to build itself up into an efficient business. In order to build an efficient business, ethics is
important for an organization because ethics are responsible to keep a track on the law and order
of an organization which is directly and indirectly linked with the prestige, reputation and
welfare of an organization. Values and principles not only increase the credibility of an
organization but also help in the process of a better decision making. Ethical behavior and
corporate social responsibility can bring out low labor turnover which would increase the
productivity of the business (Nunziato and Hill 2019). A set of ideal business ethics and
principles can attract investors and shareholders from outside which in turn, would help the
organization to get developed and improve its performance( Demirtas and Akdogan 2015).
The most common and customary reasons for unethical business behavior are excessive
pressure on the employees by the organization, which often leads to erratic code of conduct of
the employees. Excessive work pressure and critical performance evaluation might lead the
employees into anxiety, thereby, resulting in unethical behavior. Often, certain employees make
fallacious choices because they are sometimes, dubious about their opinions or decisions in the
organization. Other basic malice of human character such as self-interest, personal profit, greed
and lust for position might sometimes lead to treachery on behalf of the employees or individuals

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working or associated with the organization. Therefore, such behavior can bring a breach of
business ethics and moral code of conduct of an organization (Lindblom 2018). However, the
root cause behind unethical behavior inside the organization is “psychological trap”.
Psychological traps can broadly be classified into “primary”, “personality” and “defensive”
traps. Primary traps are the external pressure and/or tension that force an individual to work
unethically inside the organization. In such cases, the individual is tempted to desert his/her
ethics for any kind of reward. Personal and self-centered interest is one of the reasons by which
such unethical behavior is fueled. Defensive traps generally occur after an individual has already
taken a bad decision, where he/she tries to minimize his/her guilt, shame or misconduct by
justifying his/her unethical behavior with vague concepts and perspectives such as
desensitization and alcoholism or substance abuse. Whereas, personality traps are largely
dependent on internal impetus in the form of various personality attributes that can turn people
into sensitive and vulnerable beings prone to any kind of unethical misconduct from his/her part.
For instance, “need for closure” which is a psychological need of an employee for a firm answer
to any kind of ambiguity can be a cause of unethical behavior among the individuals working or
associated with the organization (Lindblom, L., 2018).
If a business enterprise faces ethical issues among the employees or associates, the
management team of the enterprise should make an utmost attempt to confine the misconduct as
soon as possible. The misconducts should be revisited quickly to avoid any further problems that
can arise any time in the organization. The management teams are assumed to be taking full
responsibility to lay down crystal clear guidelines about the appropriate behavior an employee is
expected to exhibit. Obnoxious behavior such as discrimination among the employees on the
grounds of gender, race or nationality or any kind of harassment, if conducted by any employee,

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should not be tolerated and strict rules should be imposed to curb such behavior (Guerci et al.
2015). Creating reward system for good conduct and ethical behavior can be formulated by the
organization to boost the employees for behaving properly and maintaining the decorum. If the
business enterprise is massive, in that case, creation of a panel which would cater to the ethical
needs and issues can be built within an organization. The ethics panel would then exclusively
work for the ethical and moral issues happening inside the organization and take necessary steps
to cater to the needs of the organization. The most customary and important step an organization
can take is ensuring protection and privacy to the whistleblowers and the people who file
complaints within the organization. Often employees are scared of providing the officers with
complaint in the fear of retaliation or reprisal. To deal with such cases, the organization should
make the complainers assured that their security, dignity and integrity would be taken care of on
behalf of the organization. The business enterprise should make proper penalty measures for
unethical behavior with the help of policy makers and other stakeholders of the organization but
they should also use such penalties as their last resort (Hasnas, J., 2013). Instead of intimidating
the employees of penalties, they should make an attempt to encourage the employees to behave
properly, exhibit appropriate code of conduct, maintain the discipline and decorum of the
organization and follow the business ethics religiously (Demirtas and Akdogan 2015).
The respective essay is an evaluation of definition of business ethics, different types of business
ethics, utility of business ethics , what makes an organization face business ethics and how can it
be solved.

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References:
Audi, R., 2012. Virtue ethics as a resource in business. Business Ethics Quarterly, 22(2), pp.273-
291.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Demirtas, O. and Akdogan, A.A., 2015. The effect of ethical leadership behavior on ethical
climate, turnover intention, and affective commitment. Journal of Business Ethics, 130(1),
pp.59-67.
Guerci, M., Radaelli, G., Siletti, E., Cirella, S. and Shani, A.R., 2015. The impact of human
resource management practices and corporate sustainability on organizational ethical climates:
An employee perspective. Journal of Business Ethics, 126(2), pp.325-342.
Hasnas, J., 2013. Whither stakeholder theory? A guide for the perplexed revisited. Journal of
business ethics, 112(1), pp.47-57.
Lindblom, L., 2018. Consent, Contestability, and Unions. Business Ethics Quarterly, pp.1-23.
Nunziato, J.S. and Hill, R.P., 2019. Perfectionism and the Place of the Interior Life in Business:
Toward an Ethics of Personal Growth. Business Ethics Quarterly, pp.1-28.