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Relationship Between Business Ethics and Accountability

By Darren Finkelstein
By Darren Finkelstein

The Accountability Guy®

Home » Business Ethics » Relationship Between Business Ethics and Accountability
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Just like people have moral and ethical considerations, corporations must also operate within an ethical framework. After all, it guides a company’s decision-making and directly impacts its public perception. Closely related to ethics is the concept of accountability, which applies to a corporation and its employees. Creating an ethical workplace culture based on accountability requires dedication and robust decision-making.

Business ethics and accountability significantly interplay in the modern work environment, impacting everything from employee satisfaction to company revenues. What is this relationship, why is it so important, and how can you leverage it to create better outcomes for your organization?

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Table of Contents

The Pivotal Relationship Between Business Ethics and Accountability

Business ethics and accountability share a special relationship: one can say they are part of the same coin, informing and reinforcing each other at each turn. Let’s understand ethics and accountability in-depth and their interplay in the corporate context.

Ethical Behaviour in the Corporate Context

Corporate culture is the set of beliefs and values that shape a company’s culture and guide the decisions of its employees. Ethical behavior is at the core of corporate culture and shapes how a corporation interacts with its employees and the outside world. It is a defining factor in a company’s reputation and how the world sees it.

When an organization operates within ethical bounds, it attracts top industry talent and earns a positive reputation among customers. It also leads to more robust and reliable partnerships with investors, stakeholders, and suppliers.

Here, it is pertinent to mention the example of Patagonia, a clothing brand committed to environmental sustainability. The company generates annual sales of over $1 billion. by staying true to its ethical conviction. However, Patagonia isn’t the only brand that has gotten big while following its ethical principles.

The Body Shop is another prominent example, reaching its peak revenues of $1.1 billion in 2023. These companies have attracted a loyal customer base and like-minded employees by staying true to their ethical frameworks of environmental sustainability and cruelty-free practices.

Accountability in the Corporate Context

Corporations and their employees are also held accountable for their decisions and actions. These checks and balances ensure that employees and corporations stay transparent and fair in their actions, promoting integrity within an organization. One can say that accountability enforces ethical principles because it pushes organizations and their employees to do the right thing. There are countless examples of corporate accountability that tell us how a lack of ethical outlook or practices leads to disastrous outcomes for companies.

One of the most famous examples is Enron, once a giant in the energy, commodity, and services industries in Houston, Texas. It has 20,000 employees, and its shares trading at $90.75 at its peak. However, a lack of ethical conduct and accountability led to one of the most spectacular collapses in corporate history in 2001. Enron’s executive team was involved in shady accounting practices and showed inflated profits, leading to substantial losses for employees and shareholders.

Business Ethics & Accountability are Inherently Intertwined

Business ethics and accountability are intertwined in multiple ways, guiding a company and its employees towards positive outcomes while avoiding potential pitfalls. An excellent example is environmental sustainability under corporate social responsibility and the carbon tax. While ecological sustainability has more ethical and moral undertones, the carbon tax lies precisely in the sphere of accountability.

Corporate social responsibility is a self-enforcing mechanism by companies that makes a company accountable to itself and the public. By indulging in CSR programs, a company can benefit itself in the long run and improve its societal standing. The bigger a corporation, the greater its responsibility to adopt CSR programs and show that it cares about society. There are various kinds of CSR, including:

  • Environmental responsibility 
  • Ethical responsibility 
  • Philanthropic responsibility 
  • Financial responsibility

The carbon tax is an excellent example of holding corporations accountable for their greenhouse gas emissions. By putting a price on carbon emissions and increasing it with the increase in emissions, companies are incentivized to cut down on pollution. Moreover, it pushes them to adopt greener and cleaner technologies for their operations.

Similarly, there are multiple ways in which employees are expected to uphold ethical standards for which they’re held accountable. Some examples include:

  • Meeting deadlines and performance targets.
  • Keeping confidential company data secure and not sharing it with third parties. 
  • Maintaining a professional work environment.

The Strength of the Relationship Between Business Ethics and Accountability

How strong a company synthesizes business ethics and accountability defined its stature in the long run:

  • Without a solid ethical foundation, excessive accountability measures seem stifling. It prevents employees from taking any action at all because they have a fear of being penalized for it.
  • An ethical code without robust accountability measures is just wishful thinking. Employees in such an environment cannot pinpoint what’s ethical and what’s not, promoting a culture where unethical practices go unchecked, harming the company.  

Takeaway

The ideal scenario for any corporation is to balance well-defined business ethics and accountability principles. It encourages employees to do the right thing, knowing they’ll be held accountable for doing anything wrong.

Quality mentorship plays a defining role when it comes to accountability and upholding ethical standards. If you need assistance with this you can take a look at my accountability coaching packages or take an accountability assessment today.

So, why wait until you can start smashing your goals right away? Contact me today!