12 Ethical Principles for Business Executives by Michael Josephson

by Josephson Institute on December 17, 2010

Revised November, 2013

If recent history teaches us anything is that ethics and character count, especially in business. Huge organizations like Enron, Arthur Andersen and Health South have been destroyed and others were seriously damaged (AIG, Fannie Mae, Freddie Mac) by  executives with massive ambition and intelligence but no moral compass.  In today’s ultra competitive, high tech, interdependent business world, charisma without conscience and cleverness without character  are a recipe for economic and personal failure of epic proportions.  As President Theodore Roosevelt said, “To educate the mind without the morals is to educate a menace to society.”

Competitiveness, ambition and innovation will always be important to success but they must be regulated by core  ethical principles like the ones described below.

Let’s start with a basic definition: ethical principles are universal standards of right and wrong prescribing the kind of behavior an ethical company or person should and should not engage in. These principles  provide a guide to making decisions but they also establish the criteria by which your decisions will be judged by others.

In business, how people judge your character is critical to sustainable success because it is the basis of trust and credibility. Both of these essential assets can be destroyed by actions which are, or are perceived to be unethical. Thus, successful executives must be concerned with both their character and their reputation. 

Abraham Lincoln described character as the tree and reputation as the shadow. Your character is what you really are; your reputation is what people think of you. Thus, your reputation is purely a function of perceptions (i.e., do people think your intentions and actions are honorable and ethical) .while your character is determined and defined by your actions (i.e., whether your actions are honorable and ethical according to the 12 ethical principles:

1. HONESTY. Be honest in all communications and actionsEthical executives are, above all, worthy of trust and honesty is the cornerstone of trust.  They are not only truthful, they are candid and forthright. Ethical executives do not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means and when trust requires it they supply relevant information and correct misapprehensions of fact.

2. INTEGRITY. Maintain personal integrity. Ethical executives earn the trust of others through personal integrity. Integrity refers to a wholeness of character demonstrated by consistency between thoughts, words and actions. Maintaining integrity often requires moral courage, the inner strength to do the right thing  even when it may cost more than they want to pay. The live by ethical principles despite great pressure to do otherwise. Ethical executives are principled, honorable, upright and scrupulous. They fight for their beliefs and do not sacrifice principle for expediency.

3. PROMISE-KEEPING. Keep promises and fulfill commitmentsEthical executives can be trusted because they make every reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping their commitments.

4. LOYALTY. Be loyal within the framework of other ethical principlesEthical executives justify trust by being loyal to their organization and the people they work with. Ethical executives place a high value on protecting and advancing the lawful and legitimate interests of their companies and their colleagues. They do not, however, put their loyalty above other ethical principles or use loyalty to others as an excuse for unprincipled conduct.  Ethical executives demonstrate loyalty by safeguarding their ability to make independent professional judgments. They avoid conflicts of interest and they do not use or disclose information learned in confidence for personal advantage.  If they decide to accept other employment, ethical executives provide reasonable notice, respect the proprietary information of their former employer, and refuse to engage in any activities that take undue advantage of their previous positions.

5. FAIRNESS. Strive to be fair and just in all dealingsEthical executives are fundamentally committed to fairness.  They do not exercise power arbitrarily nor do they use overreaching or indecent means to gain or maintain any advantage nor take undue advantage of another’s mistakes or difficulties. Ethical executives manifest a commitment to justice, the equal treatment of individuals, tolerance for and acceptance of diversity. They are open-minded; willing to admit they are wrong and, where appropriate, they change their positions and beliefs.

6. CARING. Demonstrate compassion and a genuine concern for the well-being  of others. Ethical executives are caring, compassionate, benevolent and kind. They understand the concept of stakeholders (those who have a stake in a decision because they are affected by it) and they  always consider the business, financial and emotional consequences of their actions on all stakeholders. Ethical executives seek to accomplish their business objectives in a manner that causes the least harm and the greatest positive good.

7. RESPECT FOR OTHERS. Treat everyone with respect. Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat all people with equal respect and dignity regardless of sex, race or national origin. Ethical executives adhere to the Golden Rule, striving to treat others the way they would like to be treated.

8. LAW ABIDING. Obey the law. Ethical executives abide by laws, rules and regulations relating to their business activities.

9. COMMITMENT TO EXCELLENCE. Pursue excellence all the time in all thingsEthical executives pursue excellence in performing their duties, are well-informed and prepared, and constantly endeavor to increase their proficiency in all areas of responsibility.

10. LEADERSHIP. Exemplify honor and ethics. Ethical executives are conscious of the responsibilities and opportunities of their position of leadership and seek to be positive ethical role models by their own conduct and by helping to create an environment in which principled reasoning and ethical decision making are highly prized.

11. REPUTATION AND MORALE. Build and protect and build the company’s good reputation and the morale of it’s employees.  Ethical executives understand the importance of their own and their company’s reputation as well as the importance of the pride and good morale of employees. Thus, they avoid words or actions that that might undermine respect and they take affirmative steps  to correct or prevent inappropriate conduct of others.

12. ACCOUNTABILITY. Be accountable. Ethical executives acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, their colleagues, their companies, and their communities.


The Josephson institute is a nonprofit organization that depends on contributions from people like you. Please help us make a more ethical society or simply show your gratitude for whatever value you find in our work by making a tax-deductible donation at http://goo.gl/uUAix

You may want to read What is Character at http://whatwillmatter.com/2011/11/commentary-what-is-character-751-2/  and The Power of Integrity  http://josephsoninstitute.org/business/blog/2012/11/business-ethics-insight-the-power-of-integrity-moral-courage-is-the-bodyguard-of-conscience-and-character/


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