Most business leaders I know clearly understand the difference between legal and illegal activities, but often are not so clear on the line between ethical and unethical.

Unfortunately, there is no universal code of business ethics, written down and enforced by some external governing body. We all have to rely on our own interpretation of what will maintain a working level of trust between all constituents.

For example, most would agree that a lending manager must look for the same qualifications from a friend that he or she applies to other applicants. But what do you do when making the right ethical choice will almost certainly upset that friend?

The problem is that so many choices fall into a gray area, and you may not even see the ethical creep that is happening in your actions.

Many professionals I know in business have the sense that an adherence to ethics is spiraling downward in business, and most don't believe they know how to make a difference. They don't realize that if they don't make the effort to be part of the solution, out of indifference or fear of jeopardizing their own careers, then they really become part of the problem.

In my view, most people agree on the fundamental principles of ethics-- integrity, objectivity, competence, confidentiality, and professional behavior.

They just need to follow a set of practical steps, including the following, to get beyond the emotion and the theoretical, to arrive at pragmatic yet ethical solutions to tough problems that we all encounter in business:

1. Isolate the legal and moral issues that frame the issue.

Ethical issues are usually driven by an attempt to accomplish a desired objective, without overtly violating some existing legal or moral code. You can't be a change agent to improve business ethics without understanding the constraints, and the gray areas that surround them.

For example, most would agree that bribery to win a contract is unethical, but how far can you go in nurturing a relationship with a key vendor? Defining legal and moral constraints is only the first step. Then you face cultural and historical norms, and your own integrity.

2. Identify any hidden objectives driving a possible outcome.

Often it helps to analyze a list of likely results and then reason backward to find who benefits and who loses.

The best solution for a tough ethical challenge is one that could be surfaced on the front page of the newspaper the next day without being misinterpreted by an unbiased customer.

In the previous example, if a given vendor has a family connection to you, legal and moral constraints are not enough. If the information surfaces that you may have the intent of favoring family or friends, your analysis of qualifications must be beyond reproach.

3. Re-examine facts that may be challenged or inaccurate.

If everyone agrees that the key facts are clearly true, or non-debatable, then the first two steps will likely lead you to an ethical solution.

Otherwise you need to examine how your decision might change if key facts are proved irrelevant or wrong. New alternatives may need to be evaluated. 

4. Put yourself in the position of other affected parties.

When you think ethically, you are in sympathy and empathy with others. It helps to meet face-to-face with the ones that differ from you most.

Your ethical eye gets sharper when you bring all relevant objects or people closer. In that context, you must treat others as you would have them treat you.

Consider, from a personnel standpoint, how much harder it is to fire someone face-to-face. That's because your empathy is engaged by their presence, and it makes you examine more closely all the ethics, facts, and emotions that are part of your decision.

5. Balance total benefits versus harm to select an action.

In this final step, you first assess how each party is impacted, then what counts, as a benefit or harm in considering the possible actions.

Good ethics are ultimately about maximizing the positives of the entire situation. This attracts loyalty and trust from customers and employees alike.

If you follow these steps, and iterate at required, I assure you that your own ethical eye will be sharpened, communicating these steps to others around you will improve their view, and will ultimately change the perception of your business in a positive way.

The number of perceived ethical dilemmas will also be reduced. You definitely can make a difference if you start now.

Published on: Sep 23, 2019
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.