What is ethics? According to the Merriam-Webster Dictionary: “Ethics is a set of moral principles; a theory or system of moral values.”

What does this definition mean when applied in a business setting? When you hear or read the phrase business ethics, what comes to mind?

You’ve probably heard about someone or a company following the “letter of the law” but not the “spirit.” In my experience, the difference in those two appellations is often the difference between legal and legal and ethical.

People want to do business with companies and employees with a reputation for both ethical and legal operations. Ideally, your business operates in both legal and ethical manners.

What about the other three permutations? Can an action or behavior be ethical but illegal? Legal but unethical? Unethical and illegal?

Consider the unethical and illegal option. Most of the time, this option is pretty obvious and easily avoided. If you sell a product you know is defective or likely to cause an injury, that action is probably illegal and certainly unethical. The same applies to a service such as insurance. When you or your client conceals a health situation from an insurance company to obtain a more favorable rate, that’s probably illegal and certainly unethical.

What about an action that’s legal, but not ethical? Here’s an example. You have someone looking for a car and they tell you they need a four-door, all-wheel-drive, small SUV that’s no more than 5 years old. You have an SUV that meets the first two criteria, but it is large and 8 years old. You really want to get that vehicle out of your facility. So, you tell the customer you can get them a great deal on this large, older SUV. They balk. You keep pushing. Eventually, the customer walks out. Was your approach legal? Sure? Ethical? Not so much.

The final permutation— ethical but illegal — is an interesting one. Years ago, presenting an ethics training to a group of city employees, we were trying to come up with an example of something that was ethical but not legal. A police office in attendance came up with an excellent example. Someone is backcountry skiing. They get lost. Night is closing in. Ahead looms a cabin. The skier knocks, but no one answers. They break into the cabin, start a fire, eat some food from the pantry, spend the night, clean up, pack up their trash, leave some money on the table (along with their contact information) and leave. 

Ethical? Probably, since it was a matter of survival. Legal? Probably not.

Please take note — these are my experience and opinions, not legal or other recommendations or advice.

It all comes down to your bottom line. What reputation do you want to have in the community?