The importance of financial management ethics

Money by itself is not necessarily evil. Rather, it is something that is used to trade goods and services. We call it "currency", and it allows us to do business between organizations. Unfortunately, that is the sterile dictionary-type definition but it does not capture all the issues that are involved with finances. In corporate life, just like many other realms, money causes all sorts of problems. People make incredibly bad decisions because of money, and plenty of people have gone to prison because of their money-related behavior. This is why people always approach money with a certain amount of uneasiness. Here are a few thoughts on why financial management ethics are important.


The numbers do not have a soul

Ethics are important because finances make people do some strange things. The spreadsheet does not have a conscience, and the goal of working with spreadsheets is to make numbers add up in a way that is pleasing to the organizations and it's constituents. Unfortunately, people can move around numbers in all sorts of ways to make them add up "correctly." Because of this, companies adopt financial management ethics in order to have an outside source of guidance. People are afraid (and rightly so) that without a moral barometer, anything is possible on that spreadsheet.

Financial management ethics are also important because of history. Just say "Enron" and people either laugh or get very serious. The trouble with Enron is that everyone was happy as long as the numbers kept looking good. However, much mischief was afoot at Enron and the company was running fast and loose with ethical principles. Enron is a textbook example of why financial ethics are important. Without ethics, there are truly no boundaries when it comes to organizational culture.

Expectations

Countries like the United States are built around many great things but they also flirt with danger on a regular basis. In a post-modern world, capitalism can quickly dissolve into greed and villainy. Again, companies that do not have any sort of moral code or ethical principles are really free to do whatever they want. Because shareholders and financial markets have impossibly high demands on certain companies, executives feel somewhat forced to make moral compromises. Before people know it, Enron appears again and again. Why? Because people aren't clear on their own ethical viewpoints and they are left to make decisions based on a reactionary environment. Therefore, if people are serious about living life a certain way, they must write a strict moral code and be willing to follow it, no matter what happens in the financial market.