business ethics

Ethics What are ethics?

– Conscience– Religion– Law– Society

What are Ethics? Firstly, the respect for human

Study and development of one’s own ethical standards, so that feelings, laws and norms do not deviate us from all that is ethical.

Nature of Ethics

Religion specific Caste specific Culture specific Society specific

Ethics are: The supreme propeller in one’s behaviour. Ethical character comprises of virtues like

honesty, integrity, loyalty. It represents the relationship between man and

man, man and organization, man and his profession and man and the society in general.

The possession and applications of virtues enhances moral, ethical and legal behaviours of employees and managers.

God said, “You should build a better world.”

I questioned, “How? The world is such a wondrous place, so complicated, and I so small and useless man, there’s nothing I can do!”

But God, all kind and wise replied,“Just build a better you!”

BusinessBusiness Ethics and Ethics and Social ResponsibilitySocial Responsibility

Business Ethics The value of what should be

done and what should not be done from the business point of view

Ethical issues for business

Product safety standards Advertising contents Working environment Unauthorized payments Employee’s privacy Environmental issues

Genesis of Ethics Ethics is a Greek word, it means Character or

manners.

Ethics is subjective while morality is objective.

Ethics is about sense of belongingness to society of business. Formed with a limited vision for economic generation but should resolve conflict with society by servicing the community.

3D of Ethics. UNITARIAN VIEW OF ETHICS

Business is a part of moral structure and moral ethics.

SEPARATISTS VIEWS OF ETHICS Morality and ethics has no role in business. Society and law deals with ethics and morality.

INTEGRATED VIEW OF ETHICSEthical behavior and business should be integrated in a new era called Business Ethics.

Integration View of Ethics.

Business. Morality & ethics

BUSINESS ETHICSMarket system

GOVERNMENT LAW

SOCIETY

NABARD, Bank of India, BPCL NABARD (National Bank for Agricultural and Rural

Development) helps 101 million poor people through micro finance program, providing access to credit.

Joint liability groups (JLG)- Rythu Mitra program- credit access to landless farmer's agricultural laborers, empowers women with micro credit, micro enterprise, created special funds for water shed development, Partnering with corporate like ITC, Tata’s, M and M, Ambuja cements etc, many more.

BPCL (Bharat Petroleum Corporation Limited) provides alternate source of energy, solar energy for street lights at villages, skill enhancement on modern farming practices, distributes smokless chulas, training for income generation projects.

Bank of India, focuses on below poverty line, adopted 101 villages.

Some more examples Tata uses ‘Leadership with Trust’. Circulates a document ‘Tata code of

conduct’. Johnson and Johnson

Morals and Values Morals are the standards, norms of

principles of right and wrong. Values comes from the Latin word ‘valere’

which means to be of worth, to be strong. Values are a set of principles or standards

of behaviour that are regarded as desirable, important and held in high esteem by society.

Values in Business KEP (Key Ethical Principles) Honesty Integrity Fulfilling commitments Abiding by agreements in letter and spirit Being fair and open minded Willing to admit errors Caring and Compassion Respect for human dignity Responsible Pursuit of excellence Being accountable for decision and its consequences

Relevance of Values in Management Young managers must be aware of the reasons that

underline moral principles. Ensure compliance by managers with company

standards for conduct. Help resolve ethical issues/dilemmas as they arise. Responsible judgments and decisions Approach to business Business ethics cannot be wholly governed by law

and government organizations but remains the concern of individual managers.

Social responsibility of the organization

Inculcates high level of integrity in managers.

Goal of ethic education is to share knowledge, build skills and develop minds.

Avoids business misconduct in organizations.

Helps to arrive at ‘just’ decisions. Improves managerial conduct. Improve the reflective skills.

Relevance of Values in Management (cont.)

A Study of CSR at Cadbury

Key Issues in CSR Labour rights:

– child labour – forced labour – right to organise – safety and health

Environmental conditions– water & air emissions– climate change

Human rights– cooperation with paramilitary forces– complicity in extra-judicial killings

Poverty Alleviation– job creation– public revenues– skills and technology

Pyramid of CSR

Philanthropic ResponsibilitiesPhilanthropic ResponsibilitiesBe a good corporate citizen.

Ethical ResponsibilitiesEthical ResponsibilitiesBe ethical.

Legal ResponsibilitiesLegal ResponsibilitiesObey the law.

Economic ResponsibilitiesEconomic ResponsibilitiesBe profitable.

Case Study Corporate Social Responsibility towards the

environment – the case of Exxon

Toys: No child’s play

Importance of CSR

Globalization Government and inter-govermental bodies Advances in communications technology Aware consumers Breaches of corporate ethics Awareness of legislature Brand image and reputation

Corporate GovernanceIt is a system of structuring operating and controlling a company with a view to achieve long-term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers with the legal and regulatory requirements apart from meeting environment and local community needs. It leads to the building of a legal commercial and institutional framework. It also demarcates the boundaries within which these functions are to be performed.

Examples

ITC Cadbury Tata steel ICSI (Inst.of Company

Secretaries of India) IDBI Bank ONGC

In the forward to the book ‘Corporate Governance: A Framework for Implementation’, Sir Adrian Cadbury wrote:

Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals.

The incentive to corporations and to those who own and manage them to adopt internationally accepted governance standards is that these standards will help them to achieve their corporate aims and to attract investment.

The incentive for their adoption by states is that these standards will strengthen the economy and discourage fraud and mismanagement.

The foundation of any structure of corporate governance is disclosure. Openness is the basis of public confidence in the corporate system, and funds will flow to the centers of economy activity that inspires trust.

Thus, the concept of corporate governance has become one of the wide and deep discussions around the globe, and needs to be taken up in earnest by all organizations.

Corporate Governance: Importance for Industry

Survival of the Fittest Globalization – Foreign investors Interests of the Shareholders

Ethical Issues related with Advertisements

ASCI (Advertising Standard Council of India) Guidelines:

– Truthful and honest representations and claims made by advertisements

– Protection against misleading and baseless advertisements

– Ensuring that advertisements are not offensive to the accepted standards

– Fairness in competition so that consumers are aware about the products and can make right decisions

– Safeguard against indiscriminate use of advertising for promoting a product which is regarded as hazardous in society and not accepted by the society in general.

Ethical Issues related with Finance

Deception Concealment of information Churning (control on account) Unsuitable investments for clients Twisting (replacing policy) Flipping (loan)

Ethical Issues related with Finance

Stock Market Speculation Insider Trading Hostile takeovers Tax Planning Financial Statements Internal AuditController: SEBI(Securities and Exchange Board of India)

Ethical Issues related with Investment

Ethical Issues related with Technology

Secular vs Spiritual Values in Management

A way of living that emphasizes a constant awareness of the spiritual dimensions of nature, without any acknowledgement of a contractual relationship between the material world and the spiritual.

Spirituality is a relationship that unites oneself with the divine. It is a journey to the search of eternal truth or the path of enlightenment at the end of which salvation lies. It can be achieved through regular Yoga and Meditation.

Secular vs Spiritual Values in Management (cont.)

Spirituality is basically dissolving one’s ego and being absolutely truthful in all affairs of life.

Spirituality is that subtle truth of life in absence of which no living being can survive.

Spirituality is a sense of higher power, having a feeling of peace and something greater than oneself in fact it is the true inner self.

Self Confidence

Self Improvement

Inner Peace

Positivism

Concentration Power

Wisdom

Moksha

Nirvana

Goals of Spirituality

Spirituality and BusinessEmployees are spiritual entities and their souls need nourishment at the workplace.

Values like loyalty, tolerance, commitment, passion, and belongingness at workplace is spirituality

Eternal quest of a person in search of eternal meaning, significant experience and a greater sense of life purpose in order to navigate through this materialize world.

Examples of Companies

Xerox – spiritual retreat – Vision QuestMicrosoft – Online spiritual serviceApple Computers – Spiritual room

Benefits to the Organization Environment of trust, loyalty, openness, honesty,

commitment and clear communication. Cultivates inclusiveness and value diversity. Increases ethical behaviour which in turns

increases productivity. Retention of the best talent with the company. Enhances the job satisfaction level which results

in personal satisfaction.(A report shows spirituality is an important source of

happiness after health.)

Work Ethics: Concept of Swadharma

Workplace ethics is how one applies values to work in actual decision-making, a proper set of ‘right’ and ‘wrong’ actions that directly affect the workplace.

Best example in Indian scenario is that of ‘Khadi’.

Factors affecting ethical behaviour at workplace

Factors affectingworkplace ethics

Corporate CultureAnd

Mythology

Individual StandardsAnd Values

Boss and Co-workers’

influences

Different CodesAnd

CompliancesRequirements

Ethics Tools: Codes of EthicsAcc. to Wallace, “credo generally describes the highest values to which the company aspires to operate. It contains the ‘thou shalt’s. A code of ethics specifies the ethical rules of operation.”

Occasionally, employees react to code with suspicion, believing the codes and values are for window dressing. But, when managing a complex issue, especially in a crisis, having a code is critical.

Developing Code of EthicsGuidelines:1. Review values needed to adhere to be

relevant with laws and regulations.2. Review which values produce the top three

or four traits of a highly ethical and successful product or service in your area.

3. Identify values needed to address current issues in your workplace.

4. Identify values needed, based on findings of SWOT analysis.

Developing Code of Ethics (cont.)5. Consider any top ethical values that might

be prized by stakeholders.6. Associate with each value, two example

behaviours which reflect each value.7. Obtain review from key members of the

organization.8. Announce and distribute the code of ethics.9. Update the code atleast once a year.

Ethics Tools: Codes of ConductAcc. to Craig Nordlund, Associate General Counsel and Secretary at Hewlett Packard, “codes of conduct specify actions in the workplace and codes of ethics are general guides to decisions about those actions.”

Codes of conduct contain examples of appropriate behaviour to be meaningful.

Developing a Code of ConductGuidelines:1. Identify key behaviours needed to adhere to the

ethical values proclaimed in your code of ethics.2. Include wordings that indicate all employees are

expected to conform to the behaviours specified in the code of conduct.

3. Obtain review from the key members of the organization.

4. Announce and distribute the new code of conduct.5. You cannot include preferred behaviours for every

possible ethical dilemma that might arise.

Developing a Code of Conduct (cont.)6. Examples of topics typically addressed by

codes of conduct include:• Preferred style of dress• Avoiding illegal drugs• Following instructions of superiors• Being reliable and prompt• Maintaining confidentiality• Not accepting personal gifts from stakeholders• Avoiding racial or sexual discrimination• Avoiding conflict of interest• Complying with laws and regulations• Not using organization’s property for personal use• Reporting illegal or questionable activity

The Five Principles Underpinning Ethics Codes

Leadership

Diversity ofthe System

Adaptation

TransparencyIntegration into

Management

Foundation

Evolution

Commitment

The Five Principles Underpinning Ethics Codes

Leadership

Diversity ofthe System

Adaptation

Transparency

Integration intoManagement

Foundation

Evolution

Commitment

Two-prongedApproach

Balance

Benefits of Ethics in the Workplace

Attention to business ethics has substantially improved society.

Ethics programmes help maintain a moral course in turbulent times.

Ethics programmes cultivate strong teamwork and productivity.

Ethics programmes support employee growth and meaning.

Ethics programmes are an insurance policy – they help ensure that policies are legal.

Benefits of Ethics in the Workplace (cont.)

Ethics programmes help avoid criminal acts “of omission” and can lower fines.

Ethics programmes help manage values associated with quality management, strategic planning and diversity management.

Ethics programmes promote a strong public image.

Advantages of Ethical Behaviour at the Workplace

Better imageand reputationof the enterprisein the industryand community

Ability toattract and

retain talentedpeople

Doing lesserlegal action

and no actionwithout any

cause.

Reduced risk of employees

making ethicaldecisions

Competitiveadvantagein the marketplace