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8/7/2019 BUSINESS ETHICS Prince Dudhatra 9724949948
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Introduction to business ethics
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Ethics
Derived from the Latin word ethicus
and Greek word ethikos which means
character or manners.
It is the science of moral, moral
principle and recognized rules of
conduct.
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Business ethics
It is defined as the normative study of
moral standards as they apply to
business policies, institutions andhuman behavior.
It becomes a part of study in 90s due to
certain factors like financial scandals.
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Approach for studying business ethics
Descriptive
Prescriptive
The conceptual study of ethics
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Importance of ethics in business
Essential for long-term success in
business.
True from both a macro and microperspective.
The market system leads to a more
efficient way of allocating resourcesthan any command system.
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Market system
It includes:
1.The right to own and control private
property.2.Freedom of choice in buying and
selling goods and services.
3.Accesses to quick, reliable, andprecise market information.
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Unethical behavior from a macro
perspective
Bribery
Coercive acts
Deceptive information
Theft
Unfair discrimination
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Macro perspective-Ethics and Trust
Trust in supplier relations
Trust in customer relations
Trust in employee relations
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Nature of business ethics
Business ethics has a five-part structure:
1. The specification of moral judgement.
2. Moral judgment and the moral standard.
3. Justification of moral judgement.
4. Logical reasoning and moral judgement.
5. Moral judgment and moral responsibility.
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Requirements for moral judgments
Moral judgements should be logical.
Moral judgements should be based onfacts.
Moral judgements should be based onacceptable moral principles.
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Scope of ethics
The scope of ethics is very wide.
A theory of moral ideal.
Principle of human behavior.
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Need for ethics
It is important to keep a check on the
corrupt management.
To determine the moral value of a conduct
not nearly by the motive but also by the
means adopted .
Ethics is needed in the fields of trade,
commerce and finance.
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The need to go beyond ethics
To get rid of phenomena like corruptionand dishonesty.
To maintain the mental and moralpowers with the external powers.
The two ways to go beyond ethics are1) science and technology .
2) spiritually.
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Values are guiding constructs or ideas,
representing deeply held generalized
behaviors, which are considered by the holder
to be of great significant.
To ensure that employees can and will act with
integrity .. Organization need a strong andconsistent set of values that dictate appropriate
individual actions.
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Values
What are the core values that are fundamentalto the success of any individual or organization?
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VALUES
Honesty
Respect
Responsibility
Fairness
Compassion
Perseverance
Courage
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Values - Honesty
Honesty
Being straightforward, sincere, truthful, free of fraud,deception or misrepresentation.
Transparency
To be open, honest and available, to provide clear,accurate, and understandable information(e.g. in thecontext of financial disclosures). Some ethicists haveargued that ethical business practices are bestmeasured by a companys character and commitmentto transparency than by their social vision.
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Values - Honesty
Honesty-
- Builds/Maintains Trust
- Fosters Community
- Makes Communication more efficient & effective
- Demonstrates Respect for the Dignity of others
Honesty & Transparency make you vulnerable. Be
honest and transparent anyway. Mother Teresa
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Values - Honesty
RICHARD SEARS
Founder of Sears Roebuck &Co.
Honesty is the best policy. I
know because Ive tried it bothways
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Values - Respect
Every man is to be respected as an absolute in
himself, and it is a crime against the dignity that
belongs to him as a human being, to use him as a
mere means for some external purpose.
Civilizations should be measured by "the degree of
diversity attained and the degree of unity
retained.
Never look down on anybody unless you're
helping him up.
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Values - Respect -- Tolerance
"Our culture has fallen into a kind of moral vertigo
we value tolerance so much that we don't know
how to talk to each other about what is right and
good.
Tolerance: Demonstrating sympathy for
indulging, or making allowances for beliefs orpractices differing from, or conflicting with one's
own.
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Values - Compassion
"Men are only great as they are kind. - Elbert
Hubbard, American entrepreneur and philosopher
(founder of Roycroft) (1856-1915).
"No act of kindness, no matter how small, is ever
wasted." - Aesop, 6th Century B.C. Writer of Greek
fables.
"If the world seems cold to you, kindly fires to
warm it. - Lucy Larcom, American poet (1826-
1893)
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Values - Responsibility
I am only one, but still, I am one. I cannot do everything
but I can do something. And, because I cannot do
everything, I will not refuse to do what I can. -E
dwardEverett Hale, American clergyman and writer (1822-
1909).
Any mans life will be filled with constant and unexpected
encouragement if he makes up his mind to do his level
best each day. - Booker T. Washington, American
educator (1856-1915).
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Values - Fairness
Fair is just equitable, impartial, unbiased objective,
Involves a elimination of one's own feelings,
prejudices and desires, so as to achieve a properbalance of conflicting interests. Implies an
equitable distribution of burdens and benefits.
Justice is demonstrating fairness, equity,
impartiality, righteous action, to some justice isabout conformity to truth to others, its aboutconformity to law.
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Values - Perseverance
Perseverance/Fortitude - steadfast determination
to continue on despite adversity usually over a
long period of time.
Nothing in the world can take the place of
perseverance. Talent will not; nothing is more
common than unsuccessful men with talent.
Education will not; the world is full of educated
derelicts. Genius will not; unrewarded genius isalmost a proverb. Persistence and determination
alone are omnipotent.
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Values - Courage
Courage is strength of mind, capable of
conquering whatever threatens the attainment of
the highest good.
Courage is a perfect sensibility of the measure of
danger and a mental willingness to endure it.
Whenever you see a successful business,
someone once made a courageous decision. -
PeterDrucker
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According to Ethical or Moral, Values,
Principles or Standards
Whose Values?
y Personal
y Family
y Peers
y Religious
y Company
y Community, Regional, National, International
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According to Ethical or Moral, Values,
Principles or Standards
Learned Where?
y Home
y Schooly Church (or other place of worship)
y Life Experience
y Work Experience
y
Booksy News Media
y Entertainment Media
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Morals
Moral is a system or set of beliefs or principles
based on values, which constitute an individual or
groups perception of human duty, and thereforewhich act as an influence or control over their
behavior.
Morals are typically concerned with behaviors that
have potentially serious consequences or
profound impacts. The word morals is derived
from the Latin mores (character, custom or habit).
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Morality
The most important human endeavor is
the striving for morality in our actions. Our
inner balance and even our very existencedepend on it. Only morality in our actions
can give beauty and dignity to life. - Albert
Einstein.
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Absolutism vs. Relativism
Ethical Absolutism: What is right or wrong isconsistent in all places or circumstances. There are
universally valid moral principles. ( only by obedience
to universal moral norms does man find full confirmation
of his personal uniqueness and the possibility ofauthentic moral growth.
Ethical Relativism (also called Situational Ethics):
What is right or wrong varies according to the
individual/society/culture or set of circumstances. There
are no universally valid moral principles.
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Code of conduct
Meaning
Codes of conduct specify actions in the
workplace and codes of ethics are
general guides to decisions about those
actions.
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Self-Regulation ofBusiness Ethics
Types of Codes ofEthics/Conduct
y Compliance Oriented: Statement of business
standards or practices.
y Visionary: Statement of beliefs, core values,
mission, principles (e.g. Johnson and JohnsonCredo) or corporate philosophy (e.g. the HP
Way)
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Types of Codes
Forbes 500 Companies (237 respondents):
Source: Patrick E. Murphy, Corporate Ethics Statements: Current Status and Future Prospects,Journal of Business Ethics 14: 727-740 (1995).
Code of Ethics
Values Statement
Corporate Credo
All Three Documents
82%
83%
81%
91%
53%
34%
49 cos.
Revised in 90s
15.5%
8.0%
22.0%
18.5%
51.0%
41.0%
Date Introduced
>20 yrs.< 5 yrs.
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Self-Regulation ofBusiness
Ethics
Why have a Code ofEthics?
y to define accepted/acceptable behaviors;
y to promote high standards of practice;
y to provide a benchmark for members to use
for self evaluation;
y
to establish a framework for professionalbehavior and responsibilities;
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Self-Regulation ofBusiness
Ethics
Why have a Code ofEthics?
y as a vehicle for occupational identity &
maturity;
y to increase ethical sensitivity & judgement;
y to enhance the sense of community among
members, of belonging to a group withcommon values and a common mission;
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Self-Regulation ofBusiness
Ethics
Why have a Code ofEthics?
y to discourage corruption, fraud and other
malfeasance
y to enhance credibility with stakeholders
y to provide a guidepost for addressing
potential problems such as potentialconflicts of interest
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Self-Regulation ofBusiness
Ethics
Some Elements of Best Codes
y Clear, Coherent, Understandable Language
y Involves sanctions and rewards
y Is more about values than compliance
y Involves Ownership (i.e. People from every
level of the company should be involved inits development.
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Self-Regulation ofBusiness
Ethics
Some Elements of Best Codes
y Provides a set framework for making ethical
decisions
y Demonstrates respect for all employees as
unique, valuable individuals
y
Supports each individual employee'sfreedom, growth, and development
y Promotes a balanced life & respect for
employee family concerns
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Self-Regulation ofBusiness
Ethics
Some Elements of Best Codes
y Promotes employee health & safety
y Promotes tolerance & an atmosphere free of
harassment
y Promotes honesty
y
Promotes fairness?y Cultivates a positive attitude/outlook
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Self-Regulation ofBusiness
Ethics
Some Elements of Best Codes
y Promotes openness/transparency (no cover-
ups)
y Promotes accountability/personal
responsibility
y
Promotes risk-taking, within limitsy Promotes excellence
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Self-Regulation ofBusiness
Ethics
Some Elements of Best Codes
y Promotes tolerance of errors & learning from
same
y Promotes unquestioned integrity
y Promotes consistency
y
Promotes cooperation/collaborationy Promotes courage & persistence
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Self-Regulation ofBusiness
Ethics
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Self-Regulation ofBusiness
Ethics
Some Implementation Methods
y Training (Role-Playing) (including outside
specialty firms, e.g. Baker Hughes signed a 3-year contract renewal and extension with LRN
, The Legal Knowledge Company to provide
online education, training and testing in ethics,
legal and compliance issues to its global
workforce through the LRN Legal Compliance
and Ethics Center)
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Self-Regulation ofBusiness
Ethics
Some Implementation Methods
y Translation (e.g. Merck & Co.s code has
been translated into 22 languages)
y Distribution (Pamphlets, On-Line, etc.)
y Annual Report
y
Ethics Officer/Department
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Self-Regulation ofBusiness Ethics
Set your expectations high; find
men and women whose
integrity and values yourespect; get their agreement on
a course of action; and give
them your ultimate trust.
By John Fellows Akers
Chairman of IBM
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Managerial Ethics
This include the examine of ethical
dimensions of managerial decisions.
The decisions make by the managers
get affected in terms of the result as well
as the process.
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Factors that affects employee ethics
This topic includes the following
characteristics-
1. Stage of moral development
2. Individual characteristics
3. Structural variables
4. Organizations culture
5. Issue intensity
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Moderators
Issue intensityIndividualcharacteristics
Ethical/UnethicalBehavior
Stage of
Moral
Development
Structural
Variables
Organizational
Culture
Ethical
Dilemma
Fig :Managerial Ethics
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Ethics in international context
Important in foreign culture to recognize
the various social, cultural and political-
legal influences.
The goal must include the global
economy.
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Issue Intensity
Proximity to
Victim (s)
Greatness of harm
ConcentrationOfEffect
Immediacy ofConsequences
Probability of Harm
Consensus of
wrong
How much agreement
is there that this action
is wrong?
How close are the
potential victims
How concentrated is
the effect of the action
on the victim (s) ?
How many people
will be harmed?
Will harm be felt
immediately ?
How likely is it that this
action will cause harm ?
Fig : Determinants of
issue intensity
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How to improve ethical behavior?
(cont..)
4. Provide ethical training.
5. Conduct social audits.
6. Provide support to individuals facing
ethical dilemmas.
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Bibliography
Books referred
Cherunilam Francis/ Business Environment/
Himalaya Publishing House/ Eighteenth
Edition.
Coulter Mary & Robbins Stephen.P/
Management/ Prentice Hall of India Pvt Ltd/
Ninth Edition.
Ghosh Biswanath/ Ethics in management &
Indian Ethos
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Bibliography (cont.)
ICFAI/ Business Ethics & Corporate
Governance.
PoirierDean.R/ Business Ethics &
Professional Responsibility.
Link : dpoirier@moc.edu
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Thank You
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