Corporate Ethics: The Moral element of business

Defining Ethics

• Understanding of right and wrong • Ability to distinguish between the

right and the wrong. • Integral part of life • Running a business is a part of life

Corporate Ethics

• Based on principles of integrity and fairness

• Focuses on -• Stakeholders, and employees.• Quality of product and services• Customer satisfaction.• Community and environment

Corporate Ethics are implemented to-

• Define the framework of the acceptable behavior.

• Follow high standards of practice. • Create benchmarks for self evaluation. • Enhance sense of community. • Create transparency in the business

activities. • Foster higher standards of business

ethics. • Comply with government laws and norms.

Who is responsible for ethics in the company?

“Everyone”

An ethical problem can’t be resolved unless it’s first recognized as a

‘dilemma’

Reward or punishment to ethical integrity and moral courage decide the act of

an individual

Corporate ethics: The global perspective

Study by Columbia University 1990• Half of 1,000 business executives

admitted being rewarded for taking action on the job that they considered unethical. 

• One in three reported that refusing to take unethical action resulted in penalties. 

The inferences

• Overemphasis on immediate gains can cascade down the organization.

• Sending message to staff to generate cash flow, supersedes all other objectives, including personal integrity. 

• This message carries more weight than official proclamations of values, and codes of ethics

• Corporate directors need to minimize a company’s ethical liabilities and maximize its ethical assets

How to maximize the ethical assets?

• Recognizing the company’s need to manage corporate ethics

• The dangers of taking it for granted.• Supporting management to prevent

or protect against unethical activities

• Developing strategies to raise the ethical standard in the organization.

• Build trust as a competitive lead.

Approaches to Bring a Code of Corporate Ethics to Life

• Emphasize values, in creating the code of corporate ethics supported by rules.

• Employees should be Educated about the corporate ethics code to make it relevant and real.

• Reinforce the code within and beyond the organization.

• Encourage employees to become active participants in upholding the corporate. ethics code and its values.

• Gather feedback, measure effectiveness and continually improve the code of conduct.

Case: Infosys Technologies

• Have a distinctive work culture and value system.

• Great importance on customer delight, leadership, integrity, transparency, fairness and pursuit of excellence.

• Open door policy. • Value employees and encourage them to

make decisions about their own work. • Treated as a flat organization when it

comes to communication and information sharing

Does Satyam’s story tell the myth and reality of Indian corporate

ethics?

Corporate Ethics: Individual’s Perspective

• Signs of ethical deterioration.• In business, people have made

immoral millions • In government, public officials

are involved in bribery.• In education, cheating scandals

among students are common.• under-the-table payments for

admission• People believe that they have to

cheat to win. • They believe that nice guys

finish last.

Ethics in Curriculum

USA teaches ethics or corporate ethics!

Ethics or business ethics should

be made compulsory for all students.

Corporate ethics: Management perspective

What is included in corporate ethics?

• Purpose of the Business

• People • Society • Government • Environment

Factors to be kept in mind

• Involvement of The Senior Management

• Involvement of The Employee

• Picking The Well Tested Model

Management of ethics; an important function of the board

• Accountable for corruption or impropriety in a company.

• Board’s decisions on resource allocation, performance targets or promotions always trump official statements of ethical values.

• Whistleblowers are to be given protection• Influence the ‘pressures’ which the CEOs

handle in managing ethics

Principals for ethically run Business

• Principle 1 – Productivity Is Much More Important Than Profitability

• Principle 2 – The Customer Is Not Sheep That Can Be Sheared

• Principle 3 – The Buyer's Domain Is More Important Than the Middlemen's Domain

• Principle 4 – Be Diplomatic With Your Competitors

• Institute of Business Ethics: www.ibe.org

• Business in the Community: www.bitc.ie

• ACCA (includes Ireland news): WWW. ACCAGLOBAL.COM

• Institute of Chartered Accountants in England & Wales: www.iceaw.com/bettermarkets

• Hermes Pension Management Ltd: www.hermes.com

• Dow Jones Sustainability Index: www.sustainability-indexes.com

• FTSE4 GOOD Index: www.ftse4good.com

• Ethical Research Services: www.eiris.org

• Ethics Resource Centre: www.ethics.org

• Wikipedia: www.wikipedia.org/wiki/business_ethics

• Spitzer Centre for Ethical Leadership: www. spitzercentre.org

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