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Business Ethics
Introduction to Business Ethics
The need for a company to behave “ethically” is described in terms of a company’s need to interact productively with its stakeholders.
Ethics is philosophy in action. It can be described as philosophy which is concerned with what is right and wrong ; good or bad.
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Introduction to Business Ethics
Public’s interest in business ethics increased during the last four decades
Public’s interest in business ethics spurred by the media
What is Ethics?
Ethics and Social Responsibility Ethics - two levels of concern individual
organizational Soc. Responsibility – Do things that benefit
society eg CSR activities Ethics - Don’t do things that may be in your
own self interest but with larger interest of stake holders eg no reduction in taxi fares though CNG is much gheaper
Business Ethics explained
The application of general ethical concepts to the unique situations confronted in business. It asks what is right or wrong behavior in business and what principles or rules can be used as guidance in business situations.
Business Ethics: A definition
‘the study of business situations, activities, and decisions where issues of right and wrong are addressed’
LawEthics
Business Ethics: A definition
Business Ethics means conducting all aspects of business and dealing with all stakeholders
in an ethical manner…
Business Ethics – A Definition
Ethics is relating to morals and is the study of moral questions – morally correct
Study of moral choices Focuses on standards , rules , codes of conduct
that govern behaviour of people eg expenditure as per I.T laws , fudged or manipulated bills(liquor bills translated to pakoda and snack bills)
Moral principles that define right and wrong in the world of business
Business Ethics – A Definition
What constitutes right and wrong in business is determined by public interest groups and business for a as well as individual personal morals and values
Ethics refers to code of conduct that guides people when tackling situations. Relates to social rules that influence people to be honest in their dealings
Business ethics is the evaluation of business activities and behaviour as right and wrong
Business Ethics – A Definition
Ethics is the discipline that examines moral standards of society
It asks how these standards apply to social systems and our lives and whether these standards are reasonable
Business ethics is a specialized study of moral standards and concentrates on how they apply to social systems and organizations, to behaviour of people at work
Business Ethics – A Definition
Business ethics is applied ethics. It is the application of our understanding of what is good and right to the assortment of institutions , technologies , transactions activities and pursuits which we call business
It is systematic attempt to integrate moral behavioral requirement with business requirement
Business Ethics – A Definition
Both parties to contract understand the nature of the contract which they plan to enter into
Neither of the parties intentionally misrepresent the contents
Neither party to the contract be coerced into accepting the terms of contract
The contract should not require the parties to take part in immoral acts
CHARACTER OF
MAN
SERIES OF
ACTIONS
MORAL STANDA
RDS
CONDUCT OF
PERSON
GOOD OR BAD RIGHT
OR WRONG
Decided By Leads
To
Taken together as
Moral Judgement
Used to Judge
Meaning of Ethics
Importance of Ethics
“There is no such thing as business ethics….There’s just ethics; and we all have to practice them every day in everything we do.”
– Peter Drucker
Why Study Ethics?
Help in trying to do the right thing Help postulate value systems for the company
which forms guidelines how business is to be conducted
Also defines moral code for supply chain members to observe
Need to have strong whistle blower mechanisms to report and pro active rectification processes to minimize reputation risk
OBJECTIVES OF BUSINESS ETHICS STUDY OF HUMAN BEHAVIOUR AND MAKE ASSESSMENT
OF WHAT IS MORAL OR IMMORAL. IT IS A DIAGNOSTIC EXERCISE
ESTABLISHES MORAL STANDARDS AND NORMS OF BEHAVIOUR
MAKES JUDGEMENT ON HUMAN BEHAVIOUR BASED ON THESE STANDARDS AND NORMS
PRESCRIBES MORAL BEHAVIOUR AND MAKES RECOMMENDATIONS ABOUT HOW TO OR NOT TO BEHAVE (eg implementation of dress code or drunkenness at work is liable for de rostering of pilots)
EXPRESSES AN OPINION ABOUT HUMAN CONDUCT IN GENERAL eg extra marital affairs
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Ethical issues at workplace
Recognizing conflicts of interests Discrimination based on sex, caste,relations etc Distinguishing between gifts and bribes Attaining fairness in employee appraisals eg IBM
India case of reversal appraisal Safe guarding confidential information and executing
non disclosure agreements with partners Ensuring that you do not recruit employees from
customer site during project or vice versa
Case study of ethical performance Maruti withdrew a complete batch of
Maruti 800 cars which had defective gears and offered full refund or replacement cars including Zens as replacement in 1990
Making sense of Business Ethics
Recognition that ‘good’ and ‘bad’ ethics inform organizing and managing
Corporate scandals and ethical difficulties, involving Union Carbide, Enron, Arthur Andersen, DSQ, Satyam etc.
Kinds of Ethical Issues
Systemic-social systems or institutions within which businesses operate
Corporate –an individual company taken as a whole
Individual-a particular individual(s) within a company and their behaviour and decisions
Ethical Norms
Set of required ethical practices shared and applied by the members
Norms define what is proper and improper behaviour
Behaviour perfectly legal may not always be ethical eg entertainment of prospects
Case study of CRIS
Business Ethics and Stakeholders Fair trade practices Product safety Equal opportunities Health and safety Employment security Pollution prevention Purchasing ethics Honesty of accounting systems
Scope of ethics
Stakeholder level Personal policy level Societal level Internal policy level
Stakeholder level
Employees Customers Investors Banks and financial institutions Regulatory and statutory bodies
Employees
Equitable treatment Fair employment terms Timely and correct payment of wages Provision for personal learning and growth
Employee obligation to firm
Achieve goal of the firm Avoid activities which might harm goals or
clash with company goals Avoid indulging in unethical practices
Customers
Fair trading practices Cogent pricing policy with no discrimination eg
hiked petrol prices at pumps immediately after budget hike but no remission of the same if prices lowered
Assurance against adverse effects of products and services
No hoarding and creation of artificial shortages Fair and un hurtful claims in ads
Investors
Financial Institutes
Complying with rules and regulations No double financing Guarantee safety of borrowed funds and no
siphoning of borrowed funds
Regulatory bodies
Complying with laws and regulations Proper filing of recorded incomes and taxes
Personal policy level
Not to use office facilities for personal use “quote Pimputkar”
Do not delegate personal work to staff eg dealing with brokers for stock trading and maintaining personal records and dealing with bank accounts
Indulging in politicking Destroying careers out of personal vendetta
Internal policy level
Fair practices related to compensation perks layoffs promotions etc
Six sources of ethics
Genetic inheritance Religious morality eg jains or vegetarians Philosophical systems eg frugal life styles Cultural experiences Customs as guidelines for
conduct. Individual values shaped by norms of society eg co-habitation
Legal system eg polygamy Company code of conduct eg company
operating policies and codes of ethics
Ethics
Moral Standards
Moral Obligations
Voluntary Human Conduct
Moral Judgement
Is area of
Regarding
Requires
Sets standards Related to
To judge
Functions of Ethics
Functions of ethics
Ethics is an area dealing with moral judgment regarding voluntary human conduct
Ethics sets the standards for moral standards
Moral judgment requires moral standards Moral standards judge human conduct
Characteristics of business ethics
Ethical decisions differ from individual perspective of different people. Each person views the ethical question in terms of his own frame of reference
Ethical decisions do not end up in themselves but have wide spread ramifications
Unfortunately most ethical decisions involve a trade off between costs incurred and benefits received eg refunds for goods
Public’s Opinion of Business Ethics Gallup Poll finds that only 17 percent to 20
percent of the public thought the business ethics of executives to be very high or high
To understand public sentiment towards business ethics, ask three questions– Has business ethics really deteriorated?– Are the media reporting ethical problems more
frequently and vigorously?– Are practices that once were socially acceptable
no longer socially acceptable?
Morality Moral standards come from various sources such as
parents , media , society , faith , etc As person grows up moral values could change due to
external influences Non moral standards are standards we judge what is good
and what is bad in a non moral way. Includes standards of etiquette by which we judge manners as good or bad, standards which we call law by which we judge legal right and wrong, the standards of language by which we judge what is grammatically right and wrong . In short all judgements are non moral
Morality
The standards that an individual or a group has about what is right and what is wrong
Moral standards include the norms observed about the kind of objects which are morally god and bad
Moral norms can be expressed as general rules or statements eg always tell the truth
Moral values expressed as statements describing objects that have loftiness such as Injustice is bad
Characteristics of moral standards Not established by law or legislature Preferred to other values Based on impartial considerations Associated with emotions and vocabulary
Moral Judgment
•Right/Wrng•Good/Bad•Moral/Imrl
Moral Standards
Human Conduct Judged
Are Require
By Which
Moral Judgements
– Cheating on your expense accounts– Stealing supplies– Bribery– Manipulation of supplier rates or customer
pricing– Bending policies for certain suppliers ,
customers and employees– Violating income tax rules
Ethics and Business
Ethics conflicts with profit at any cost Business always chooses profits over ethics Ethical value systems and transactional
integrity form basis of business ethics
Ethical definitions of ownership Intellectual property is intangible property
created by people or companies which is protected under trade secret , copyright patent laws etc (case of film title being registered but never saw the light of the day (B R Chopra had to change name of his film from Talaak to Nikah because of an injunction order)
Trade secret or confidential document is an intellectual work used for business purpose eg coca cola formula or pricing details
Ethical definitions of ownership
Copyright is a statutory grant which prevents plagiarism for a specifically long period eg 20 years. Software or video piracy or availability of latest films on internet. Non freeware software on net
Patent is a monopoly right granted to a person who has invented or discovered a thing or a process and gives exclusive rights to manufacture or render service
Ethical definitions of ownership
Trademark is a visual symbol applied to goods which are branded and are registered under a trade name eg software products have a trademark which is registered and the name bears the acronym Tm
ETHICAL ISSUES CONFRONTING BUSINESS CONCERN ABOUT CORRUPTION FINANCIAL SCAMS even in TATA eg TATA
FINANCE MISLEADING ADVERTISEMENTS SAFETY AND WORKING CONDITIONS AT WORK
PLACE eg REST ROOMS FOR WOMEN PROTECTION OF EMPLOYEE RIGHTS
REASONS FOR ETHICAL PROBLEMS PERSONAL GAIN DEGRADING MORALITY DIFFERENCE IN INDIVIDUAL VALUES (BRIBE VERSUS
CONSIDERATION) CLASH OF INDIVIDUAL VALUES AGAINST
ORGANIZATIONAL VALUES( TATA VALUES FOR SALE – NO BUSINESS WITH BLACK LISTED COMPANIES)
VALUES OF TOP MANAGEMENT COMPETITIVE PRESSURES
Unethical Business Practices Price fixing by companies who operate in monopolistic
markets eg OPEC Manipulation of supply – Firms in monopolistic markets
limit their production(OPEC) or resort to hoarding (cement , steel ) to create an artificial shortage in the market to enable the hike of prices
Maximum retail price not honored Price discrimination – charge different price to different
customers (surgeons) Clash of values between individual and company both
ways
Case study 1 in Business Ethics
Case study 1 Please comment on which code is being violated by the acts
-Employees who leave an R&D set up lends his design to competition (DEC PDP11 v/s DG ECLIPSE) -Unethical customer shows confidential pricing of competition to preferred vendor for a consideration -Making remixes of old hindi film songs -R&D for drug done in India but patent registered in country of multinational and Indian company charged royalty for manufacture of drug it has helped to discover -Almost identical symbols or words used by unethical company leading to litigation related to registered trade mark. Most branded products have trademarks eg Oracle is trademark of Oracle Corp
Classification of business ethics problems Overt-Open to public view . Lack of ethics
openly practiced eg payment of under the table money for purchasing homes
Covert-Secretive deals not apparent until the lid is blown by whistle blowers. Satyam real estate deals. Difficult to detect and control. General cancer in society
Factors influencing business ethics Corporate culture Individual employee values systems Leadership Environment Personal v/s group dynamics
Elements of ethical culture
Leadership Fairness to employees Employee authority structure Reward systems Organization focus on ethical practices
2 areas where HR can have a major impact on ethics
Ethics and HR Management
Corporate Governance Employee Involvement
ETHICAL CONCERNS FOR EMPLOYEES Privacy – the extent to which personal info collected is
used and protected Integrity-the allocation of responsibility for data
integrity and the controls which ensure integrity Influence-the extent to which it reduces individual
discretion in decision making ; the automation of processes in decision making and the results in relation to individual safety and well being
Impact-the extent to which the IS affects individual up skilling; also the possible effects of surveillance monitoring of performance
GUIDELINES FOR ETHICS IN HR Fair employment regardless of caste and sex Equal pay and opportunities for all Promotions based only on performance and professional
merit and not any other consideration Standard code of judgment for all Maintenance of data confidentiality Non performance factors not to be used in appraisals (IBM
case) Arrangement with head hunters leading to recruitment
from outside and ignoring current employees
EMPLOYEES AND ETHICS RIGHT TO FREEDOM FROM
DISCRIMINATION RIGHT TO PRIVACY RIGHT TO DUE PROCESS RIGHT TO PARTICIPATION AND
ASSOCIATION HEALTHY AND SAFE WORKING
CONDITIONS FAIR WAGES FREEDOM OF CONSCIENCE AND SPEECH RIGHT TO WORK
PROTECTION OF EMPLOYEE RIGHTS EQUALITY – NO DISCRIMINATION EQUAL PAY FOR EQUAL WORK JOB SECURITY WHERE EMPLOYEE FIRED ONLY IF
HIS PERFORMANCE IS TANGIBLY BELOW DEFINED PARAMETERS AND AFTER PREVIOUS WARNINGS GIVEN eg CASE IN TIL WHERE PROMOTED IN MAR PINK SLIP IN SEP FOR UNDER PERFORMANCE?;INVOLVEMENT IN CRIMINAL ACTIVITY;DRUNKENNESS ON THE JOB OR MISBEHAVIOUR;DISRUPTING BUSINESS
RIGHT TO FREE EXPRESSION AT WORK PLACE JOB ENRICHMENT AND SELF DEVELOPMENT
EMPLOYEE DUTIES
DUTY TO COMPLY WITH CONTRACT DUTY TO COMPLY WITH THE LAW DUTY TO RESPECT EMPLOYER’S
PROPERTY
Bluffing and Deception
Doctored CV’s sent by body shoppers to clients abroad or software professionals doctor cv to enhance job opportunities
Making false claims in advertisements Overselling company and employee
prospects during recruitment process Is This Ethical?
Employer Employee
Pay decent wageDefine work expectations
Each employee to be treated with respect
Employee Employer
•Must be honest about his qualifications for job•Must do work promised•Respect employer interest
Employer-Employee Ethics
BUSINESS ETHICS IN MARKETING
Business ethics in marketing
Products and services – disclose product risks and identify any factor which may change performance eg 85 km/ltr under test conditions
Advertising – Avoid deceptive and misleading communication eg 50% sale on al products while stocks last otr the toothpaste war which claimed to have a certain ingredient which competition claimed it had not
Distribution – Do not create artificial shortage to hike prices Pricing – clarify all services included and excluded eg proposal should
not contain standard services as applicable
ETHICAL ISSUES IN MARKETING Deceptive advertising Ambiguous claims such as conditions apply
or till stocks last or under test conditions Withholding product test or technical data Falsifying market research behaviour Ethics of market intelligence Excessive telemarketing Excessive credit facility creating debt trap
ETHICAL ISSUES IN CONSUMERISM Filing false claims Fraudulent return of merchandise Rerecording of copyrighted music , videos
or software (% licensed s/w to unlicensed s/w)
Phoney insurance claims
UNETHICAL MARKETING PRACTICES DISHONEST PRACTICES IN SHOWROOM UNWANTED AND UNTARGETED
TELEMARKETING ANNOYING OVERKILL AD CAMPAIGNS IN
ELECTRONIC MEDIA ESPECIALLY INTERNET WITH ADS POPPING UP IN THE MIDDLE OF A SESSION
LOUD SELF PRAISING ROAD SHOWS WITH INTENT TO LOCK IN PROSPECTS POST LAVISH FESTIVITIES
WHEN TO REFUSE AN ORDER YOU DON’T HAVE APPROPRIATE SOLUTION AND
SOMEONE ELSE IS BETTER EQUIPPED TO SOLVE THE PROBLEM (HONESTY)
THERE IS NOT ENOUGH TIME TO DO THE JOB WELL(QUALITY)
THE JOB REQUIRES COMPETENCES YOU DO NOT HAVE(HONESTY)
THE CLIENTS DEMANDS OR LOCATION IS SUCH THAT HIS POST SALES SERVICES IS UNECONOMICAL (RATIONALIZATION)
CLIENT ASKS YOU TO DO SOMETHING UNETHICAL – PROVIDE SOURCE CODE (INTEGRITY)
UNETHICAL ADVERTISING FALSE AND MISLEADING ADVERTISEMENTS DELIBERATE OMISSION OF REQUIRED INFORMATION IMPLYING A BENEFIT THAT DOES NOT EXIST EXAGGERATION OF BENEFITS USING UNWARRANTED TECHNICAL JARGON INADVERTENTLY OR OTHERWISE RUNNING DOWN
COMMUNITIES OR RELIGION CREATING CULTURAL DEGENERATION eg AD OF FILM
WITH SAIF AND KAREENA (KURBAN) PLAGIARISM OPEN CRITICISM OF COMPETITORS
UNETHICAL MARKETING BEHAVIOUR SALE OF PRODUCTS WITH SAFETY RISK eg NOKIA MOBILE
SETS WHICH TENDED TO EXPLODE PUSHING POOR QUALITY PRODUCTS IN A MARKET WHERE
DEMAND EXCEEDS SUPPLY WARRANTY PERIOD TERMS NOT HONORED eg FREE
REPLACEMENT OF PARTS IS DOWNSIZED TO ONLY FREE REPLACEMENT OF CERTAIN COMPONENTS . PARTS FOR WHICH WARRANTY NOT COVERED NOT MENTIONED DURING SALE. CASE OF SOFTWARE PRODUCT SALE. WHAT IS MEDIA WARRANTY FOR 90 DAYS AFTER SHIPMENT. WHY PEOPLE HAVE TO PAY 20-25% OF PRODUCT VALUE AS AMC IN THE FIRST YEAR TO RECEIVE FIXES FOR BUGS
UNETHICAL MARKETING BEHAVIOUR COUNTERFEIT BRANDED GOODS SOLD AS
ORIGINALS eg RETAIL SHOPS SELLING THEIR OWN BRANDS WITH NAMES ALMOST SAME AS THE ORIGINAL eg VON HULSEN
EXCESSIVE MARKUPS BY RETAILERS eg BEVERAGES 500ML 18/20/22/25 RS
EXAGGERATED PRODUCT CLAIMS CHALLENGED BY OTHERS eg HLL TOOTHPASTE CLINICAL INGREDIENTS AND BENEFITS CHALLENGED BY COLGATE
TASTELESS ADVERTISING SHOWING A PARTICULAR COMMUNITY IN POOR LIGHT
UNETHICAL MARKETING BEHAVIOUR HARASSING TELE MARKETING DECEPTIVE LABELLING eg NET WEIGHT 1000
GMS. HAS ANYBODY CHECKED THE WEIGHT OF RICE BAGS (1KG) IN THE RETAIL SHOP. DO YOU SEE A WEIGHING SCALE IN THE RETAIL SHOP WHERE YOU CAN CHECK THE WEIGHT CASE OF BASKIN ROBBINS ICE CREAM 1 KG PRINTED ACTUAL WEIGHT 850 GMS
UNETHICAL CUSTOMER PRACTICES PHOTOCOPYING BOOK TAKEN ON REVIEW AND THEN
RETURNING IT. CASE OF STRAND BOOK STALL SHOP LIFTING RETURNING CLOTHES WHICH WERE WORN TRAVELLING ON BUS TICKETS BEYOND STATED POINT ABUSING WARRANTY TERMS RETURNING PRODUCTS BOUGHT IN SALE AND
DEMANDING FULL CREDIT OR RETURNING PARTIALLY USED PRODUCTS AND DEMANDING FULL CREDIT
PHOTOCOPYING BOOKS OR USING PIRATED SOFTWARE, FILMS OR MUSIC
CORPORATE CODE OF ETHICS Statements of values and principles which
define the purpose of the company Statement of the norms and beliefs Terms such as codes of ethics , codes of
conduct , codes of practice are synonymous and sometimes used inter changeably
Case studies in lack of advertising ethics Terms of reference of sale of products False claims made by some fitness centres
related to weight loss by women
CORPORATE CODE OF ETHICS Codes seek to clarify ethics of the
organization and to define its responsibilities to different groups (this is what company stands for). Behaviour expected to conform to ethics and principles stated in the code
Statement of values and principles which define the purpose of the company “This is how we expect you to behave (IBM unwritten code of whom you keep company with)
CORPORATE CODE OF ETHICS Statements of norms and beliefs of company Code of ethics makes employee aware of his
obligation and the moral duties towards the company
Existence of company code of ethics taken into account while convicting companies on charges of breach of ethical conduct
Code of ethics to be implemented and monitored across supply chain. HOW?
CORPORATE CODE OF ETHICS Code of ethics does not establish priority
between norms and beliefs Priorities between ethical practices and
business gains is often a tough call for managers
GENERAL GUIDELINES FOR ETHICAL CODES Contribute to well being of society Avoid harming others Be honest and trust worthy Respect people and property rights
including copyrights and patents Respect privacy of others
CODE OF CONDUCT
Statement of rules stated either in affirmative or prohibitory(must do or must not do)
Penalties for transgressions identified and systems of compliance defined
Potential conflict of interest described with rules for guidance
Specify actions in the work place and focused at lower levels
NEED TO FORMULATE CODE OF ETHICS Be a socially responsible organization Provide guidelines for employee behaviour Comply with laws and regulations Establish better corporate culture Avoid conflict of interest Make proper use of company assets eg using company car on private
usage and even running as private taxi For self regulation To shape ethical behaviour To take moral responsibility For improving image of company eg Infosys and Phaneesh Murthy case
NEED TO FORMULATE CODE OF ETHICS Respect for traditions Respect for core human values which determine the absolute moral
threshold for all business activities Need for self regulation especially in advertising , press releases etc Honesty in relationships with stakeholders Comply with regulatory and statutory requirements (TDS deducted at
source. TDS Form 16 given only in May which says TDS deducted credited in treasury on 30th March.)
Follow proper dress code (neck ties at half mast , slippers, jeans ). Case study of P&G salesmen selling Ariel wearing whites
Polite language in conversations especially with customers and juniors eg Army rough address
NEED TO FORMULATE CODE OF ETHICS Maintain confidentiality of information related to employees ,
customers etc No place for friendship or personal gains in decision making No payment to people groups parties for improper use Not to provide false or misleading information to people Do not use company property or assets for improper usage (case of
Municipal commissioner using personal car on personal visits)
CODE OF PRACTICE
Interpretations and illustrations of corporate values and principles addressed to employees as individual decision makers(this is how we do it here-unlearning process from public sector to private ; B-school to first multi national job etc
Codes seek to highlight stated values through the practice by employees using guidelines for decision making. Ethics means what we do is because it is our character
85
CODE OF CONDUCT
a code of conduct shall be prepared for board members and senior management which shall be posted on the website.
board members/ senior management to affirm compliance of the code and the annual report should contain such a declaration signed by chairman.
Reasons for adopting code of conduct Self regulatory code of conduct (Tata code
of conduct) in order to avoid punitive action by government eg voluntary printing of smoking is injurious to health or printing of max price payable anywhere and clear details of how to complain on wrapping
Code of conduct by profession
How to develop code of conduct
Identify key behaviour needed to adhere to ethical values proclaimed in code of ethics or values statement
Include wording that indicates all employees are expected to conform to behaviour specified in code of conduct
Review the controls in ethical practices regularly especially with respect to potential risk areas of breaches in ethics
MAJOR CONCERNS IN ETHICAL CODES How business may make effective use of
company codes The impact of company codes on business
practice from different perspectives Analyze company codes using theories of
ethics
Code of conduct for consultants Conflict of interest eg audit companies should not show internal control
weaknesses in processes so that their consulting wing can give services. An audit company is debarred from doing consultancy in an account where they have done an audit (conflict of interest).Same way an ad company cant run a campaign for 2 competitors
Confidentiality Non employment statement Protection of IPR and copyright in work Technical competence Impartiality and objectivity Adherence to ethics related to commissions Value for money with bundled services Client ethics eg Pwc , Arthur Andersen Dress and behaviour codes eg IBM - Rockfeller
Code of ethics for auditors
Obligation to exercise honesty , objectivity and diligence in the discharge of their duties
Hold trust of their employers and exhibit loyalty in matters pertaining to audit
Not be a party knowingly or otherwise to illegal transactions being carries out by the engager
Refrain from activities which may be in conflict of interest of employers and would prejudice objectivity of audit
Code of ethics for auditors
Shall not accept gifts or offers Shall not be on board of directors of a
company or subsidiary which is being audited
Maintain secrecy of information learnt during audit and not to misuse such information and seek clearance of engager prior to usage of case studies based on their fiscal data
BRITISH AIRWAYS CODE OF BUSINESS CONDUCT Success of airlines dependent on quality of
decisions and behaviour of individuals at all levels in the organization
Code developed to provide guidance and assistance to employees and stakeholders
Adherence to principles will ensure reputation and success grows
CODE OF CONDUCT IN BA
Compliance-Comply with laws that regulate the conduct of business
Fairness-Treat all stakeholders equally Integrity-Show respect to individuals who have
business relationship Openness-Share and declare information on conflicts
of interest Honesty-Do not allow people to be misled Fair competition-Competition to be based on quality
and integrity
CODES OF BUSINESS ETHICS- UNILEVER CODE OF CONDUCT OBEYING THE LAW EMPLOYEES CONSUMERS SHAREHOLDERS COMMUNITY INVOLVEMENT PUBLIC ACTIVITIES BUSINESS INTEGRITY COMPLIANCE-MONITORING-REPORTING
RBI ETHICAL POLICY
Will not invest in or supply financial services to any company which oppresses the human spirit , takes away rights of individuals or deploys any instrument of torture or abuse
Will not encourage customers to take a proactive stance of the environmental impact of activities
Will ensure that financial services not misused for money laundering etc
RBI ETHICAL POLICY
To offer all customers consistent high quality and good value services and strive for excellence
To act at all times with honesty and integrity within regulatory requirements
Corporate GovernanceCorporate Governance Business EthicsBusiness Ethics
CORE VALUESCORE VALUESTransparencyTransparency
FairnessFairnessAccountabilityAccountabilityResponsibilityResponsibility
Guide for behaviorGuide for behaviorStructure of decision-makingStructure of decision-making
RELEVANT SECTIONS UNDER SOX FOR BE SOX stands for Sarbanes Oxley act of 2002; an act brought
in by SEC in 2002 in the aftermath of financial scandals such as Enron etc
11 sections under SOX Sections relevant to Business ethics are -
Section relevant to Business ethics is Section 406 which is related to the code of conduct -Section relevant to Whistle blowers policy is Section 806 -Section 301 relevant to oversee the correctness of and manage complaints received in the category as well as protect the complainant -Section 302 talks about declaration of quarterly results -Sections 404 is related to integrity of internal controls of financial data
SECTION 406 OF SOX
Requires disclosures regarding code of ethics in their annual reports
Disclosure whether issuer has code of ethics for senior management and how is the code of conduct monitored and controlled
CODE OF ETHICS UNDER SOX 406 Honest and ethical conduct including the
ethical handling of conflicts of interests between personal and professional relationships
Avoiding conflict of interest including disclosure to appropriate person identified in the code of ethics , related to any material transaction or relationship that could give rise to such a conflict
CODE OF ETHICS UNDER SOX 406 Full , fair , accurate , timely and
understandable disclosure to appropriate person identified in the code if any material transaction or relationship could give rise to such a conflict
Full fair accurate timely disclosures to stakeholders in reports that accompany company communications (Maytas funding)
CODE OF ETHICS UNDER SOX 406 Honest and ethical conduct including the
ethical handling of conflicts of interests between personal and professional relationships
Avoiding conflict of interest including disclosure to appropriate person identified in the code , if any material transaction or relationship could give rise to such conflicts
CODE OF ETHICS UNDER SOX 406 Prompt internal reporting related to
violation of code of conduct Accountability for adherence of code
(Satyam) Provision for reporting of violations and
process to receive whistle blowers inputs and addressal
TOPICS COVERED UNDER CODE OF ETHICS CONFLICT OF INTEREST CONFIDENTIALITY (NON DISCLOSURE AGREEMENT) FAIR DEALING WITH SUPPLIER , EMPLOYEE AND CUSTOMER PROTECTION AGAINST MISUSE OF COMPANY FIXED AND
MOVEABLE ASSETS(CONTINUE TO STAY IN COMPANY QRTRS LONG AFTER LEAVING,USING COMPANY TELEPHONE AND CAR FOR PERSONAL USE, RENTING COMPANY CAR AS PRIVATE TAXI , SUB LETTING COMPANY ACCOMODATION-PG)
MANAGING MRP PRICES CONTROLLING COUNTERFEIT PRODUCT SALE IN MARKET ENSURE THAT EXPIRED PRODUCTS ARE NOT SOLD ADHERENCE TO WEIGHTS AND MEASURES
CORPORATE CODE OF ETHICS AS SELF REGULATION SOX ACT SECTION 406 REQUIRES ALL PUBLIC COMPANIES
TO DISCLOSE THE CONFIRMATION OF ADOPTION OF CODE OF ETHICS FOR SENIOR MANAGEMENT
EXTENSIONS TO THIS SECTION WILL INCLUDE CODE OF ETHICS FOR PARTNERS IN SUPPLY CHAIN
CURRENTLY CORPORATE CODE OF ETHICS ARE VOLUNTARY MECHANISMS FOR SELF REGULATION AND DO NOT ASSURE THAT ETHICAL CODE WILL BE EFFECTIVE IN FOSTERING ETHICAL BEHAVIOUR
REFER TO CASE OF MARUTI WHO WITHDREW THE WHOLE BATCH OF DEFECTIVE 800 AND REPLACED WITH ZENS OR MONEY BACK WITH INTEREST IN 1989
CODES DO NOT ENSURE ADHERENCE BUT THEY EDUCATE EMPLOYEES ABOUT STANDARDS OF BEHAVIOUR
WHISTLE BLOWERS POLICY UNDER SECTION 806 SECTION 806 OF THE SOX ACT PROTECTS WHISTLE
BLOWERS FROM RETALIATION IN THE FORM OF HARASMENT , DEMOTION , TRANSFER OR EVEN DISMISSAL
A CORELATED SECTION 1107 IMPOSES CRIMINAL SANCTIONS FOR RETALIATION AGAINST WHISTLE BLOWERS
POLICY PROTECTS EMPLOYEES OF PUBLICLY TRADED COMPANIES WHO REPORT CONDUCT WHICH THEY BELIEVE IS FRAUDULENT AND AFFECTS STAKEHOLDERS ADVERSELY .THIS INCLUDES ACCOUNTING FRAUDS ,MANIPULATIONS;BANK AND STOCK EXCHANGE
FRAUDS (DSQ SHARE SCANDAL)
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WHISTLE BLOWER POLICY
company to have an internal policy on access to audit committee by employees on unethical and improper practice.
the policy to be communicated to employees and included in the HR manual.
company shall affirm that it has not denied any personal access to audit committee and has provided protection to whistle blowers from unfair termination etc.
the affirmation shall from part of the board report on corporate governance.
Whistleblowing Act of disclosing wrongdoing in an organization Term first used to enable employee to go public with
complaints of corruption or disclosure of unethical practices
Like blowing a whistle to call attention to a thief Types -Internal – covered by SA
8000 and corporate governance rules -External – allows public to report insider trading or any other irregularity
Whistle blowers may pay high price for dissent
Whistleblowing
Attempt by a member of company or outside to disclose wrong doing in or by company
Whistle blowing can be internal or external internal when reported to senior management and external when it is reported to external agencies such as police government or press
Steps needed in whistle blowing
Encourage free expression of dissenting view points
Streamline grievance procedure so that all problems receive prompt and fair hearing
Find out what employees think of company ethics and values and encourage inputs
Encourage employees to exercise their conscience
QUESTIONS TO BE ASKED BEFORE WHISTLE BLOWING Is knowledge complete and accurate What public interest is being harmed How much is the matter worth pursuing and
how far in the company should you go with your concerns
Are you justified in approaching outside agencies
Should you resign before you complain eg Maj Gen Mayadas in Bofors case ADG MO
Moral justification of external whistle blowing There is clear substantiated evidence that the
company is engaged in wrong activities which will wrong other parties
Reasonably serious attempts to prevent the wrong through internal whistle blowing that will prevent the wrong
Wrong is serious enough to justify injuries that external whistle blowing will inflict on oneself or other parties
QUESTIONS TO BE ASKED BEFORE WHISTLE BLOWING How will colleagues perceive the action What is expected to be achieved by opening
up Should it be reported anonymously What protection is available after blowing
whistle
Risks of whistle blowing
Poor evaluation , demotion and dismissal Blacklisting leading to unavailability of
jobs in sector Career disruption and financial hardship Loss of friends Loss of life or fear of physical attacks
Whistleblowing Example (cont.)
Another example is that of a multi national company which has an intranet where any employee can post suggestions, complaints to any higher authority. Based on the seriousness of the complaint the mail is directed to appropriate level.
In this case a woman employee was being sexually harassed by her boss. She sent a mail to the MD who was abroad in the far east. He sacked the offender on his return
Whistleblowing Example
A senior manager in a reputed management consulting company seeks sexual favours from one of his female colleague and because she did not comply she was fired for poor performance. Although she complained to one of the partners no action was taken against the offending person till she complained to the police and press. The manager was arrested and the incident highlighted in the newspapers
Whistleblowing Example (cont.)
Case of Satyandra Dubey the Indian Oil engineer who was murdered because he blew the whistle on petrol adulteration
COMPONENTS OF WHISTLEBLOWERS POLICY PROGRAM SHOULD BE PART OF LARGER SYSTEM WIDE
COMPLIANCE TO ETHICS PROGRAMS CORPORATE VALUES AND CULTURE SHOULD SUPPORT
ETHICAL BEHAVIOUR BILATERAL EMPLOYEE COMMUNICATION RELATED TO
UPDATES OF CASES REPORTED UNDER THE AEGIS OF 806 ESTABLISHMENT OF STRONG CODE OF CONDUCT WITH
STRICT CONTROLS AND QUICK RETRIBUTIVE ACTION IMPLEMENTATION OF HOTLINE WITH ASSURED ANONYMITY
(eg KNP HARASMENT CASE) ESTABLISH INVESTIGATION PROTOCOLS ESTABLISH REAL TIME FEEDBACK CONTROLS FOR
VIOLATIONS AND FORTIFY REQUISITE PROCESS TO DISALLOW ANY SUCH INCIDENTS FROM RECURRING (KPMG,KNP)
SARBANES-OXLEY SECTION 301 HANDLING COMPLANTS Section 301 of Sarbanes-Oxley adds new Section 10A(m) to the Exchange Act and
requires that by April 26, 2003 the SEC, by rule, direct the national securities exchanges and NASD to prohibit the listing of securities of any company, including foreign companies, that do not meet the following requirements: – Each member of the company’s audit committee must be a director and must
otherwise be independent; :– The audit committee must be responsible for hiring and discharging the
independent auditors– The audit committee shall be responsible for approval or all audit and non-audit
services– The audit committee shall receive reports from the independent auditors
regarding critical accounting polices and practices, discussions that have taken place with management regarding alternative treatments of financial information under GAAP, and any accounting disagreements and other material written communications between the auditors and management
– The audit committee must establish procedures to receive and address complaints regarding accounting, internal control and audit issues, and to provide company employees an opportunity to make confidential, anonymous submissions regarding accounting and auditing matters
COMPONENTS OF WHISTLEBLOWERS POLICY INCORPORATE OBSERVANCE OF BUSINESS AND PERSONAL
ETHICS INTO PERFORMANCE REVIERW SYSTEMS (HUMAN CAPITAL MONITOR –CAPABILITY , POTENTIAL , CONTRIBUTION , VALUES)
ESTABLISHMENT AND UPDATION OF COMPLAINT MGT SYSTEM AND SWIFT COMMUNICATION TO COMPLAINANT REGARDING STATUS OF COMPLAINT
Sarbanes-Oxley Act Section 301 Requires the Audit Committee to:
– Directly oversee the Company’s external audit firm.– Be independent.– Establish procedures for handling complaints about
accounting or auditing matters.– Have authority to hire advisors.– Be adequately funded.
Specific issues to be defined in Audit Committee Charter– Purpose - Internal Control– Authority - Reporting– Financial Statements - Composition– External Audit - Compliance
Ethical Behavior Matters
Why does it matter?– Ethical business practices = ability to retain existing
customers, gain new ones
– Positive impact on employees - management
– Supply chains, global market opportunities
– Corporate citizenship and the role of business in society
Building systems to support ethics Ensuring system audits to monitor and enforce
ethical behaviour New employees informed of ethical standards
and existing reaffirmed about values system Annual performance includes observance of
code of ethics Importance of personal integrity Encouragement of whistle blowers policy and a
watch dog panel to resolve issues
Training needed in areas of ethics
Accounting methods Ethics in sales and marketing Probity of purchasing procedures Ethics in dealing with stakeholders Ethics at work place
Case study 2 in Business Ethics?
Case study 2
Several private higher educational institutes have “arrangements, affiliations” to educational institutes abroad. Their legal status and ranking
in their own country is not specified. These private institutes also do not purport NAAC
accreditation. They also claim high placements and six months of intensive training abroad.
What will you do if you are an aspirant
ETHICAL ISSUES CONFRONTING BUSINESS EMPLOYEE RIGHTS ETHICAL BUSINESS CONDUCT CHILD LABOR ENVIRONMENTAL PROTECTION UNDER PAID BASED ON SEX ,RELIGION ,COLOUR,
NATIONALITY etc BONDED LABOR EXPLOITATION OF UNORGANIZED LABOR
(HEALTH CLUB EMPLOYEES NO HOLIDAYS NO UNION)
MINIMUM WAGES
VALUES
Foundation on which company is built Vision and values are mirror of business and
should stand the test of time Values should support vision and reflect in the
daily operations of the company Value system may be influenced by external
factors Vision charts future direction while values
provide motor to get there
VALUES
Develop supporting practices for values Values provide a guidance system for
change management Values translated into measurable practices Examples are Customer Service:Average
purchase and Market share;Employee care:Employee turnover and 360 degree appraisal
Classification of values
Universality of application Individual choice Minimized societal interference Controlled greed Pursuit of pleasure Work ethics Sticking to truth Transparency and honesty
Classification of values
Fair justice Fair trading practices Fair accounting practices Adherence to laws and regulations Protection against plagiarism and IPR thefts Copyright violation (different instruments
used in reproducing same tune is not violation of copyright)
VALUES AT TATA MOTORS
Transparent and honest Management Employees form an integrated part of the
industrial family Customers , Dealers and suppliers form part
of the extended family Ethical transactions within and externally
VALUES AT INFOSYS
Integrity and transparency Fairness in dealings with stakeholders Pursuit of excellence
TESTING VALUES
Advisor to government on privatization project has a relationship with a potential buyer of the public sector enterprise(centaur deal)
A problem is found in an audit related to business process accounting accuracy. Auditor suggests that a division of his company rendering management advisory services be retained as consultant for process improvement . Barred by SEC
TESTING VALUES
Job offer made to client personnel overtly or covertly during or just after engagement. Many agreements specify cooling period
Inputs given to auditor during audit are implicitly accepted and certified without verification (Satyam , ISO 9000 audits)
Working on similar project for competition during the course of the initial project execution
Conflict of interest
Arises when an employee of a company is engaged in carrying out a certain task on behalf of the company and the employee has a personal commercial interest in the outcome of the task
Employee is obligated to exercise independent judgment on behalf of the company to performing the task (segregation of auditing and consulting functions in audit firms)
Conflict of interest
Conflict of interest arise when employees have a vested interest that could induce them to under perform or act in a way which is not in the best interest of the company eg A consultant holds large number of shares in a company offers his professional services for internal audit services
Need not be financial but also ethical eg promoting products of competing company
Objective conflict of interest-conflicts of interest that are based on financial relationships
Subjective conflict of interest-conflicts of interest that are based on emotional ties or relationships
Potential conflict of interest-occur when employee has an interest which could influence the judgment made for the employer if the employee were performing a certain task for the employer but has not been given that task to perform
Actual conflict of interest-when an employee has an interest that might influence the judgment he makes for the employer when performing a certain task for the employer and has actually been given that task to perform
Apparent conflict of interest-situation in which an employee has no actual conflict of interest but in which other people looking at the situation may come to believe that there is actual conflict of interest
Conflict of interest
Areas of conflict of interest
Exercising biased judgment – auditor promotes management consulting services of same company for resolution of problem or doctor referring you to a friend for investigation
Engaging in direct competition with employer – employee has interest in another org which competes with his employers. Eg employee is in a marketing team which is bidding for a large contract. Brother works for competition
Avoiding conflict of interest
During an assignment a consultant is supposed to achieve best possible results in the interest of a client
Not very obvious what the client interest is Conflict of interest between groups in
company and between short term and long term interests
Conflict of interest avoidance is a critical ethical issue in consulting
Areas of conflict of interest
Directorship or controlling or financial interest in any business in competition with client (ad agencies)
Financial interest in goods and services recommended or supplied to a client(interior décor of office done by wife)
Personal relationship with employed senior management in client place
Personal investment in client organization or its parent (shares)
Managing conflicts of interest
Avoidance of areas of conflict uncle of a vp who was in a technical committee evaluating a tender bid withdrew from the committee because his nephew worked for one of the strong bidders
3rd party independent judgment external auditors
Objectivity-no external influences eg pwc acting on input given by md
Conflict of Interest Cases
Done a very successful consulting assignment for a leading FMCG company leading to high degree of success. Competition hears of this assignment and is willing to pay twice what the current company has paid. There is no Non Disclosure Agreement .
Can an advertising company which has run a Maruti campaign run one for Tata Motors
Cautious Approach to Whistleblowing1. Make sure situation involves an imminent
threat to society or to the business
2. Document all allegations
3. Examine internal whistleblowing first
4. Should you remain anonymous?
5. Get another job first!!!
Case study 3 in Business Ethics?
Case 3
Provider of IT solutions bids for a large tender
Your proposal is far superior to any othertechnically the soundest
almost the lowest bid To get the order what should you do You have 3 “experienced” players to
contend with
Ten commandments of ethics
observe ethical practices in corporate governance
observe company legal guidelines do not offer or take bribes do not mislead people through wrong
statements in advertisements or in presentations (conditions apply or flat 50% on all products but in reality on very few items)
Ten commandments of ethics do not obtain competitive information illegally do not disseminate misinformation do not steal trade secrets do not plagiarize especially books and music take care of adverse effects of products and
services on society give employees option to opt out of activities they
consider unethical without fear of recrimination
Steps to achieve increased organizational effectiveness Increased ethical behaviour is a result of: -
clear personal values -clear organizational values -effective internal controls and corporate governance systems -inspirational leadership
Increased ethical behaviour results in increased employee commitment
Increased employee commitment provides increased organizational effectiveness
Managing ethics
Need to find precise ways to measure the end results of the efforts to develop effective corporate ethics compliance programs
A firms approach to ethics and legal compliance management has tremendous impact on employee attitude and behaviour
Perception of ethical and legal compliance management matter immensely for public opinion
Influences on ethics and compliances Values based cultural approach to ethics
and compliances eg fair treatment of employees , rewards for ethical conduct (promotion for refusing bribes) ,concern for external stakeholder (customer), motivating employees to practise ethics at work place , setting high moral and ethical standards and holding them accountable for violation of codes
ETHICAL ISSUES IN PURCHASING Judgment of what is right ethically and what
is wrong Buyers can by their actions affect their affect
their company profitability and reputation Maintaining strict ethical code can project
right image of company Ethical violations include bribery deception
rigging , gifts etc
ETHICAL ISSUES IN FINANCE Creative accounting done to make figures
look decent; legal but not ethical. Done within confines of accounting rules eg wip costing , inventory costing , royalty payments, inflating intangible assets
Effectiveness of internal controls as will be seen in corporate governance
Manipulation of shares Insider trading
SHAREHOLDERS AND BUSINESS ETHICS LOCUS OF CONTROL FRAGMENTED OWNERSHIP DIVIDED FUNCTIONS AND INTERESTS RIGHT TO SELL STOCK RIGHT TO VOTE IN MEETINGS RIGHT TO CERTAIN INFORMATION ABOUT THE
COMPANY RIGHT TO SUE MANAGERS FOR MISCONDUCT CERTAIN RESIDUAL RIGHTS IN THE EVENT OF
LIQUIDATION ISSUES OF CORPORATE ACCOUNTABILITY
INSIDER TRADING Act of buying and selling shares on the basis of
inside company information which is not available to general public and which could have significant impact on the price of company stock
Insider trading is illegal and also unethical Unethical because person who trades on insider
info steals info and gains unfair advantage over the public
Through this inside info stocks inflated or deflated artificially
ETHICAL ISSUES IN ACCOUNTING Under stating income Falsifying account heads through inflation ,
deflation or fictitious heads Allowing questionable deductions
GUIDELINES FOR ETHICS IN OPERATIONS MGT Is the problem really what it appears Is the action being contemplated legal Who will benefit from the action Has opinion of people been sought
LISTING OF ETHICS VIOLATION BY SEC IPR Theft Conflict of interest Discrimination Misuse of confidential information Fudging of accounts Misuse of facilities or company assets Industrial espionage Deliberate misstatements in legal document
LISTING OF ETHICS VIOLATION BY SEC Receiving expensive gifts or entertainment False or misleading advertisements Insider trading of shares Influencing regulatory or government
decisions in their favour Violation of weights and measures or
product specifications
GLOBALIZATION AND ETHICS CROSS BORDER TRANSACTIONS TECHNOLOGY AND POLITICS CULTURAL ISSUES ACCOUNTABILITY LEGAL ISSUES
BUSINESS ETHICS MANAGEMENT MISSION OR VALUE STATEMENTS CODES OF ETHICS REPORTING/ADVICE CHANNELS RISK ANALYSIS AND MANAGEMENT ETHICS MANAGERS, OFFICERS AND
COMMITTEES ETHICS EDUCATION AND TRAINING AUDITING, ACCOUNTING AND REPORTING
SA 8000
A common standard seeking to guarantee the basic rights of workers
A set of universal requirements in line with the ILO Conventions
The first auditable global social standard Provides the framework for the independent verification
of the ethical production of goods and services Has been developed by CEPAA,
now SAI (Social Accountability International)
OVERVIEW OF SA 8000 SOCIAL ACCOUNTABILITY REQUIREMENT GLOBAL STANDARD ON CORPORATE SOCIAL ACCOUNTABILITY AIMS TO GUARANTEE BASIC RIGHTS OF WORKERS INVOLVED
ESPECIALLY IN INDUSTRIAL UNITS SETS BASIC STANDARDS FOR:
-CHILD LABOUR BELOW AGE OF 15 -FORCED LABOUR -HEALTH AND SAFETY -DISCRIMINATION -FREEDOM OF COLLECTIVE BARGAINING -DISCIPLINARY PRACTICES INCLUDING TORTURE AND CORPORAL PUNISHMENT
-REGULATED WORKING HOURS NOT EXCEEDING 12 HRS/DAY AND ENFORCED BREAK AFTER EVERY 10 SUCCESSIVE WORK DAYS -COMPENSATION TO MEET MINIMUM WAGES ACT -SYSTEMS TO CONTROL COMPLIANCES TO STANDARDS
The Standard SA 8000 (download: www.cepaa.org)
DiscriminationManagement
Communication
Working Hours
Remuneration
Health & Safety
Supply Chain
Disziplinary Practices
Child Labour
Forced Labour
Freedom of Association & Right to Collective Bargaining
Auditors Ethics
Audit team selection (gender) Language Knowledge of customs and laws Understanding of the culture Do no harm Information is about people When auditors leave, people remain If you cannot do the work – do not try Do not deceive Do not misrepresent
Worker Benefits
Fewer accidents Enhanced opportunities to be organized A way to address and improve the conditions
where people work Increased worker awareness about core labor
rights Enhanced communication to the management
Worker Benefits
Evidence that labor rights are good for society and business
Improved business practices lead to economic growth and new job opportunities
Employer benefits A credible and effective way to put social responsability
into action Enhanced company and brand reputation Improved employee recruitment, retention and
performance Gains in quality and productivity Savings from fewer workdays lost and lower insurance
bills Less expensive than an internal compliance program Better relationships among workers, trade unions,
companies, customers, NGOs and government
Consumer benefits
Clear, credible information for those who want to make ethical purchasng decisions
Useful data for socially responsible investors Identification of products made under humane
conditions Identification of companies making progress
toward humane conditions Broad coverage of product categories and
production geography
OTHER BENEFITS OF SA 8000 PUTTING COMPANY VALUES INTO ACTION ENHANCING COMPANY BRAND IMAGE IMPROVING EMPLOYEE RECRUITMENT ,
PERFORMANCE AND RETENTION BETTER CORPORATE PERFORMANCE ENHANCED EMPLOYEE LOYALTY AND
COMMITMENT
BENEFITS OF SA 8000 AT TATA STEEL Improved brand image Increased employee morale and enhanced
productivity and reduced absenteism Improved score in TBEM Tracking of legal compliances Improved workplace conditions No labour unrest for many years
Case study 4 in Business Ethics?
Case study 4
List and present the violations to SA 8000 code Nike corporation was alleged to have committed
ADVANTAGES OF BEING ETHICAL Employee loyalty and commitment Less likelihood of fraud or theft in company
with senior leaders setting high degree of moral values
Better working atmosphere Greater customer care and customer loyalty
BENEFITS OF ETHICAL CONDUCT Enhancing company’s image Inculcating company’s values into employees Defining company’s policies Signaling expectations of ethical conduct from suppliers employees
and distributors Enhancing employee self image and improving values of new recuits Promoting corporate excellence Strengthening the internal controls of company for sensitivity to
breaches in ethical behaviour
Case studies for discussion
Case Studies for discussion
Should a woman be recruited in the army and be serving in forward areas
A CEO of a very large IT multi national based out of Singapore asked for selected proposal files of offers made in India. These files were sent to him from India with no suspicions aroused. Very shortly he resigns from this company and takes over the regional operations of a competitor
Case Studies for discussion
Several teachers in schools sign pay vouchers and receive salary less than offered during appointment
Falsified , exaggerated or non claimable claims while on tours
