Business Ethics

Business Ethics
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Business Ethics - Introduction

Ethics involves systematizing, defending and recommending concepts of right & wrong behavior Ethics is a mass of moral principles or set of values about what is right or wrong, true or false, fair or unfair, proper or improper What is right is ethical and what is wrong is unethical
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Business Ethics - Definitions

There is only one ethics, one set of rules of morality, one code that of individual behavior in which the same rule apply to everyone alike .. Peter Ethics is a branch of philosophy which is the systematic study of selective choice, of the standards of right & wrong and by which it may ultimately be directed .Phillip Wheel Wright
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Drucker
Business Ethics - Definitions

Supreme oneness is the rationale of all ethics and morality. Ethics cannot be derived from the mere sanction to any personage. Some eternal principle of truth has the sanction of ethics. Where is the eternal sanction to be found except in the only infinite reality that exists in you & us and in all ,in the self, in the soul . Swami Vivekananda
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Business Ethics: What Does It Really Mean?

Business Ethics:Today vs. Earlier Period
Societys Expectations of Business Ethics Ethical Problem
aut c A dn a det c ep xE sc ht E ss en s u B fo i i
Ethical Problem
Actual Business Ethics
1950s
Time
Early 2000s
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Ethics:
Objectives
Define the greatest good of man & establish a standard for the same Set / Establish moral standards / norms of behavior An overall study of human behavior what is moral / immoral should be assessed Apply judgement upon human behavior based on these standards and norms Suggest moral behavior, prescribe recommendations about Dos & Donts Ones opinion or attitude about human conduct is expressed
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Ethics & Related Terms

Ethics & Morality: Morality is a set of rules to guide the actions of individuals Ethics & Religion: Ethics gets ideas from religion & through experiments it approves them as Code of conduct Ethics & Law: Law is a code of conduct which the authority in power prescribes for society. It differs from Ethics in its option to use force when necessary Ethics & Values: Values are deep-seated ideas & feelings that manifest themselves as behavior or conduct Law + Knowledge = Ethics
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Business Ethics
Business ethics are the application of general ethical rules to Business Behavior Business ethics are rules of business by which propriety of business activity may be judged Business ethics is a form of applied ethics
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Business Ethics
The 3 Cs of Business Ethics are
Compliance of laws, principles of morality & policies of the company Contribution to society in terms of Quality of products / services, employment etc Consequence of business activity towards environment, social responsibility towards shareholders, bankers, customers, employees & good public image
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Business Ethics Case Study 1

Sanjay Verma was an MBA, specialized in Marketing & Advertising. He has just joined ABC Ad Agency. He was a competent & intelligent person with outstanding performance during his MBA period at the institute. Yet he got this job with great difficulty due to recession in the job market. He had somehow managed to find this job through a contact of his uncle. The chairman of the company wanted him to somehow persuade a well known newspaper to avoid reporting on a controversial corruption charge against him & instead write a favorable editorial. Verma was not convinced that his chairman was clean in the case. On the other hand the newspaper was willing to accommodate the chairman, if the organization was willing to give a large size advertisement. Recently Verma lost his father leaving Verma to take care of his mother & three sisters. What should Verma do?
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Business Ethics Case Study 2

Amit was a young & dynamic manager at XYZ Pvt Ltd and was recently married. Due to the nature of his job, he had to do lot of travelling and therefore unable to devote his time for his wife. At one time he was away for 25 days tour only to return for a day and again go for 10 days tour. This situation led to differences in his married life, turning to serious note. Once he took his wife along with him to tour and found that he and his wife could stay in hotel within the permissible limits of his lodging & boarding allowance with no extra burden on his company. Thus he was away for work for a good part of the day but could spend time with his wife in the evenings. This situation worked out perfectly for himself & his wife and their relations became good. Therefore he started taking his wife along with him on his tours. Is it ethical on the part of Amit.
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Business Ethics - Significance

Good business ethics promotes good business Good business ethics always leads to positive consequences Good ethical behavior will increase goodwill of both business as well as the businessman. If the business image is tarnished it would have a direct consequences on sales, profits, morale & day to day functioning of the business Good B. ethics protects both sides of the business Good ethics promotes self satisfaction, mental relief, free from anxiety Good B. ethics encourages & motivates others to follow and sets example Good B. ethics breeds success Good B. ethics has ushered in an era of New Management that has laid down a code of conduct based on good ethical practices
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Concept of New Ethics

New economy has brought in greater transparency / flexibility but also greater complexity & risks This has resulted in a change in the ethical dimension by raising new ethical issues Varied dimension of the new economy like globalization, technology, assets, framework, recruiting & talent retention has lead to the need for a new definition of ethic
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Concept of New Ethics Ethical Dimension

A good code of conduct should include certain managerial & employee guideline for making ethical decisions. A typical code of ethics would include
Do not use abusive language Manage personal finance well Demonstrate courtesy, respect, honesty & fairness Exhibit good attendance Conduct business in compliance with law Follow all accounting rules & control Make true claims in product advertisements
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Globalization: Growing integration of economies & societies around the world has lead to globalization faster communication, improved infrastructure, technology, changed regulations, free trade & free movement of people. Ethics, morality & globalization are connected with each other. Technology: is the driving force helping business face challenges of today's competitive business environment. All functional areas of the organization marketing, finance, HR, manufacturing, are being facilitated by technology Intangible assets: Everything that can be counted does not necessarily count; everything that counts cannot be necessarily counted .... Albert Einstein . All intangible assets like customer, intellectual property, employee, leadership, culture, strategy, brand, innovation , knowledge, are future oriented so they create future value. Intangible assets are difficult to manage & control and hence risky. Intangibles cannot be directly measured.
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War for Talent : This is a critical driver for corporate performance. Good talent management is required for hot economic times. Talented, skilled, knowledgeable people with innovative ideas are amongst the most valuable intangible assets of a company. Recruitment, selection, as well as retaining talented people is a big challenge to companies today. Many companies offer attractive financial incentives to recruit / retain talent. However these are inadequate. Companies who do a better job of addressing the needs of the Genxers will be the most successful in this war for talent. Some of the steps required to address this war for talent are Discover the needs/wants of the talented people Offer a good package in line with the competition Assessment of gaps based on expectations of employees / realities Address the root cause on why people want to leave the organization Healthy work life balance
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Factors Causing Unethical behavior Competition High expectation of the stakeholders of the business like shareholders, employees, customers etc Ambiguous situations creates ethical dilemma leading the manager to take decision on an alternative which gives higher return at the cost of losing integrity. Political corruption Social values & customs are not followed by the new generation Money & success becomes the important motivator behind any activity People neglecting social responsibility, integrity & discipline
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Unethical conduct Encourage corrupt practices False representations of returns & income statements Exploitation of scarce natural resources Ignoring social interest Unhealthy competition Political donations Exploitation of common consumer Illegal trade with enemy country
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Factors for building an Ethical Infrastructure Commitment from Top Management: Ethical behavior should be fully supported by top management by setting examples. Setting up of an ethics committee: which looks into
Holding meetings to discuss ethical issues Dealing with grey areas Communicating/enforcing the code of conduct to all employees Tracking violations of the codes Rewards / punishment for compliance / violation Reporting to top management on the ethics activities.
Code of Ethics: To encourage ethical conduct, formal codes of ethics are framed A code of ethics states an organizations basic & primary 07/26/12 19 values and rules of conduct

Communicating Ethics The best ethics program is one which is communicated well and easily understood by all Both written and verbal form of communication needs to be adopted Communication needs to clear & crisp without any ambiguity Ethics Training: Effective ethics training should have Employee participation to exchange views Clarify ethical values & enhance awareness of ethics Define criteria for ethical decision making Focus on ethical issues of the organization Investigate ethical environment of the organization, analysis, strategies, resources & goals an upgrade them 20 07/26/12 continuously.
Response & Enforcement Implementing an ethical program is one of the biggest challenges for an organization Reward systems, incentives & penalties form a part of enforcement
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Case Study 3 An airplane manufacturer has spent great deal of money to develop a new state of the art airplane. The company needs cash badly as it is financially over extended. If it does not get some large orders soon, it will have to close down some part of its operation. Doing that will put several thousand workers out of job. The result will be disastrous not only for the workers but also for the town in which they live. The President of the company has been trying to influence the government of a foreign country in a large purchase. He learns that one of the key government minister in charge of making the final decision is heavily in debt because of gambling. He quietly contacts gthe minister & offers him one million rupees in cash if he awards the contract for 10 planes to his firm. The money is paid and the contract is awarded. 07/26/12 22 Comment on the ethics issue involved in tha above case
Values & Ethics

Value: What we choose as worthwhile or believe to have merit in a general or broad sense. Issues of right or wrong are related to ones Values. Values are the standards of right & wrong. Whether something is right or wrong is not a matter of fact. It is a matter of opinion. An action may be upheld by some as right while others might have a contrary view. Values represent A specific mode of conduct or end state of existence is personally or socially preferable to an opposite or converse mode of conduct or end state of existence Stephen Robbins Edward Spranger defines Values as the constellation of likes, dislikes, viewpoints, inner inclinations, rational / irrational judgments, prejudices, and association pattern that determines a persons view of the world.
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Values & Ethics

Characteristics of Values Values tend to be relatively stable & enduring. A significant portion of our values are established in our early years from parents, teachers & others Values constitute the foundation of ones character. They are the core of our personality and a powerful force affecting / influencing behavior They are abstract representation of what people believe as right, proper & worth while to pursue Some values are not fixed, but change over time & situation Values have intensity and content attributes in which the content attribute says that a mode of conduct is important and the intensity attribute explains how important Values which are internalized by an individual, becomes a part of his personality, then go beyond the zone of choice for the person concerned. His actions based on these values then become spontaneous & continuous, automatic and instinctive.
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Values & Ethics

Value Formation in Society: The values in an individuals value system are introduced and later reinforced over a life time of experiences, particularly during growing up or formative years. During this period the major influences are from 1. Family one is born into 2. School / educational institutions one goes through 3. Religion 4. Society / community one belongs to Values are fostered by each of the above institutions & together form the value system of the individual.
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Values & Ethics

Types of Values Instrument Values: The values which concerns the way we approach the end states. These relates to means of achieving the desired results. Examples are Hard work & achievement Education & intellectual pursuits Self sufficiency, independence Truthfulness, honesty Assertiveness- standing up for yourself Being well mannered & courteous towards others Open-mindedness open to new ideas Caring towards others
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Values & Ethics

Terminal Values: They are those end state goals that we praise such as comfortable life, a sense of accomplishment, equality among all people. Some of them are 1. Happiness; satisfaction in life 2. Peace & harmony in the world 3. Knowledge & wisdom 4. Pride in accomplishment 5. Security; freedom from threat Ethical Value System: Everything that we see, hear, say, imagine or do can be divided into two main categories 1. The way situations are 2. The way situations ought to be How situations ought to be is what gives rise to values. These values are not easy to measure or express in words. If we know the consequences of our actions, we can convert values into rules of behavior that can be described as ethics. 07/26/12 27 Value + Knowledge = Ethics
Values & Ethics

Any initiation of action begins with an inventory of values. These get converted to intentions for actions, which then get articulated as actual behavior. Values Intentions Behavior Consequences One of the important lessons to learn in ethics is to see life as it is, without our perceptions and attitudes distorting it to fit in with what we want to see. All of us react not to reality itself, but to our own interpretation of reality. Our behavior is affected by not by a particular situation, but by how we see and what we see in that situation. When we describe the world around us or people in it, we in effect describe ourselves, our perception, attitudes, our morality and our ethical value 07/26/12 28 system
Values & Ethics

Ethics & Value Maximization When ethics & values are taken together, we should do the analysis of ethics in relation to value maximization to find out the values of ethics for people working in any organization Ethics & Trust Trust is one of the most important ethical complements, they are compatible with each other as ethical behavior leads to trust
Ethical behavior of employees
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Build trust among employees
Higher productivity of the organization
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Ethics in Organization Development of Ethical Corporate Behavior
Employees towards Organization
Organization towards Employees
Ethics Domain
Organization towards other Economic

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Institution
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Ethics in Organization Development of Ethical Corporate Behavior Organization towards employees: It covers areas of wages & working conditions, hiring & firing and employee privacy Employee towards organization: Covers how employees treat the organization. Whether employees maintain honesty & confidentiality with regard to company matters when dealing with outsiders Organization towards other economic institutions: Deals with how organizations treats other institutions like share holders, suppliers, customers, competition & dealers
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1. Methods for Developing Ethical Corporate Behavior Ethics training: To achieve corporate excellence across the organization covering all functions. Many companies have started regular ethics training. Carefully designed ethics training programme can make a positive contribution. Ethics training has a long lasting effect unlike other training programmes. Some of the objectives addressed through the ethics training programmes are Creates awareness of companies ethical policies How to apply & where to apply ethical principles on a day to day basis Covers all in the organization with simulated case studies based on actual events in the company
a) b) c)
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2. Code of ethics : This reflects the organizations primary values, norms, beliefs & ethical rules of operations. Generally framed to encourage ethical behavior duly supported by top management. When managing complex issues, having a code of ethics helps in continued dialogue & reflection around ethical values produces ethical sensitivity & consensus. Continuous feedback, review, modification & updation needs to be done. Each function can have its own code of ethics like for Marketing, Purchasing, Design, Accounts & manufacturing
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3. Organizational Ethics Development System (OEDS) This involves Development of ethics policy handwork & manual for self governance and integrity. Top management commitment which is very important to corporate ethics should be effectively communicated. Assessment of ongoing improvements of ethics Sound ethics reporting & conflict resolution process for non-compliance Assessment of individual / organizations integrity system
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4. Ethics Committee: Formation of an ethics committee is a new concept. Some of the salient features are
a) b) c) d) e) f) Periodical assessment Frequent meetings about ethical issues Proper communication about code of ethics from top to bottom Establish reward & punishment system Enforcing the codes Timely reporting to BODs
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5. Ethics Advocate : An ethics specialist or officer is a member of the Board of Directors who plays a key role to guide ethical conduct & a good and wide contribution in boards decision making. He shows the correct path to the board members as well as other decision makers in the light of ethics. Integrate Ethical Concepts :Senior level executives have responsibility to apply & integrate ethical concept in day to day actions. They have to build a kind of structure that supports ethical behavior like proper information to new employees about ethics standards, annual performance appraisals, ethical guidance and very important system of internal whistle blowing which makes higher management aware of violations in time. Checklist Method :By using a checklist, employees can avoid situations wherein people do unethical behavior & justify it as saying that its not illegal
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6.
7.

7. Rewards & Punishment system :Motivation has a great impact on employees behavior. So the best way to get people on ethical path is establishment of a fair reward system. So when people behave in an unethical manner, they do it for some hidden rewards. Hence the organization must develop a system to reward ethical behavior & punish unethical behavior. This will motivate people to conduct themselves ethically. 8. Whistle Blowing :Whistle blowing is when an employee tells the employer, who is breaking the law. This was first used for Government employees who made complaints to public about corruption. In a true sense whistle blowing involves telling somebody outside the company about the illegal activities being carried out within the company.
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Whistle Blowing
Reports the unethical behavior to higher authorities in the same organization
Internal
External Reports about unethical behavior to external agencies like media, newspaper or public interest groups
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10. Other Guidelines : Establish audit agency reporting to outside directors Practice what you preach should be followed by the leadership team Surprise & unpredictable audits Ethics must be evaluated for long-term impact on the individual as well as the organization
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A company X listed on NSE supplies components to company Y. Y markets the components in the global market. Since the company Y has a stand in the global competitive market, it has signed certain agreements with company X which specifies that company X will use raw materials from well known companies A & B. Instead of buying the raw materials from A & B as per the agreement, company X buys from elsewhere with bills & certificates identical to A & B. Suresh who is a manager with X came to know about the companies unethical practice regarding printed fake bills & certificates providing substandard products to company Y He tried to expose the fraud internally and approached to the head of the Deptt. As there was little protection to whistle blowers, Suresh has been fired by his boss. But he did not give up that easily. He approached to an external agency POLO services to expose the fraud. As the proof of the mischief, he showed the fake bills & test certificates including the invoice from where they were printed.
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Some experts from POLO services approached company A. The CEO of company A scrutinized the bills and confirmed that they were fake. After this Suresh with personnel from POLO visited company Y and convinced company Ys top management about the fraud. Company Y set up a committee to go through the entire case in detail. One month later Suresh again approached company Y to find the progress of the case because of which he had lost his job. He talked to the CEO of the company and was very much disappointed to see that the case was all over. The CEO tried to make up the things by merely saying that as far as Quality was concerned they found everything perfectly alright and as company X was facing some problems of excise evasion, law would take its due course. Suresh regretted about company Ys response and was very confused about why no action was initiated against the proven fraud. List your comments on the case
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Ethical Leadership
Leadership: The ability to influence a group towards the achievement of goals. Leadership plays a significant role towards goal attainment. Leadership is different from Management. Good Management brings about order & consistency by drawing up formal plans, designing & monitoring results against plans. Leadership deals with coping with change. Leadership develops a vision of the future, align people by communicating this vision & motivate, inspiring them to overcome hurdles. Leaders in the 21st century are facing a conflicting situation where on the one side there is a pressure to show excellent results by exploiting opportunities taking into account new economy, and on the other side there is pressure to discharge social responsibilities, respond to growing expectations from customers.
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Ethical Leadership
To operate a business companies need to have social approval & an implicit license from a number of stakeholders. This social approval demands from leaders & their companies to follow processes which are consistent with ethical & moral values.
Customers Industry reputation Employees Politics Suppliers
Public Opinion Law
Company
Investors
Competitors Industries & Mkt Std
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Ethical Leadership
Leadership Ethics & Values: Leaders who are able to keep a balance between entrepreneurial skills & corporate citizenship are the effective leaders of the new economy Effective leadership is about laying the foundations for the efficient & ethical conduct of business Long term survival as well as growth starts from ethical leadership Integrating ethics into the organization needs true effective leaders Organization mission & objectives can be reflected by their vision To take an organization on the excellence path, a blend of strategic & culture is required which can be achieved by effective leadership Strategic thinking & cultural building can be achieved by a leader's moral principles & integrity Leadership makes real difference between success & failure, whether in war, business, sports, family & society
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Ethical Leadership
Establish An Ethical Framework: The Co-operative Bank, UK aims to deliver value to all its Partners in a balanced fashion over time, where value is defined by partners & not the Bank. In 2000, the Bank produced a pre-tax profit of 90.3 million pounds, an increase of 9% compared to 1999. The after tax return on equity was 22%. The outstanding commitment of the staff was the single most important reason for the success. In every staff survey conducted it was found that extra ordinary levels of pride in the Bank as the leading promoter of ethical business practice. Mervyn Pedelty, CEO
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Ethical Leadership
The example in the previous slide clearly states that ethical framework which takes an inclusive approach starts with Leadership Philosophy . The interpretation of ethical value system may vary for different organizations. It is far more important that values are acceptable to employees rather than being enforced by top management. Therefore it is quite important that top level management & leaders demonstrate the values they preach. Leaders have an important role to establish the culture in which ethical behavior can be nourished. By setting clearly the purposes & values, achieving universality in diversity, identifying success, measuring performance objectively and providing appropriate rewards & further communicating with all stakeholders, leaders can contribute effectively in the set of ethical infrastructure.
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Ethical Leadership
To show how a leader can influence his followers to follow ethics, here is a good example about IBM. As early as 1961, I circulated a standard of ethics about what our people could & could not do. These were rules against bare-Knuckle selling practices, such as disparaging other companies products or leaking information about machines we hadnt yet announced in order to block a competitor from making sale. Perhaps the most important, I told the salesman that in fighting for orders, they had to show a sense of fair play. Tom Walton Jr, President IBM Mr. Walton's 1961 note to salesman includes the words Turn the situation around. Suppose that you were a Competitor small, precariously financed, without large support organization and without a big reputation in the field, but with a good product. How would you feel it if the big IBM company took the action which you propose to take
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Ethical Decision Making

The very speed of change introduces a new element into management, forcing managers to make more & more decisions at a faster pace. Alvin Toffler
Management Planning Organizing Leading Controlling
Decision Making
Goals & Achievements
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Ethical decision making is a very complex & difficult task. There cannot be a single standard or process which can be followed by all persons in the organization. People who work in an organization are the moral agents. They make collective decisions and act on them. They follow certain rules which are explicit / implicit, codes of conduct & regulations. Actions based on the followed behavior can be subjected to ethical appraisals.
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Ethical Decision Making Structure of Ethical Decision Making

Identify problem Generate alternate solutions
Evaluate alternatives using costbenefit approach
Select the best solution
Implement the chosen solution
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How to Use Ethical Reasoning : 1. Utilitarian Criteria: This is used to provide the greatest good for the greatest number which is guided by the value UTILITY. Decisions are made on the basis of outcomes or consequences. It attempts to make ethical evaluation precise by aggregating the happiness of everyone affected and deducting their unhappiness. To be on the safer side decision makers choose utilitarian criteria for important decisions like termination, closing down plants, laying off large number of employees, raising prices in the best interest of the organization. Many people have contradictory views and they argue that the perspective needs to change. Hence some more criteria has been developed to guide decision makers using non-utilitarian criteria
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2. Rights Criteria: Decision making based on Rights Decision which is consistent with the fundamental rights and liberties as laid down in the constitution like the right to speech Example: As whistle blowing is the latest phenomenon occurring in the modern corporate world of the 21st century. So if decision makers use rights criteria, a good protection can be given to the whistle blowers when they blow the whistle against wrong doers 3. Distributive Justice Criteria :This ethical reasoning sees justice value as a most likely outcome of an ethical process of decision making. The essential feature of this concept is Transparency & full participation of those affected. This requires individuals to impose & enforce rules fairly & impartially so there is equal distribution of 07/26/12 52 benefits & costs

4. Social Contract Criteria: It suggests that empirical & normative what is and what ought to be must be combined. It integrates two contracts
a) b) General social contract among economic participants that defines the ground rules for doing business A more specific contract among specific members of a community that covers acceptable ways of behavior
Studies have shown that Utilitarian is consistent with objectives such as efficiency, productivity & high profits. But because of the changing world of management, this opinion, perspective should also be changed. New society demands to follow non-utilitarian criteria, managers must fix some ethical standards. Commonly accepted virtues such as happiness, lawfulness, consistency, integrity, & loyalty may be in specific situations conflict one another. Thus managers typically face moral dilemmas in their decision making. The two approaches to moral questions are a) Natural Law: This approach considers that certain ultimate values are matters of natural law. Under this view, certain actions are always wrong 07/26/12 because they break some basic intuitive law. 53
Ethical Decision Making b) Situational law: To determine that an action is right or wrong, it totally depends on the situation in which the action occurs. This view holds that an action under one set of circumstances and one environment would be right. Where as the same action under another set of circumstances and in another environment would be considered wrong. Decision Making
Ends
Means
Motives
Foreseeable Outcomes
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Ethical & unethical actions are largely a function of both the individuals characteristics and the environment in which he Works. The following model explains the ethical/unethical decision making behavior.
Moral Development
Organization Environment
Locus of control
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Moral Development : General belief is that a persons values are formed during his childhood and do not change subsequently. The ability to deal with moral issues develops as they move through their lives. The process of examining ones moral standards and applying them to concrete situations includes two parts 1. A persons ability to use and evaluate his/her moral standards, which develops in the course of a persons life. 2. Reasoning processes through which these moral standards are employed and evaluated. The highest ones moral development is, the less dependent he is on outside influence. Example: Managers with high moral development place increased values on the rights of others and regardless of majoritys opinion. They are likely to challenge organization practices which they believe are personally wrong.
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Organization Environment: Whether the work/organization ethics align with personal ethics. Does the organization support / encourage ethical behavior by rewarding it or discourage unethical behavior by punishing it. An individual with high ethical behavior gets demotivated if the organization does not recognize the same. The converse a new comer in an ethical organization, though not so ethical personally, slowly moulds in the morally strong environment. Locus of control: Locus of control is a personality trait which measures the extent to which people believe they are selfresponsible for the happenings and events in their life.
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Locus of Control
Internal External Meaning believes what happens Meaning believes that what to them in life is fully because of happens to them is because of their own actions luck or chance. Consequences believe in Consequences rely on external themselves; follow their own influence, less likely to take internal standards of right / wrong responsibilities to guide their behavior
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Problems in Ethical Decision Making 1. Due to globalization, as companies deal with other countries where cross culture diversity issue arise. Managers working in MNCs find it very difficult to standardize ethical standards as they do change as society changes 2. Sometimes decision makers do not follow what they must follow as they have conflict in individual values vs. organizational goals. 3. Individual moral standards affect whole organization decisions if they are morally strong, ethical decisions would be the outcome 4. If the decision makers / managers / policy makers are greedy, look for short cut routes to earn in the shortest possible time, they have an upper hand on the moral values and therefore ethically the decision process would be corrupt. 5. Competitive pressure would also be one of the main causes which forces decision makers to choose such path where they have to kill their morals, values and move on unethical path just to cope with the competition. 6. Poor decisions without deep thinking of consequences 7. Ambiguous situations create problem which put the manager in dilemma as to which decision they should make & follow 8. 07/26/12 Pressure of budget systems 59

Guidelines for Manager for Ethical Decision Making 1. Have individual codes of conduct (personal code of ethics moral, right & ethical) 2. Industrial codes of ethics - list of Do Nots / Dos
a) b) c) d) Non deceptive ad's Fair dealing with customers Safety measures Quality products
3. 4. 5.
Professional managers who are more ethical do not go for compromises Sometimes Govt. rules, values & beliefs guide managers to follow ethics path in decision making. Corporate Code of ethics
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Ethical Dilemmas
Ethical Dilemmas in Organization Ethical dilemmas are situations where business men face lots of choices and no clear cut right answer. Business men find dilemmas out of the eternal conflict between ends & means. Ethical dilemmas are complex judgments on the balance between the economic performance & the social performance
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Ethical Dilemmas
Salient Features of Ethical Dilemmas Uncertain outcomes: One cant be sure about the consequences that result from most ethical choices. Multiple choices and alternatives: These are situations where we find more than two alternates which have to be considered. Mixed Consequences: Ethical dilemmas in management when solved, the outcome oppose each other. One decision considered as favorable by one party and unfavorable by another party. Example a decision to terminate 10% of the workforce & increment in the salaries of the remaining 90% workforce. Direct/Indirect involvement: Ethical dilemmas are more prominent when one is directly involved as against a person who has an indirect involvement. Example-What do you do when your boss wants you to make false TA / DA bills and transfer the benefits to him.
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Ethical Dilemmas
Approaches / Method for Resolving Ethical Dilemmas. There are no easy approaches to resolve ethical dilemmas. As the degree of complexity increases, the risk to choose and Apply the approaches & methods will become more. Some of the approaches are listed below.
Approaches to Resolve Ethical Dilemmas
Utilitarian (End-based)
Universalism (Rule-based)
Care-based
Virtue ethics
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Ethical Dilemmas
1. Utilitarian (end-based) approach: This was originated by the British thinker Jeremy Bentham. It aims at creating the greatest degree of benefits for the largest number of people. According to this system, a human conduct is considered as good if it results in benefits for society and bad if it generates harm to society. 2. Universalism (rule-based): This is based on the duties & obligations of an individual. The moral worth on individual action should be judged by the intention of the person and not by the outcome of the action. It assumes that good intentions always result in good outcomes, ultimately if not immediately. 3. Care-based approach: You have to reserve the dilemma keeping in mind that you have obligation to care for those you have a close relationship or who care for you. You must care for them just to maintain a strong bond in relationship. But some men argue that this would create favoritism while working with those you have valuable relationship as well as it can degenerate into unjust favoritism & sacrifice of own needs to care for children, parents, spouse & friends with whom you have a close relationship. 07/26/12 64
Ethical Dilemmas
4. Virtue Ethics : Virtue ethics can be represented as a mental construction with prudence.. This mental construction has two ceilings one is crowned by private prudence and the other by public prudence. In general we say that when a person follows virtue ethics, that means while performing any action, he / she should develop a morally virtuous character. Methods of resolving ethical dilemmas : Ethical dilemmas occur in organizations in different forms, framework and structure. Hence a single unique /standard method can not be applied to resolve them. Each organization has its own strategies, planned procedures for dealing with ethical dilemma. Some of the methods / steps adopted by different organizations are
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Ethical Dilemmas
1. 2. 3. Define the problem and clearly recognize the moral issue in it Determine who will be affected by the decisions? What would be your role? Until the ethical dilemmas can be reduced to common issues which are manageable, it is hard to resolve them. Collect information & facts about the problem. Isolate the illegal issues involved in the problem by testing right versus wrong. Identify right v/s right paradigm such as
a. b. c. d. Justice v/s mercy Short term v/s long term Truth v/s loyalty Individual v/s community
4. 5.
6.
At this stage you can select any one appropriate approach to resolve dilemma like
a. b. 07/26/12 c. d. Care based Rule based End based Virtue based
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Ethical Dilemmas
7. Find out if there are any other way out of the situation 8. Decide & act use approach that is most suitable and take action 9. Review the decision. Platinum Standard of Ethics : Scoft Ventrella provided a platinum standard of ethics for dealing with ethical dilemmas as listed below. I. Ask yourself whose problem it is? Is it a case of conflicting interests or a question of right and fairness? Legal /illegal II. Does the decision accurately reflects the kind of person you are? Does your character match your decision? Do you follow Practice what you preach? III. Be careful and aware of what actions you show and try to imagine the situations that if all your deals, actions, phone calls being observed, recorded and further reported, what would be the outcomes? IV. Keep your words How firmly you fulfill your commitment? V. Develop & sustain integrity the most powerful value is integrity which is
a. b. c. d. e. Courage (telling the truth) Self discipline Goodness - honesty, morality, kindness, fairness, generosity Centering power Living by inner truth and inner mind to remain incorruptible ie. Let your mind be guided by conscience 67
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Ethical Dilemmas
Case study A: Amith Mishra, GM (HR) for a manufacturing firm ABC. The firm is undergoing a major change in direction. The rapid Changes in industries as well as competitors dynamic policies and plans, puts a big pressure over the firm to adapt in the new environment. Mr.Mishra is thinking of hiring some young & energetic person to cope with the changing dynamic Situation. ABC has organized a walk in interview for the new Recruitments. Ms. Isha Patil, well qualified as well as experienced in similar field has appeared for the interview. She has just left one of the competitors company because of Some personal reasons. Meanwhile in the interview she indirectly gave hints that she would be happier to tell you all the07/26/12 competitors plans & policies. What should Mishra do? 68
Ethical Dilemmas
Case study B: Mr.Murthy was working as an officer in the excise dept of a reputed steel company. He was from a very reputed & good family. The steel company was reportedly involved in excise evasion of its goods. Excise evasion resulted in the dealers selling steel which was not excise paid. Mr.Murthy along with his boss were directly involved in excise evasion. Their philosophy being that they are doing it for the good of the company and not for themselves. The govt. had recently raided a few companies practicing excise evasion in the vicinity of the steel company. Therefore Mr.Murthy was under tremendous stress these days. Even he knew that he his name would come in the list as one of the companys executive to be interrogated. Mr.Murthy wife, knowing about the entire situation advised him to get out of such activity or else quit the company. Mr.Murthy was in a dilemma. What should he do?
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Corporate Social Responsibilities

Why business should be socially responsible? 1. Long term survival: If an organization wants to survive in the long run, it has to establish a loyal brand of customers etc. If the business does harm to society by their irresponsible acts, society will not allow them to exist in the future. 2. Public Expectation: General public expects certain behavior from organizations apart from quality products, fair prices, good services etc. While doing business they should not disturb any balance of society like pollution, crime, corruption etc. 3. Goodwill: As we know that goodwill needs to be earned by firms understanding & discharging their social responsibilities 4. Govt.Laws & Regulations: Some times govt. laws force the business to behave in a socially responsible manner to survive in the long run. 5. Better Environment to Operate: If an organization can improve the quality of life of customers, try to integrate private good & public good, more focused on solving a particular problem of society, the better it will be able to solve its own problems and in a better 07/26/12 70 environment to operate.

6. Keep the balance (give & take relationship): Business organization exists & operates within society. As it takes so much from society, it should owe something back. When businessmen understand the fact that they are social entities and without societys approval they wouldn't exist, they accept their responsibilities towards society and attempt to fulfill them. Social Responsibilities Model : Inputs
Human Resources Raw Material Machinery Money Infrastructure Information Market Material
Processing
Utilization of all kinds of inputs Processing of information to manufacture products & services
Outputs
Employment generation Goods & services to satisfy customers needs Work as a corporate citizen to meet societys expectations Spread education
Feedback
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To understand social responsibility technically some models have been developed 1. Ackermans Model: The basic goal of any corporate entity should be social responsiveness. All firms in order to be socially responsible pass through some development stages Awareness stage Planning & action stage Implementation stage
Top managers & decision makers learn of an existing social
problem.
Planning stage to address the problem (hiring a specialist or consultant if required) Implementation stage must be integral part of daily operations True commitments at all levels of the organization must be obtained 07/26/12 72

2.
i. ii. iii. iv.
Carroll's Model: According Carrolls, there are four categories of social responsibilities
Economic responsibilities the primary responsibility of any business is to be economic. Producing goods & services to meet needs / wants of society and generate profit by selling them Legal responsibilities Each & every business must operate within the law and legal framework which are considered as legal responsibilities Ethical responsibilities Meeting the ethical expectations of society Discretionary responsibilities are steps forward of ethical responsibilities, in which firms go for voluntary actions to serve society. There is no demand from society. The firm willingly contributes to the welfare of society.
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3. Approaches to Social Responsibility
Social Contribution Social Response Social Obligation Social Opposition
Level of Social Responsibility
a) Social Opposition: When businesses opposes society by feeling or showing no obligations towards it is called social opposition. If while doing any unethical act they are caught, they play safe by denying it or some other practices like 07/26/12 74 bribery.

b) c) Social Obligation The firm in this category believe that as they are operating in society so it is their duty to do business in the legal boundaries. Social Response The firm in this degree do more than their social obligations. They realize that merely fulfilling legal requirements are not sufficient. So they go beyond towards ethical conduct of business. Social Contribution The firms which contribute themselves to social development fall in this category. It is the top most step on the ladder of social responsiveness. The do business with full dedication & commitment to society.
d)
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Main Social Responsibilities of Business Organization 1. Responsibility to make profit The basic objective of any business is to make profit. As a loss making firm, it cannot produce quality products, cannot fulfill commitments and therefore cannot generate revenues/profits to its shareholders. Hence organizations have a social responsibility to be profitable and only then it can meet its social obligations / commitments. 2. Responsibility to generate employment All businesses must provide fair opportunities to all people. The must create the conditions / situations which help the employees to put forward their best efforts achieve organizational goals.
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3. Responsibility of Optimum Utilization of Resources Each organization must understand that it has some moral obligations to utilize the scarce national resources of the country in an optimum way, without wasting, avoid damages or mis-utilize the resources. Responsibility to Provide Quality Products Providing quality products at fair prices is one of the most important social responsibilities. Responsibility to Protect the Environment Protection of environment is equally important as other responsibilities. Business organization as responsible corporate citizens must take serious steps to protect environment and keep it in a healthy condition. Responsibility to Provide Quality of Life Quality of life is ones internal growth, growth of character, mind & soul and enriched life. Hence business organization should provide opportunity to its employees as well as society to enrich their lives and better quality of life. Responsibility to Safeguard the health Safeguard the health & physical safety of consumers as well as employees become a vital area to be cared by organizations. This becomes more serious with drug & other chemical companies. They must take adequate care to check & safeguard consumers health & well being. Fair Trade Practices If business firms are showing socially responsible behavior they must go for fair trade practices, some of which are not making false advertisements, avoid monopolistic trade practices, not go for artificial scarcity, not bribing public servants, providing quality products & services, fair prices & provide timely & accurate information to its 07/26/12 77 stakeholders.
4. 5.
6.
7.
8.

9. Responsibility to Development of Nation If companies are involved in international business, they must contribute their efforts towards development of their country by earning foreign currency, earning goodwill, and reputation in global market, make good relationship among nations. 10. Responsibility to fulfill all duties & national obligation As a corporate citizen, business firms are required to fulfill certain obligations under various laws and to perform certain duties. They must operate their business within the boundaries of legal framework provided by govt. They must contribute to national prosperity & try to reduce some national problems like corruption, unemployment etc.
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Corporate Social Responsibility and India - CSR activities are now an integral part of organizational objectives in India. Post liberalization Indian companies have come to term with CSR and its wider ramifications. Both Public & Private sectors have accepted CSR as a part & parcel of their economic activities. Some Public sector companies have been more active in CSR. Examples being Oil India, NTPC etc. NTPC is the first PSU to have developed a comprehensive Resettlement & Rehabilitation policy. The main CSR policies of NTPC are 1. To lead the sector in the areas of resettlement & rehabilitation and environment protection including effective ash utilization, peripheral development & energy conservation practices 2. To continuously attract & develop competent & committed human resources to match standards 3. 0.5% of its profits are set aside for community development measures under the umbrella of CSR 4. 07/26/12 To contribute to sustainable power development by discharging CSR 79

Indian private sector have also shown their good efforts at CSR activities The TATA group whose belief is shaping a society with social purposes. Jamshedji Tata, the founder of TATA group and his sons believed that the real purpose of Industry was to go beyond the creation of wealth to the building of a new society through proper allocation of wealth. It was from this vision that Tata Institute of Social Science was born. JRD Tata conducted his business in a very socially responsible way. He wanted to bring an industrial revolution to an economically backward India. The specific goals of JRD Tata was to establish a hydro electric power project at Bombay as a cheap source of energy, the steel industry at Jamshedpur and the Indian Institute of Science at Bangalore to provide Scientific & Technical education.
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Corporate Governance
Corporate means legally united into a body so as to act as an individual and Governance means control. So Corporate Governance is nothing but the way by which corporations are controlled & directed. CG refers to guidelines, procedures, rules for decision making. It is means of achieving targets on corporate affairs. It also deals with how to measure performance. The origin of CG took place in UK in 1990. Some of the factors that drives CG are a. The majority of shares were from Institutions rather than ndividuals. Institutional investors like pension funds owned big amount of capital which represents the savings and pensions of lakhs of people so if the company is not being managed well the needy people would be in trouble. b. As global operations were speeded up, it came up as a tool for attracting foreign investment. c. Due to competitive pressure, the no of false documentation, fraud cases and unethical practices were increasing. d. It was thought that the companies would undermine the social, ethical 07/26/12 81 & environmental concerns in the era of privatization
Factors Behind the Origin of Corporate Governance 1. In this era of globalization, when expansion, innovation, diversification of the business is happening at a rapid rate, foreign investors have become very careful about investing their money. So in order to attract foreign capital, you need to practice CG 2. Government of India has also implemented strict rules / laws to be followed. 3. The no of institutional investors has increased so there is a need felt to safeguard their interest. 4. Increase in investigative journalism in business 5. No of international events like joint ventures, mergers, takeovers have lead to the mandatory practice CG.
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Important Issues of Corporate Governance 1. Social responsibility 2. Multiple divergent expectations of shareholders 3. Economic, Social & Environment obligations are also important for organizations. 4. Fair business deals & corruption Corporate Governance in India The corporate world in India comprises of two parts 1. Public Sector 2. Private sector
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Private Sector In India the broad categories of shareholder for private sectors are Promoters Financial Institutions Individual investors Any private sector board consists of three types of directors Promoter director Professional director Institutional nominee
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Public Sector The firms where equity shares are owned wholly(51% or more) by Govt of India ( in the name of the President of India) are in the category of Public Sectors. The board of Public Sectors would comprise of Functional directors Govt. directors Outside directors Professionalization of Corporate Governance In order to bring about reforms to CG the following have been developed.
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Distinguish Management from Control: It means that control needs to be separated from management. Some of the components of Management & Control are
Control Ratification Proposals developed in the initial stages are evaluated and if found suitable they are approved Monitoring Assessment of executives performance and implementation of proper reward systems Management Initiation Proposals for managing the resources of the firm are developed Implementation Execution of the approved proposals.
Active role of institutional investors: Institutional investors can contribute effectively towards improvement in CG as they have a higher stake. Expand role of non-executive directors: To improve the quality of CG, the role of non-executive directors must be enlarged since they can provide rich experience & good objectivity in monitoring corporate 07/26/12 86 behavior. CII has recommended a code of CG which are related to non-
Non E.D should occupy at least 30% board seats Limit on the number of boards on which a person can serve An audit committee having at least 3 non ED must be set up and given access to all information Degree of accountability must be higher than at present All non E.D must be compensated well for their time & effort
Proper & Timely information to the Board: The board of

directors must get full information about long term plans, budgets, competitive developments, quarterly results etc
Size of the board: Lipton & Loesch have done some excellent
research & provided the result with optimum size of the board as 10-12
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Improve accounting & Reporting Practices: Accounting
reports are important means of information for shareholders, creditors, & investors of any company. SEBI has brought in some improvements in corporate accounting & reporting practices. Further improvements are required like
a)
b)
Business line reporting: Financiers should et integrated
information about profitability of different diversions of a single company. Group Accounting: International accounting standards classify investor companies in 3 categories.
Subsidiary companies Jointly controlled companies Associate companies Hence it is required that firms prescribe different accounting reporting treatments for these investments to reflect their financial Implications. 07/26/12 88
c) Tax effect accounting: It eliminates the effects of timing differences in tax liability while arriving at reported earnings. In India companies account for taxes as and when they are payable so it is difficult to calculate reported earnings. d) Earnings per share reporting: EPS is a very commonly used term in stock market analysis. In India there are no accounting standards prescribed for compiling EPS, no uniformity in the ways EPS is computed. But as we know that the practical significance of EPS is great, it is essential to formulate sound standards to calculate & report EPS in India. How to achieve good corporate governance In the new millennium big accounting scandals like Enron, Tyco & WorldCom have shown the failure of financial accounting system, corruption & weak corporate governance. Corporations are realizing the role of good CG in the success of their business, they have started taking steps in improving the balance. According to a recent survey, 70% of companies are using technology tools to get accuracy in financial / accounting matters. 07/26/12 89
ANAO Australias National Audit Office suggests five key operating
principles that demonstrate different dimensions of corporate governance which are
1. 2.
Leadership: The basic fundamentals of CG are leadership & direction. The CEO / MD & other directors should follow good CG practices Management Environment: Should ensure the following
Sound business planning with clear objectives Yardsticks for performance measures, evaluating performance with feedback Clear cut division of work & responsibilities Establish an ethical framework Ensure right decision about workforce
1. 2. 3.
Risk Management: Effective risk management practices Monitoring: Monitoring of Quality systems, adherence to plans & procedures.
Monitoring helps to ensure best practices by continuous improvements.
Accountability: Accountability is measured by effective internal & external reporting on conformance & performance against set 07/26/12 90 objectives.
Ethics in Marketing
Marketing is a task of creating, promoting & delivering goods & services to consumers & businesses. Common Unethical Practices: Duplication of original brands Inadequacy of warranty offering Poor quality products Unsafe products Unauthorized mfg of hazardous products Products which are not bio-degradable leading to environmental pollution Discrimination in pricing Differentiation in prices Excessive mark up in prices Misleading / deceptive advertisement False promises Lower the dignity of women No fairness, transparency in relation with suppliers & retailers Artificial scarcity 07/26/12 91
Ethics in Marketing
Factors behind Ethical Practices: 1. To Collect the Power by Society: Society gives the power to marketers, which they earn by their own efforts & influence. So they should utilize their power in socially responsible & acceptable manner. 2. Goodwill of the Organization: Goodwill, reputations are big assets for any organization. As marketing executives represent the whole organization, they need to build up the image of company as highly ethical & carry out business in a dignified manner. 3. Government Regulations: Sometimes government regulations have an impact on the ethical behavior of organizations. Therefore to avoid excessive regulations, companies need to become self regulatory by living up to ethical practices. 4. Build up Transparency: Buyers become more suspicious while buying dubious products due to lack of transparency. High level of transparency convinces public that they are aware of their social responsibilities. 07/26/12 92
Ethics in Marketing
Important Issues in Marketing Ethics 1. Product: This is the first & important element in marketing. A product is anything that can be offered to a market to satisfy need or want. The manufacturer knows more about the product than the buyer. Hence they must be careful to not to break the trust of the buyer. Some of the important factors to be considered are
a) b) c) d) e) f) Idea initiation Planning & screening of product design Product development Marketing strategy Introducing the product in the market Decline stage
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Ethics in Marketing
2. Ethics in Pricing: Price is a critical element in marketing which produces revenues. It communicates to the market the companys intended value propositioning of its product. Companies generally do not go for a single price but a price structure that has some variations according to purchase timing, order levels, geographical demands, market segment requirements like
Price discounts Discriminatory pricing Geographical pricing
There are four major areas of unethical pricing practice like Price discrimination: It occurs when a company sells a product at two or more prices that do not reflect a proportional differences in costs but becomes unethical when sellers offers different price terms to different people within the same group. Predatory pricing: Selling below the cost when just having the 07/26/12 94 intention to destroy competition
Ethics in Marketing
Deceptive pricing: Deceive the customers to show them the wrong pictures about the prices by
a) b) Low price offers Inflated price
Price Fixation: Prices are fixed at certain levels either by

Horizontal price fixing: price fixing at artificially high levels Vertical price fixing Price fixing agreements between manufacturers & retailers or between manufacturers & distributions. It says that product will be sold at the manufacturers suggested price and will not be discounted by the retailer or wholesaler
3.
Ethical promotion: Promotion plays an important role in marketing of any product / service. Generally comprises of sales promotion, advertising, sales force, public relation, direct mail etc.
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Ethics in Marketing
Case Study Breast milk is a natural, safe & free human product. Breast feeding creates a strong maternal bond between mother & child and is designed to protect the baby against a number of conditions such as pneumonia & diabetes. Not only are these, but women who breastfeed themselves are protected from breast & ovarian cancers. In this modern world, many women feel awkward in breast feeding and sometimes the medical staff do not have the time to provide adequate training to teach new mothers how to breast feed. Now, the infant formula is the obvious alternative. However this product is derived from cows milk, which is not designed for humans. Though it can supplement the diet of a hungry baby, or help a working mother during the day, but it should not be marketed as an option, that can replace breast milk entirely. The working mothers easily get convinced with the formula manufacturers, as the infant formula is much easier and more convenient to use. In developing nations, the area of breast feeding is very pathetic, sad and & uneducated one. The big powerful multinationals that control the worlds infant formula market take all the advantages of the poor and uneducated in order to increase their own profits.
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Ethics in Marketing
The World Health Organization has a marketing code, endorsed by UNICEF which bans all promotion for baby formula milk both through advertisements and through health workers and midwives, but these powerful companies pay little more than lip service to it. As the data says, in the developing world, one baby dies every 30 seconds from unsafe bottle feeding. These MNCs which enjoys almost 40% of the world wide infant formula and try to capture more & more. They send their representative to developing countries who give free samples of formula to hospitals & health workers. The mother is encouraged by these health workers along with the medical staff to use infant formula by providing free sample and therefore discouraging breast feeding obviously promoting their products by free gifts & incentives to local health officials. Other kind of promotion of their products is in the form of posters on the walls of clinics, some advertisements in magazines etc. As the companys main aim is to encourage mothers to use the formula, they never provide adequate information about formula feeding. They do not teach these women about sterilizing the bottles they use. So the uneducated & unaware mothers use un-sterilized bottles & dirty water mixed with the infant formula which causes severe diarrhea & dehydration in the babies resulting in death also. Very soon, after the infants have become dependant on the formula and the mothers milk has dried up, the free samples stop coming.
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Ethics in Marketing
The only option is to buy the infant formula at high prices. The majority of the families cannot afford this. So either they go without food themselves and feed their babies or just dilute the powder to make it last longer. Again the babies will be suffering from malnourishment and often lose their lives. These companys do not follow WHO codes according to which they are required to put labels on formula products in the appropriate language. They actively promote the use of infant formula as opposed to breast milk and always try to make as healthy a profit as possible. Do you regard these marketing practices as ethical? Explain your view. -----------------------------------------------------------------------------------Marketing ethics is a sub-set of business ethics and examines the moral issues relating to marketing decisions made by organizations. Its roots can be traced to the 1960s, marketing ethics is believed to have come of age only in 1990s.
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Ethics in Finance
There is a close relationship between ethics & finance. High finance is the particular area where most of the breakdown of ethical norms occur. The basic foundation of business is trust
Finance
Financial market Commodity markets Currency markets Option markets Financial operations & services Financial planner Tax adviser Stock broker Insurance agents
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Ethics in Finance
Some common unethical activities in finance 1. Unsuitability : Insurance agents, brokers and other sales persons cheat innocent investors by recommending unsuitable securities / financial products 2. Deception : Most common unethical practice by strengthening the return & minimizing the weakness & risk factors. Sales person, agents, advisers deceive the public using the misleading statement like tax free or 0% interest etc. They make public unable to make rational choices among so many alternatives. 3. Inappropriate and excessive trading : This situation arises when broker keeps an intention to generate commission rather than benefits to client in the standing of having control over the clients account
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Ethics in Finance
4. Fraud & manipulation in markets: By law all the participants in the financial markets are the same. So fairness in our dealings is desired. Fraud means when a company fails to report proper information and manipulation of buying / selling of securities to misguide investors. Investors have to rely on information available to them which is hard to verify. 5. Unequal Bargaining Power : The principle of equal bargaining power says that all parties have relatively equal bargaining power. 6. Insider Trading : The act of buying / selling a companys stock based on inside information about the company is called insider trading. Insider trading is illegal as well as unethical. A person who practices Insider trading enjoys the unfair advantages over the other general public. Ethics in finance is about far more than trust. Finance would be impossible without ethics since the very act of placing our assets in 07/26/12 101 the hands of other people requires immense trust.
Ethics in Human Resources Management

A. Ethics in Job Design: An understanding of job design can help executives to design & redesign job in such a way that it positively affects employee motivation. It includes
Work simplification Job rotation Job enlargement Job enrichment Job sharing Independent work teams Dejobbing Empowerment
B. C. D. E. F. G. H.
1. 2. 3. 4. 5. 6. 7. 8.
Ethics in Human Resource Planning Ethics in Recruiting & selections Ethics in training & Development Ethics in career development Ethics in performance evaluation Ethics in wages & salary administration Ethics in Layoffs 07/26/12
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Ethics in Human Resources Management

Ethical Guidelines: We have seen how ethics is involved in each and every corner of HRM. Hence some guidelines have been evolved to help the HR professional to handle ethical issues in much better ways. 1. Ethical Leadership 2. Professional responsibility 3. Fairness & Justice 4. Professional development 5. Conflict of Interest 6. Use of Information
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Ethics in Information Technology

Ethics in IT have opened up new issues & dimensions IT has no geographical boundaries, but application & usage of IT may affect differently in different culture / environment. Computer Ethics: This was founded by Proff. Norbert Wiener in early 1940s during world war 2 when he was helping to develop an aircraft cannon capable of shooting down fast Warplanes. He along with his colleagues created a new branch of science called Cybernetics the science of information feedback system. He foresaw revolutionary social & ethical consequences.
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Technology Ethics: This is relatively new and interesting subject. Some of the ethical issues are 1. Think ethically about human biotechnology 2. Taking responsibility for E-waste 3. Unprofessional emails 4. Use of cloning 5. Cyber smut from blocking software to legislation, addressing childrens access to objectionable material on internet 6. Invasion of privacy on internet
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These are various ethical issues involved in IT which can be categorized into four groups a) Accessibility b) Privacy c) Property d) Accuracy
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Environmental Ethics
ENVIRONMENT
Natural Resources Land Air Water Fuels Fauna & Flora Raw materials Minerals
Man-made Resources People Heritage Socio economic Structure
Environmental ethics: This deals with how to keep a balance between business & environment. Due to rapid spread of environment consciousness, the traditional perception about trade-offs between environment quality & economic growth is 07/26/12 107 also changing.
Pollution:
air pollution water pollution noise pollution earth warming ozone depletion
Role of ethics in Environmental Protection

Resolving conflicts in both the visible & invisible areas Intergenerational ethics Spiritual ethics
Environment Protection in India The environment protection act (1986) The factories act, 1948 and its amendment in 1987
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Hazardous Wastes Public liability Insurance act (PLIA) 1991 National Environment Tribunal act 1995 The National Environment Appellate Authority Act, 1997 Examples of Environmental Pollution 1. Bhopal Gas Tragedy 2. Exxon Valdez Disaster 3. Chernobyl Accident
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Corruption & Ethics

The dictionary meaning of corruption is the misuse of public power for private gain. 1. Corruption is the practice of unlawful or improper use of influence, power or other means for personal gains 2. Corruption is the lack of integrity or honesty Causes of Corruption 1. Individuals perspective motivation by personal greed 2. Societys Structural perspectives due to political, social & cultural needs of society. Corruption develops when the risk of being caught is far less than the reward of being corrupt.
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Corruption & Ethics

Some of the basic factors behind corruption are 1. Culture 2. Inadequate / low salaries 3. Weak legal framework and absence of rules & regulations 4. Adherence to transparency & accountability 5. Other reasons like
a) b) c) Opportunities Circumstances International phenomenon
Impact of corruption: Slows economic development Reduces investment Increases poverty Leads to poor administration Decline in human development Increases discrimination & unfair treatment Supports criminal activities 07/26/12 111 Distorts incentives & creates uncertainties about expected profits
Gender ethics, Sexual Harassment & Discrimination

Discrimination Unfair distinctions leading to unjust treatment. Not based on merit but on other considerations like gender, economic status, racial & disability Sexual Harassment- a kind of discrimination directed primarily at women. Difficult to define and hence prevent & police. It may include
Remarks Looks Touching Jokes Attitudes Sexual comments Recurring requests for dates Use of sexual artifacts Use of sexually explicit language
Gender ethics - Men & women should be treated as equals. To treat them as different would be unethical. Equality 112 07/26/12 needs to be reinforced by laws & regulations.
Gender ethics, Sexual Harassment & Discrimination
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Business Ethics

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Business Ethics

Business Ethics - Introduction

Business Ethics - Definitions

Business Ethics - Definitions

Business Ethics: What Does It Really Mean?

Actual Business Ethics

Ethics & Related Terms

Business Ethics Case Study 1

Business Ethics Case Study 2

Business Ethics - Significance

Concept of New Ethics

Concept of New Ethics Ethical Dimension

Concept of New Ethics Ethical Dimension

Concept of New Ethics Ethical Dimension

Concept of New Ethics Ethical Dimension

Concept of New Ethics Ethical Dimension

Concept of New Ethics Ethical Dimension

Concept of New Ethics Ethical Dimension

Concept of New Ethics Ethical Dimension

Concept of New Ethics Ethical Dimension

Values & Ethics

Values & Ethics

Values & Ethics

Values & Ethics

Values & Ethics

Values & Ethics

Values & Ethics

Build trust among employees

Higher productivity of the organization

Ethics in Organization Development of Ethical Corporate Behavior

Employees towards Organization

Organization towards Employees

Organization towards other Economic

Ethics in Organization Development of Ethical Corporate Behavior

Ethics in Organization Development of Ethical Corporate Behavior

Ethics in Organization Development of Ethical Corporate Behavior

Ethics in Organization Development of Ethical Corporate Behavior

Ethics in Organization Development of Ethical Corporate Behavior

Ethics in Organization Development of Ethical Corporate Behavior

Ethics in Organization Development of Ethical Corporate Behavior

Reports the unethical behavior to higher authorities in the same organization

Ethics in Organization Development of Ethical Corporate Behavior

Ethics in Organization Development of Ethical Corporate Behavior

Ethics in Organization Development of Ethical Corporate Behavior

Public Opinion Law

Competitors Industries & Mkt Std

Ethical Decision Making

Goals & Achievements

Ethical Decision Making

Ethical Decision Making Structure of Ethical Decision Making

Evaluate alternatives using costbenefit approach

Select the best solution

Implement the chosen solution

Ethical Decision Making

Ethical Decision Making

Ethical Decision Making

Ethical Decision Making

Ethical/unethical decision making behavior 07/26/12 55

Ethical Decision Making

Ethical Decision Making

Ethical Decision Making

Ethical Decision Making

Ethical Decision Making

Corporate Social Responsibilities