International Journal of Business Management & Research (IJBMR) ISSN 2249-6920 Vol.

2 Issue 4 Dec 2012 85-90 TJPRC Pvt. Ltd.,

BUSINESS ETHICS:-ISSUES IN MANAGEMENT CHANGE

MOHAMMAD ASLAM KHAN Jazan University,Jazan, K.S.A

ABSTRACT
In a globalised environment, Business across the nation is very challenging and businessmen need to use lots of strategies to survive in the competitive market. Efficient Capital Market will ensure economic growth and Corporate Governance will ensure efficient capital market. Therefore establishing good corporate governance is essential to sustain long-term development and economic growth. Corporate governance is the set of processes, customs, policies, laws and institutions, affecting the way a corporation is directed, administered or controlled. Corporate governance is nothing but conducting of business ethically. Parties involved in corporate governance are Share holders, Management and Board of Directors. Now it is high time that business needs to have ethics as an essential ingredient of business conduct. It is a multifaceted subject. It is to ensure the accountability of certain individuals in an organization towards stakeholders. In this paper we explored the Business Ethics of business in corporate world and discuss about effective business corporation and success of business, social welfare measures. Various measures like concept of social responsibility for profit maximisation, legal responsibility were discussed.

KEY WORDS: Corporate Governance, Business Conduct, Socio-Economic, Development Profit Maximisation,
Corporate World, Business Ethics, Social Welfare Measure, Value-Based Management

INTRODUCTION
Managers responsible for the day-to-day operations of a firm follow certain rules for survival and success within the company. These rules guide their relationships with superiors, subordinates, and peers, as well as with those they have contact within or outside the organization. The company, its culture, and its bureaucracy determine these rules. These rules can be called Descriptive Ethics in the sense that it is not obligatory for anyone to follow them (as is the case in Prescriptive Ethics). These rules are contextual and situational moral guidelines that managers derive from their personal set of moral beliefs. Organizational bureaucracy shapes the moral consciousness of managers. Consequently, the world of work can be seen as a realm where everyday morality has no place except to serve the interest of public relations.

ETHICS & BUSINESS CONDUCT

Corporate Governance is the hottest news today, media throws light, due to a recent trends in Share market. This paper explores on the title Ethics & Business Conduct. How business is being conducted and how it is supposed to be conducted, the lacuna between these two stages may be stated as the progress of corporate governance. Traditionally the objective of business was Maximisation of profit. It was later realized that customer was the focus point of business, which got the concept of Customer Satisfaction. It was further refined due to growing importance of customers and their rights, brought the concept of Customer Delight. The objective was further polished as Shareholders satisfaction (Investors confidence) since shareholders are the people who contribute their investment towards business. Apart from shareholders, co-operation from other stakeholders are also inevitable for the continuous growth of an organization. Therefore, the objective is further enshrined asStakeholders Satisfaction. Finally, the

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situation has now emerged as Stakeholders Delight (Stakeholders confidence) due to a recent case of SATYAM Computers wherein the stakeholders are at heavy loss due to the misgovernance of the corporate.

Fig.1 Redefining Business Objectives Ethics as Essential Ingredients of Factors of Business Now it is high time that business needs to have ethics as an essential ingredient of business conduct. The factors of production can be listed in the following fashion: 1. 2. 3. 4. 5. Land Labour Capital Organisation and Ethics (or) 6. 7. 8. 9. Men Material Machines Money and

10. Moral

CORPORATE GOVERNANCE
Corporate governance is the set of processes, customs, policies, laws and institutions, affecting the way a corporation is directed, administered or controlled. Corporate governance is nothing but conducting of business ethically. It is a multifaceted subject. It is to ensure the accountability of certain individuals in an organization towards stakeholders. It is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.

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Amalgamation of Ethics in Corporate Governance How are the ethical problems facing an individual at work different from those faced elsewhere? Many of the difficult moral decisions faced at the workplace are raised by issues that are not peculiar to work but are to do with one's treatment of other people and vice versa. As an example, problems related to the protection of confidential information and the circumstances under which it may or should be disclosed are not peculiar to business ethics, nor are they generated solely by role conflict. They arise in all circumstances, both public and private. The duty to tell the truth is always qualified by the need to ask whether the person you are telling it is entitled to know it. Those who engage in gossip walk a thin line between passing on what, justifiably, is in the public domain and what one may know but ought not to disclose. Value-Based Management Value-based management thought looks at the concept of management differently. It would define management as 'a series of ethical actions done by people, using technology and resources, to achieve a state of joy and happiness in the minds of both, producers and consumers'. The subject of management ethics deals with individual conduct and responsibilities of management. The issues of managerial mischief and moral issues in management fall under the topic of management ethics. Organizations that do not have a heritage of mutually accepted shared values tend to become hinged during stress, with each individual bailing himself out. Managers responsible for the day-to-day operation of a firm follow certain rules for survival and success within the company. These rules are contextual and situational moral guidelines that managers derive from their personal moral beliefs. Professional ethics are moral rules-in-use that guide professionals in their behaviour at work. Another issue of management ethics is of the 'conscientious employee'. Some of the significant benefits of being ethical include clarity of strategy, better decision making, clearer communication, and greater ease in delegation with lower cost of supervision. The perspective on the subject of management ethics adopted in this paper deals with individual conduct and the responsibilities of management. There may be many ethical issues at the workplace (Donaldson, 1989). A short list would include: 1. 2. 3. 4. 5. 6. 7. 8. 9. Recognizing conflicts of interest and avoiding them Deciding if a business gift is just a gift or a bribe Attaining fairness in employee performance appraisals Initiating disciplinary action against an employee Executing an order to take action against staff Managing a problem employee Handling reports of wrong doing on the job Safeguarding confidential information Recognizing and balancing the legitimate interests of customers, employees, suppliers,

10. owners and the society in which they all live. How can managers cope with the ethical dilemmas that they face at work? Are there any guidelines that can be offered to them? The answer to these questions is not straightforward. Every role in an organization carries some expectations. Coping with the differences between formal and informal expectations is a skill which adults acquire to varying degrees of competence through their experience. However, life is made more difficult by several roles one plays at any given time. Social and organizational influences have a significant influence on an individual's behavior at work and, consequently, on his ethical behavior. Administrators, managers, and all other employees have an overriding duty to public

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safety that must supersede the loyalties to their immediate masters and the organizations. Each is willing to do his bit just so long as it is not too inconvenient.

PROBLEMS OF CORPORATE GOVERNANCE

Over-Regulated and Under-Enforced Legal System There is no threat of legal system. For any misgovernance there is a loophole to escape or to cover up. No Independence of Audit System The role of auditor is described as watchdog and not bloodhound. The auditors can be bought easily is the prevailing system. There is independence for auditors/ audit system. Impromptu Credit Rating System Their rating criteria are listed and overall opinion is not given investor friendly. Stock Exchange System The listing requirements are given. But they are not sound enough to ensure good corporate governance. Window Dressing / Manipulation of Financial Statement Balance sheet and profit and loss account are under projected for the purpose tax authorities and over projected for the purpose investors differently has become very common nowadays. Systemic Problems of Corporate Governance Demand for Information: A barrier to shareholders using good information is the cost of processing it, especially to a small shareholder. The traditional answer to this problem is the efficient market hypothesis (in finance, the efficient market hypothesis (EMH) asserts that financial markets are efficient), which suggests that the shareholder will free ride on the judgments of larger professional investors. Monitoring Costs: In order to influence the directors, the shareholders must combine with others to form a significant voting group which can pose a real threat of carrying resolutions or appointing directors at a general meeting. Supply of Accounting Information: Financial accounts form a crucial link in enabling providers of finance to monitor directors. Imperfections in the financial reporting process will cause imperfections in the effectiveness of corporate governance. This should, ideally, be corrected by the working of the external auditing process. A case of Mr. Satyendra Dubey IIT-Kanpur Civil Engineering Graduate Working with the National Highways Authority of India Satyendra Dubey was a 31-yearold IIT-Kanpur Civil Engineering graduate working with the National Highways Authority of India and assigned to former Prime Minister Vajpayes per project, the Golden Quadrilateral, to connect the four corners of India. He was posted at Koderma, Jharkhand. On discovering rampant corruption and poor implementation of work in the section where he had been posted, Dubey, wrote to the Prime Minister exposing the irregularities. In the letter, received by the Prime Ministers Office (PMO) on 11, November 2002, he had named some companies. Fearing retribution, he had requested that his name be kept a secret. But the PMO officials circulated his letter along with details of his identity among the bureaucracy. The number of notings on the file bears witness to, this. (The Indian Express, 30, November 2003). While the file was making the rounds, not one official thought about the threat Dubey was being exposed

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to. Why officials in the PMO did not heed Dubey's request for anonymity is not known. But just over a year later, on 27, November 2003, he was murdered in Gaya, Bihar. This is a clear signal to everyone that honesty in India has only one result failure. An honest citizen must be prepared to forfeit his life. When a citizen files a complaint or brings some wrongdoing before the local police, he believes that the police will protect him. The minimum expectation of a citizen from the State is of a reasonable level of safety and protection for his body and life. The State is expected to ensure these at all levels. Shailesh Gandhi, Chairman of the IIT Bombay Alumni Association, wrote: 'The anger against Satyendra's murder must ensure a quick change for a better India. He is a symbol of an urge for an honest and ethical India. He has done more than his share; we must carry his ideals forward; otherwise we fail India and ourselves. The best tribute can be a Whistleblower's Act. Most people are badly hurt by the corruption in our country. This is the time for them, along with various bodies and associations, to get together and initiate a movement for a more honest society and good governance.' Concluding Comments In the context of the Satyendra Dubeys case, we need to raise the following questions and try to seek meaningful answers. They are: 1. 2. 3. _ What are the practical limits of moral imagination and vision at our workplace? _ At what level of effort or commitment can we discharge our ethical responsibilities? _ Having decided to raise an issue, should we take into account following points: (a) How is the ethical issue to be raised? (b) Should it be reported anonymously? (c) Should the report be made internally or does one go to the proper legal authorities or even the Media?

CONCLUSIONS
Corporate governance is a tool for socio-economic development. Strategically, in the global market, Corporate Governance has become inevitable. But its implementation adoptability and adaptability may take place at a slow pace. It is high time that business men need to realize that unethical progress of business cannot be accepted anymore and cannot go on a long way. Ethics and business conduct need to go hand in hand at least for the achievement of long-term goals, mission and Business needs to have some value & ethics. Corporate Governance is the way for healthy growth of business and key for gaining investors confidence. The positive effect of good corporate governance on different stakeholders ultimately is a strengthened economy. The problem of investors has burst in the global financial market. Therefore, it has gained adequate importance and the solution for the problem is expected to be very stringent and immediate. If the problem was Indianised, then it would have been suppressed as usual. But in this case the situation has affected global investors, and if the problem is not given due treatment, there will be serious effect on foreign inflow and it will affect the economy as a whole. Corporates should take measures to restore public confidence in corporate governance.

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Management ethics has become a vital concern to organizations and society over the past several decades. Polls indicate that the public does not have a high regard for business and management ethics. For the management community to turn this situation around, significant efforts are required. Part of the challenge is coming to understand what management ethics means, why it is important and how it should be integrated into decision making. Principles of ethics from moral philosophy and management theory are available to inform interested managers. One of the most formidable challenges is avoiding immoral management, and transitioning from an amoral to a moral management mode of leadership, behavior, decision making, policies and practices. Moral management requires ethical leadership. It entails more than just "not doing wrong." Moral management requires that managers search out those vulnerable situations in which amorality may resign if careful, thoughtful reflection is not given by management. Moral management requires that managers understand, and be sensitive to, all the stakeholders of the organization and their stakes. If the moral management model is to be achieved, managers need to integrate ethical wisdom with their managerial wisdom and to take steps to create and sustain an ethical climate in their organizations. If this is done, the desirable goals of moral management are achievable.

REFERENCES
1. 2. 3. 4. Aguilar, F. J. (1994), Managing Corporate Ethics, Oxford University Press, New York. Berenbeim, R. E. (1987), Corporate Ethics, The Conference Board, New York. Blanchard, K. and Peale. N. V. (1988), The Power of Ethical Management, Fawcett Crest, New York. Buchholz, R. A. and Rosenthal, S. B. (1998), Business Ethics: The Pragmatic Path Beyond Principles to Process, Prentice-Hall, Upper Saddle River. 5. Campbell, A. and K. Tawadey, Mission and Business Philosophy, Oxford: Butterworth Heinemann, 1992. 6. 7. Donaldson, J., Key Issues in Business Ethics, London: Academic Press, 1989. Gellennan, S.W., 'Why Good Managers Make Bad Ethical Choices,' Harvard Business Review, July/August 1986. 8. 9. 10. 11. 12. 13. IM Pondey, Financial Management, (2007), Tata McRaw Hill. Khan & Jain, Financial Management, (2007), Tata McRaw Hill. Mckeon, Richard, The Basic Works of Aristotle' (trans.), New York: Random House, 1941. Nader, R., P.J. Petkas, and K. Blackwell, Whistle Blowing, New York: Grossman Publishers, 1972. Shaw, W. and V. Barry, Moral Issues in Business, 4th edn. California: Wadsworth Pub. Co., 1989. The Hindu Business line (1996), September 1 , p-6.