Ethics

Ethics
• Ethics is relating to what is good or bad & having to do with moral duty &
obligation
• Ethics is enquiry into the nature & grounds of morality where the term
morality is taken to mean moral judgments, standards & rules of conduct
• Ethics is our code of conduct
• Ethics area a set of rules & standards that guide our behavior.
Personnel ethics, Professional ethics, Managerial

• Personnel ethics
• Professional ethics
• -Honesty
• -Fairness
• -Respect
• -Compassion
• -Integrity
• -Self discipline
• Professional ethics may be integrated with corporate & organizational values

• Managerial ethics- What is good or bad in conduct & decision making. Ethics
& social responsibility are more widely recognized & companies can use code
of ethics & their corporate culture to govern behavior, thereby eliminating
the need for additional laws
• Immoral Management-Managerial behaviors devoid of any ethical principles
represent immoral management
• Moral management-Managerial behaviors focus on & follow the ethical
norms, professional standards of conduct& compliance with applicable rules
& laws. Moral managements does not pursue profits outside the boundaries
of the law & sound ethical principles.
• Amoral Management-Managerial behavior that are indifferent to ethical
considerations as thought different standards of conduct applying to business
than to other aspect of life characterize amoral management. This seems to
lack awareness of ethical or moral issues.

Business ethics
• Business ethics are rules of business conduct. Ethical principles are dictated
by the society & social policies.
• Business ethics also relates to the managers/employees. It is to ascertain the
responsibilities & ethical obligations of business professionals. Here the focus
is in people, how individuals should conduct themselves in fulfilling the
ethical requirement of business.
• Oxford dictionary defines it as the science of morals in human conduct, a
moral principle or code

• Business ethics encompass how a person in business deals with his or her
• -Colleagues
• -Staff & workers
• -Shareholders
• -Customers
 • -The community
• -The government
• -The environment
• -The nation & its interest

Scope of business ethics

• Social Level
• -Concern for poor
• -No discrimination
• -Concern for clean environment
• -Prevention of scare resources
• -Contribution for better quality life
• Stakeholders Level
• -Employees- Job Security, Better working conditions, Participative
management, Welfare
• Customers- Better quality goods, reasonable prices, Not to make false claims
in ad’s.
• Shareholders- Ensure capital appreciation, Ensure steady & regular dividends,
Disclose all relevant information, Protect interest at the time of mergers &
acquisitions.
• Banks- Safety & Volumes of borrowed funds, Prompt repayments of loans.
• Government- Complying with rules & regulations, Honesty in paying taxes &
other dues,
• Internal policy level- Fair practices relating to recruitment, compensation,
perks, promotions. Better communication.
• Personnel policy level- Mutual help, respect others, good team member,
work for company objectives/goals
• Moral implies conformity with the generally accepted standards of goodness
or rightness in conduct of character

Three C’S of Business Ethics

• Compliance of rules including
• -Laws
• -Morality
• -Policy of company & fairness
• Contribution to society through
• -Core values
• -Quality products & services
• - Employment
• -Usefulness of activities to community
• Consequences of business activity
• -Towards environment
• -Social responsibility
• -Good public image

Benefits of managing ethics in organization

• Substantially improved society
• -Maintain a moral in turbulent time
• - Cultivate strong team work & productivity
• -Supports employees growth
 • -Help avoid criminal acts
• -Help manage values associated with quality management, Strategic
planning
• -Promote strong public image

Why fostering good business ethics

• -To protect organization & its employees from legal action
• -To create organization that operates consistently
• -To produce good business
• -To avoid unfavorable publicity
-To gain goodwill of the

Values
• Value is enduring belief that a specific mode of the conduct or end- state of
existence in personality or socially preferable to an opposite or converse
mode of conduct or end state of existence.
• An individual value system is defined as an enduring organization of beliefs
concerning preferable modes of conduct or endstates of existence
• Different value systems go a long way towards explaining individual
differences in behaviors
• Values sometimes are also classified as moral values & competence values
• Moral values are concerned with modes of behavior
• Competence values are concerned with self actualization & such values
reflect a personal rather than an impersonal focus
• Values shapes-Beliefs-Perceptions-Attitudes-Behavior, Interests, Personality
• Following aspects help in understanding values
• -Giving due value money for customers in terms of quality, quantity & service
• -Defining corporate mission & strategies
• -Concern for efficiency of work
• -Reasonable profit margins-pricing
• Feeling for society, nation & poor
• -Fair & proper decision making
• Characteristics of values
• -Values are at core of personality & are powerful force affecting behavior
• -Values have both content & intensity attributes
• -Values are not fixed, but they change over time
• Importance of values
• -Values influences managerial & organizational behavior
• -Managers values go hand in hand in performing management functions
• -Problem solving approach
• -Human values help in self development
• -Human values helps in good inter personal relations
• -Human value enhance reputation, goodwill & image of the organization
• Types of values
• -Instrumental values- are those values concerning the way we approach.
These relates to means for achieving desired results.
• -Terminal values are those end state goals that we praise such as
comfortable life, sense of accomplishment , equality among people.
• Instrumental values
• -Being helpful or caring towards others
 • -Education
• -Hard work & achievements
• -Truthfulness & Honesty
• Terminal values
• -Knowledge & wisdom
• -Peace & harmony
• -Pride in accomplishment
• -Lasting friendships
• -Security & freedom

Five key Forces- Determinants of Individual’s Ethics

• -Family Influences
• -Peer Influences
• -Experiences
• -Values & Morals
• -Situation Factors
• Moral Development Pyramid
• - Beliefs
• - Religiousness
• - Law

Ethics in Business- Myth & Reality

• Business ethics at workplace is about prioritizing moral values for the
workplace & ensuring that behaviors are aligned with those values- its value
management
• Myths- Business ethics is matter of religion than management
• Myth- Our employees are ethical so we do not need attention to business
ethics
• Myths- Business Ethics is a discipline best led by philosophers, academics &
theologians who treat it as a philosophical debate or a religion
• Myth- Ethics is a matter of the good persons preaching to bad persons
• Myth- Business ethics is the new police person in organizations & it is a
recent phenomenon.
• Myth- Ethics cannot be managed.
• Myth- Business ethics & social responsibility are same thing
• Myth- Our organization is not in trouble with the law, so we are ethical
• Myth- Managing ethics in the work place has little practical relevance

Normative theories of Business Ethics

• -Confusion in defining business ethics as a field of study between the ethical
theorists & those engaged in business.
• The search for a down to earth theory has lead to the evolution of normative
theories that suit specific business environment
• A normative theory of business ethics is an attempt to focus this general
theory exclusively upon those aspects of business life that involve business
relationships
• Normative theory is specifically meant to provide people with ethical
guidance when they carry out their day to day business.

Normative Theories
• Stockholder Theory
• Stakeholder Theory
• Social Contract Theory

Stockholder/Shareholder Theory
• -Express the business relationship between the owners & their agents who
the managers are running day to day business of the company.
• Owners advance capital to realize certain ends beneficial to them
• This binds managers not to spend any resources for social cause. Thus
business can have no social responsibilities
• Managers have no options but to follow orders of their masters
• Company to maximize returns on investments
Criticism
• - Cruel & dangerous in practice
• - Impractical
• - Discredited because of its failure
• - The contemporary economic conditions are so far removed from those of a
true, free market

Stakeholders Theory
• Stakeholders of a firm
• Primary Secondary
• Survival of firm Affect/Affected by fir
• Stockholders Media, Consumers
• Employees Govt., Competitors
• Suppliers Society, Political group
• Creditors Trade associations
• Customers Environment
Criticism
• - It is not applicable in practice by corporation
• - Difficulty of defining concept.
• - Accused of opening up a path to corruption
• - Criticized on the ground that it extends the rights of stakeholders far too
much

Social Contract Theory

• It stresses that all business are ethically duty bond to increase the welfare of
the society by catering to the needs of consumers & employees
• Based on the principles of social contract wherein it is assumed that there is
an implicit agreement between the society & business unit & interest of the
society to be served in specified way.
• Based on a assumed contract between the businesses & members of the
society who grant them the rights to exist in return for certain specified
benefits
• These benefits are the result of functioning of these businesses , both for
their own sake & that of larger society
Criticism
• Social Contract is legally speaking no contract
• To serve the interest of the society are not specified in law & can have
substantial impact on the profitability of the firm
The Indian Business Scene
Ethics in HR
• - Recruitment, Selection & Promotion
• - As per company guidelines follow selection process
• - Wages/ Worker’s Unions
• -Discrimination/ Harassment/Discipline
• - Human Rights/ Labor Laws

Ethics in Marketing
• -Buyer Seller relationship(contract, liability views)
• -Product-safety, quality, duplication, trademark, labeling
• -Pricing- Situational advantage, fixing, price control, channel members
margins
• -Distribution- Channel members appointments, Reverse logistics
• Promotion- False deceptive & unfair advertising
• Market Research- False information

Values of Indian Culture

• -Individuals must be respected, Cooperation
• -Jealousy is harmful for mental health
• -Top quality product/service
• -Work is worship, creativity, self discipline

The Indian Business Scene

• Ethics, Morals & values are followed in limited way
• Management operations (various departments like HR, Marketing, Finance,
operations etc.)
• Commitment levels are low
• Corporate social responsibility on lower side
• Law & order situation(corruption & bribery, fraud, theft)
• Patents/ Intellectual property

Global Trends in Business Ethics

• Companies in developed countries, moving operations to third world
countries, requiring heavy manual labor, hazardous chemicals production.
• Discrimination of employees in various countries
• Violation of accounting standards(failure to disclose substantial changes in
business conditions to investors
• Environmental
• Free movement of people along with globalization
• Terrorism