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Question 1: Can Profitability & Morality co-exist?

Answer: Profitability is of two types: Tangible and Intangible (a) Tangible Return on Investment Cash flows Dividends (b) Intangible Trust of the consumers of the organization Evaluation of the Organizations profits Status of the people behind the organization Morality The only definition which can be given to morality is That which is selfish is immoral and that which is unselfish is moral. The natural tendency of every human being; taking everything from everywhere and heaping it around one centre, that centre being mans own individual self. When this tendency begins to break, then begins morality. This is fundamental basis of all morality. We find that as knowledge comes, man grows, morality is evolved and the ides of nonseparateness begins. Morality can be either cultivated or inherited. A smile from the air hostess is morality cultivated and a smile from a child is inherited. Co-existence of Profitability and Morality (Yes they can and they should) There is one and only social responsibility of business and that is to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say engages in open and free competition without deception or fraud. The question is of whether, in defining the business and understanding it as a moral reality, we should focus primarily on its goal of producing goods and services or of generating profits. A single concept of profit is not by itself sufficient to define what we mean by business. Even goods and services have to be really goods and services from the view point of enhancing total human existence (P F Camenisch). While quoting the anti-social responsibility perspective of the business Evans reasons that since the society supplies the mandate and power to business, it must respond to social obligations while earning profits. This is no way means that ethics in business is a means to profit. Morality is an end, a justification in itself. The fundamental basis of trust is moral. Question 2: Discuss Morality in Advertising. Answer

Anyone who has worked in business organizations learns that the specific challenges thrown up in the marketing area are amongst the most taxing. Promise, large promise, is the sould of an advertisement. Should advertising make the promises it does make? And does it deliver the promise? The economic case for advertising is fairly clear when it is considered as a necessary component of the competitive marketing system. It draws attention to goods and services which are available and by stimulating purchases it contributes to return of costs, increases market share etc etc etc There may be a grey area in the distinction between, on the one hand, misrepresentation, or making claims which are false and on the other hand omitting certain facts about the product or being economical with the truth Exaggerations and unwarranted claims about the efficacy of the product also fall into consideration in assessing the truth factor in advertising, whether those claims have to do with ones health, or ones sex-appeal, or ones social status, or ones general wellbeing in the society. Drinking a special brand of Whisky will transport one into a fairyland or harem of delights. The unspoken pre-supposition here of course is that the potential customer will be not only resistant but also sensible and reasonable in assessing the claims for various goods and services and will not take it all absolutely literally. It is in such areas particularly that regulation and monitoring of advertisements have an important social function by protecting the vulnerable in the society from being exploited. Another more ethically interesting sphere in which advertising needs to be scrutinized is the area of pressure on individuals to make particular choices The final and underlying consideration concerning the ethics of advertising is to what extent advertising responds to demand OR on the contrary actually creates demand? The objective of advertising any goods or services should be: To inform the consumers about the goods and services, Persuade them to buy the goods and services AND Remind them about the goods and services The most important pre-requisite i.e. remember the 3 As (i) Acquisition, (ii) Allurement & (iii) Advantage. While advertising, a business house should also keep the environment in mind. When we say environment, we mean Economical elements, Social elements, Ethical elements and regulatory elements. Morality (It is basically being right or wrong in conduct.) conform to moral standards?) are synonyms. And Ethics (Whether you

There are basically two issues in advertising (i) (ii) Dilemma Lapses

Dilemma is the unresolved question. The consumer is in tow minds about the advertised product or service. The advertisement has confused him and hence decision making becomes that much more difficult. E.g. Reliance India Mobile... Actually it is a fixed line phone with Limited mobility, however it is proclaimed as a mobile phone... Recruitment advertisements by large corporate houses often begin in bold print with words to the effect We are looking for people with sharp analytical minds. For the right person the sky is the limit But we are yet to see one announcement which seeks individuals with synthesizing capabilities. Does effectiveness in the long run not require analysis and synthesis? Lapses are unethical decisions like (1) Advertising unhealthy products (Cigarettes) (2) Advertising to Children (Cola adsinjurious to a childs health in the long run and (3) Using Puffery in advertising (Free Dental Insurance if you buy Rs. 20 worth tooth paste, In reality there are strings attached! Question 3: Why good managers make bad ethical decisions? Answer: There are internal as well as external factors which induce good managers to make bad ethical decisions. Internal factors could be The boss wants you to reach your targets by hook or crook, Peer pressure, Others dont catch me on the wrong foot & till such time I am not caught, I will do it AND external factors could be Strict govt. regulations, Tax policies, Maximum benefits to maximum number of people. Managers at various levels very frequently cite the following examples of having to quash their ethical sentiments in order to keep the organization/business running:(a) I have to satisfy an inspector from the electricity board to maintain adequate power supplies in times of recurrent shortage (b) I am obliged to entertain and enrich an important customer to keep him from switching over to our competitor (c) I have to fiddle around with year-end inventories to show a higher profit figure to the board of directors (d) I have to produce fake securities and bills receivable to procure ready cash (e) I have to over-invoice import bills and under-invoice export bills to oblige overseas owners (f) I have to oblige a monopoly supplier, at an individual level, to ensure supplies of a critical component. (g) I have to sign the transfer order of an officer to satisfy the prejudice of a higher-level boss. (h) I have to arrange for cash payments to retired high court / supreme judges who are on the informal rolls of our company at the instance of owners.

(i) I have to manipulate data to understate the profit figures for the purpose of trade negotiations (j) I have to manipulate data when preparing the project report to meet the hurdle rate of financial institution. These are invoked to circumvent the conflict between the instant, relative values and enduring universal values (honesty, responsibility etc). This side-stepping is also an excuse at times to subvert personal ethics in favor of company goals, under the argument that personal values are inappropriate as standards for corporate decisions. D G Jones states that managerial ethics is a subset of business ethics and those aspects of managerial relationships which involve employees and other market agents like suppliers, vendors, customers, creditors and competitors. Managerial ethics deals with practical management problems that have an ethical strand interwoven with internal & external factors. Question 4: Personal Values maketh the man, Discuss. Answer Both managers and academics have often asked whether Values/Ethics can be taught. People are born with certain values, Certain Values are cultured at home, Certain Values are internal and certain Values are shaped by external environment, certain values are relative. Therefore formal discussion on values for adults is pointless. As to the question of whether ethics/values can be taught, a frequently stated view is that these are learned from ones parents and are fully formed in early life, so that later efforts at teaching are really pointless. The final caveat however is that modes of ethical analysis ina business context can be taught. Personal values can be evaluated in three distinct categories (a) Mother & Son relationship - Bhakti (b) Student & teacher relationship - Yukthi & (c) Grandchild & Grandfather Relationship - Mukthi (a) Mother and Son relationship (Bhakti) The mother and chilld relationship is the sweetest, most trusting and least calculating relationship. Moreover most of us can relate effectively only to a personality and not any abstract concept. Can a mother knowingly giver her child stale food? Does she feel most blessed when able to feed and clothe her child well even if she herself has to go hungry and remain ill-clad? These initiate the laying of the foundation for integral power for ethico-moral motivation. The ultimate basis of healthy ethico-moral transactions and relationships at any level and any sphere lies in the depth and sweep of the unitive feeling amongst personalities involved. (b) Student & teacher relationship (Yukthi) The comprehension of meaning is dependent on study, and teaching is for the preservation of that memory and for the increase of virtue. This statement can be

dovetailed with the modern management process of student-teacher relationship in the leader-team members context. It is a distinct possibility that if a leader were to assume the role of a teacher on a regular basis, he/she would be spurred to internalize and project higher values more deeply and genuinely than if job were delegated to other specialists. The teaching process can provide a strong moral drive to practice what is preached, especially when the leader accepts the mentorship role. Owing to the very process of mental reflection involved in the preparation for the teaching session and the necessity of participating in the ensuing question-answer session, the subject matter is imprinted more clearly in the teachers own mind. Therefore since all behavioral is preceded by thought-change, this study cum teaching methodology can be a head start for the self-transformation process of the leader himself.

(c) Grandchild & Grandfather Relationship (Mukthi) May need some more explaining of the concept Consider the following example: The grandfather is waiting for his son to return home from work and finds that his son has been overworking himself for a long time and this has him worried. He is concerned about his sons health and well being. He takes his grandson and makes him stand in the sun with a brick on his head. When the son sees this, he questions his father how can you do this?, the father says that if this is how you feel about your son, dont you think I too will have the same feeling about you?!. Question 5 : Write Short notes on (a) Whistle blowing (WB) Whistle blowing mat be defined as the attempt by an employee or former employee of an organization to disclose what he or she believes to be wrong-doing in or by the organization. Like blowing a whistle to call attention to a thief, whistle blowing is an effort to make others aware of practices one considers illegal or immoral or unethical. If it is reported t someone higher in the organization it is said to be internal. If it is reported to outside groups such as reporters, public interest groups or regulatory agencies, it is said to be external. Under what conditions is WB justified? There are varied views to this (i) Some have argued that WB is never justified because employees have absolute obligations of confidentiality and loyalty to the organization for which they work (ii) It has also been argued that WB is always justified because it is an exercise of the right to freedom of speech. The criteria for justifiable WB(a) The firm through its product/policy will do serious and considerable harm to the public

(b) Once an employee identifies the threat, he/she should report it to his/her immediate superior and make his/her moral concern known (c) If ones immediate superior does not act, the employee should exhaust internal procedures within the firm-take it up to the manager, board of directors etc (d) The WBlower should have evidence to back his claims Factors to consider in WB (a) Make sure that the situation is one that warrants WB-Situation should involve immoral actions which are harmful to others (b) Examine your motives (c) Verify and document your information (d) Determine the type of wrong doing involved and to whom it should be reported (e) State your allegations in an appropriate way (f) Stick to the facts (g) Decide if WB has to be internal or external (h) Decide if WB has to be open or anonymous (i) Consult lawyer (j) Anticipate and document retaliation You can cite examples of Dr. Subba Rao, Admiral Vishnu Bhagwat, Arthur Andersen, Dr. Fitzgerald (b) How bureaucrats can shape the Morality of Politicians? (.Khairnar,.TN Seshan,Chandrasekhar,Mun com of Surat Rao Puncutality,Services,etc )

Three Case Studies Case Study (A) The parable of the dark child of Narhi-La The events of three weeks at far away Narhi-La had a deep significance for Chandra in understanding and resolving the ethical discord he was having with his organization for the past two years. He was the export manager of Mansukhani Sarkar and company who were in the business of handlooms and handicrafts. They had exclusive boutiques in several urban centres in India and a few abroad and all making large profits. Their two directors, Mrs. Mansukhani and Mrs. Sarkar had close connections with politicians and were therefore able to garner a lot of government support for their company in the form of subsidies and other benefits. Whereas they projected themselves as great social workers, helping the preservation of ancient crafts and skills of the country, when it came to sharing profits with the primary producers, Chandra felt that they were harsh and unethical. Further they operated through middlemen, who they knew took big cuts before paying the primary producers. Mrs. Sarkar also has an embarrassing habit of lifting items she liked from the showroom of the middlemen and not ever paying for them. Some of them complained to Chandra, but did not pursue the matter as Mrs. Sarkar had powerful politician friends. Chandra often felt like resigning from his job. But his wife always dissuaded him. You cannot expect every person in the organization to have exemplary ethics. As long as they are doing good overall, you should turn a blind eye to their faults she said. Chandra was not

sure if she said so only to prevent him from taking any disastrous course which would hurt her and their children. It was however true that the company gave him considerable freedom to develop a network of artisans in the deserts of Kutch in Gujarat and in the poverty stricken Erode district of Tamil Nadu. Mrs. Sarkar was invaluable in getting contracts from abroad and the company was free with its finances and could support a large turnover with sufficient credit arrangements. Admittedly this large number of artisans who manufactured for exports through Mansukhani and Sarkar were much better off than other artists of the area. A couple of them even managed a free trip abroad with government support and high profile publicity. Chandra was in the last stages of clinching a long term contract with an American Party. He had sent them samples and a quotation. Before he went abroad to negotiate with them, he thought he should undertake a Himalayan trek to spiritually recharge himself away from his mundane life at Mansukhani and Sarkar. The trip had unexpected consequences. The group had a mixed crowd geographers from Japan, a black American medical technician, a Norwegian journalist, Chandra and Dr. Gulati a pediatrician from Delhi. They were to assemble at Tehridun at Uttarakhand, transported 350 km by jeep to jyoti math and then trek to Narhi-La 150 km away. After acclimatization at Narhi-La they had to go to the Chinese border. Narhi-La had a scanty population of 30, mostly the aged. The able bodied had all gone to the plants. Five year old Lakhan was one of the few children whose parents had gone to the plants for work, leaving him in the care of his old grandmother. Unusually dark for a child from Narhi-La, he was held in reverence by the villagers as in their mythology the gods when they came to earth were dark. The team members became great friends with Lakhan. The weeks trek along the border was spiritually elevating for all the members of the team. They reflected on the follies of humanity inflicting violence on each other. The spirit of the mountains seemed to help them in communicating with each other without words and without language. Back at Narhi-La they were horrified to find Lakhan in Coma due to high fever. Lakhans grandmother was wailing. The whole village was in panic. The team was rudely awakened from their spiritual euphoria to the realities of the world. It seemed the spiritual centre of their world was now in Narhi-La. Every ones first inclination was to see Lakhan through his difficult days and leave only after he was well. But each had second thoughts. How could Dr. Gulati miss his sister-in-laws wedding? How could the Japanese miss the conference at Beijing?, where they hoped to present an important paper. How could the American leave his wife for so long, when she was battling with the task of looking after his old mother? Chandra had this most important meeting in New York which was the fruition of two years effort to get a good deal for his artisans. The Norwegian had little more time as he could mail his story a little later. But what could he do sitting there and watching the child die. Chandra found that everyone had devious ways of legitimizing their ethical stand of not wanting to go full length in their ethical duty. They were however willing to do their best within their self-imposed constraints. The Japanese rummaged their rucksack and brought out some medicines luckily good enough for Dr. Gulati to revive the child. Dr. Gulati remembered he had a friend at

Tehridun who was a good pediatrician. The Norwegian said his wait would be worthwhile if he could carry the child to Tehridun first on his back to Jyoti math and thereafter by motor transport. The American remembered he had noted the telephone number of a medical laboratory at Jyoti math where some help may e available. Chandra would monitor the entire operations by telephone from New York and Bombay, and support it with Money. All the team members gave whatever money they could spare. Everyone seemed a little relieved but not entirely free from a feeling of guilt. But the plan worked. Lakhan was nearly cured when the Norwegian left him at Tehridun in the care of the doctor. Chandra came back after a successful trip from the USA and organized the shipment. He then went to Tehridun, picked up Lakhan and dropped him back to NarhiLa. He felt the entire episode was a clear answer to his worries he had had with the ethics of Mansukhani and Sarkar. WHAT DO YOU THINK WAS THE ANSWER WHICH CHANDRA FOUND IN THIS EPISODE? Case Study (b) The Portable Ultrasonograph Never before has it happened in my life. We have failed in our public relations, bemoaned Virji Suratwala, Chairman, of Universal Electronics as he watched the small group headed by Dr. Arulnayagam (hereafter referred to as the doctor), fasting in front of his factory gates. Their banners proclaimed to the whole world that Universal Electronics are mercenary murderers of innocent babies. As they caught a glimpse of his face, they roared lustily. The doctor was protesting against the latest Universal Electronics product, a much vaunted revolutionary technology in ultrasonography brought into the country in collaboration with a world famous American multinational. The product was a small sized portable ultra scan sonographic recorder small enough to be packed in a briefcase. The foetus tests would become much easier and could be carried out even at home. For a year the doctor had tried every other means to persuade Universal Electronics not to make this product. Picketing was his last desperate step to stop them. The doctor felt that in India it could have only one effect. It would dramatically increase the number of female foeticides as it would be easier to determine the sex of the child. If it was a girl it would be aborted. For their complicity in this unethical outcome, he branded UE as the most unethical company in India. Paradoxically, both UE and the American multinational with whom they were collaborating prided themselves as being ultra ethical. Both the companies had won many international awards for ethical excellence. Ironically, the American company had also provided that the Indian company should distribute along with the machine a note by a known American doctor on the ethics of using the ultrascan machine. It said that the chances of a baby girl being mistaken for a baby boy were 7% in the first 20 weeks of pregnancy and therefore it would be unethical for parents with a history of haemophilia to abort a child identified as male just because the chances of males getting the disease were high. But the notes ignored that baby boys can never be mistaken for baby girls. It frivolously also added that one might as well wait for the baby to be born before deciding if the nursery walls should be colored pink or blue.

UE had been chosen after a long search for an ethically strong Indian Company. Virji still recalled the demeaning ethical examination he was put to by the foreign multinational. As if all Indians are crooks and all Americans are angels he remarked. We have given up crores of rupees of profits because we refused to offer bribes And everyone knows that in this industry, bribery is most rampant he added. He was speaking the absolute truth. He had ensured that the induction program for his new recruits drilled them on ethics. The slightest fall in standards would mean the sack. For him unethicality only meant corruption. This perception of unethicality was also shared by the foreign collaborator. Virjis legal advisors first disputed the doctors statistics. But that was a fruitless approach. He was a well respected public health statistician. He could back his statistics to the hilt. Then the PR line harped on the womans right to abort abnormal foetuses. The doctor then detailed case histories to show that in most of the decisions, the new portable instrument could be used secretively. The family seniors could overrule the mother. Social activists had little opportunity to intervene. Otherwise they could at least park themselves in front of the sonography clinics. The abortion usually pushed mothers to months of intense depression. UEs next line of defence was that the instrument did nothing more than make the currently used technology more efficient and cost effective. The machine could easily be moved into labour rooms in hospitals and used concurrently with the delivery of the child. If sonographs were right, portable sonographs too were right. The doctor countered this by saying that the new portable technology was like giving users a pistol with a silencer to kill a person and destroy evidence. Lastly UE stated that the instrument was only a means of ascertaining the medical facts correctly and could have many other positive uses other than determining the sex of the child. It could detect foetal abnormalities. If used for criminal purposes, the perpetrators of the crime were both the mother and those who forced her or her doctor and not UE. They quoted the provisions of the prenatal diagnostic Techniques act 1994 under which communicating the sex of the foetus to the mother is an offence punishable with a three year sentence and the doctor concerned can be struck off the membership of the state medical council. The mother and the other family members can also be punished. All users of such machines had to be registered under the act. UE thought they had clinched the legal angle. The doctor had no patience for legal or ethical analysis. He said that he was not doing a right or wrong analysis, but a with or without analysis. With the instrument babies were killed. Virjis world was crumbling. His companys ethical image was being mercilessly shaken up. He was convinced that UE was not being unethical, but he doubted if others would look at it the same way. If only I had persuaded the doctor before his views had got hardened, everything would have ben fine. It was a failure of my PR and not ethics he said and cursed his fate. If he now went back on the project, UE would lose at least Rs.20 Crores. IF YOU ARE IN THE POSITION OF VIRJI SURATWALA HOW WOULD YOU SOLVE THE PROBLEM? Case Study (c) The computer Whiz-Kid Dr. P. Rajatahnam (hereafter called Rathnam a name by which he was popularly known) had a wide variety of qualifications that included a doctorate in petroleum

engineering and a masters degree in computer science. He was a well-known authority in the application of knowledge engineering in the field of petroleum refining. He was a professor at the University of Texico in Texas. In 1986, a team of high level executives from Colorado petroleum Incorporated (CPI) an oil company in the Gulf, was on a study tour of the school of petroleum engineering at Texico. They were highly impressed with the work of Rathnam, particularly in the field of knowledge engineering applications to olve process problems associated with petroleum refineries. The sequel was a fantastic offer of appointment by CPI to Rathnam, which he accepted, little realizing the master plan of his new employers. Rathnam was the chief executive engineer of their computer installations which were primarily used for geological analysis, planning drilling programmes and trouble shooting refinery problems. Soon after joining, he was introduced to Dr. S C Bose, the chief geologist, who became his close friend. They freely exchanged experiences over many hours of professional discussions. Bose was a true scientist who did not hold back any knowledge. Rathnam knew all about Boses methods of investigation and developed an expert system that embodied this knowledge. The top management of CPI supported this project beyond the expectations of the two scientists. The news that CPI had decided to give Bose the golden handshake was a terrible moral shock to Rathnam who had no difficulty in identifying the cause the much regarded knowledge base of his own creation. Rathnam pleaded with the top management to change their minds. He reminded them that Bose was a heart patient and would find it impossible to another good job, and also that this action of theirs would result in many brilliant persons shying away from the companys employment. They did take him seriously. Much to their shock Rathnam resigned from his job. As a permanent resident of the USA, Rathnam could have returned there after his stint with CPI. But he did not intend to return to Texico though he was welcome there .He had just turned 56 and he could have worked as professor for at least another 10 years. He chose to come back to India in spite of the offers from several Universities in the USA as he expected to be more comfortable with the ethical climate in India. Rathnam had offers from several institutes of management in India. He decided to make his choice only after acquainting himself with each of them for a period of two to three days. He told them all that he would like to belong to the growing segment of early retirees who spent their time and expertise to serve the society at large and educational institutions are the best media he would prefer. However Rathnam soon started showing signs of disapproval of the things happening in India. The Indian world sems to have changed from my student days and I see much petty dishonesty and a permissive ethical climate though not as ruthless as CPI but saddening nevertheless, he said. He was disturbed by three problems. There was large scale use of pirated software, this weighed on his conscience. Second, there was hardly any spirit of knowledge-sharing among computer professionals. Third, Indian systems had little protection for ensuring privacy of Information. Admittedly, this would require very high cost, but he felt that the price was worth paying. In one of the institutes, he had heart-to-heart discussions with Professor Kulkarni who belonged to his generation. Rathnam was further bewildered by Kulkarnis views. Kulkarni felt that the ethics of pircy must also be seen in the light of the ethics in fair

pricing by foreign software manufacturers. But it seemed that the Indian Copyright Act was now tightened and foreign manufacturers had posted representatives who could help police raids to capture evidences of Piracy. Greater liberalization had also provided greater opportunities for equable bargains by educational institutions. Some others felt that the Indian legal system was unequal to the task of regulating piracy as corruption could destroy all semblances of law and order. As for the reluctance of many Indians to share their knowledge, he found most heads of institutions unable to do anything about it as computer personnel were in short supply with a high turnover. He had hoped that the Indian culture would have een able to reassure persons that organizations would not behave in the manner that CPI had with Dr. Bose after getting all his knowledge. But nowhere did he find such a relationship of trust. Lastly he found most institutions unwilling to go all out to ensure privacy of information using foolproof systems, they attempted to ensure this only by a better code of ethics among computer professionals. But with shortage of personnel in the field, strict enforcement of this code was not always possible. Rathnam was wondering if he had indeed taken a wrong decision in returning to India, or whether he should now give us his earlier ambition of serving the society at large through educational institutions. He could also go in for business to avoid all these hassles. Or maybe his entire rationalization had been a faade to cover his overwhelming self-righteousness and inability to view ethics as a means of larger good than the application of rigid codes of conduct. 1. IF YOU WERE RATHNAM WHAT WOULD YOU DO? DO YOU THINK PROFESSIONAL CODES FOR COMPUTER PROFESSIONAL NEED TO BE DIFFERENT IN THE USA AND INDIA? Chapter 4 Managerial Ethics and Corporate Social Responsibility Ethics The code of moral principles and values that govern the behaviors of a person or group with respect to what is right or wrong. Codified Law Values and standards are written into the legal system. Free Choice Behavior about which law has no say and for which an individual or organization enjoys complete freedom Example: An individual's choice of a marriage partner or religion. Three Domains of Human Action Ethics

Obedience is to unenforceable (at least in a legal sense) norms and standards

Ethical Dilemma

When all choices have been deemed undesirable because of potentially negative ethical consequences, making it difficult to distinguish right from wrong.

Common Ethical Dilemmas Honesty in advertising and in communications with superiors, clients, and government. Problems relating to special gifts, entertainment, and kickbacks. Overlooking wrong doings of others Criteria for Ethical Decision Making Utilitarian Approach Individualism Approach Moral-Rights Approach Justice Approach Utilitarian Approach Moral behaviors produce the greatest good for the greatest number. Individualism Approach Acts are moral when they promote the individual's best long-term interests (e.g., the golden rule). Moral-Rights Approach Human beings have fundamental rights (e.g., free consent, privacy, due process) Justice Approach Standards of equity, fairness, and impartiality. Factors Affecting Ethical Choices The Manager Level or stage of moral development Learned Ethics The Organization Systems Culture Moral Development Preconventional Level = concerned with external rewards and punishments Conventional Level = conform to the expectations of peers and society Postconventional (Principled) Level = individuals develop a personal, internal set of standards and values. (About 20% of adults) Guidelines for Dealing with Ethical Dilemmas Is it legal? Is it right? Is it beneficial? To whom? How much?

Is it harmful? To whom? How much?

Guidelines for Dealing with Ethical Dilemmas (cont.) Would you be willing to allow everyone to do what you are considering? Would you like your family to know? Would you like your decision printed in the newspaper? Have you consulted others who are objective and knowledgeable? Ethical Responsibilities

To be ethical, an organization should seek a higher standard than merely obeying the law: o e.g., Act with equity, fairness, and impartiality o e.g., Respect the rights of individuals o e.g., Act for the common good

Ethical Leadership By Example Senior managers must be strongly committed to ethical conduct. Code of Ethics A formal statement of the company's values concerning ethics and social issues. Types of Codes of Ethics Principle-based: Designed to: Enable the employee to make ethical decisions based on appropriate values e.g., treat people fairly or dont be dishonest Policy-based: Outline how to act in specific ethical situations (reducing the need for thinking or shared values): Conflicts of interest Proprietary information Political gifts Equal opportunities Organizational Structures to Promote Ethics

Ethical ombudsman is the corporate conscience Ethics committee = group appointed to monitor company ethics Ethics training programs Hot lines- employees can report questionable behavior, possible fraud, waste, or abuse( i.e., Blow the Whistle).

Whistle-Blowing Definition: The disclosure by an employee of illegal, immoral, or illegitimate practices by the organization.

Guidelines: Be sure you are right (keep accurate records) Try to resolve the situation in-house first Consult an attorney before contacting the media, etc. Realize you could be fired Dont expect to profit financially Ethics: A definition Relating to what is good or bad, having to do with moral duty and obligation. (Moral is defined as relating to principles of right and wrong) Business Ethics Acting with an awareness of the need for complying with rules, such as the laws of the land, the customs and expectations of the community, the principles of morality, the policies of the organization and such general concerns as the needs of others and fairness. Tools for Decision Making What would a reasonable person do, or how would they perceive your decision? Think of someone whose moral judgment you respect. What would that person do? What would I want my family to do? How would my family perceive my actions? Policy Compliance Evaluate the issues, options, and consequences Ethics in advertising? Advertising is about as ethical as the American public. About as ethical as you and your neighbors. About as selfish as you and your acquaintances. It has about the same moral standards as the upper socioeconomic strata of society because it is created, approved and paid for by the upper echelons of modern U.S. society. I'll modify that to say that it is a little more ethical, a little more moral, than the upper economic strata of society. Why? Because advertising lives in a fish bowl. It is the most visible of all commercial practices. It has 200 million critics. And no business, no communications medium, no art form (or whatever you want to call advertising), no other enterprise has so many watchdogs." Morris Hite, quoted in Adman: Morris Hite's Methods for Winning the Ad Game, 1988, Dallas, TX: E-Heart Press, p. 200-201 Ethics is a choice between good and bad, between right and wrong. It is governed by a set of principles of morality at a given time and at a given place. Ethics is related to group behavior in the ultimate analysis, setting thus the norms for an individual to follow in consistence with the group norms. Advertising too, has its ethical values. Advertising communications may be artfully presented facts but the same are subservient to ethical principles. In order to be consumer-oriented, an advertisement will have to be truthful and ethical. It should not mislead the consumers. If it so happens and word does get out, the credibility is lost and the communication becomes ineffective rather futile.

Advertisements truth should be viewed from the consumers point of view, and not in the narrow legalistic frame in order to find a loophole and to get out after an irresponsible action. Many times a clear line of demarcation between truth and lies is difficult to establish. But the advertisement is as much judged by its impact as by its acceptance by the consumers. What it promises must be there in the performance of products. Advertisements should not be indecent and obscene. Gambling or to encourage gambling is against ethical code. Endorsement of products by celebrities who are opinion leaders is also sometimes criticized for spreading falsehood. Especially if the word gets out that the celebrity has endorsed without actual personal experience, it can have a very detrimental effect on consumers. As advertising a social process, it must honour the traditional norms of social behavior, and should not affront the moral senses of a society. In order to enforce an ethical code we in India now have Advertising Standards Council of India; ASCI. It is a non-profit organization set up by 43 founder members who are involved with advertising in one way or the other. It puts forward a regulating code. ASCI proposes to adjudicate on whether an advertisements is offensive and its decision will be binding on its members. It proposes to deal with government if there are any disputes. Enron Enron, a large Houston-based energy company, long held a reputation as a great American innovator and a stock market darling. However, due to a shadowy history filled with poor investments, an unnecessarily complex fiscal structure and other questionable managerial decisions, the company very publicly fell apart in 2001. Enron eventually was forced to lay off thousands of employees and to undergo the largest Chapter 11 bankruptcy in U.S. history. Meanwhile, in early 2002, the Securities and Exchange Commission and the U.S. Justice Department began conducting criminal investigations surrounding allegations of fraudulent financial reports and manipulation of energy markets. Waist-deep in the scandal was Andersen, Enrons auditor. Andersen was indicted by the DOJ in March 2002 when it came to light that the firm had destroyed thousands of Enron documents and assisted the company in covering up losses and other dubious financial dealings. Three months later, a federal jury found the firm guilty of obstruction of justice. Granted, Andersens misdeeds lay with the accounting side of the firm, and with a small number of people working out of one office at that. In the court of public opinion though, the resulting stigma potentially could rub off on anyone even remotely associated with the scandal. Who is likely to be affected? There is of course Andersen, whose consulting arm, while not accused of any wrongdoing, garnered millions in fees from Enron. The Big Five firms sea of troubles has been well documented and continues to make headlines on a daily basis. Then there is McKinsey,

a longtime Enron adviser and former employer of the now-notorious Jeffrey Skilling, the Enron executive primarily responsible for engineering many of the companys shady reporting practices. Eggs of whistle blowers Name David Chacon Cynthia Cooper Roy Olofson Barron Stone Sherron Watkins Company Allegations Personal Outcome Left firm, filed lawsuit Talking to U.S. Justice Department Fired, filed lawsuit Forced to change jobs at Duke Testified to Congress Company Outcome Subject of congressional and NASD probes Forced into bankruptcy Forced into bankruptcy Awaiting results of an audit Forced into bankruptcy

Salomon Improper IPO Smith Barney allotments WorldCom Global Crossing Duke Energy Enron Massive accounting fraud Round-trip trades and improper accounting Improper accounting Massive accounting fraud

Business Ethics By Language: 1. 2. 3. 4. 5. 6. 7. Everybody Else does it If we dont do it, somebody else will That is the way it has always been done We will wait until the lawyers tell us it is wrong It does not hurt anyone The system is unfair I was just following orders

By category 1. Taking things that dont belong to you 2. Saying things you know are not true 3. Giving or allowing false impression 4. Buying influence or engaging in conflict of interest 5. Hiding or mutilating information 6. Taking unfair advantage 7. Committing acts of personal 8. Perpetrating interpersonal abuse 9. Permitting organization abuse 10. Violating rules 11. Condoning ethical actions 12. Balancing ethical dilemma

Social responsibility Issues in business 1. Can profitability and morality go together? 2. Do companies have conscious? Profits are of two types Tangible & Intangible profits Book Profits e.g. Tatas are remembered for their social work. 3. Sales representation & product launches how ethical can it be? Morality and advertising 3As Allurement, Advantage 4. How burocrat can shape the life of people 5. Personal value of ethics Indian system, western system & comparison Bhakti mother taking care of child. Yukti relation between student and leader, saam, daam dand, bhed Mukti Indirect method used by company 6. Business & business ethics Books Ethics and Mgmt By Hosmer Business Ethics by Shekher Business Ethics by Chakrobarthy (Oxford publication) HOW DOES MANAGERIAL ETHICS IMPACT BUSINESS?

Causes of Managerial Ethics Short Summary


Many surveys of business organizations show that managerial ethics works for a companys effectiveness when ethically compliant management styles involve commitment to ethics, fair treatment of employees, rewards for ethical conduct, concern for external stakeholders, and consistency between policies and actions. Critical decision-making moment that faces management has two ways, considering the difference between making an ethical decision and defining an ethical decision. To enforce positive impacts on the companys business, a corporation needs a process and procedure for developing managers as moral individuals. Furthermore, a company must engage in formulating and implementing policies that support the companys and the individuals ethical performance.

Full Text

Managerial ethics affects a company and its business in two ways: it works for them in a way, and it hurts in the other way. Many surveys of large American companies show some interesting results. Managerial ethics works when ethically compliant management styles involve commitment to ethics, fair treatment of employees, rewards for ethical conduct, concern for external stakeholders, and consistency between policies and actions [See Reference 1]. On the other hand, managerial ethics hurts a companys

effectiveness when it works in a way that would force employees to protect management from blame. It is also harmful when a companys culture focuses on unquestioning obedience to authority and employee self-interest. The results of effective management can be measured by increased or reduced number of reports in the following areas: unethical (and illegal) conduct within (and outside) the organization; awareness of ethical issues; ethical advice seeking within the firm; willingness to deliver bad news or report ethical (and legal) violations to management; acceptable decision making and level of employee commitment. Critical decision-making moment that faces management has two ways, considering the difference between making an ethical decision and defining an ethical decision [See Reference 2]. An ethical decision typically involves choosing between two options: one we know to be right and another we know to be wrong. A defining moment challenges the management in a deeper way by asking them to choose between two or more ideals which they deeply believe are morally acceptable: such decisions rarely have one correct response. Experience in such decision-making processes may form the basis of the managements individual character. Defining moments ask executives to dig below the busy surface of their lives and refocus on their core values and principles. Once uncovered, those values and principles renew their sense of purpose at the workplace and act as a springboard for shrewd, pragmatic, politically astute action. Three types of defining moments are particularly common in todays workplace. The first type is largely an issue of personal identity. The second type concerns groups as well as individuals. The third kind involves defining a companys role within society. By learning to identify each of those three situations, managers can learn to navigate right-versus-right decisions successfully. By engaging in this process of self-inquiry, managers can gain the tools to tackle their most elusive, challenging, and essential business dilemmas. However, even a managers individual character and quality may not always help him or her to make a clearly right choice in ethical decision-making [See Reference 3]. How can usually honest, intelligent, compassionate human beings act in ways that are callous, duplicitous, dishonest, and wrongheaded? Unethical behavior can be found everywhere, and ambitious managers facing murky borderlands between right and wrong sometimes cross over the line. Their decisions could ruin people's lives, destroy institutions, and give business as a whole a bad name. There is a clash of ideas within the very business ethics and management decision-making, when a companys business cases involve formulating a corporate response to the incidents that happen, the communities affected, government agencies and other corporate stakeholders. There are also disagreements among those who make decisions over what preventive measures to use and how the company and its employees can be such moral agents. These details influence how the top managers will define the companys ethical standards in conducting a business [Reference 7]. The impacts of management ethics are not only brought by the individuals of a company but by the institutional forces of the entire corporation and its environment, both as a conscious being [See Reference 4]. A corporation can and should have a conscience. Organizational agents such as corporations should be no more and no less morally responsible (rational, self-interested, altruistic) than ordinary persons. The analogy that holds between the individual and the corporation makes it possible to project to corporations the concept of moral responsibility as it applies to persons.

We now hold some principles that are introduced above in discussing in what and how managerial ethics may influence a business. How then, in practice, can a manager develop his or her, and of the companys, ethical values, attitudes and behavior [See Reference 5]? As practical matters, business ethics has a managerial challenge with the following aspects. First, a corporation needs a process and procedure for developing managers as moral individuals. Second, such a process and procedure must also include building an environment in which ethical standards and values are central to the company's strategy. Third, a company must engage in formulating and implementing policies that support ethical performance. These need to be coded and practiced as the essence of management responsibility, so as to make decisions when there appears to be no clear choices or absolute answers to the companys ethical problems. Ethics is as much an organizational as a personal issue, and hence it may involve serious legal issues [See Reference 6]. Managers who fail to provide leadership and institute systems that facilitate ethical conduct share responsibility with those who knowingly benefit from corporate misdeeds. Executives who ignore ethics run the risk of personal and corporate liability. In addition, they deprive their organizations of the benefits available under regulatory guidelines that recognize the organizational and managerial roots of unlawful conduct and base fines on the extent to which companies have taken steps to prevent that misconduct. Management must combine a concern for the law with an emphasis on managerial responsibility for ethical behavior. When integrated into the day-to-day operations of a company, such strategies can help prevent damaging ethical lapses, while tapping into powerful human impulses for moral thought and action. Summary How can we define the clear standards of business ethics? There is a clash of ideas in business ethics and management decision-making, when a companys business cases involve formulating a corporate response to the incidents that happen, the communities affected, government agencies and other corporate stakeholders. The clear understanding of authority and responsibility that each moral agent holds in every situation, must be the starting point of defining business ethics. On Definition of Business Ethics [FULL TEXT] Concepts of ethics necessitates a set of standards by which a group or community decides to regulate its behavior, distinguishably as what is legitimate and acceptable in pursuit of ones aims. Ethics can also be such a set of standards by definition. Although the use of ethics does not need to be associated with specific aspects of life or activities, it makes sense to discuss it within a restricted area or in reduced sense. In many cases, such as medical, legal, and business ethics, all the use of such terms takes its legitimacy and tolerance as that of particular kinds in certain contexts. In practice, we need to decide what types of moral standards are applicable to particular interests of our lives. Hence, in like manner business ethics has clear connections with the needs of the groups and individuals engaged in the business region of our social system. Whats the Matter with Business Ethics? How can we, then define the clear standards of business ethics? The more business ethics secures its status in organizations across the nation, the more confusing it

appears to actual managers and their constituencies. Far too many business ethicists have not offered their community the practical advice they need. Conflicting factors involves not that business people dislike the idea of doing the right thing, but whose interests and needs are to be considered first, or at most relevant, and also the potential costs of planning and implementing the right thing to do. Frankly speaking, business ethics has emerged from and would stay within the muddled world of mixed motives. There is a clash of ideas in business ethics and management decision-making, when a companys business cases involve formulating a corporate response to the incidents that happen, the communities affected, government agencies and other corporate stakeholders. There are also disagreements among those who make decisions over what preventive measures to use and how the company and its employees can be such moral agents. These details influence how the top managers will define the companys ethical standards in conducting a business. Many research results present how managers define ethical issues and resolve them. First, young managers would receive explicit instructions from their middle managers or would have felt strong organizational pressures to do things that they believed were untrustworthy, unethical, or illegal. Second, corporate ethics programs codes of conduct, mission statements, hot lines, and so forth may prove to be of little help to these young managers. Third, many of them might believe that their companies' executives were out-of-touch on ethical issues, either because they are too busy or because they would seek to avoid responsibility. Fourth, the young managers can resolve the dilemmas they face largely on the basis of personal reflection and individual values, not through reliance on corporate credos, company loyalty, the exhortations and examples of senior executives, or philosophical principles or religious reflection. Going through such difficult and even traumatic experiences, many managers may believe that they would be able to learn important lessons about themselves and their work. Many people believe that there is some single, overarching approach to business ethics: e.g., serve the shareholders and the stakeholders, or follow your conscience. In reality, however, the search for a grand, unifying principle of management morality often leads to frustration and doubt. The moral dilemmas that managers face are, in essence, clashes among different spheres of responsibility. In a framework for resolving ethical issues, managers' responsibilities to shareholders, employees, other stakeholder groups, and to their own values and commitments in life conflict with each other. The framework needs to be analyzed in terms of duties, consequences, personal values, and practicality. Therefore, we need to have an analytic framework for a course or module on business ethics, which brings together basic considerations in moral philosophy with practical pressures, perspectives, and concerns of business executives. Considering ethics in practice, business ethics would invite a challenge with three parts. First, developing managers as moral individuals; second, building an environment in which standards and values are central to the company's strategy, just as economic purpose is; and third, formulating and implementing policies that support ethical performance, as well as safeguards to assure they are observed. The essence of management responsibility is to make decisions when there are no clear choices or absolute answers. Emerging Issues in Ethics and Policy

Business ethics in modern societies are changing, as is the very nature of modern business itself. While Americans may consider some current business practices in other parts of the world to be questionable or even unethical, they may fail to appreciate that the reverse is true as well. We need a series of recommendations for multinational business managers to assist them in interpreting their own, as well as others, business behavior in order to develop business practices that will be ethically acceptable to many. A framework for identifying and analyzing the ethical and policy issues can be triggered by the various capabilities of information technology (IT). Those IT capabilities include access and acquisition of information and resources, speed and throughput, permanence or durability, storage capacity, duplication, tracking and monitoring, data conversion a and/or recombination, and job design as well as suppliers resource and logistics. Ethical issues to be involved are among the ideas such as ownership, privacy, accuracy, security, and quality control. There are matching legal issues to these, such as data policy, intellectual property rights, worker's rights, and the policy on regulating competitions. The globalization of corporate cultures and information technology put business ethics in another kind of turmoil, even in much wider sense than ever. Among those who are at stake in a companys business, which has the most significant influence in already so many different situations. On the other hand, who are they, if we are too far away here to see them, or are simply invisible here, knowing only their user names or access codes? Many established approaches such as stakeholder analysis, equity theory, and goalbased, duty-based or right-based analysis, would simply come short of comparing the influence power parities/disparities among the member of a diverse business community. Even with a good intention of the management to do no harm to any people of the group, the management might need to take cases one at a time. Redefining Business Ethics of a Corporation Here, the clear understanding of authority and responsibility that each moral agent holds in every situation, must be the starting point of defining business ethics. Codes of conducts can be based on the differences made in a description of responsibilities that each authority in particular terms and conditions would have. Whether ones responsibility is described as his or her duty, right, or a business or management goal, such an account of responsibilities itself holds the key to separating the issues. Then, we can start analyzing which responsibilities would apply to particular set of stakeholders as well as customers and suppliers, all of which could be either at present, unreachable, or simply invisible behind the screen. Therefore, the definition of business ethics needs to take several steps. First, define the responsibilities of those who engage in particular aspects of business, based on the knowledge of what authority they have and where such accounts of knowledge can be located, either with the responsibilities, or above. Then, as the second step, link (or hyperlink) the statement of such responsibilities and knowledge source to the community members who are to be engaged with the associated business activities. Third, draw the line and pick the morally relevant part of the business responsibilities, and list them, in form of a map or matrices.

Now in such a matrix of descriptions we would see the causal relationships among all those who engage in one big circle and cycle of a business. We could then separate the issues, by sorting the list by context, significance (or potential risk) and decision level. Reformatting such lists of moral relations would make a detailed analysis of a companys ethical conducts, and hence by subject this would make a statement of ethical standards. Maybe a ten-page summary of that would be used as the codes of conduct across the board. One companys business ethics is thus defined. Business Ethics There is much more to international business ethics than corruption, but it usually comes to mind first. Different cultural systems are corrupted in different ways. Corruption In Western culture, cronyism, bribery and kickbacks undermine the system. For example, purchasing agent is expected to make decisions based on public information (transparency). If he awards contracts to friends or receives kickbacks, it is a conflict of interest. His and his friends interest conflict with his companys interest. In another system, the agent must rely on personal relationships rather than public information. There is no conflict of interest if the agent favors a friend. The company wants to do business with trustworthy people. The Western system is based on rules and law, but excessive legalism corrupts the system. This is a problem in the USA. Singapore. Bribery is illegal. The law is strictly enforced with harsh penalties. There is little corruption of any kind. South Korea. Payments in white envelopes are a regular part of business. It is impossible to get anything done without special relationships with government officials. In Japan, bribery is clearly illegal. Although gifts are important... people are careful to give them in circumstances that cannot be interpreted as bribery. Yet bribery is not uncommon. Even if bribery is not involved, favors are often granted through close relationships between government officials and corporate executives. The Japanese regard this as a form of cooperation that is good for the country. In India, many government officials could not survive on their salaries alone. Small facilitating payments are ubiquitous. One might argue that this is the Indian way of financing government. Kickbacks are also very common. When a government official awards a contract to a company, he receives a reward from the company. There is also skimming. Funds appropriated in Delhi may evaporate in the bureaucracy before they reach their destination. In one case, funds for upgrading the Calcutta sewer system had dwindled to zero

before reaching Calcutta. The system relies on family and other networks for its stability. But kickbacks and skimming represent this system out of control. In Egypt, kickbacks are built into the contract. A certain fraction of the cost of a contract is allocated to paying off the parties who negotiated it. This alone may not be corrupting. In parts of Africa, extortion payments may account for a large fraction of a deals cost. Patronage is also standard practice. The national leader will pay off important families with money and favors to retain their support. Ethical Differences The main ethical difference between cultures is the distinction between guilt-based and shame-based cultures. Guilt-based cultures rely on internalized rules (conscience). The psychological cost of violating the rules is guilt. Shame-based cultures rely on social censure. The cost of deviant behavior is shame or loss of face. They must be high-context cultures. The guilt-based cultures share a Judeo-Christian-Islamic background. They include most of Europe, North America, Australia. Islamic countries rely on both guilt and shame. Tendency to send missionaries. Guilt-based cultures give the false impression to foreigners of being free or licentious. Less social control is necessary, because the rules are internalized. As in Scandinavia, where the culture is very permissive but the rules strict.