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1. Meaning
of Ethics:-
of Business Ethics:-
Leads To
Conduct of a
Service of
action
considered as Wrong
Moral or Immoral
By which we can
Judge again
Moral
Standards
Know as
Moral
Requires Judgment
An understanding of Ethics:In
any
organization,
from
top
management to Employees at all levels, Ethics is
considered as everybodys business. In business it is
not just only achieving high levels of economic
performance, but also to conduct one of businesss
most important social challenges, ethically.
The problems in a business are multifold. Many
of the vendors offer Kickbacks to the buyers, for the
purchase of their goods and securities. These bribes are
many a times hefty and within a short period, the buyers
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Case Study No.2: - In another case, a senior Librarian who was very casual and negligent in his
attitude, had to make one of his weak Assistant a scapegoat at the end of the year when Library
Inventory was checked and nearly 500 books were short. The Senior Librarian know very
well that his Assistant is highly loyal, sincere and honest in his work and such a thing would not
have happened from him. However, the reason of the books lost could not be found out by him
and he had to put the blame on his junior who is mentally weak and innocent. Otherwise, he had
to take the full blame. He took the decision of putting the blame on his junior rather than on
himself.
There would be many episodes like this, raising ethical question for a number
of reasons. Sometimes society is harmed. At other times the individual makes profit in an unfair
way at the expense of others. We all know the story of the clever monkey that ate the curd rice
and smeared it on the face of the goat. The Goat was punished severely by his master who thought
that it had eaten the same
A business firm suffers many a times with higher costs when the firm has
to pay hidden costs for its suppliers.
Sources of Ethics
3.
4.
1.
2.
3.
4.
5.
6.
3. Genetic Inheritance:-
4. Philosophical System:To the Epicureans the quality of pleasure to be derived from an act was
the essential measure of its goodness. Philosophies have been instrumental in our
societys moral development.
5. Code of Conduct:The primary categories of codes are ,(1) Company codes, (2) Company
operating policies, (3) Codes of Ethics.
Objectives of Ethics:The primary objective is to define the highest good of man and set a standard for the same.
Here we have to consider ethics to deal with several interrelated and complex problems which may
be of psychological, legal, commercial, philosophical, Sociological and political in nature.
objectives Business Ethics:Ethical issues exist at all levels of business activity. As per Peter Pratley, Business
Ethics has a two fold objective:1. Evaluates human practices by calling upon moral standards.
2. Gives prescriptive advice on how to act morally in a specific kind of situation.
The first objective implies Analysis and Evaluation. It leads to an ethical diagnosis
of past actions and events.
Security of Job
Better working condition
Better Recommendation
Participative Management
Welfare Facilities.
II. Customers: Better quality of goods.
Goods and services at reasonable price.
Not to corner stocks and create securities.
Not to practice discriminatory pricing.
Not to make fake claims about product in advertisements.
III.Shareholders: Ensure capital appreciation.
Ensure steady and regular dividends.
Disclose all relevant information.
Protect minority shareholders interest.
Not to window dress balance sheets.
Protect interest in times of merges, amalgamations and takeovers.
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IV. Bank and other lending institutions: Guarantee safety of borrowed funds.
Prompt repayment of loans.
V. Government: Complying with rules and regulations.
Honesty in paying taxes and other dues.
Acting as Partner in the progress of the country.
2.
Personal Policy level: Not to use office Car, Stationary and other facilities for personal use
Not to fall prey to short ends.
Not to misuse others for personal.
Not to indulge in policies to gain power.
Not to spoil promotional chances to others.
Promise keeping
Mutual help.
3.
4.
Internal policy level: Fair practices relating to requirement, compensation, layoffs, perks promotion etc.
Transformational leadership to motivate employees to aim at better and higher
things in life.
Better communication at levels.
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Case Study No. 3: COLD ANNEALING OF STEEL
Work on bridge construction was going on over the river Ganga. The contractor who had been
awarded the contract had quoted the lowest rates on the condition that the Executive Engineer would
allow him to use hot annealing of steel, where he would save nearly Rs. 2, 00,000/- per ton. The
bridge required fifty thousand tons and the contractor was to save ten crore of rupees, if the Engineer
overlook the provision of cold annealing. The Contractor was ready to share half of the Extra profit
with the Engineers. The Executive Engineer Incharge had agreed to the stipulation. He knew that a
lay person would never be able to decipher the difference between cold and hot annealing of steel.
Usually the auditing and costing people belonged to that category and the Executive Engineer was
sure that he would be able to keep the audit team happy by looking after
Assistant Engineer:
You may not be aware that on the bridge site, the Contractor is
cheating the Government by using not annealed steel. Thereby risking the safety of the
bridge. I have stopped the work, although the contractor was justifying hot annealing as
you had approved it. Of course, he could not show any written approval given by you.
Executive Engineer:
I believe what you did was the right decision from a youngster like you.
You have no experience of building bridges, while I am veteran in this game. I can
recount at least ten bridges which I got constructed and all of them have stood the test of
time, by being in use for 10 years or more.
The Assistant Engineer had read the reports of the collapse of the
Mandovi river bridge in Goa, which was constructed by the Executive Engineer but he
kept quiet about it. The Executive Engineer said you have had a tiring day. Go home and
relax. You will find your wife in quite a good mood tonight.
The Assistant Engineer found a new Thirty inch TV had been installed
in his house, courtesy the Contractor.
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Question for the students:1.
Accept the gift and fall in line with the Executive Engineer.
2. Politely return the TV and yet kept protesting with the boss
about the Un-ethical practice of the contractor.
3. Report the matter to the Chief Engineer; even though he has a sneaking
suspicious that perhaps even he was involved in the
racket. 4. Report the matter to the Minister and the Police.
Conclusion:-
It is the job of the CEO to organize training programmes in ethical business for the new entrants
in the organization and also have refresher course for the existing employees. Such training
programmes need the total support and the approval of the Board of Directors. The training
should be done by using real life case studies, where free and frank views need to be expressed
by the participants without any fear of persecution at a later date. The HR Department should
ensure that no training programme is organised without an element of training on Ethics. The
employees must be encouraged to report on unethical behaviour of any employee (at whatever
level he or she works in the organisation) found guilty. For this purpose the CEO has to build the
organisational culture, which is conducive to ethical behaviour and of non tolerance of unethical
behaviour. Each member of the company, new and old, must be given a copy of the code of
conduct for the employees with continuous updates to it as and when made. The CEO plays an
integral role in the conduct of business of the organisation and in todays competitive world he
can servive in the market place only by conducting himself ethically and creating the
organisational culture, which fosters such behaviour among other employees.
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Case Study No. 4: The marketing manager is visiting a top office of his customers firm, who has to place a
large order on the firm.
Top Officer:- I think you have come on a wrong day. I am very disturbed today. My college
going son has been pestering me to buy a new Motorcycle, worth Rs. 50000/-. I do not have
spare money today to buy it. Even my wife joined my son and I do not get any peace at
home. Naturally, I am in no condition mentally to take a decision on your tender.
Marketing Manager:- Sir, why do you worry? Just give me a cheque in the name of Ram
Automobiles for Rs. 50000/- and the Motorcycle will be at your house by tomorrow.
Next day the Motorcycle receipts for the cheque and an envelope with Rs. 50000/- cash
was delivered at the officers house.
Case Study No. 5: Distributor:- I know my quota is only 7 tons per month. If you can allot 70 tons instead, I
promise to place Rs. 1000/- per ton, that is Rs. 70000/- per month in any Bank account you
name in India or even in Switzerland.
After 6 months, if you keep starving other distributors, I will double the amount. We both will
become richer by your decision and since other distributors will keep getting some quantities,
they will not complain. If any one complains I will settle with him by going him some quantities.
Top Officer:- Mr. Distributor, you have come to the wrong place. I do not play such games. Now you
better leave the place or I will have you thrown out of my office by calling our security guards.
The story does not end here. The Distributor writes letters to the concerned
Minister, the Prime Minister and the Managing Director of the firm saying that the office is
depriving him of his legitimate quota because on the last visit to his office, the officer had
asked for Rs. 2000/- per ton on being allotted minimum quota of 70 tons.
Lucky for the officer, his implacable reputation as a rare honest officer came to
his rescue, when the Managing Director assured the concerned persons about his honesty.
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Case Study No. 6: The boss of an International Firm in India orders supply of 10 Tank Wagons of white oil (used in
dry cleaning process) to be delivered to one of the Major Distributors of the of the Firm. This high
demand came up because the boss came to know that the white oil can be mixed to the extent of up
to 50%in petrol and the cars would run smoothly for at least 3 years is long enough period, and cars
mostly go bad in this period anyhow. On the financial side, the distributor would make Rupees
hundred thousand per wagon and he was agreeable of giving the boss Thirty Thousand per wagon.
It would amount to Three hundred thousand per month and in the next 4 years; the boss would have
enough money to retire in peace. All went well till some wise guy the bosss junior, stated prying into
the deal and in less than 3 months, the boss who was to take over as the Top Boss in the country,
was given the sack. It was his good luck that he was not handed over to the Police.
The students have to analyse the case for the following:1. The junior who disclosed the fraud risked his job. Was it the right thing to do?
2. Other juniors also had come to know about it and some had in fact abetted in the crime.
How should the firm treat them, in view of the fear under which they use operating?
The boss in India rules supreme as he keeps a sword hanging over the head of his employees,
especially, those who are not part of a union, and with this fear psychosis the employees are
ready to do anything ordered by the Boss. These are people, who are extremely honest in their
private life, while they succumb to the bosss orders during office operations. Then these are
others, who do the illegal tasks ordered by the Boss willingly, almost eagerly, ready to deliver the
bribe to the right person as they would take a handsome cut from the bribe as personal
insurance against any problem they may face as a result of the act of giving the bribe.
Conclusion of the Case Study:There are two types of firms: Some firms have stayed on the right track of ethical business for a long
time. These are a few elite firms, who have been carrying on their operations on ethical moral and even
religious lines. Such firms keep a steady but slow growth since they do not believe in get rich quick.
th
Techniques of the present day business. In fact in the 18 century, rarely a firm could be found indulging
in unethical operations. They were turned to their social responsibilities. The emergence of unethical
firms can be traced to the twentieth century in India for the following reasons:-
operations and they had to pay these people money for letting the firm carry out its
legitimate operations.
4. Government approvals, Licenses, No objection certificates all had a price and some of
them are still present giving opportunities to Government officers to make money.
Most persons are quick to blame the system, the Government for the state of affairs. They believe
that the laws are made for letting the Government officers make as much money as they can.
Today, the first kind of honest firm has become a rarity as the others have taken over
the business world. It must be argued that it is the businessmen who have corrupted the
Government officers for their benefit and in the process unleashed a major Frankenstein,
who they find different to tie down.
2.
Participatory Ethics are privileged part of Business Ethics for common good and
common interest.
3. Recognitional Ethics are ones moral rights vis a vis moral duty. For example, the
Employees aged 57 to 60 years morally obliged to retire to give way to some younger
colleagues, who being in the midst of their careers can rise to more weighty claim to a job.
Personal Ethics:-
1.
2.
3.
4.
5.
The Personal Ethics reflects general expectations of any person in any society, acting
in any capacity.
The Principles of Personal Ethics include:Concern for the well being of others.
Trustworthiness & Honesty.
Willing compliance with the law.
Refusing to take unfair advantage.
Preventing Harm.
Professional Ethics:1.
2.
3.
4.
The Professional Ethics are written codes containing rules of conduct and
standards of behaviour based on the principles of Professional Ethics, which include: Impartiality.
Objectivity.
Confidentiality.
Avoiding potential or apparent conflict of interest.
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Business Ethics:The Business Ethics are desired norms of behaviour exclusively dealing with actions
related to performance of duty.
1.
Moral principles that define right and wrong behaviuor in the world of Business.
2.
The desired norms of behaviour exclusively dealing with commercial transactions.
3. Systemic study of moral matters pertaining to Business, Industry or related activities
or practices and beliefs.
4. It is a specialised study of moral right or wrong and the application of Ethics in Business.
Values of Ethics:Values are a set of principles that will govern behaviour in the pursuit of a vision.
Values are a general term referring to those things which people regard as Good, Bad, Right,
Wrong, Desirable, Justifiable etc. We can speak of truth Values (true or false) and the value of
judgments which are statements about what is Valued, Sound, Deplorable, Skilled etc.
Business is driven by Values. Values determine :- (I) What Business people
do? (II) How other react?
Values are potent sources of conflict as well as of Co-Operation, Control and Self control.
Through values, business can and does create value in the form of goods, services,
employment etc. It is also noted that in extreme cases business and whole industries can cease
to function because their continued existence to inconsistent with certain powerful values.
Values are of many types, like Cultural values, Moral Values, Ethical Values, Managerial
Values. Hence, values are collective representations of what constitutes a good life or a
good society. Health is a value and self respect and so are democracy, tolerance and
freedom. The basic premise is that these values not across culture and time.
Norms of Ethics:Norms are expectation of proper behaviour. These are criteria of behaviour. Each
individual within the society has a set of norms, beliefs and values that together form his or her moral
standards. Norms are the ways an individual expects all people to act with a given situation.
In India lower level employees address the higher level at the time of
starting the discussions as SIR to show respect to them. The same is not found in USA, as
they call their bosses by name as MR. This may look awkward in the beginning for the
Indian students or Indian employees who go for employment to USA.
The norms are not published, may not be obeyed and cannot be enforced. It
is not consistent nor universal. Norms are just the way we feel about behaviour. Norms are
collective expectations regarding a certain type of behaviour, for example, Brush your teeth
twice a day, keep your premise clean, Chew the food properly while eating, etc.
Beliefs of Ethics:The beliefs in an ethical code are standards of thoughts. These are the ways
that the Senior Executive in the organisation wants others to think. The intention is to
encourage ways of thinking and patterns of attitudes that will pave way towards the wanted
behaviour. It is expressed in a positive form in an ethical code. Our first intention to serve
our customer is an example of a positive belief that commonly appears in Code of Ethics.
Beliefs are criteria of thought. They are the ways an individual expects people
to think about given concepts.
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For Example:- (i) I believe in the present method adopted by University regarding teaching. I
expect others to recognise the worth of that concept and accept it as a form of teaching.
Morality In Ethics:Morality is the standards that an individual for a group what is right and wrong, good
and evil. The term morality is derived from the Latin root Morales means Behaviour Moral
standards examples could be Integrity is good Dis honesty is Bad. It is right to tell the truth and
wrong to endanger the lives of others. So, Moral standards includes the norms we have about the
kinds of action we believe are morally right and wrong as well as the values we place on the kinds of
objects we believe are morally good and morally Bad. Moral Norms are expressed as general rules
or statements such as, Always tell the truth. It is wrong to kill the innocent people etc.
Moral Value are expressed as statements describing objects that have worth, such as,
Honesty is good. Anger is bad.
Moral Actions pertain to set of actions engineered by the characters and
expressed through behaviours. In Gandhiji or J.R.D Tata we find certain set of activities like
(I) Honesty, (II) Truthfulness, (III) Sincerity, (IV) Generosity, (V) Transparency, (VI) CoOperation, (VII) Integrity and (VIII) Strong will power etc.
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for
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Normative Ethics in Management:A Normative Study is an investigation that attempts to reach
normative Conclusions.
- Conclusions about what things are good or bad?
- About what actions are right or wrong?
A normative study aims to discover what should be Ethics are the study of
moral standards whose explicit purpose is to determine as far as possible
which standards are Correct or supported by the best reasons. It attempts to
reach conclusions about moral right and wrong and moral good and evil.
Eternal
Ethics
Empirical
Ethics
Teleological
Theory
Ethical
Egoism
Uttitariam
Principal
Deontological
Theory
Rights
Principal
Justice
Principal
Ethical Decision Making:Ethical issues arise out of every day business decisions. An individuals
Personal benefits and the moral atmosphere of the organisation in which one works
significantly after the behaviour one exhibits. Many philosophers, organizational
relationship and opportunity influence behaviour as does the organizational
Opportuni
ty
environment.
Organisatio
nal
Environmen
t
Individual
Behaviour
Organisatio
nal
Moral
Philosoph
y
Behaviour
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Provided with opportunities.
Provided Skill.
Produce quality products at a competitive price.
to
20
Not
Making
Ethical
Decision
Strengthen
the
standards and
Take
corrective
Policies
Decision
Then
Company to
Investigate
Wh
y?
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ETHICAL ISSUES THAT ARISE FOR MANAGERS:The Ethical issues that arise for Managers are indeed for all
people, including Employees, Customers, Consumers and Members
of the public.
Corporate activities affects us all and so the conduct of business is a
matter of concern for everyone with a stake in ethical management.
The ethical issues are regularity faced by the Managers in the
Ordinary Course of their works.
These are also major issues debated in the Parliament and
scrutinised by the courts, This is because ethical issues in Business
are closely tied to important matters of Public Policy and to the
Legislative and Judicial Processes of the Government.
REASONS FOR ETHICAL PROBLEMS:1. Cross Cultural Contradiction:These
problems
arise
and
occur
because
Corporations do business in other societies where ethical
standards differ from those at home.
2. Competitive Pressures: When Companies are squeezed by severe
competition, Managers sometimes engage in un-ethical
activities to beat out a competitor.
3. Personal Gain: Personal gain or even greed, causes some ethical
problems.
Business sometimes employs people whose personal values
are less than desirables.
4. Organisational Goals:-
makers
and
policy
makers,
they
have
more
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3. Methods of Ethical Reasoning Are
Utilitarian
Rights
Justice
Utilitarian are comprising benefits and costs where an action is
ethical when net benefits exceeds net costs. Its limitation is, it is
difficult to measure some human and social costs. Majority may disregard rights of minority.
Rights: - The critical determining factor is to respect the basis
human Rights, where it is difficult to balance conflicting Rights.
Justice: - Here an action is ethical when benefits and costs are fairly
distributed. But it is difficult to measure benefits and a cost as these
is lack of agreement on fair shares.
The levels of Decision - making occurs in 3 distinct levels: Level of the Individual.
off
(or
terminate)
the
workers
without
regards
for
the
24
Gandhiji
laid
great
stress
on
Personal
person
promises
his
colleagues
something
of
25
26
27
substandard material
28
4.Marketing Research:Research
is
conducted
only
to
substantiate
the
29
5.H.R. Management:Recruitment of kins without assessing their abilities.
Recruitment based on getting financial favours from
the candidates.
Arranging training for only pet employees, whether
they deserve it or not.
Planning training programme without assessing the
training needs of the employees.
30
31
7.Management of Quality:Accepting
marginally bad
materials.
Allowing substandard materials
to be used in the manufacturing
process.
32
8.Finance Function:-
inflated
salaries,
getting
receipts
from
33
9.CEO of the Company:
Nepotism in recruitment.
Favouritism in purchasing.
keeping
promises
made
to
buyers,
suppliers,
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Ethics in International
Business
for Multinational
Environmental
preservation,
Involvement
in
MNCs
generally
recognize
Social
International
the
development
Business lies in
of International
Some criticised
practices are
Operating
outside
the
home
country,
MNCs
generally
recognise
social
Justice
Human Rights
Welfare
For Justice, one kind of unfairness is offer the one sided
division of the benefits from foreign investment.
to
provide
safety
equipment
to
protect
to
overthrow
democratically
elected
participation)
Employing child labour as found
mostly in India (the right to minimum
education)
the local culture and work with and not against it.
Pay their fair share of Taxes.
Coperate with the local government in developing and
enforcing just background organizations.
Global Companies are criticised primarily in cases where
they take more than a fair share by exploiting their
superiors position in an imperfect market.
CASE STUDY
BRIBE TO GET SUPPLY ORDER
A Director of a company
had to issue a supply order to a company supplying for purchasing of computers. Marketing Manager
of the Computer Supplying Company went to the Director for expediting the supply order. But the
Director had some problems with his college going Son and Wife.
The College going son wanted a Motor cycle and the
Director did not have sufficient money to purchase it. The case went to little more complication when
his wife also justified the need of their son for a Motor-Bike to go to College. So, the Director told to
the Marketing Manager to come on other day since that day was a bad day for him with difficulties
with his family members like his son and his wife. Hearing the difficulties of the Director, the
Marketing Manager of the Computer Supplying Company told to the Director that it did not appear to
be a difficult case and offered to help the Director to meet the need of his son and wife.
The MarketingManager asked the Director to give a cheque of Rs.50000/- in favour of M/s. Ram
Automobiles who would be supplying the Motor cycle. But The Director informed the Marketing
Manager that he did not have sufficient Balance in the Bank. Account and hence, if the cheque is
issued , it would be surely Bunched due to not having sufficient Balance. The Marketing Manager
informed the Director that he would take care of this Banks problem.
Next morning, the Marketing Managers came to the Director and delivered a New Motorcycle, a
packet containing Rs. 50000/- Cash and a payment receipt from M/S Ram Automobiles.
Marketing Manager asked the Director to deposit this cash of Rs. 50000/- in his Bank
Account. So that the cheque is not Bunched. Also informed the Director that Non- a- days vigilance
Department is very efficient and they might check and verify the payment details and hence a proper
Payment Receipt is obtained so that the Director do not have any problem with the Vigilance
Department at any time.
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Research
Assessment of the needs of Community
Identification of problem
Key problems confronting the community out of research
and needs
Set Objectives
Objectives for solving problems.
Design the strategy and levels of investment.
Implementation of community welfare programme to
reach the objectives.
Public Relations Communication programmes to provide
CSR.
Evaluations of Community Programmes
Report to the Management and relevant audiences on
progress based on evaluation and measurement.