Ethics & Management

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GROUP MEMBERS
NAME OF THE MEMBER ROLLNO.

ZOYA KHAN AMREEN NANAVATI

7 12 18 27 33

DIVYA RAI MINAH SHAIKH ANJALI TRIPATHI

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ACKNOWLEDGEMENT

We would firstly like to thank our Institution & sincere thanks to Principal Prof. A. E. Lakdawala and Vice Principal Prof. Kamala Arunachalam for providing us support and giving us an opportunity for doing B&I course and completing this project.

We would also like to extent our profound and sincere gratitude to our project guide Prof.Manasi sinari who has guided our project with her vast fund of knowledge advice and constant encouragement. We kindly appreciate her implicit and valuable contribution in drawing up this project.

We also thank all our colleagues without who this project would have not been completed.

Thank you all for your contribution towards the project whether big or small and will forever be indebted to each and every one of you. We also thanks to all those whom we have forgotten to mention in this space.

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INDEX
SR. NO. 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) CONTENTS PAGE NO. 4 5 6 7 9 11 13 15 16 17 20 22 23 24 25 28 30 31 32 33 33

"What is ethics?" What is Business Ethics? History of ethics in business Importance of Business Ethics in Business What Are Business Ethics And Do They Affect Your Company? Business ethics from a management perspective Society as a Stakeholder Business Ethics is Now a Management Discipline The Management Consulting Competency Framework 9 Benefits of Managing Ethics in the Workplace 8 Guidelines for Managing Ethics in the Workplace One Description of a Highly Ethical Organization Ethics Management Programs: An Overview 6 Key Roles and Responsibilities in Ethics Management Codes of Ethics Example of fraud Ethics Tools: Training The Dimensional Management Model Publics Opinion of Business Ethics Conclusion Webliography:

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"WHAT IS ETHICS?"
Ethics involves learning what is right or wrong, and then doing the right thing -- but "the right thing" is not nearly as straightforward as conveyed in a great deal of business ethics literature. Most ethical dilemmas in the workplace are not simply a matter of "Should Bob steal from Jack?" or "Should Jack lie to his boss?" (Many ethicists assert there's always a right thing to do based on moral principle, and others believe the right thing to do depend on the situation -ultimately it's up to the individual.) Many philosophers consider ethics to be the "science of conduct." Twin Cities consultants Doug Wallace and John Pekel explain that ethics includes the fundamental ground rules by which we live our lives. Philosophers have been discussing ethics for at least 2500 years, since the time of Socrates and Plato. Many ethicists consider emerging ethical beliefs to be "state of the art" legal matters, i.e., what becomes an ethical guideline today is often translated to a law, regulation or rule tomorrow. Values which guide how we ought to behave are considered moral values, e.g., values such as respect, honesty, fairness, responsibility, etc. Statements around how these values are applied are sometimes call ed moral or ethical principles

Three Types of Management Ethics

1. Immoral Management A style devoid of ethical principles and active opposition to what is ethical. 1. Moral Management Conforms to high standards of ethical behavior. 2. Amoral Management  Intentional - does not consider ethical factors  Unintentional - casual or careless about ethical considerations in business

Definitions
y Ethics involves a discipline that examines good or bad practices within the context of a moral duty y Moral conduct is behavior that is right or wrong y Business ethics include practices and behaviors that are good or bad

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WHAT IS BUSINESS ETHICS?

Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. Applied ethics is a fiel d of ethics that deals with ethical questions in many fields such as medical, technical, legal and business ethics.

Business ethics can be both a normative and a descriptive discipline. Descriptive ethics involves describing, characterizing and studying morality
What is Normative ethics involves supplying and justifying moral systems What should be

As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non -economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within majo r corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters). In some cases, corporat ions have redefined their core values in the light of business ethical considerations

Note that many people react that business ethics, with its continuing attention to "doing the right thing," only asserts the obvious ("be good," "don't lie," etc.), and so these people don't take business ethics seriously. For many of us, these principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine. Anyway, there are many other benefits of managing ethics in the workplace.

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HISTORY OF ETHICS IN BUSINESS

Business ethics being part of the larger social ethics, always been affected by the ethics of the epoch. At different epochs of the world, people, especially the elites of the world, were blind to ethics and morality which were obviously unethical to the succeeding epoch. History of business, thus, is tainted by and through the history of slavery history of colonialism and later by the history of cold war. The current discourse of business ethics is the ethical discourse of the post-colonialism and postworld wars. The need for business ethics in the current epoch had begun gaining attention since 1970s. Historically, firms started highlighting their ethical stature since the late 1980s and early 1990s, as the world witnessed serious economic and natural disasters because of unethical business practices. The Bhopal disaster and the fall of Enron are instances of the major disasters triggered by bad corporate ethics. It should be noted that the idea of business ethics caught the attention of academics, media and business firms by the end of the overt Cold War. Cold Wars, seen through pages of history were fought through and fought for American business firms abroad. Ideologically, promotion of firms owned by American nationals were presented as if it were freedom and the local resistance against the excess of American firms were labelled communist upraising sponsored by the Soviet Block. .Further, even legitimate criticism against unethical practice of the firms was presented as if it were infringement into the 'freedom' of the entrepreneurs by activists backed by communist totalitarians. This scuttled the discourse of business ethics both at media and ac ademics. Overt violence by business firms has decreased to a great extent in the democratic and media affluent world of the day, though it has not ceased to exist. The war in Iraq is one of the recent examples of overt violence by corporations. Evidence is the rise in the amount of and usage and actions of private security firms. Private security was all but replacing military personnel for movement security, and the basis for the increase in them was the money that the firms received directly or indirectly from governments and the amount they paid their employees.

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IMP R
Pro i

CE F

INE

ximi

ion:

The i t e of ethi i busi ess can be understood by the fact that ethical businesses tend to make much more profits than the others. The reason for this is that customers of businesses which follow ethics are loyal and satisfied with the services and product offerings of such businesses. Let us take an example. Suppose, there is an organi ation named XYZ which manufactures cosmetics. XYZ greatly believes in the importance of business ethics. When XYZ advertises its cosmetics in the market, being an ethical organi ation, it will be very truthful and honest in its communication with the probable customers. It will tell correctly about the kind of ingredients it has used while manufacturing the cosmetics. It will not lie or exaggerate about the benefits or uses of its products either. So the customers, who buy its cosmetics, know precisely what they are buying and how useful that product is going to be for them. This way, the product will meet their expectations and thus, satisfy the customers. When customers are satisfied, they will become loyal to the company and come back again for re-purchasing. This will surely increase the profits of the organi ation. Thus, the importance of business ethics is that it creates loyalty in customers and maximi es the profits.

E i i n U ili

ion o Bu in

In an organi ation, people working at the junior levels often emulate the ones working at the top. The same applies with ethics too. If the management or seniors of an organi ation follow ethical business practices, i.e., they do not bribe to get their way or they do not cheat the customers, investors, suppliers, etc., the employees will follow suit. The employees too will refrain from using the office property or resources for personal benefits. This will result in better and efficient utili ation of the business resources.

Cr

Goo will in

rk :

an organi ation, which is well known for its ethical practices, creates a goodwill for itself in the market. Investors or venture capitalists are more willing to put their money in the businesses which they can trust. Shareholders too, remain satisfied with the practices of ethical businesses. Thus, the importance of

E HICS IN BUSINESS

R our :

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business ethics in creating goodwill and building long term relationships cannot be denied. Also, an ethical business puts greater value on its employees and thus, employees remain loyal to such an organization too.

E amples of unethical behaviour abound in business stories around the orld. And
individuals itness some form of unethical behaviour in their or place every day. nethical behaviour here people deliberately intend to harm themselves or others, develops from and is reinforced by, destructive states of mind, including fear, greed, anger and jealously. In contract, ethical behaviour enhances the ell-being of everyone because it is developed from and reinforced by strong motives and emotions such as love, joy, generosity and compassion.

Believe it is much more than important, it is a critical, essential and nonnegotiable characteristic of an effective leader. Strong business ethics is a pillar of my strategic planning and strategic thinking business coaching efforts each and every day. Clients are encou raged to develop a set of core values and guiding principles and publish them for their clients and stakeholders to know that this is the way they do business. And furthermore, the clients are continually reminded to make sure the core values are demonstra ted in all that they do.

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WHAT ARE BUSINESS ETHICS AND DO THEY AFFECT YOUR COMPANY?

Business Ethics have only come to the fore recently. They state that there is more to business than just making a profit. The new focus is also on how the business treats the environment, reacts with the local community and works with its staff to build a responsible company that is both sustainable and adds value to the people that it interacts with. "Greed is good" is no longer acceptable to most consumers. The consumer is now better educated with new means at his disposal. High speed internet access and forums like Academy now mean that good and bad news travels almost at the speed of thought. They are now demanding more from businesses even though their own ethics at times might be questionable! Business ethics are now included in most business courses and the top management schools. The top graduates enter the corporate world ready to incorporate what they have learnt in the classroom. Businesses need to have specific programmes in place to manage their staff and workplace in a responsible manner. They must give social welfare a high priority if they are to maintain their public image. They have to be seen to be recycling their waste and disposing of old e quipment in an environmentally friendly way. Businesses now have to be wary of using sweat shop labour in the third world especially if they treat them badly. Everybody realises that third world country wages are lower but they expect Western companies to treat their employees with some respect and dignity. Businesses that employ children are now frowned upon even though child labour is the norm in these countries. Many "watch dogs" now exist that "police" most large companies and report any blatant abuse o f ethics. Most of these have only been set up in the last twenty years. Most large media organisations also have special reporters whose sole purpose is to identify where breaches are taking place and publicise them. The top brands in the world need to be extremely careful now. The value of a brand might have taken decades to build but can be destroyed in a matter of weeks. An example of this is when Gerald Ratner made a speech to the Institute

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of Directors and in humour referred to a cheap necklace that "e veryone knows is crap". These comments served to wipe out over a half a billion dollars of the companies value and played a major part in the downfall of a once thriving jewellery retailer in the United Kingdom. There are now funds that specialise in only investing in ethical businesses. They refuse to invest in companies that produce weapons or manufacture cigarettes as an example. These funds have taken of spectacularly and have billions of dollars to invest in the stock markets. Before they invest in a b usiness they send their fund managers in to investigate the business fully to see if they comply with their guidelines. If the company is not willing to answer all their questions fully then they might not get approved for investment. When properly managed and executed the use of business ethics can actually serve to enhance the profitability of the company concerned. The business can proudly declare their values in brochures, newspapers, internet and television marketing campaigns. Reputation is the strongest asset that a company has and maintaining this and the value of their brands is essential to the long term future of the business.

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BUSINESS ETHICS FROM A MANAGEMENT PERSPECTIVE

Issues surrounding ethical business practices effect an entire company, yet most of the responsibility for ethical behaviour is placed on management's shoulders.

Business ethics, which is generally defined in terms of the social, communal and environmental responsibilities of business professionals, requires managers to take into account much more than the bottom line when making business related decisions. This means that those in supervisory positions need to reflect on the manners in which their decisions affect employees, associates, the environment and society as a whole. While some experts contend that the responsibility of a firms management team should focus exclusively on meeting the needs of its shareholders, it is important to keep in mind that most times, being socially and ethically responsible, results in more profitable business ventures. The issue of business ethics heavily spotlights the abilities and inabilities of some managers to prevent ethical violations from becoming costly issues for the company. However it is unrealistic to expect managers to resolve these matters without proper edification of the issues involved. While many managers acknowledge their responsibility to stay informed of changing issues such as sexual harassment, insider trading, equal hiring practices and so on, the problem is that they often feel they do not have the authority to effectively resolve such matters. It is a fact that corporations, and societies that desire a prosperous economy are forced to compete with lower salaries, taxation, safety regulations and standards fo r environmental protection that can send gross expenditures through the roof. . This makes it extremely difficult for managers to perform their duties in a manner that benefits both the shareholders and the whole of humanity. In order to untie the hands of managers facing ethical dilemmas, discussing the responsibility of individual corporations or managers is important, however open communications regarding the moral adequacy of the institutional frameworks within the organizations daily operations is e qually essential. It is

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therefore not so much the moral fiber of individual managers that needs to be addressed as it is the ethical structure and overall agenda of the company itself. No matter how ethically sound and socially aware a manager is, if company policy prevents him from acting as he thinks he should, how much liability can reasonably be placed in his lap? Corporations and entire areas of business have developed numerous systems designed to incorporate ethical issues into their decisionmaking procedures. These guiding principles include industry concerns, health issues, safety and environmental policies, disclosure responsibilities and a variety of other pertinent issues. The effects of the business operations in relation to these issues must be examined from a managers perspective in order to ensure proper implementation. However along with the ability to examine these issues must come the responsibility to deal with them effectively? Social and environmental issues must also be scrutini ed in every level of the organi ation, which would imply that the responsibility of the effects of business activities could be included in the normal decision making procedures of the companys managers. When properly executed and inspected, these factors make up a large portion of the criterion that determines the reputability of a corporation, its managers and its employees. In accordance with ethical standards, every manager in a corporation is responsible to those whom his or her actions affect. Consequently, since managers' decisions can influence so many diverse aspects of not only the business itself, but of society as a whole, it is critical that managements current level of accountability and responsibility be thoroughly examined.

THREE APPR ACHES TO MANAGEMENT ETHICS

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SOCIETY AS A STAKEHOLDER Since, in a capitalist society, the means of production are privately held by business firms, society itself is a stakeholder for the large and small business alike. Small business, as well as large firms, must promote harmonious relationships between business and government and between business and other segments of society. It is the responsibility of all business to have a commitment to raise the standard of living and promote sustainable develo pment. Small business must strive to contribute to their community and be a good corporate citizen. Somewhere along the way, the financial firms on Wall Street forgot this very important lesson of capitalism.
Examples

The near collapse of our economic system really began sometime back with the financial failure of firms like Enron. The Enron Corporation was a huge energy company that went bankrupt in 2001. It employed 22,000 people and had innumerable shareholders. It collapsed due to an accounting scan dal, or "cooking the books," perpetuated by its own auditing firm, Arthur Andersen, one of the premier accounting firms in the U.S., which also collapsed. Tens of thousands of employees were left without a job and more shareholders were left with a retirement portfolio full of worthless Enron stock. Enron was the country's largest bankruptcy until 2008 and Lehman Brothers, a huge Wall Street financial services firm. Lehman went under primarily due to the subprime mortgages it made during the 1990s and the e arly 21th century. The bankruptcy of Lehman Brothers began a domino effect on Wall Street. In order to prevent massive financial firm failures, the Bush Administration put together a huge financial bailout, called TARP, to save most of the other large Wall Street banks. Since the fall of 2008, we have had many financial firm failures and failures in other business sectors. Failures have not been confined to large businesses. Small business has had its share of failures, primarily due to the economic recession that resulted from the collapse of Wall Street and the credit crisis that resulted.

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Summary The only way for capitalism to truly prosper is for every business, large business and small business alike, to subscribe to a doctrine of financial and business ethics. If business tries to take shortcuts to profits, they will fail in the long run as we've seen during the early part of the 2 st century. Small business plays a crucial role in the American economy. It can make the difference between success and failure of our economy and financial system.

MORAL MANAGEMENT MODELS AND ACCEPTABLE STAKEHOLDER THINKING

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BUSINESS ETHICS IS NOW A MANAGEMENT DISCIPLINE

Business ethics has come to be considered a management discipline, especially since the birth of the social responsibility movement in the 1960s. In that decade, social awareness movements raised expectations of businesses to use their massive financial and social influence to address social problems such as poverty, crime, environmental protection, equal rights, public health and improving education. An increasing number of people asserted that because businesses were making a profit from using our country's resources, these businesses owed it to our country to work to improve socie ty. Many researchers, business schools and managers have recognized this broader constituency, and in their planning and operations have replaced the word "stockholder" with "stakeholder," meaning to include employees, customers, suppliers and the wider community. The emergence of business ethics is similar to other management disciplines. For example, organizations realized that they needed to manage a more positive image to the public and so the recent discipline of public relations was born. Organizations realized they needed to better manage their human resources and so the recent discipline of human resources was born. As commerce became more complicated and dynamic, organizations realized they needed more guidance to ensure their dealings supported t he common good and did not harm others -- and so business ethics was born. Note that 90% of business schools now provide some form of training in business ethics. Today, ethics in the workplace can be managed through use of codes of ethics, codes of conduct, roles of ethicists and ethics committees, policies and procedures, procedures to resolve ethical dilemmas, ethics training, etc.

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THE MANAGEMENT CONSULTING COMPETENCY FRAMEWORK

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9 BENEFITS OF MANAGING ETHICS IN THE WORKPLACE

Many people are used to reading or hearing of the moral benefits of attention to business ethics. However, there are other types of benefits, as well. The following list describes various types of benefits from managing ethics in the workplace. 1. Attention to business ethics has substantially improved society. A matter of decades ago, children in our country worked 16 -hour days. Workers limbs were torn off and disabled workers were condemned to poverty and often to starvation. Trusts controlled some markets to the extent that prices were fixed and small businesses choked out. Price fixing crippled normal market forces. Employees were terminated based on personalities. Influence was applied through intimidation and harassment. Then society reacted and demanded that businesses place high value on fairness and equal rights. Anti trust laws were instituted. Government agencies were established. Unions were organized. Laws and regulations were established. 2. Ethics programs help maintain a moral course in turbulent times. As noted earlier in this document, Wallace and Pekel explain that attention to business ethics is critical during times of fundamental change -- times much like those faced now by businesses, both nonprofits or for -profit. During times of change, there is often no clear moral compass to guide leaders through complex conflicts about what is right or wrong. Continuing attention to ethics in the workplace sensitizes leaders and staff to how they want to act -- consistently. 3. Ethics programs cultivate strong teamwork and productivity. Ethics programs align employee behaviours with those top priority ethical values preferred by leaders of the organization. Usually, an organization finds surprising disparity between its preferred values and the values actually reflected by behaviours in the workplace. Ongoing attention and dialogue regarding values in the workplace builds openness, integrity and community -critical ingredients of strong teams in the workplace. Employees feel strong alignment between their values and th ose of the organization. They react with strong motivation and performance. 4. Ethics programs support employee growth and meaning. Attention to ethics in the workplace helps employees face reality, both good and bad -- in the organization and themselves. Employees feel full confidence they can admit and deal with whatever comes their way. Bennett, in his article "Unethical Behaviour, Stress Appear Linked" explained that a consulting company tested a range of executives and managers. Their most striking finding: the more emotionally healthy executives, as measured on a battery of tests, the more likely they were to score high on ethics tests. 5. Ethics programs are an insurance policy -- they help ensure that policies are legal.

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There are an increasing number of lawsuits in regard to personnel matters and to effects of an organizations services or products on stakeholders. As mentioned earlier in this document, ethical principles are often state -of-the-art legal matters. These principles are often applied to current, major ethical issues to become legislation. Attention to ethics ensures highly ethical policies and procedures in the workplace. Its far better to incur the cost of mechanisms to ensure ethical practices now than to incur costs of litigation later. A major intent of well-designed personnel policies is to ensure ethical treatment of employees, e.g., in matters of hiring, evaluating, disciplining, firing, etc. Drake and Drake note that an employer can be subject to suit for breach of contract f or failure to comply with any promise it made, so the gap between stated corporate culture and actual practice has significant legal, as well as ethical implications. 6. Ethics programs help avoid criminal acts of omission and can lower fines. Ethics programs tend to detect ethical issues and violations early on so they can be reported or addressed. In some cases, when an organization is aware of an actual or potential violation and does not report it to the appropriate authorities, this can be considered a criminal act, e.g., in business dealings with certain government agencies, such as the Defence Department. The recent Federal Sentencing Guidelines specify major penalties for various types of major ethics violations. However, the guideline potentiall y lowers fines if an organization has clearly made an effort to operate ethically. 7. Ethics programs help manage values associated with quality management, strategic planning and diversity management -- this benefit needs far more attention. Ethics programs identify preferred values and ensuring organizational behaviours are aligned with those values. This effort includes recording the values, developing policies and procedures to align behaviours with preferred values, and then training all personne l about the policies and procedures. This overall effort is very useful for several other programs in the workplace that require behaviours to be aligned with values, including quality management, strategic planning and diversity management. Total Quality Management includes high priority on certain operating values, e.g., trust among stakeholders, performance, reliability, measurement, and feedback. Eastman and Polaroid use ethics tools in their quality programs to ensure integrity in their relationships with stakeholders. Ethics management techniques are highly useful for managing strategic values, e.g., expand market share, reduce costs, etc. McDonnell Douglas integrates their ethics programs into their strategic planning process. Ethics management progra ms are also useful in managing diversity. Diversity is much more than the colour of peoples skin -- its acknowledging different values and perspectives. Diversity programs require recognizing and applying diverse values and perspectives -- these activities are

Ethics & Management the basis of a sound ethics management program.

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8. Ethi programs promote a strong publi image. Attention to ethics is also strong public relations -- admittedly, managing ethics should not be done primarily for reasons of public relations. But, frankly, the fact that an organi ation regularly gives attention to its ethics can portray a strong positive to the public. People see those organi ations as valuing people more than profit, as striving to operate with the utmost of integrity and honour. Aligning behaviour with values is critical to effective marketing and public relations programs. Consider how Johnson and Johnson handled the Tylenol crisis versus how Exxon handled the oil spill in Alaska. Bob Dunn, President and CEO of San Francisco-based Business for Social Responsibility, puts it best: Ethical values, consistently applied, are the cornerstones in building a commercially successful and socially responsible business. 9. Overall benefits of ethi s programs: Donaldson and Davis, in Business Ethics? Yes, But What Can it Do for the Bottom Line? explain that managing ethical values in the workplace legitimi es managerial actions, strengthens the coherence and balance of the organi ations culture, improves trust in relationships between individuals and groups, supports greater consistency in standards and qualities of products, and cultivates greater sensitivity to the impact of the enterprises values and messages.

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8 GUIDELINES FOR MANAGING ETHICS IN THE WORKPLACE

The following guidelines ensure the ethics management program is operated in a meaningful fashion: 1.Recognize that managing ethics is a process. Ethics is a matter of values and associated behaviours. Values are discerned through the process of ongoing reflection. The refore, ethics programs may seem more process-oriented than most management practices. Managers tend to be sceptical of process-oriented activities, and instead prefer processes focused on deliverables with measurements. However, experienced managers reali ze that the deliverables of standard management practices (planning, organizing, motivating, controlling) are only tangible representations of very process oriented practices. For example, the process of strategic planning is much more important than the plan produced by the process. The same is true for ethics management. Ethics programs do produce deliverables, e.g., codes, policies and procedures, budget items, meeting minutes, authorization forms, newsletters, etc. However, the most important aspect fro m an ethics management program is the process of reflection and dialogue that produces these deliverables. 2. The bottom line of an ethics program is accomplishing preferred behaviours in the workplace. As with any management practice, the most important outcome is behaviours preferred by the organization. The best of ethical values and intentions are relatively meaningless unless they generate fair and just behaviours in the workplace. That's why practices that generate lists of ethical values, or codes of ethics, must also generate policies, procedures and training that translate those values to appropriate behaviours. 3. The best way to handle ethical dilemmas is to avoid their occurrence in the first place. That's why practices such as developing cod es of ethics and codes of conduct are so important. Their development sensitizes employees to ethical considerations and minimizes the chances of unethical behaviour occurring in the first place. 4. Make ethics decisions in groups, and make decisions publ ic, as appropriate. This usually produces better quality decisions by including diverse interests and perspectives, and increases the credibility of the decision process and outcome by reducing suspicion of unfair bias. 5. Integrate ethics management with other management practices. When developing the values statement during strategic planning, include ethical values preferred in the workplace. When developing personnel policies, reflect on what ethical values you'd like to be most prominent in the orga nization's culture and then design policies to produce these behaviours.

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6. Use cross-functional teams when developing and implementing the ethics management program. Its vital that the organizations employees feel a sense of participation and ownership in the program if they are to adhere to its ethical values. Therefore, include employees in developing and operating the program. 7. Value forgiveness. This may sound rather religious or preachy to some, but its probably the most important component of any management practice. An ethics management program may at first actually increase the number of ethical issues to be dealt with because people are more sensitive to their occurrence. Consequently, there may be more occasions to address people s unethical behaviour. The most important ingredient for remaining ethical is trying to be ethical. Therefore, help people recognize and address their mistakes and then support them to continue to try operate ethically. 8. Note that trying to operate ethically and making a few mistakes is better than not trying at all. Some organizations have become widely known as operating in a highly ethical manner, e.g., Ben and Jerrys, Johnson and Johnson, Aveda, Hewlett Packard, etc. Unfortunately, it seems that when an organization achieves this strong public image, it's placed on a pedestal by some business ethics writers. All organizations are comprised of people and people are not perfect. However, when a mistake is made by any of these organizations, the organi zation has a long way to fall. In our increasingly critical society, these organizations are accused of being hypocritical and they are soon pilloried by social critics. Consequently, some leaders may fear sticking their necks out publicly to announce an ethics management program. This is extremely unfortunate. It's the trying that counts and brings peace of mind -- not achieving a heroic status in society.

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ONE DESCRIPTION OF A HIGHLY ETHICAL ORGANIZATION

The following four prin iples for highly ethi l org ni tions:
. they are at ease interacting with diverse internal and external stakeholder groups. The ground rules of these firms make the good of these stakeholder groups part of the organi ations' own good. 2. They are obsessed with fairness. Their ground rules emphasi e that the other persons' interests count as much as their own. 3. Responsibility is individual rather than collective, with individuals assuming personal responsibility for actions of the organi ation. These organi ations' ground rules mandate that individuals are responsible to themselves. 4. They see their activities in terms of purpose. This purpose is a way of operating that members of the organi ation highly value. And purpose ties the organi ation to its environment.

The following characteristics of a high integrity organi ation:

. there is a clear vision and picture of integrity throughout the organi ation. 2. The vision is owned and embodied by top management, over time. 3. The reward system is aligned with the vision of integrity. 4. Policies and practices of the organi ation are aligned with the vision; no mixed messages. 5. It is understood that every significant management decision has ethical value dimensions. 6. Everyone is expected to work through conflicting-stakeholder value perspectives.

Sources of Ethical Norms

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ETHICS MANAGEMENT PROGRAMS: AN OVERVIEW

About Ethics Management Programs Organizations can manage ethics in their workplaces by establishing an ethics management program. Brian Schrag, Executive Secretary of the Association for Practical and Professional Ethics, clarifies. "Typically, ethics programs convey corporate values, of ten using codes and policies to guide decisions and behaviour, and can include extensive training and evaluating, depending on the organization. They provide guidance in ethical dilemmas." Rarely are two programs alike.

"All organizations have ethics programs, but most do not know that they do," wrote business ethics professor Stephen Brenner in the Journal of Business Ethics A corporate ethics program is made up of values, policies and activities which impact the propriety of organization behaviours." "Balancing competing values and reconciling them is a basic purpose of an ethics management program. Business people need more practical tools and information to understand their values and how to manage them."
Benefits of Managing Ethics as a Program

There are numerous benefits in formally managing ethics as a program, rather than as a one-shot effort when it appears to be needed. Ethics programs: Establish organizational roles to manage ethics Schedule ongoing assessment of ethics requirements Establish required operating values and behaviours Align organizational behaviours with operating values Develop awareness and sensitivity to ethical issues Integrate ethical guidelines to decision making Structure mechanisms to resolving ethical dilemmas Facilitate ongoing evaluation and updates to the program Help convince employees that attention to ethics is not just a knee -jerk reaction done to get out of trouble or improve public image

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6 KEY ROLES AND RESPONSIBILITIES IN ETHICS MANAGEMENT Depending on the size of the organization, certain roles may prove useful in managing ethics in the workplace. These can be full -time roles or part-time functions assumed by someone already in the organization. Small organizations certainly will not have the resources to implement each the following roles using different people in the organization. However, the following functions points out responsibilities that should be included somewhere in the organization. 1. The organization's chief executive must fully support the program. If the chief executive isn't fully behind the program, employees will certainly notice -- and this apparent hypocrisy may cause such cynicism that the organization may be worse off than having no formal ethics prog ram at all. Therefore, the chief executive should announce the program, and champion its development and implementation. Most important, the chief executive should consistently aspire to lead in an ethical manner. If a mistake is made, admit it. 2. Consider establishing an ethics committee at the board level. The committee would be charged to oversee development and operation of the ethics management program. 3. Consider establishing an ethics management committee. It would be charged with implementing a nd administrating an ethics management program, including administrating and training about policies and procedures, and resolving ethical dilemmas. The committee should be comprised of senior officers. 4. Consider assigning/developing an ethics officer. This role is becoming more common, particularly in larger and more progressive organizations. The ethics officer is usually trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas. 5. Consider establishing an ombudsperson. The ombudsperson is responsible to help coordinate development of the policies and procedures to institutionalize moral values in the workplace. This position usually is directly responsible for resolving ethical dilemmas by interpreting policies and procedures. 6. Note that one person must ultimately be responsible for managing the ethics management program.

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Codes of Ethics
"A credo generally describes the highest values to which the company aspires to operate. A code of ethics specifies the ethical rules of operation. In the latter 1980s, The Conference Board, a leading business membership organization, found that 76% of corporations surveyed had codes of ethics. Some business ethicists disagree that codes have any value. Usually they explain that too much focus is put on the codes themselves, and that codes themselves are not influential in managing ethics in the workplace. Many ethicists note that it's the developing and continuing dialogue around the code's values that is most importan t. Occasionally, employees react to codes with suspicion, believing the values are "motherhood and apple pie" and codes are for window dressing. But, when managing a complex issue, especially in a crisis, having a code is critical. More important, it's having developed a code. As demand for the ethical business is increasing most of the business organizations opted to implement the code of the ethics:        To define the framework of the acceptable behaviour. To follow high standards of practice. To create benchmarks for self evaluation. To enhance sense of community. To create transparency in the business activities. To foster higher standards of business ethics. To comply with government laws and norms.

The code should include following key areas:  The Purpose and Values of the Business: The vision and mission of the organization should be kept always in consideration while creating the code. The products and services offered by the company, production and financial goals should be kept in the mind.  Stakeholders: Shareholders, Customers, Employees, Suppliers are the integral parts of the organization. y The employee welfare, working conditions, equal opportunities, harassment issues and retirement plans should be mentioned.

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y Maximization of Returns' to share holders is the basic purpose of any business. While making the code of the ethics, the conflicts may arise while dealing with this purpose. The protection to the investments and the timely returns on the investment are always needed. y Every business organization knows the importance of the customer satisfaction. The promises about the fair pricing, quality, after sales service made to the customers should always be kept. y The payments to the supplier should always be on tim e. No excess hospitality or bribe should be accepted or given.

 Society, Government and Environment : The compliance with the laws and the social norms should be maintained. The company's activities should always be environment friendly.  Implementation Process: It always important the code is implemented properly. It should be seen that the code is reached and understood properly by all. Awareness campaigns and the training programs should be run if required.  Scope for Feedbacks : The feedback is always neces sary for improvement and evaluation of the code. At least annual report should be given to the board members. Review procedure should be created to update the codes. Following factors should be always kept in the mind:  Involvement of the Senior Management : Every company needs a champion or role model or mentor to guide the corporate ethics program. A senior person mostly CEO or Chairman should take the responsibility to lead the ethics program. The board and senior management should show the enthusiasm and always provide the guidance to the employee.  Involvement of the Employee: No program can be successful without involvement of the grass root employees. It is important to know what bothers people while making the code of ethics. Each and every person should know the code of the ethics and should be made to follow it.  Picking The Well Tested Model : A framework which addresses issues as they affect different constituents should be used. Sometimes the competitors should be considered. If the company is globa l then laws and people of the other nations must be included in the model. Running the Corporate Ethics Program is not always easy but it's worth running as it gives returns in the long run.

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EXAMPLE OF FRAUD
One Investment Adviser, no n idely due to his Saturday-morning radio sho , induced his clients to turn over more than $4 million. He accomplished this by touting phony performance figures for a bogus mutual fund called the GT Fund, hich stood for "Good Till canceled," that promised "ma imum capital gro th consistent ith the preservation of capital." nfortunately for the investors, he used the money to run a typical Ponzi scheme in hich early investors ere paid ith later victims' money. The money also supported a lavish lifestyle that included his horse racing business and gambling jun ets. He as finally arrested and as ultimately sentenced to eight years in jail. A father-and son, ho ere not registered as investment advisers, told clients of their accounting firm that they ould pool investor funds and purchase various securities. T elve investors ultimately provided $1.7 million. Investigators uncovered massive diversion of investor funds for the personal benefit of the father and son. Victims included an entire church congregation here one of them served as treasurer. oth men ere found guilty in state and federal courts. A registered investment adviser, ho as the o ner of a college planning service, advertised his e pertise in repositioning assets for families see ing financial aid for their college-bound children. Offering fraudulent securities and trust agreements he obtained $293,000 from 14 investors and used the money to pay for personal and business e penses including a lu ury Mercedes ith the license plate IPLAN4 . One of his victims as a 19year-old man ho lost $15,000 he had received after his father had died from cancer. He as convicted on one count of mail fraud, sentenced to 24 months in prison plus three years of probation, and ordered to ma e restitution. A oman s indled $1.8 million from 80 individuals she recruited from her income ta preparation service. In league ith her husband and son, the oman convinced her carefully selected clients that they ould receive returns higher than certificates of deposit from nine separate limited partnerships in residential mortgage loans that she offered. After pleading guilty, she as convicted of securities fraud and money laundering and sentenced to 57 months in federal prison. Her former clients lost everything they invested. A former pro football player and self-proclaimed investment adviser ith a history of being disciplined for securities violation, as arrested after a joint investigation by state and federal agencies. The accused allegedly ran a Ponzi scheme in hich early investors ere paid ith money provided by later ones, then encouraged to invest ever larger sums. esidents of several states may have been bil ed out of as much as

 

 

          

 

    

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$30 million. The accused o ned several lu ury homes and an airplane, as an avid golfer, and recruited many of his victims from a local country club.
y

The relationship bet een business and ethics is intrinsically ent ined. A successful company is one hich can effectively recognize and cultivate the relationship hich e ists bet een the t o.

Satyam fraud scandal

Outsourcing firm Satyam omputer Services has gone from being India's IT cro n je el, the country's fourth largest company ith high-profile customers, to being embroiled in the nation's biggest corporate scandal in living memory amalinga aju, the chairman and founder of Satyam, has been arrested and confessed to a 1 billion fraud, admitting he had made up profits for years. According to reports, aju and his brother ama aju, ho as the managing director, hid the deception from the company's board, senior managers and auditors. Today, a ne board, quic ly appointed by the government over the ee end, told investors and the media it is or ing on a rescue plan that includes bringing in ne auditors and a ne layer of top management ith government bac ing. ut the company still has no clean accounting boo s, nor has any idea on the amount of or ing capital the firm.

Management Morality and Emphasis on CSR

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ETHICS TOOLS: TRAINING

The ethics program is essentially useless unless all staff members are trained about what it is, how it works and their roles in it. The nature of the system may invite suspicion if not handled openly and honestly. In addition, no matter how fair and up-todate is a set of policies; the legal system will often interpret employee behaviour (rather than written policies) as de facto policy. Therefore, all staff must be aware of and act in full accordance with policies and procedures (this is true, whether policies and procedures are for ethics programs or personnel management). This full accordance requires training about policies and procedures. . Orient new employees to the organi ation's ethi s program during newemployee orientation. 2. Review the ethi s management program in management training e periences. 3. Involving staff in review of codes is strong ethics training. 4. Involving staff in review of policies (ethics and personnel policies) is strong ethics training. 5. One of the strongest forms of ethics training is practice in resolving comple ethical dilemmas. Have staff use any of the three ethical-dilemmaresolution methods in this guidebook and apply them to any of the real-tolife ethical dilemmas also listed in this guidebook. 6. Include ethical performance as a dimension in performance appraisals. 7. The best ethics trainer: Bill Goodman, Chief Human Resource Officer at Aveda, describes, "We start our training even in our job ads," then ads, "but the best trainer is the behaviour of our leaders." 8. Give all staff a copy of this free "Complete Guide to Ethics

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The imensional Management Mo el (3 MM): reflects that all

complex systems reflect the 3DMM this can be seen at the information level, society, organi ations, psychology, nanobots activities at subchromosome levels, etc. Ethics is of the 27 plans that make up the 3DMM. The ethics plan (S ) is located at the 3rd infrastructural level i.e., Management Style; within the Executive row and Directive column. Whether

the various views on life and ethics recogni e it or not, Ethics remains a component of 3DMM and will inevitably reflect: a) View of man; b) contribute to definitions; c) identify actual managed functions, activities, priorities and behaviour; as well as, d) affect the other 26 plans at the Executive, Supervisory, Functional management at the three infrastructural levels: Style, Operation and Design. When Ethics at the executive 'S ' level is denied or compromised, then substitute 'ethics' may emerge at the Operational supervisory management level (e.g., quality control - 'O9'), at the Design supervisory management level (e.g., rules and regulations - 'D6') or other plans.

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PUBLICS OPINION OF BUSINESS ETHICS

y Gallup Poll finds that only 17 percent to 20 percent of the public thought the business ethics of executives to be very high or high y To understand public sentiment towards business ethics, ask three questions  Has business ethics really deteriorated?  Are the media reporting ethical problems more frequently and vigorously?  Are practices that once were socially acceptable no longer socially acceptable?

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CONCLUSION
Ethics are important not only in business but in all aspects of life because it is an essential part of the foundation on which of a civilized society is build. A business or society that lacks ethical principles is bound to fail sooner or later. Knowing what is right is very important to personal and business ethics. Doing what is right is absolutely critical to personal and business ethics. A strong unwavering commitment to your core values and guiding principles of your business or organization will lead to the right ethical decisions and actions. In the absence of these actions, all one has is good intentions and that simply is not enough for effective leadership.

WEBLIOGRAPHY:
(http://www.duke.edu/~wgrobin/ethics/surfing.html) (http://www.ethics.ubc.ca/resources/business/)

http://managementhelp.org/ethics/ethxgde.htm