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BUSINESS ETHICS

SWAMI VIVEKANAND VIEWS ON ETHICS


THE BASIS OF INDIAN SUBJECTIVITY LIES IN THE BELIEF OF GOD. HE SUGGESTED THE FUNDAMENTAL LAW OF ETHICS DONT INJURE OTHERS, LOVE EVERYONE AS YOUR OWNSELF UNIVERSE IS ONE

Definition The principle of conduct governing an individual or group The study of morality Ethics is a kind of investigation- includes both activity of investigation as well as results of that investigation- morality is subject matter that ethics investigates Morality is standards that an individual or a group has about what is right and wrong, or good and evil Non moral standards-Etiquette, legal, language, aesthetics, athletics.

Ethics

Characteristics of moral standards


Involved with serious injuries or benefits Not established by law or legislature Should be preferred to other values including self-interest Based on impartial considerations-universal standpoint. Associated with special emotions and and vocabulary

Ethics is a Greek word, it means Character or manners. Ethics is subjective while morality is objective Ethics is about sense of belongingness to society of business. Formed with a limited vision for economic generation but should resolve conflict with society by servicing the community. The discipline that examines ones moral standards or the moral standards of a society

Genesis of Ethics :

Business Ethics
The value of what should be done and what should not be done from the business point of view

Introduction
Inventory of Ethical Issues in Business Employee-Employer Relations Employer-Employee Relations Company-Customer Relations Company-Shareholder Relations Company-Community/Public Interest
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Why is Ethics Important in Organizations?


Character and ethical behavior in organizations affects:

Attendance

Loyalty

Safety
Quality

Security
Profitability

Productivity

Why Should Organizations Behave Ethically?


Prevent harm to others, avoid reputational harm and reduce potential liability Fulfill public expectations and improve external relations Protect organization from others (employees, competitors, etc.) Improve workforce productivity but protect employees if needed from their employers Promote personal morality

Business Ethics: Today vs. Earlier Period


Societys Expectations of Business Ethics

Ethical Problem
Ethical Problem 1950s Time Early 2000s
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Actual Business Ethics

What is Ethical Behaviour?


In many situations lines between right and wrong are blurred. Such situations can lead to ethical dilemmas. When faced with ethical dilemmas, it is important to consider outcomes of the decision-making process. One way of dealing with ethical dilemmas is by using the four way test to evaluate decisions. This test involves asking four questions: Is my decision a truthful one? Is my decision fair to everyone affected? Will it build goodwill for the organization? Is the decision beneficial to all parties who have a vested interest in the outcome?

Reasons for Ethical Problems in Organizations

Personal Gain and Selfish Interest


Competitive Pressure on Finances Organizational Goals vs. Personal Values

Sources of Ethical Norms


Fellow Workers Regions of Country

Family The Individual Conscience

Profession

Friends

Employer

The Law

Religious Beliefs

Society at Large
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Ethics and the Law


Law often represents an ethical minimum Ethics often represents a standard that exceeds the legal minimum
Frequent Overlap

Ethics

Law

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Making Ethical Judgments


Behavior or act that has been committed compared with

Prevailing norms of acceptability

Value judgments and perceptions of the observer

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Ethics, Economics, and Law

Models of Management Ethics


1.Moral Management Conforms to high standards of ethical behavior. 2 Immoral Management A style devoid of ethical principles and active opposition to what is ethical. 3. Amoral Management Intentional -does not consider ethical factors Unintentional -casual or careless about ethical considerations in business

Ethical issues for business


Product safety standards Advertising contents Working environment Unauthorized payments Employees privacy Environmental issues Environmental issues

3D of Ethics. :
UNITARIAN VIEW OF ETHICS: Business is a part of moral structure and moral ethics. SEPARATISTS VIEWS OF ETHICS: Morality and ethics has no role in business. Society and law deals with ethics and morality. INTEGRATED VIEW OF ETHICS: Ethical behaviour and business should be integrated in a new era called Business Ethics.

Integration View of Ethics


Law

Government
Morality and Ethics

Business

Market system

Business Ethics

Society

Ethical Consciousness
Stage 6 Corporate citizenship

Stage 5 Stakeholder concept Stage 4 Profit maximization in the long run Stage 3 Profit maximization in the short term
Stage 2 Anything for profit Stage 1 Jungle Law

Ethical standards vary bet. Cultures and countries More evident from amongst entrepreneurs Corporations Long term profitability and attractiveness of org. is key to competitive strategy Both attractiveness and competitive strategy can be shaped i.e. challenging and exciting

Two Domains
Overt approach External theft, bribery etc. Covert approach Internal merger and acquisitions, insider trading

Ethics Dilemma pricing, advertising, promotion, Working conditions, customer service Work force reduction, environment Community relations, supplier relations Importance of trust (empathy), maturity in relationship

Ethics is about field or domain of enquiry while morality is the object of enquiry. Ethics or behavior accepted with in a group is recorded as credos espoused value of group/Orgn. When espoused value become practiced values, then the group is said to be ethical Organisation Ethical theories can be classified into three subject areas: Meta ethics Normative ethics Applied ethics

Ethics and morality :

Meta Ethics
:

Deals with entire gamut of ethical issues:moral values exists independent of humans psychological issues that deals with psychological basis of the moral actions and linguistic issues dealing with moral terms Reflect on reactions on photo at UK deities and others. Belief system, tradition- Kentucky launching chicken product at Bangalore.

Applied Ethics
Deals with ethics dealing with Euthanasia, TERRI SCHIAVO FLORIDA women!!- female feticide and infanticide, displacement of tribal people due to hydel power projects, cloning, testing drugs on animals

Normative theories-Business ethics. That which guides and controls human conduct. Sets out certain standards that determine what is right and what is wrong. Golden principle behind this WE SHOULD TREAT OTHERS THE SAME WAY THAT WE WANT OTHERS TO TREAT US There are Three leading theories of Normative ethics STOCK HOLDERS THEORY STAKE HOLDERS THEORY SOCIAL CONTRACT THEORY

Normative theories

ETHICS AND CORPORATE GOVERNANCE


Deals with determination what is right'," fair, prior and just" in decisions and actions made that affect stake holders. It focuses on the business relationship with employees, customers, stockholders, creditors, suppliers and member of the society in which it operates. Corporate ethics , is a matter of leadership. Adhere to corporate credos-code of conduct. Development of IQ,EQ and SQ culture.

NABARD, Bank of India, BPCL :


NABARD helps 101 million poor people through micro finance program, providing access to credit. Joint liability groups(JLG)- Rythu Mitra programcredit access to landless farmer's agri- labourers, empowers women with micro credit, micro enterprise, created special funds for water shed development, Partnering with corporate like ITC, Tatas, M and M, Ambuja cements etc, many more BPCL provides alternate source of energy, solar energy for street lights at villages, skill enhancement on modern farming practices, distributes smoke less chulas, training for income generation projects.

Bank of India, focuses on below poverty line, adopted 101 villages .makes use of four M with NGO for various services. New world is outsourcing: Anything done most efficiently cost effectively can be done by someone else.. NGO have to develop new tie up with corporate to align themselves to meet the changing needs of society.. Corporate have fund of Rs. 1 lakh crores for CSR in India alone. Not to speak of Transnational corporation Networking of NGO and development of search engines for various relevant social projects is the need of the hour. .

Bank of India :

4 M- CSR Corporate :
Many of the philanthropist activities are not monitored or measured. Unlike Corporate CSR. Four M of corporate social responsibility taken up By corporate has inbuilt 4 M Meaningful, projects Managing the projects Monitor projects Measure projects Bank of India does check NGOs how they operate Effectively and efficiency. Nearly Rs. 1 lakh crores of fund Available with corporate for CSR activities.

Organizational/Business Ethics
Ethics! Important to All Stakeholders
In Conclusion, High Ethics Companies

1. are at ease interacting with internal and external stakeholders;


2. are obsessed with fairness, honesty, and integrity; 3. see actions and decisions driven by values;

4. are confident with the ethical activities of individuals and work groups;
5. value ethical purpose; and

6. can make ethics a core competency in strategic planning.


Ethics in business and organizations result in investor confidence and loyalty, customer satisfaction, and high performance and profits. Shelley Groves, Ph.D.

Organizational/Business Ethics
The Integrity Based Strategy
CHARACTERISTICS OF A COMPLIANCE STRATEGY CHARACTERISTICS OF A INTEGRITY STRATEGY

Etho: Objective: Leadership: Methods: Penalties Behavioral Assumptions:

Conformity with Standards Prevent Misconduct Lawyer Driven Education; Auditing;

Self Governance Enable Responsible Conduct Management Driven Leadership; Accountability; Systems Decision Processes

Social Beings Guided by Values Autonomous Beings Guided and Ideals Material Self Interest The need to be ethical is viewed as a positive aspect of organizational life, rather than one more unwelcomed restraint imposed by the authoritarian culture. Unknown

Thought for the Day


All that is necessary for the triumph of evil is that good men [people] do nothing.
Edmund Burke Irish orator, philosopher, & politician (1729 - 1797)