business ethics
TRANSCRIPT
Business EthicsS.K.Palhan
Course Content
• Introduction ,Indian ethos in management
• Self management for effectiveness
• Value of values in business
• Stakeholder analysis
Course Content
• Corporate governance
• Ethical dilemmas
• Principle cantered leadership
• Work ethics
• Ethics in marketing & entrepreneurship
• Case studies in business ethics
Indian Ethos in Management
• Existing management systems have not succeeded in India
• Quality of life has gone down in terms of– Happiness– Material development
Indian Ethos in Management
• Development based on local value system has succeeded in– Japan– Korea– Singapore– Taiwan
Indian Ethos in Management
• Modern value system has deteriorated quality of life leading to :-– Consumerism– Stress– Erosion of values and family life
Present Status
• Expectation– Money– Fulfillment of
desires– Power– happiness
• Result– Money– Comforts and
enjoyment– Worries– aimlessness
Present Status
• Growing dissatisfaction
• Selfishness
• Greed
• Exploitation of– Society– environment
Indian Ethos in Management
• Survival of Indian civilization unlike.Roman,Greek and Babylonian
• What is the secret of survival ?• Is there excellence in India ?
– Distribution of wheat and coconuts– Brassware , carpets, handloom– Bania shop– Morning newspaper vendors– Mumbai’s Dubbawalas
Indian Ethos in Management
• Indian ethos is not merely shlokas from the scriptures
• It is applicable in productivity,growth,leadership and human resource management
Indian EthosManaging Through Wisdom
knowledge
skills
attitude
Job skills
Emotional stability
Holistic view of realityLife skills
Distinctive Features of Indian Ethos
• Self development (values )• Life skills• Holistic approach for physical.mental,social and
spiritual growth• Balanced pursuit of multiple life objectives
– Dharma,artha, kama, moksha
• Self management through the handling of the gunas (tendencies ),sattva,rajas & tamas
Indian Ethos
• Divinity of all souls with infinite potential
• Holistic vision ,concept of advait
• Stress on– Skills or– Values
• Efficient worker or wisdom worker
Ethics of East
• Hindu philosophy– Dharma artha,kama ,moksha
• Islam– Concern for poor,non interest,risk sharing
• Buddhism– Self control,right action
• Jainism– Non violence
Ethics of East
• Chaarwak philosophy
• Chanakya neeti
• Single political party condoning poor ethics
Western Ethics
• Plato and Aristotle– Living good life– Responsibility of the elite
• Stoics– Austerity– Endurance– Tolerance
• Shaw, Russell, Malraux,Rolland– Anti imperialism and exploitation
Western Ethics
• Christianity– Compassion
– Sharing and Responsibility
• Existentialism– Personal responsibility to all mankind
• Modern western government & Business Schools– Corporate ethics
– Good governance
Western Ethics
• Epicureans and Hedonist – Pleasures without responsibility
• Nietzsche and Schopenhauer– Emphasis on power,superman,might is right
• Darwin– Survival of the fittest by any means
Western Ethics
• Milton and Friedman– Business and not social responsibility
• Some MNC– Kick backs are justified
Deontological Ethics(Means)
• Decisions based on rules or principles which govern decisions
• Stress on rules rather than the consequences by Kant, Confucius,Aristotle
Teleological Ethics(End Result )
• The teleological morality of a decision is determined by measuring the probable outcome or consequences
• Utilitarianism seeks as its end the greatest good ( or utility ) for the greatest number
• John Rawls :- (distributive justice) Ethical acts or decisions are those which lead to an equitable distribution of goods and services
• Hybrid theories :- Balance of Mercy and justice
Why Values
• The business benefits through shared values
• The right thing – Integrity– Obey laws– Quality life– Satisfaction to the customers
Why Values
• Changing attitude / aspirations– Holistic life with values
• Changing pattern of work– More people working with mind rather than the hands
• Positive encouragement and not negative prohibitions
• Urgent need for value education– Youngsters appear to have rejected or not aware of
basic code
Business Values &Ethics
• Long term foundation of corporate governance can be built through values and ethics
• Absence of values and ethics may inadvertently or otherwise dilute safeguards of law, organizational systems and rules
• Chairman & non- executive directors should demand & approve the core values to guide major decisions,operations &behaviour in organizations
Corporate Ethics
• Rising levels of services to the multiple stakeholders
• Trusteeship of resources entrusted to the care and leadership of promoters & managers
• Fair dealings with stakeholders,business partners• Optimum contribution through the creation of
wealth,jobs,exports and Innovation • Good corporate citizenship through legal
compliance & social responsibility
Values
• Value indicates the regard for– A thing– Situation– Attitude
Which for some reasons is prized by the value holder
Values
• In Sanskrit an ethical value can be defined as Dharma,which is a standard or norm of conduct derived from the way in which I wish others to view or treat me
• I want others to speak the truth to me,I do not want others to lie to me ,truth speaking is a dharma for me
• Ethical norms are not just arbitrary but stem from an inherent common regard for one’s own interest and comfort
Value –Speak the Truth
• I want others to speak the truth
• Authorities tell me to speak the truth (parents,society,religion )
Ethics in Decision Making
• Ethics in organizational decision making have a wise spectrum– No consideration at all of ethics– Ethics considered briefly but thought to be
irrelevant– Problems of ethics recognized after decision is
made / implemented– Ethics said to be important but not systematized– Ethics built into decision making process
Integration of Ethics in BusinessCorporate Vision
• Doing ( goals )– Finance
– Markets
– Technologies
plans
operations
• Being ( values )• Principles• Relationships• Behaviour
code of conduct– specialist policies
» Quality» Environment» Health» People’s development» Customer care
Principles
• Principles are guidelines for human conduct that are proven to have enduring value
• They are fundamental and self evident
Principles
• Consider the absurdity of living an effective life based on the opposite of principles e.g– Unfairness– Deceit– Uselessness
• Happiness-the ultimate objectiveness of life comes only through Dharma-righteous action
Ethical Issues in India
• Poor productivity
• Lack of integrity, selfishness
• Non responsive system
• Stress on rights instead of duties
Ethical Issues in India
• Jobs not suiting swardharma
• Poor wages
• Profits through loopholes in laws and personal contacts and not world class results
• Serving the boss and not the customers
• Not walking the talk
Corporate Values
• Eastman Kodak company– Honesty
– Fairness
– Trust
– Teamwork
– Diversity
– Employee’s well being
– Citizenship
– Winning attitude
Corporate Values
• Hewlet Packard– Growth-a measure of strength and requirement
for survival– Products & services should be useful– Profit : the best single measure of our
contribution to society to be pursued & maximized but consistent with our objectives:
• Creativity,personal satisfaction and employee’s share in success of the company
Mission Statements of Corporate
• Honesty & trust in relation to– Customers– Shareholders– Suppliers
• Respecting the needs of individuals• Becoming showpiece of productivity and
quality• The customer matters most
Mission Statements of Corporate
• Safety and health as our highest value
• Never to take or give bribe
• No false billing etc
• 100 % testing of finished products
• Will not handle business of harmful items like drugs, tobacco,liq
Stakeholder Model
BUSINESS
shareholders
customers
employees
promoters
community
governmentregulators
competitors
vendors
dealers
lenders
Stakeholder Management
• Stakeholders expectations
(Internal & external)
Corporate objectives
Long term vision & goals
Strategy & plans
Organization & management
operations
Resource auditExternal scan
Feedback &learning
Stake Holder's Action Plan
• Managerial leaders-set examples,prevent erosion of values
• Entrepreneurs-ethical,socially relevant projects• Regulators-create environment for ethical
behaviour,suitable awards & punishment• Business stakeholders-support ethical business• Social stakeholders-ethical guardians,no
unreasonable demands• Press media-highlight positive roles
Corporate Ethics
• Rising levels of service to the multiple stakeholders
• Trusteeship of resource entrusted to the care and leadership of promoters and managers
• Fair dealings with stakeholders, business partners
Dealings With Suppliers
• Are you honest in negotiating with your suppliers?• Do you pay your suppliers in time as per the
agreement ?• In dealing with smaller suppliers do you bully or
abuse your power ?• Do you either offer or accept bribes?• Do you behave towards your suppliers as you
would like your customers to behave?
Ethical Issues in Marketing
• A survey of 1076 marketing managers identified the following difficult issues– Bribery ( gifts,payments,kickbacks)
– Fairness ( conflict of interest-manipulation )
– Honesty ( lying,misrepresentation)
– Pricing issues- predatory pricing
– Product – safety ,quality
– Personal confidentiality
– Advertising-puffing , misrepresentation
Ethics in Banking/financing
• Personal behaviourResources
Power
,information
Opporunity
temptation
Situation
Ups -downs
Value system
Moral standing
constraints
Life goals Moral code
Level of integrity External
pressure
Ethics in Banking/financing
• Factors considered by lenders ( Chartered Institute of Bankers – 1989 )
– Character– Ability to pay– Margin– Purpose– Amount– insurance
Resolving Dilemmas
• SITUATION– What are the facts,root cause,risk.
Opportunities?– Affected stakeholders– Perception of facts by the stakeholders
Resolving Dilemmas
• ALTERNATIVES– What are the options ?– Are there no other options?-Be creative– Impact of alternatives on stakeholders
Resolving Dilemmas
• ANALYSIS– Vital values involved in the decision– Judgment based on
• Means (deontology )
• Results (teleology )
– Can you eliminate few alternatives ?– Lateral thinking –other alternatives – Value of values- decision criteria
Resolving Dilemmas
• CHOICE– Choose according to the most important criteria– How can you minimize the negative impact– How to communicate the choice ?
Case Study in Dilemma
• You are the G.M.in a company exporting jeans & negotiating a Rs. 2 crores deal in country X
• There is recession in the local market & you may have to close one of your manufacturing plants in India if this order is not received
• You can get the order if you pay a bribe of Rs. 20 lacs to the agent of the commerce minister of X & the order is big enough to absorb the bribe
• What would you do ?
Business Case Study-2
• you have to cut lending to small business & you have to choose between accounts A & B
• A- a play group for handicapped children.It just manages to break even. Your friend’s child also attends it.
• B- video shop known for video nasties,it is currently in loss but will certainly move into profit shortly, provided it is not closed by the authorities
• What would you do ?
Business Case Study-3
• You publish a successful teenage magazine• Profitability depends on major advertisers• You have bowed to the pressure of tobacco coys
& do not run anti smoking articles• Now , however you are concerned over tobacco
co. ads targeting teens • Tobacco coys have recently merged with food
coys who account for your bulk ad. Sales• WHAT WOULD YOU DO ?
Business Case Study-4
• You have been suddenly asked to stand in for your manager ( on sick leave) at a day at the races sponsored by an important customer.Your hosts are highly hospitable & suggested a number of horses to back, some of which won.your bets were modest & you estimate your winnings at $50.At the end of races the hostess gives you an envelope of winnings with your manager’s name on it.You open the envelope at home & find $5000 in it.
• What would you do ?Give your analysis.
Principles Centered Leadership
churchprinciples
money
posessions
work
pleasure
friend
enemy
self
church
spouce
family
GUIDANCE
POWER
SECURITY
Alternative life centers
WISDOM
Principles Centered Leadership
• Principles as life center give• GUIDANCE
– Sense of direction,your own interpretation
• SECURITY– Sense of worth,identity,self esteem
• WISDOM– Sense of balance,judgment,comprehension,oneness
• POWER– Capacity to act,energy to make choice,to accomplish
Principles Centered Leadership
• Alternative organizational centers may be– Profit– Supplier– Employee– Owner– Customer– Program– Policy– Image– Competition– technology
Principles Centered Leadership
• Each of us has a center, though we do not recognize it as such
Principles Centered Leadership
• Principles are guidelines of human conduct that are proven to have enduring permanent value
Principles Centered Leadership
• Principles do not react e.g.– Fairness,– integrity,– honesty,– quality– Excellence– Human dignity– service
Principles Centered Leadership4 Levels
1. Personal trustworthiness• Character• Competence
2 Interpersonal trust• emotional bank account
3 Managerial empowerment
4 Organizational alignment
Principles Centered LeaderCharacteristics
• Continually learning
• Service orientation
• Radiate positive energy
• Believe in other people
Principles Centered LeaderCharacteristics
• Lead balanced life
• See life as an adventure
• Synergistic
• Exercise for self renewal– Physical,mental,emotional,spiritual
Work Ethics
• Why?
• What?
• How?
• Which work –priority ?
• Work attitude
• For whom ?
Rights &Duties
• I oriented
Product development marketing issues
Ethical Issues in Marketing
• A survey of 1076 marketing managers identified the following difficult issues– Bribery ( gifts,payments,kickbacks)
– Fairness ( conflict of interest-manipulation )
– Honesty ( lying,misrepresentation)
– Pricing issues- predatory pricing
– Product – safety ,quality
– Personal confidentiality
– Advertising-puffing , misrepresentation
Marketing ethics
• Shall not do any harm knowingly
• Shall not knowingly promote conflict of interest
• Is honest and fair in serving customers
Marketing ethics
• Done in good faith to all parties concerned
• Deliver products and services which are safe and fit for the intended use
• No deception about the product while communicating
• Redressal system for handling complaints
• Adhering to applicable laws & regulations
Pricing issues
• Increase price & the give discount-bogus sale
• High prices for captive customers on renewal of services
• Low product cost but very high service cost
Pricing issues
• Cross subsidize products
• Promoting ordinary products as luxury items
• Bundled price for fast moving items with slow ones
• High prices during shortage
• Form cartels to keep the price up
Pricing issues
– Tyres– DRAM chips-Samsung & others
• MRP as retail price
• Predatory pricing
Promotion issues
• Surrogate advertizing
• Using irrelevant attributes of product
• False claims
• Advertizing to children
• Use of fear appeal– Insurance– Fairness creams
Ethical issues in HRM
• Discrimination
• Privacy issues
• Phone tapping
• Electronic surveillance
• Safety
• health
Ethical issues in operations
• Safety
• Quality -compromise
• Affluent
• Health hazards
Ethical issues in Banking
• Misappropriation and breach of trust
• Manipulation of records
• False financial documents
• Unauthorized credit facilities
• Forgery in demand draft
• Irregularity in foreign exchange guidelines
• False letter of credits