Business Ethics Business Ethics FundamentalsFundamentals

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Introduction Business Ethics

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

• Public’s interest in business ethics increased during the last four decades

• Public’s interest in business ethics spurred by the media

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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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Business Ethics: What Does It Really Mean?

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Ex p

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Eth

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Ethical Problem

Ethical Problem

Society’s Expectations of Business Ethics

Actual Business Ethics

1950s Early 2000sTime

Business Ethics:Today vs. Earlier Period

Business Ethics: What Does It Really Mean?

Definitions• Ethics involves a discipline that examines

good or bad practices within the context of a moral duty

• Moral conduct is behavior that is right or wrong

• Business ethics include practices and behaviors that are good or bad

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Business Ethics: What Does It Really Mean?

Two Key Branches of Ethics• Descriptive ethics involves describing,

characterizing and studying morality• “What is”

• Normative ethics involves supplying and justifying moral systems• “What should be”

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Ethical issues for business

• Product safety standards• Advertising contents• Working environment• Unauthorized payments• Employee’s privacy• Environmental issues

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origin of Ethics

• 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.

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Meaning of Ethics

Character of a man

Conductof a person

Series ofActions

Good or Bad,

Right orwrong,

Moral orImmoral

Moral Standards

Decided by Leads toTakentogether

Considered As

Known asMoral

Judgement

Requires

By which we can Judge again

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Objective of Ethics

• Studies human behavior and makes evaluative assessment about them as moral or immoral

• Establishes moral standards and norms of behavior

• Makes judgment upon human behavior based on these standards and norms

• Prescribes moral behavior and makes recommendations about how to or how not to behave

• Expresses an opinion or attitude about human conduct in general

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Business Ethics

When business people speak about “business ethics” they usually mean one of three things: 1. Avoid breaking the criminal law in one’s work related activity

2. Avoid action that may result in civil law suits against the company

3. Avoid actions that are bad for the company image

Businesses are especially concerned with these three things since they involve loss of money and company reputation.

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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 ETHICSEthical behavior and business should be integrated in a new era called Business Ethics.

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Unitarian View: Business & morality cannot be separated and it must play by the rules of ethics of the community.

Views on relationship between Business & Ethics

Moral Structure

Business

Moral Ethics13

Separatist view of Ethics

• Proposed by Adam Smith and Milton Friedman: Business is a distinct entity and does not include ethics and morality

Business Ethics

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Integration view of ethics

• Proposed by Talcott ParsonsLaw

Society

Government

Market Systems

BusinessMorality

& Ethics

BusinessEthics

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Ethical Consciousness

Stage 6 corporate citizenship

Stage 5Stake holder concept

Stage 4 Profit Maximization in the long term

Stage 3 Profit MaximizationIn the short term.

Stage 2 Anything for Profit

Stage 1 Jungle Law

Ethical standardsVary between cultures

And countries.More evident

From /amongstEntrepreneurs/

Corporations.

Long term profitability and Attractiveness of Orgn

Is key to competitive strategy

Both attractiveness & competitivePosition can be shaped

i.e. challenging and exciting16

Stake holder concept

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Ethics and morality• 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 Organization.

Ethical theories can be classified into three subject areas:-

• Meta ethics• Normative ethics• Applied ethics.

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Details of 3 Ethical theories

Meta Ethics• Deals with entire scale of ethical issues:-

moral values of humans • It is the branch of ethics that focuses on how

we understand, know about, and what we mean when we talk about what is right and what is wrong.

•  Addresses questions such as "What is goodness?" and "How can we tell what is good from what is bad?“.

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Applied Ethics:-Applied ethics is, in the words of Brenda Almond, co-founder of the Society for Applied Philosophy, "the philosophical examination, from a moral standpoint, of particular issues in private and public life that are matters of moral judgment".

• It is thus a term used to describe attempts to use philosophical methods to identify the morally correct course of action in various fields of human life

• E.g. BIOETHICS,  BUSINESS ETHICS ,  ENVIRONMENTAL ETHICS

Details of 3 Ethical theories

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Applied Ethics contd..

• There are six domains to help improve organizations and social issues at the national and global level:

• Decision ethics, or ethical theories and ethical decision processes

• Professional ethics, or ethics to improve professionalism

• Clinical ethics, or ethics to improve our basic health needs

• Business ethics, or individual based morals to improve ethics in an organization

• Organizational ethics, or ethics among organizations• Social ethics, or ethics among nations and as one global

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Normative theoriesThat 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-1. STOCK HOLDERS THEORY2. STAKE HOLDERS THEORY3. SOCIAL CONTRACT THEORY

Details of 3 Ethical theories

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Sources of Ethical Norms

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Fellow Workers

Family

Friends

The Law

Regions of Country

Profession

Employer

Society at Large

Fellow Workers

Religious Beliefs

The Individual

Conscience

3 Models of Management Ethics

1. Immoral Management—A style devoid of ethical principles and active opposition to what is ethical.

2. Moral Management—Conforms to high standards of ethical behavior.

3. Amoral Management• Intentional - does not consider ethical factors• Unintentional - casual or careless about ethical

considerations in business 24

3 Models of Management Ethics

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Three Types Of Management Ethics

Three Approaches to Management Ethics

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Making Moral Management Actionable

Important Factors• Senior management• Ethics training• Self-analysis

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Developing Moral Judgment

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Developing Moral Judgment

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Developing Moral Judgment

External Sources of a Manager’s Values

• Religious values• Philosophical values• Cultural values• Legal values• Professional values

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Developing Moral Judgment

Internal Sources of a Manager’s Values

• Respect for the authority structure• Loyalty• Conformity (TRADITIONAL VALUES)• Performance• Results

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Elements of Moral Judgment• Moral imagination• Moral identification and ordering• Moral evaluation• Tolerance of moral disagreement and

ambiguity• Integration of managerial and moral

competence• A sense of moral obligation

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Common Unethical Acts...

• Lying and withholding needed information

• Abusive or intimidating behavior

• Misreporting time worked

• Discrimination and sexual harassment

• Stealing

• Breaking environmental and safety laws

• Falsifying records

• Drug or alcohol abuse

• Giving or accepting bribes

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Why Misconduct Is Not Reported...

• Belief that nothing will be done

• Fear of retaliation

• Fear of being viewed as a troublemaker

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Why ethical behavior is important???

• Business is a subsystem of society

• Reduction in cost of friction with social environment

• Important for organizations leaders because they influence the ethical climate for the rest.

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Why Ethical problems occur?

• Personal gain

• Individual values widely differ with organizational goals

• Managers values and attitudes

• Competitive pressures

• Cross-Cultural contradictions 36

Encouraging Ethical Conduct

• Ethics Training• Key features of effective ethics training

programs• Top management support.• Open discussion.• A clear focus on ethical issues.• Integration of ethics into the organization.• A mechanism for anonymously reporting ethical

violations.• Reward ethical conduct.

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Encouraging Ethical Conduct (cont’d• Whistle-Blowing

• The reporting of perceived unethical matters.• Reducing the fear of retaliation against

whistleblowers• Anonymous hotlines and web sites• Personal, confidential guidance

• Ethical Advocate• An ethics specialist who plays a role of critical

questioner in top-management’s decision-making.• Serves as the Board of directors’ social conscience.• Helps prevent groupthink and blind conformity

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Encouraging Ethical Conduct (cont’d)

• Code of Ethics• Published statement of moral expectations for

employee conduct• Requirements for an effective ethics code

• Must describe specific practices as unethical (e.g., kickbacks, payoffs, gifts, falsification of records, and misleading product claims).

• Must be firmly supported and fairly enforced by top management.

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Role of the Business Officer

• Employee/Staff rely on you to explain the rule/policy• Be able to say no and explain why

• Ethical leadership• Be the example, not the exception• “Ethics are what you would you do, if you were

sure no one would see you.”• Be consistent

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THANK YOU

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