business ethics

1. Module – 1

2. Module 1
 Definition and concept of Ethics and business ethics
 History of Ethics
 Principles of personal ethics and professional ethics
 Institutionalising Ethics
 Code of conduct and ethics for managers, Ethical
Committees.
 Significance and need for business ethic
 Values and Ethics
 Case –“Infosys Technologies-The Best among Indian
Corporations”
 Assignment 1

3. Ethics in Managing
 Ethics is derived from the greek word ethikos meaning
custom or character.
 Ethics is defined as the discipline dealing with what is good and
bad and with moral duty and obligation.
 Personal ethics are referred to as the rules by which an
individual lives his or her personal life. E.g. honesty, fairness,
preventing harm to others etc.
 Accounting Ethics pertains to the code that guides the
professional conduct of accountants.
 Business Ethics is concerned with truth and justice and other
aspects like expectations of the society, fair competition, advertising,
PR, social responsibility etc. in a corporate environment.

4. What is ethics?
 Ethics is the branch of philosophy that focuses on
morality and the way in which moral principles are
applied to everyday life. Ethics has to do with
fundamental questions such as “What is fair?” “What
is just?” “What is the right thing to do in this
situation?” Ethics involves an active process of
applying values, which may range from religious
principles to customs and traditions.

5. What is Ethics?
Ethics:
• is a branch of philosophy.
• is a normative science because it is concerned
with the norms of human conduct.
• as a science, it must follow the same aspects of
logical reasoning as other sciences.
• as a science, involves systemizing, defending
and recommending concepts of right and
wrong behaviour.

6. What is business ethics?
 Business ethics focuses on what constitutes right or
wrong behavior in the world of business. Corporate
business executives have a responsibility to their
shareholders and employees to make decisions that
will help their business make a profit. But in doing so,
businesspeople also have a responsibility to the public
and themselves to maintain ethical principles.

7. Business Ethics
 Although ethics provides moral guidelines,
individuals must apply these guidelines in making
decisions. Ethics that applies to business
(business ethics) is not a separate theory of ethics;
rather, it is an application of ethics to business
situations. Although all people have ethical
responsibilities, higher ethical standards are
imposed upon professionals who serve as social
models, such as physicians, attorneys, and
businesspeople.

8. What is Business Ethics?
Business ethics is the application of general ethical ideas to business
behaviour.
It is based on the principle of integrity and fairness and concentrates on the
benefits to the stakeholders, both internal and external. Stakeholder
includes those individuals and groups without which the organization does
not have an existence. It includes shareholders, creditors, employees,
customers, dealers, vendors, government and the society.

9. Why Ethical Problems Occur
 Personal gain and selfish interest
 Competitive Press
 Business Goals versus Personal Values
 Unclear Policies
 Unethical Culture

10. Ethical Decisions in the Workplace
 An example of an ethical decision is being asked to
cover for a co-worker.
 Harassment
 Misrepresenting/ Fraud
 Theft
 Customer Relations
 Whistle Blowing

11. Principles of Personal Ethics
 Concern and respect for the autonomy of others;
 Honesty and willingness to comply with the law;
 Fairness and ability not to take undue advantage of
others;
 Benevolence and preventing harm to any creature.

12. Motivation for being ethical
 Most people want to maintain a clear conscience
and would like to act ethically under normal
circumstances.
 It is natural for people to ensure that their actions
do not cause any injury, whether physical or mental
to others.
 People are obliged to obey the laws of
land/countries’ constitutional laws.
 Social and material well-being depends on one’s
ethical behaviour in society.

13. Principles of Professional Ethics
 impartiality: objectivity;
 Openness: full disclosure;
 Confidentiality: trust;
 Due diligence/duty of care;
 Fidelity to professional responsibilities; and
 Avoiding potential or apparent conflict of interest

14. Making an Ethical Decision
How do you deal with them?
 Address this issue first
 Determine who is effected
 What is the ethical concern of this issue
 What do others think?

15. Ethical Decisions
Companies need to be trustworthy and honest
 Effects Stakeholders, customers, employees, and
community
 Ethics and Business go together
Create the environment where people feel safe
enough to speak up
Get Facts
 Which solution will be for the greater good of the
company and create the least harm
 Which solution respects the rights of everyone

16. Ethical Dilemmas
 Conflict of interest
 Situation in which a business decision may be
influenced for personal gain.
 Honesty and integrity
 Telling the truth and adhering to deeply felt ethical
principles in business decisions.
 Whistle blowing
 Employee’s disclosure of illegal, immoral, or
unethical practices in the organization.
 Loyalty Vs truth
 Businesspeople expect employees to be loyal and
truthful, but ethical conflicts may arise.

17. Institutionalising Ethics
 By establishing company policy or code of ethics.
 Appointing Ethical
 committee.
 Teaching Ethics in Management Development
Programmes.

18. Code of Ethics
 A code is a statement of policies, principles, or rules
that guide behaviour.
 Companies require employees to sign the code and
include ethics criteria in appraisal.
 Firms connect compensation and rewards to ethical
behaviour.
 Managers to encourage ethical behaviour.
 Employees should be encouraged to report unethical
practices.

19. Code of Conduct and Ethics for
Managers
 Integrity
 Impartiality
 Responsiveness to the public interest
 Accountability
 Honesty
 Transparency

20. Ethical Committees
 Functions
 Regular meetings
 Dealing with grey areas
 Communicating the code to members
 Check for possible violation
 Enforcing the code
 Rewarding compliance and punishing violations
 Reviewing and updating
 Reporting activities to Board of Directors

21. Importance and Need for Business Ethics
• A business organization competes in the global market on its own
internal strength, in particular, on the strength of its human resource and
on the goodwill of its stakeholders.
• The value-based management and ethics that an organization uses in its
governance enables it to establish productive relationship with its
internal customers, and lasting business relationship with its external
customers.
• Real type situations (Tata Steel and Infosys) show that use of ethical
practices in business creates high returns for companies.

22. Values and Ethics in Business
A value is a view of life and judgment of what is desirable. It is very
much part of a person’s personality and a group’s morale.
Business ethics relates to issues of “what is right” and “what is wrong”
while doing business. What values are to individuals, ethics are to
business.
Business ethics operates as a system of values, relating business goals
and techniques to specific human ends.

23. Distinction Between Values and Ethics
Values Ethics
Personal in nature
(e.g. a belief in
providing customer
satisfaction and being
a good paymaster)
Generalized value
system (e.g. avoiding
discrimination in
recruitment and
adopting fair business
practices).
Offer alternatives to
choose from.
Provides general
guidelines within which
the management can
operate.

24. Why should Businesses act Ethically?
The reasons for an organization to be ethical include:
• To protect its own interest,
• To protect the interests of the business community as a whole so that
the public will have trust in it,
• To keep its commitment to society to act ethically, and
• To meet stakeholder expectations.

25. Why should Businesses act Ethically? (contd.)
The reasons for an organization to be ethical include:
• To prevent harm to the general public,
• To build trust with key stakeholder groups,
• To protect themselves from abuse from unethical employees and
competitors,
• To protect their own reputations,
• To protect their own employees, and
• To create an environment in which workers can act in ways consistent with
their values.

26. Ethical Decision-making
Norman Vincent Peale’s and Kenneth Blanchard’s suggestions to conduct
ethical business.
• Is your decision fair?
• Is it a win-win situation for all?
• Is your decision legal? If it is not legal, it is not ethical.

27. How Corporations Observe Ethics in Their
Organizations?
• Publish in-house codes of ethics to be strictly followed by all their
associates.
• Employ people with a reputation for high standards of ethical behaviour at
the top levels.
• Incorporate consideration of ethics into performance reviews.
• Give rewards for ethical behaviour.

28. How Corporations Observe Ethics in Their
Organizations? (contd.)
• SEBI, CII and such other organizations representing corporations issue
codes of best practices and enjoin their members to observe them.
• IIMs and highly rated B-schools give extensive and intensive instruction
in business ethics, corporate social responsibility and corporate
governance as part of their curriculum.
• Conduct an Ethics Audit.

29. Corporate Governance Ethics
• Corporate governance is a set of rules that governs the administration
and management of companies.
• Its goalposts are transparency, integrity, full disclosure of financial and
non-financial information, and protection of stakeholders’ interests.

30. Benefits from Managing Ethics in Workplace
The many benefits that arise from managing ethics in the workplace are:
• Attention to business ethics improves society.
• Ethical practice contributes towards high productivity and strong team
work.
• Changing situations require ethical education.
• Ethical practices create strong public image.
• Strong ethical practices act as an insurance.

31. Characteristics of an Ethical Organization
Mark Pastin provides the following characteristics of ethical
organizations:
• At ease while interacting with diverse internal and external
stakeholder groups.
• Obsessed with fairness.
• Individual responsibility, with individuals assuming personal
responsibility for actions of the organization.
• See their activities in terms of purpose.

32. Caselet
 A secretary who has worked for your corporation for fifteen
years is involved in a car accident in which she permanently
loses the use of her right hand. Thus, she can no longer
effectively type, file, or perform many of the other functions
that she previously had performed and that are included in
her job description.
 Your corporation has a very tight budget and does not have
sufficient funds to pay for an additional secretary without
reallocating budget items. The injured secretary has been
very loyal to your corporation, and you have been very
satisfied with her work and dedication. She wants to stay at
her job.
 Moreover, she does not believe that she could find other
employment at this time. Should your corporation fire her,
lay her off with compensation, or find a way to retain her?

33. Internet Activity
 Go to the homepage of a Fortune 500 company
that has published its code of ethics on the World
Wide Web. What ethical concerns does it cover?
Is it a detailed document or general in its terms?

34. THANK -YOU