Ethics

 Genesis of Ethics
 Ethics is derived from the Latin word “ethicus” and Greek
word “ ethikos”, it means character or manners.
 Ethical codes of conduct instruct us on what we ought or
ought not to do.


Origin In West
 Socrates(469-399BC)
 Plato(427-347BC)
 Aristotle(384-322BC)

Fundamental principles of ethics
 INTEGRITY
 OBJECTIVITY
 CONFIDENTIALITY
 PROFESSIONAL COMPETENCE AND DUE CARE
 PROFESSIONAL BEHAVIOUR

• The principles and standards that determine acceptable
conduct in business organizations.
•Is a form of professional ethics that examines ethical
principles and moral or ethical problems that arise in a
business environment.
Business Ethics

Nature of Ethics
 Nature of Business Ethics:
 Most businesses encounter two types of ethical problems:
 Overt Ethical Problems:
o Deals with bribery, theft, collusion etc.
o They are clear (transparent) and reprehensible (conveying
disapproval, criticism or punishment).
 Covert Ethical Problems:
o Incorporate acquisitions, marketing and personnel policies, capital
investment etc.
o They are complex, clear and have deft (skilful and quick) ethical
solutions.

 3 TYPES OF ETHICS
 The Unitarian view of ethics
 The Separatist view of ethics
 The Integration view of ethics
 Unitarian view argues that morality and ethics are related to business.
 TheSeparatist view expressed that, business should concentrate on
profits, and ethics and morality do not form a part of business.
 The Integration view defined a new area called business ethics,
where ethical behavior and business are integrated.

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Mike,
Graphic Designer
“What to do?
My producer is a bully and hiring
like-minded people.
Ethics is becoming a question in
my organization.”

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Stella,
HR, Executive
“I find few employees of my
organization, disclosing
confidential client data to our
competitors.”

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Stephany,
HR, Executive
“Should the performance
feedback session follow a
corrective or punitive
approach?”

ETHICAL Or UnEthICAL ?
• Laying of employees after assuring no
layoffs
• Operating cancer treatment centre with
tobacco company

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All these are issues addressing common workplace ethics.
Ethical Problems are inevitable in all levels of business.
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Common Workplace Ethics
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Punctuality
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Responsibility

Integrity & Loyalty
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Teamwork
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Professionalism
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In the work place the senior management have a responsibility to
set an example that reflect the
company expectations.
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Training on workplace ethics is imperative.
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Ethics help a lot in effective productivity as well as a great
balance of responsibilities in your life on personal &
professional front.
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3 Models of Management Ethics
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Three Types Of Management Ethics

Models of Management Ethics
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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—
3. Unintentional - casual or careless about
ethical considerations in business

Three Approaches to Management Ethics
6-18

Developing Moral Judgment

 Stages of Ethical Consciousness in Business:
 Ethical standards vary between cultures and countries.
 It has been found that moral (ethical) development follows a specific
sequence of stages, irrespective of cultures and countries.
 In the business context, the stages of ethical consciousness are as
follows:
 Law of the jungle
 Anything for profit
 Profit maximizing in the short-term
 Profit maximizing in the long-term
 Stakeholder concept
 Corporate citizenship

First Stage: Law of the Jungle-
 Businesses were run on brute strength
 Business decisions were driven by the philosophy of
“might makes right”
 Business ills like price fixing etc are common in this
stage.
Second stage: Anything for profit
 Business was ready to do any thing to make profit.
 Business at this stage had only one goal ie, profit.
 To generate profit, business resort:
 False representation of products
 Bribery of Govt officials
 Tax evasion etc.
 Business in this stage of ethical consciousness strongly
believe that “anything goes as long as one does not get
caught by the law or by the customer”.

The third Stage, “Maximizing profits in the
short-term”:
 Business believed that “good business is good ethics”.
 Performance of businesses is measured based on short-term growth
in sales and profits.
 Main aim of business in this stage was to maximise profits within
the constraints of the law.
The Fourth Stage, “ Maximizing profits in the long-term”:
 A shift in focus from ‘business’ to ‘ethics’.
 Business acknowledge that “sound ethics is good business” in the
long run
 Interest of the shareholders remain primary concern of businesses
 Equal concern for conducting business in a manner that is both
‘right’ and profitable over the long term.
 short term profits alternatives are declined.
 At this stage firm created the post of an ‘ethics officers’.

 Fifth Stage, “Stakeholders Concept”:
 Concentrated on profits to have a social as well as economic mission.
 Business objectives included:
 Profit sharing
 development of community service projects
 Philanthropy
 Assumption of this concept is:
 Providing service to stakeholders
 Working towards the good of society
 Building and maintaining mutually enabling relationships, which in turn create value
for others and justified firms profit.
 Success measured not just in:
 Financial terms
 But also in terms of contribution to society
 Some companies have gone so far as publish regular:
 Annual social reports
 Annual Financial reports

 Sixth Stage, “Corporate Citizenship”:
 Proposes a higher level of ethical consciousness
 Redefines the mission of business in society
 “World Business Academy” and “Business for Social
Responsibility” are among the principal proponents
 Major responsibility to society transformation
 Their belief, “ Business can be healthy, only if society around it
is healthy” and no other institution (Govt and religious) in society
has the resource and credibility to bring about this transformation.
 Entrepreneurs on this level seek to achieve:
 promoting community health
 participating in job creation
 Employing handicapped people
 Self realization of employee
 Financial success of the company

Ethical theories are commonly divided into 3 branches :
 Meta ethics
 Normative
 Applied ethics
 Meta-ethics is the branch of ethics that seeks to understand the
nature of ethical properties, statements, attitudes, and judgments.
Metaethics is the study of what ethical terms and theories actually
refer to.Meta-ethics addresses questions such as "What is goodness?"
and "How can we tell what is good from what is bad?
 Normative Ethics is the study of ethical theories that prescribe how
people ought to act.
 Applied ethics: How do we take moral knowledge and put it into practice?
Ethical Theories

Why Ethics is important in business
• Creates credibility
• Unites people
• Work Efficiently
• Improves decision making
• Increases interest over shareholders
 Easier change management
 Strong team work and productivity
 Enhanced Employee growth
 Guarantee that personnel policies are legal
 Helps to detect violations easily
 Helps to manage values associated with quality management,
strategic planning

Why Ethics is important in business
Ethics brings a sense of right and wrong in organizations.
• When the law fails
• Ethics stops organizations from harming the society.

Common Causes of Unethical Behavior
 Pressure
 Fear
 Greed
 Convenience
 Self Interest
 Legal Need
 Image
 Payback Principle
 Social Pressure
 Reward Motive

Why Misconduct Is Not Reported...
 belief that nothing will be done
 fear of retaliation
 fear of being viewed as a troublemaker

Sources of Ethical Norms
Fellow Workers
Family
Friends
The Law
Regions of
Country
Profession
Employer
Society at Large
Religious
Beliefs
The Individual
Conscience
Culture

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

Sources of Unethical Behavior
Abusive and intimidating behavior
“Bullies” behavior:

Is it ethical to:
 Shop online during company time?
 Using office equipment for personal use?
 Read personal emails while at work?

Libeling or slandering a client
1999
T.Y. LEE
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Sharing confidences without compelling
professional reasons
1999
T.Y. LEE
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Assaulting, causing physical injuries, or
placing clients in danger
1999
T.Y. LEE
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Discriminatory practices
1999
T.Y. LEE
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Withdrawing services precipitously
(abandoning a client)
1999
T.Y. LEE
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Failure to warn and protect the victim of a violent
crime
1999
T.Y. LEE
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Failure to exercise reasonable precautions with a
potentially suicidal client
1999
T.Y. LEE
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Promising “cures” for problems
1999
T.Y. LEE
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Coke & Pepsi in India
Today, more from the world of
product safety. This time the story
is about Coke and Pepsi, and
allegations that the versions of
their products manufactured in
India contain unacceptably high
levels of pesticides.
world’s biggest brand names,
known for wooing customers
around the world, are facing a
credibility crisis in one of their
crucial emerging markets.

Least Corrupt Countries
2-54

2 5 , 0 0 0 H I G H S C H O O L S T U D E N T S :
•62% cheated on exams at least once
•35% copied documents from Internet
•27% shoplifted
•23% cheated to win at sports
Personal Ethics
Honesty?
2-55

•F A L S E / M I S L E A D I N G A D V E R T I S I N G
•D E C E P T I V E P E R S O N A L S E L L I N G T A C T I C S
•P R O D U C T S A F E T Y A N D Q U A L I T Y
•U N S U B S T A N T I A T E D C L A I M S
•P R O D U C T L A B E L I N G
Ethical Concerns
Communications
2-56

T H E A C T O F T A K I N G S O M E O N E E L S E ’ S W O R K
A N D P R E S E N T I N G I T A S Y O U R O W N W I T H O U T
M E N T I O N I N G T H E S O U R C E
Ethical Concerns
Plagiarism
2-57

Improving Ethical Behavior in Business
Ethical decisions in an organizations
are influenced by three key factors
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How do you train your employees to be ethical to one and
all, whether in the professional realm or personal?
• A written code of conduct
• Define ethics to be maintained in an organization.
• Each employee should have one, including new hires.
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Training programs
• Organizations should focus on training in ethics at the
workplace.
• A few members from the top level management can lead the
ethics training programs.
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Performance feedback sessions should be
corrective in nature.
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Good Behavior should be
acknowledged.
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Role model
• Seniors behaving in a morally upright manner will set an
example for employees to follow.
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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.

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.

How can high ethical standards be maintained?
Management - Chapter 3
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Codes of ethics:
 Formal statement of an organization’s values and ethical
principles regarding how to behave in situations
susceptible to the creation of ethical dilemmas.
Areas often covered by codes of ethics:
 Bribes and kickbacks
 Political contributions
 Honesty of books or records
 Customer/supplier relationships
 Confidentiality of corporate information

Whistleblower
A whistleblower is an employee who reports real or
perceived wrongdoing under the control of his or her
employer to those who may be able to take
appropriate action.

“Whistleblower’s” Reluctance
 Didn’t believe action would be taken.
 Feared retaliation from mgmt.
 Didn’t trust confidentiality.
 Feared not being a team player.
 Feared retaliation from co-workers.
 Didn’t know who to contact.
 Nobody cares, why should I?

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

Pyramid of Social Responsibility
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CAPITAL PUNISHMENT
 Apart from the United States, few countries use the death penalty.
 Only China and Iran execute more people than the U.S.
 No member of the European Union uses it. Under the European
convention for the Protection of Human Rights and Fundamental
Freedoms, it is regarded as a human rights violation, so no nation can
be admitted to the European Union if it still has the death penalty on its
books.