3
1. Meaning of Ethics:-
Ethics in Latin Language is called “Ehicus” and in Greek, it is called “Ethicos”. In fact this word has originated from ‘ethos’ meaning Character or Manners. Ethics is thus said to be the source of morals -------- moral principles, recognised rules of conduct. The character of a man is expressed in terms of his conduct. Ethics refer to the code of conduct that guides an individual while dealing in a situation. It relates to the social rules that influence people to be honest in dealing with the other people. Ethics are the principles of behaviour that distinguish between the right from the wrong. According to Oxford Dictionary, Ethics is related to morals. It is the science of morals which is concerned with human character and conduct, capable of knowing right and wrong. Ethics concern the rightness or wrongness of human conduct. It describes what is right and what is wrong in human behaviour. These rules tell us when our behaviuor is acceptable and when it is disapproved and considered to be wrong. These are a set of rules that define right and wrong conduct.
MEANING OF BUSINESS ETHCIS
Business Ethics is the Evaluation of business activities and behaviour as right or wrong. Ethical conduct confirms with what a group or society as a whole considers right behaviour. In the simplest forms, Business Ethics are moral principles that define right and wrong behaviour in the world of business. What constitutes right and wrong behaviour in business is determined by the public interest groups, and business is organizations, as well as an individual’s personal words and values.
Business Ethics are the desired norms of behaviour exclusively dealing with commercial transactions. Business Ethics, in short, can be described as the systematic study of moral matters pertaining to Business, industry or related activities, institutions or practices and beliefs. These are rules of business conduct by which the proprietary of business activities may be judged. But also relates to the behaviour of managers.
Business Ethics concentrate on moral standards as they apply to business policies, institutions and behaviour. It is a specialised study of moral right or wrong. Today, more and more interest is being given to the application of ethical practices in business dealing and the ethical implications of business as Business Ethics are nothing but the application of ethics in business.
1
Introduction to Business Ethics Leads To Character of a Man
-------- Decided by
Taken together
Conduct of a
Service of
person
action
considered as
Good or Bad Right or Wrong Moral or Immoral
By which we can Judge again
Moral
Requires
Know as Moral Judgment
Standards
Ethics thus can be considered as the source of Character of a person expressed as Right or wrong conduct or Actions.
AN UNDERSTANDING OF ETHICS :In any organization, from top management to Employees at all levels, Ethics is considered as everybody’s business. In business it is not just only achieving high levels of economic performance, but also to conduct one of business’s most important social challenges, ethically. The problems in a business are multifold. Many of the vendors offer Kickbacks to the buyers, for the purchase of their goods and securities. These bribes are many a times hefty and within a short period, the buyers make plenty of money. A number of Ethical Problems in business can arise”-\
CASE STUDY NO. 1 : -
When orders dropped in any manufacturing company, the Supervisor is asked to terminate a few employees to save cost. The Supervisor knows that some of them though loyal, hard working, they have to be terminated to save his skin. He knows it is unfair to terminate the employees and still he is helpless. Even if he is given two months termination time by the Company, he will not reveal his plan of termination to the employees with a fear that employees will quit while still needed or not work as hard as they usually did after being told. The Supervisor had to entrée all company rules and policies. For him, the ethical dilemma relates to two dimensions :- (I) Personal (II) Professional.
CASE STUDY NO. 2 : -
In another case, a senior Librarian who was very casual and negligent in his attitude, had to make one of his weak Assistant a scapegoat at the end of the year when Library Inventory was checked and nearly 500 books were short. The Senior Librarian know very well that his Assistant is highly loyal, sincere and honest in his work and such a thing would not have happened from him. However, the reason of the books lost could not be found out by him and he had to put the blame on his junior who is mentally weak and innocent. Otherwise, he had to take the full blame. He took the decision of putting the blame on his junior rather than on himself. There would be many episodes like this, raising ethical question for a number of reasons. Sometimes society is harmed. At other times the individual makes profit in an unfair way at the expense of others. We all know the story of the clever monkey that ate the curd rice and smeared it on the face of the goat. The Goat was punished severely by his master who thought that it had eaten the same A business firm suffers many a times with higher costs when the firm has to pay hidden costs for its suppliers.
ETHICAL RULELS ;Ethical rules are guides to moral behavior. For example, all Societies have ethical rules and these are all basic rules of behavior which are of much use for the presentation and continuation of organised life. I.Forbidding II. Buying III. Stealing IV. Deceiving and V. Harming others. Similar to these, other ethical rules are.:1.Honesty 2.Keeping Promises 3.Helping Others and 4.Respecting the right of others. SOURCES OF ETHICS The earliest recorded Codes of Conduct found in the Bible are:1.Honour your father and your mother, that you may have a long life in the land which the Lord, your God is giving you. 2.You shall not kill.
3.You should not commit Adultery.
4.You shall not steal.
5.You shall not bear false witness against your neighbours.
6.You shall not covet your neighbour’s house; you shall not covet your neighbour’s wife, nor his male or female slave, nor his ox or ass, nor anything else that belongs to him or her.
PRIMARY SOURCES OF ETHICS :-
1.The legal system. 2.Religion 3.Genetic Inheritance. 4.Philosophical System 5.Code of Conduct 6.Cultural Experiences.
1. The legal System:-
Laws represents a rough approximation of society’s ethical standards. Thus the laws serves to educate about the ethical causes in life. 2. Religion:-
Religious morality is clearly a primary force in shaping our societal ethics. The applicability of religious ethics to the business community is the concern. 3. Genetic Inheritance:-
In recent years, Socio- Biologists have lots of evidence and arguments to suggest that the evolutionary forces of natural selection influence the development of traits such as cooperation and alteration that lie at the core of our ethical systems. 4. Philosophical System:-
To the Epicureans the quality of pleasure to be derived from an act was the essential measure of its goodness. Philosophies have been instrumental in our society’s moral development.
5. Code of Conduct:-
The primary categories of codes are ,(1) Company codes, (2) Company operating policies, (3) Codes of Ethics. 6. Cultural Experience:-
The rules, customs and standards transmitted from generation to generation are considered as guide lines for appropriate conduct. Individual values are shaped in large measure by the norms of the Societt.
OBJECTIVE OF ETHCIS:-
The primary objective is to define the highest good of man and set a standard for the same. Here we have to consider ethics to deal with several interrelated and complex problems which may be of psychological, legal, commercial, philosophical, Sociological and political in nature. The other objectives are:1.Study of human behaviour, making evaluative assessment about them. 2.Establishing moral standards and norms of behaviour.
3.Making judgment upon human behaviour based on these standards and norms. 4.Prescribing moral behaviour and making recommendations how to behave or vice-versa. 5.Expressing an opinion or attitude about human conduct in general.
6 SCOPE AND OBJECTIVES OF BUSINESS ETHICS :-
Ethical issues exist at all levels of business activity. As per Peter Pratley, Business Ethics has a two fold objective:1.Evaluates human practices by calling upon moral standards. 2.Gives prescriptive advice on how to act morally in a specific kind of situation. The first objective implies Analysis and Evaluation. It leads to an ethical diagnosis of past actions and events. The second objective is to provide the Therapeutic advice. It suggests slowdowns and policies when facing the present dilemmas and future dangers, based on well- informed opinions. This specially requires an identification of relevant stakeholders and a clear understanding of the vital issues at stake.
SCOPE OF BUSINESS ETHICS:1. STAKEHOLDSERS LEVEL :I. Employees:-
− Security of Job − Better working condition − Better Recommendation − Participative Management − Welfare Facilities. II.Customers:-
− Better quality of goods. − Goods and services at reasonable price. − Not to corner stocks and create securities. − Not to practice discriminatory pricing. N − ot to make fake claims about product
in
advertisements.
− −
III.
Shareholders:-
− Ensure capital appreciation. − Ensure steady and regular dividends. − Disclose all relevant information. − Protect minority shareholders interest. − Not to window dress balance sheets. −Protect interest in times of merges, amalgamations and takeovers.
IV. Bank and other lending institutions:-
− Guarantee safety of borrowed funds. − Prompt repayment of loans. V.Government:-
− Complying with rules and regulations. − Honesty in paying taxes and other dues. − Acting as Partner in the progress of the country. 2. PERSONAL POLICY LEVEL :-
−Not to use office Car, Stationary and other facilities for personal use − Not to fall prey to short ends. − Not to misuse others for personal. − Not to indulge in policies to gain power. − Not to spoil promotional chances to others. − Promise keeping − Mutual help.
3. SOCIETAL LEVEL :-
− Concern for poor and downtrodden.
−No discrimination against any particular section or group. − Concern for clean environment. − Preservation of scarce resources for prosperity. − Contributing to better quality of life. 4. INTERNAL POLICY LEVEL :-
− Fair practices relating to requirement, compensation, layoffs, perks promotion etc. − Transformational leadership to motivate employees to aim at better and higher things in life. − Better communication at levels.
CASE STUDY COLD ANNEALING OF STEEL
Work on bridge construction was going on over the river Ganga. The contractor who had been awarded the contract had quoted the lowest rates on the condition that the Executive Engineer would allow him to use hot annealing of steel, where he would save nearly Rs. 2, 00,000/- per ton. The bridge required fifty thousand tons and the contractor was to save ten crore
of rupees, if the Engineer overlook the provision of cold annealing. The Contractor was ready to share half of the Extra profit with the Engineers. The Executive Engineer Incharge had agreed to the stipulation. He knew that a lay person would never be able to decipher the difference between cold and hot annealing of steel. Usually the auditing and costing people belonged to that category and the Executive Engineer was sure that he would be able to keep the audit team happy by looking after them and by giving expensive gifts. The Executive Engineer had not considered the possibility of a new young Assistant Engineer joining the team for the bridge project. On his first inspection tour, the Engineer stopped the work on the bridge site after finding out that hot annealing was being carried out. When the contractor told him that before stopping the work he should consult his boss the Executive Engineer, who in fact authorised the hot annealing by explaining that the hot annealing would yet take care of the bridge for at least the next 10 years and by that time he would have retired from service. The assistant Engineer remained adamant on his decision and decided to report the matter to the Executive Engineer.
Assistant Engineer: You may not be aware that on the bridge site, the Contractor is cheating the Government by using not annealed steel. Thereby risking the safety of the bridge. I have stopped the work, although the contractor was justifying hot annealing as you had approved it. Of course, he could not show any written approval given by you. Executive Engineer: I believe what you did was the right decision from a youngster like you. You have no experience of building bridges, while I am veteran in this game. I can recount at least ten bridges which I got constructed and all of them have stood the test of time, by being in use for 10 years or more. The Assistant Engineer had read the reports of the collapse of the Mandovi river bridge in Goa, which was constructed by the Executive Engineer but he kept quiet about it. The Executive Engineer said you have had a tiring day. Go home and relax. You will find your wife in quite a good mood tonight.
The Assistant Engineer found a new Thirty inch TV had been installed in his house, courtesy the Contractor.
Question for the students:1.Accept the gift and fall in line with the Executive Engineer. 2.Politely return the TV and yet kept protesting with the boss about the Un-ethical practice of the contractor.
3.Report the matter to the Chief Engineer; even though he has a sneaking suspicious that perhaps even he was involved in the racket. 4. Report the matter to the Minister and the Police.
Conclusion:-
It is the job of the CEO to organize training programmes in ethical business for the new entrants in the organization and also have refresher course for the existing employees. Such training programmes need the total support and the approval of the Board of Directors. The training should be done by using real life case studies, where free and frank views need to be expressed by the participants without any fear of persecution at a later date. The HR Department should ensure that no training programme is organised without an element of training on Ethics. The employees must be encouraged to report on unethical behaviour of any employee (at whatever level he or she works in the organisation) found guilty. For this purpose the CEO has to build the organisational culture, which is conducive to ethical behaviour and of non tolerance of unethical behaviour. Each member of the company, new and old, must be given a copy of the code of conduct for the employees with continuous updates to it as and when made. The CEO plays an integral role in the conduct of business of the organisation and in today’s competitive world he can servive in the market place only by conducting himself ethically and creating the organisational culture, which fosters such behaviour among other employees.
CASE STLUDY NO. 4 :The marketing manager is visiting a top office of his customer’s firm, who has to place a large order on the firm. Top Officer:- I think you have come on a wrong day. I am very disturbed today. My college going son has been pestering me to buy a new Motorcycle, worth Rs. 50000/-. I do not have spare money today to buy it. Even my wife joined my son and I do not get any peace at home. Naturally, I am in no condition mentally to take a decision on your tender. Marketing Manager:- Sir, why do you worry? Just give me a cheque in the name of Ram Automobiles for Rs. 50000/- and the Motorcycle will be at your house by tomorrow. Top Officer:- Why do you want the cheque? It May bounce! Marketing Manager:- Sir, these days the Vigilance has become active and I am only booking at your safety. The cheque will be encashed, please keep that much money in the Bank. Next day the Motorcycle receipts for the cheque and an envelope with Rs. 50000/- cash was delivered at the officer’s house.
CASE STUDY NO. 5 :-
Distributor:- I know my quota is only 7’ tons per month. If you can allot 70 tons instead, I promise to place Rs. 1000/- per ton, that is Rs. 70000/- per month in any Bank account you name in India or even in Switzerland. After 6 months, if you keep starving other distributors, I will double the amount. We both will become richer by your decision and since other distributors will keep getting some quantities, they will not complain. If any one complains I will settle with him by going him some quantities. Top Officer:Mr. Distributor, you have come to the wrong place. I do not play such games. Now you better leave the place or I will have you thrown out of my office by calling our security guards. The story does not end here. The Distributor writes letters to the concerned Minister, the Prime Minister and the Managing Director of the firm saying that the office is depriving him of his legitimate quota because on the last visit to his office, the officer had asked for Rs. 2000/- per ton on being allotted minimum quota of 70 tons. Lucky for the officer, his implacable reputation as a rare honest officer came to his rescue, when the Managing Director assured the concerned persons about his honesty.
11 CASE STUDY NO. 6 :The boss of an International Firm in India orders supply of 10 Tank Wagons of white oil (used in dry cleaning process) to be delivered to one of the Major Distributors of the of the Firm. This high demand came up because the boss came to know that the white oil can be mixed to the extent of up to 50%in petrol and the cars would run smoothly for at least 3 years is long enough period, and cars mostly go bad in this period anyhow. On the financial side, the distributor would make Rupees hundred thousand per wagon and he was agreeable of giving the boss Thirty Thousand per wagon. It would amount to Three hundred thousand per month and in the next 4 years; the boss would have enough money to retire in peace. All went well till some wise guy the boss’s junior, stated prying into the deal and in less than 3 months, the boss who was to take over as the Top Boss in the country, was given the sack. It was his good luck that he was not handed over to the Police. The students have to analyse the case for the following:1. The junior who disclosed the fraud risked his job. Was it the right thing to do? 2. Other juniors also had come to know about it and some had in fact abetted in the crime. How should the firm treat them, in view of the fear under which they use operating? The boss in India rules supreme as he keeps a sword hanging over the head of his employees, especially, those who are not part of a union, and with this fear psychosis the employees are ready to do anything ordered by the Boss. These are people, who are extremely honest in their private life, while they succumb to the boss’s orders during office operations. Then these are others, who do the illegal tasks ordered by the Boss willingly, almost eagerly, ready to deliver the bribe to the right person as they would take a handsome cut from the bribe as personal insurance against any problem they may face as a result of the act of giving the bribe.
CONCLUSION OF THE CASE STUDY There are two types of firms: Some firms have stayed on the right track of ethical business for a long time. These are a few elite firms, who have been carrying on their operations on ethical moral and even religious lines. Such firms keep a steady but slow growth since they do not believe in get rich quick. Techniques of the present day business. In fact in the 18th century, rarely a firm could be found indulging in unethical operations. They were turned to their social responsibilities. The emergence of unethical firms can be traced to the twentieth century in India for the following reasons:1. Government controls on Private Business, which result in quota, permit raj. 2. Powers vested with even the junior government officers who demanded benefits each time the firms wanted a favours, even if it was strictly under the law.
3. The Government departments like the public utility offices had an axe to grind with the firms operations and they had to pay these people money for letting the firm carry out its legitimate operations. 4. Government approvals, Licenses, No objection certificates all had a price and some of them are still present giving opportunities to Government officers to make money.
Most persons are quick to blame the system, the Government for the state of affairs. They believe that the laws are made for letting the Government officers make as much money as they can. Today, the first kind of honest firm has become a rarity as the others have taken over the business world. It must be argued that it is the businessmen who have corrupted the Government officers for their benefit and in the process unleashed a major Frankenstein, who they find different to tie down.
TYPES OF ETHICS :There are normally three types of Ethics. 1. Transactional Ethics are performed on the basis of connected interests of Equality, Honesy and reciprocity. 2. Participatory Ethics are privileged part of Business Ethics for common good and common interest. 3. Recognitional Ethics are one’s moral rights vis – a – vis moral duty. For example, the Employees aged 57 to 60 years morally obliged to retire to give way to some younger colleagues, who being in the midst of their careers can rise to more weighty claim to a job. There are also 3 other important Ethics as below:-
PERSONAL ETHICS :The Personal Ethics reflects general expectations of any person in any society, acting in any capacity. The Principles of Personal Ethics include:1. Concern for the well – being of others. 2. Trustworthiness & Honesty. 3. Willing compliance with the law. 4. Refusing to take unfair advantage.
5. Preventing Harm.
PROFESSIONAL ETHICS :The Professional Ethics are written codes containing rules of conduct and standards of behaviour based on the principles of Professional Ethics, which include: 1. Impartiality. 2. Objectivity. 3. Confidentiality. 4. Avoiding potential or apparent conflict of interest.
13
BUSINESS ETHICS “The Business Ethics are desired norms of behaviour exclusively dealing with actions related to performance of duty. 1. Moral principles that define right and wrong behaviuor in the world of Business. 2. The desired norms of behaviour exclusively dealing with commercial transactions. 3. Systemic study of moral matters pertaining to Business, Industry or related activities or practices and beliefs. 4. It is a specialised study of moral right or wrong and the application of Ethics in Business.
VALUES OF ETHICS :Values are a set of principles that will govern behaviour in the pursuit of a vision. Values are a general term referring to those things which people regard as Good, Bad, Right, Wrong, Desirable, Justifiable etc. We can speak of “truth Values” (true or false) and the value of judgments which are statements about what is Valued, Sound, Deplorable, Skilled etc. Business is driven by Values. Values determine :- (I) What Business people do? (II) How other react? Values are potent sources of conflict as well as of Co-Operation, Control and Self – control. Through values, business can and does create value in the form of goods, services, employment etc. It is also noted that in extreme cases business and whole industries can cease to function because their continued existence to inconsistent with certain powerful values. Values are of many types, like Cultural values, Moral Values, Ethical Values, Managerial Values. Hence, values are collective representations of what constitutes a good life or a good society. Health is a value and self respect and so are democracy, tolerance and freedom. The basic premise is that these values not across culture and time.
NORMS OF ETHCIS :Norms are expectation of proper behaviour. These are criteria of behaviour. Each individual within the society has a set of norms, beliefs and values that together form his or her moral standards. Norms are the ways an individual expects all people to act with a given situation. In India lower level employees address the higher level at the time of starting the discussions as “SIR” to show respect to them. The same is not found in USA, as they call their bosses by name as “MR”. This may look awkward in the beginning for the Indian students or Indian employees who go for employment to USA. The norms are not published, may not be obeyed and cannot be enforced. It is not consistent nor universal. Norms are just the way we feel about behaviour. Norms are collective expectations regarding a certain type of behaviour, for example, Brush your teeth twice a day, keep your premise clean, Chew the food properly while eating, etc.
BELIEFS OF ETHICS :The beliefs in an ethical code are standards of thoughts. These are the ways that the Senior Executive in the organisation wants others to think. The intention is to encourage ways of thinking and patterns of attitudes that will pave way towards the wanted behaviour. It is expressed in a positive form in an ethical code. “Our first intention to serve our customer” is an example of a positive belief that commonly appears in Code of Ethics. Beliefs are criteria of thought. They are the ways an individual expects people to think about given concepts.
15
For Example:- (i) I believe in the present method adopted by University regarding teaching. I expect others to recognise the worth of that concept and accept it as a form of teaching. (ii) Similarly, I believe I energy conservation or afforestation and I expect other people to recognise the importance of that idea and accept it as a good worth preceding in that direction.
MORALITY OF ETHICS :Morality is the standards that an individual for a group what is right and wrong, good and evil. The term morality is derived from the Latin root “ Morales” means “Behaviour” Moral standards examples could be “ Integrity is good Dis honesty is Bad. It is right to tell the truth and wrong to endanger the lives of others.” So, Moral standards includes the norms we have about the kinds of action we believe are morally right and wrong as well as the values we place on the kinds of objects we believe are morally good and morally Bad. Moral Norms are expressed as general rules or statements such as, “Always tell the truth.” It is wrong to kill the innocent people etc. Moral Value are expressed as statements describing objects that have worth, such as, “Honesty is good. Anger is bad.” Moral Actions pertain to set of actions engineered by the characters and expressed through behaviours. In Gandhiji or J.R.D Tata we find certain set of activities like (I) Honesty, (II) Truthfulness, (III) Sincerity, (IV) Generosity, (V) Transparency, (VI) Co-Operation, (VII) Integrity and (VIII) Strong will power etc.
16
HOW DOES ETHICS HELP:1. Help maintain a moral Course at all times. 2. Take right decisions at all times. 3. Cultivates strong teamwork and productivity. 4. Supports employee growth and meaning. 5. Helps excuse that policies are legal. 6. Promotes a strong public image. 7. Helps to pursue Business Excellence. 8. Helps commitment towards equal opportunity for personal recognition and career development.
17
NORMATIVE ETHICS IN MANAGEMENT
A Normative Study is an investigation that attempts to reach normative Conclusions. - Conclusions about what things are good or bad? - About what actions are right or wrong? A normative study aims to discover what should be. Ethics are the study of moral standards whose explicit purpose is to determine as far as possible which standards are Correct or supported by the best reasons. It attempts to reach conclusions about moral right and wrong and moral good and evil. Though Ethics are a Normative Study, the Social Sciences engage in a Descriptive Study of Ethics. A descriptive study is one that does not try to reach any conclusions, about what things are truly good or bad or right or wrong. Instead, it attempts to describe or explain the world without reaching any conclusions about whether the world is, as it should be.
Normative Ethics in Management The Holistic Theory
Eternal Ethics
Empirical Ethics
Teleological Theory
Ethical Egoism
Uttitariam Principal
Deontological Theory
Rights Principal
Justice Principal
Principals of Eternal Ethics believe in the core divinity of individuals . Holistic Theory believes that there are two different approaches in Ethics. The eternal and empirical. These could be read in the Bhagwad Geeta shlokas 15 and 16. “The world consists of the empirical and the externals. All the worldly things come under the empirical self, whereas the timeless, spaceless dimension comes under the Eternal.” Empirical is the one whose knowledge is got from experiences and induction only whereas Eternal is ever lasting, an appellation of God. Man is not only potential divine but also divine in all our behaviour and actions. It is this intrinsic divinity that takes place not only in human dimension but also in other dimensions also. Man is considered as an embodiment of the divine. It is the divine who thinks and gets in the garb of man. Biodiversity is the diverse revelation of the same divine in different directions and proportions. The Teleological and Deontological theories are utilitarianism and Kantianism. Teleological Theory determine ethics of an act by looking to the consequences of the decision. Rightness of actions is determined solely by the good consequences they produce.
Deontological theory determines the Ethics of an act by looking at the process of the decision. It does not appeal to consequences (Kantian Ethics).
ETHICAL DECISION MAKING:Ethical issues arise out of every day business decisions. An individual’s Personal beliefs and the moral atmosphere of the organisation in which one works significantly after the behaviour one exhibits. Many philosophers, organizational relationship and opportunity influence behaviour as does the organizational environment. Opportunity Organisational Environment
Individual Behaviour
Organisational
Moral
Behaviour
Philosophy
Individual Behaviour components, The factors influencing Behaviour . Example:If any garment manufacturer selects a small place in India where these is no Industry and make improvements in the place through:Brought a higher standard of living to the local people.
− − − −
Provided with opportunities. Provided Skill. Produce quality products at a competitive price. Products used by local people also to meet their requirements.
But paid kickback to the local State Government officials for operation. To discuss the Role of Moral Philosophies in decision making:Moral Philosophy is a set of principles setting forth what is believed to
be the right way to behave. Role is something that is moral conforms to a standard of
accountability. A philosophy is a study of the general principles of a subject such
as Morality. Individuals learn the principles through socialization by family members, social groups and formal education.
SUGGESTIONS FOR ETHICAL DECISION MAKING:-
1.Top Management can improve behaviour. The managers should be quick to consider ethical principles in their decision making by improving their understanding to develop their moral philosophies. 2. Code of Ethics improves decision making: - Business establish codes of Ethics and corporate policies on ethics to foster ethical decision making by reducing the opportunity for unethical activity. Enforcement of corporate policies is a common way of dealing with ethical problems. The establishment of corporate policies and codes of ethics helps employees understand what is expected of them. Understanding how individuals choose their standards of Ethics and what prompt a person to engage in unethical behaviour may reverse the current trend towards unethical activity in Business. 3. Interactions with Peers and other colleagues: - People learn ethical behaviour from interacting with individual also in Social, Business and other groups. Thus Business should examine their structure to see how policies, rewards and punishments affect ethical beahaviour. Without companywide standards for behaviour employees generally base ethical decision on their observation of Peers and Management.
20
4. Control System:- If a Company is to maintain ethical behaviour, its policies, rules and standards must be worked into its control system. Reducing unethical behaviour is a business goal, not very much different from increasing profits. The business set a goal – achieving greater ethical behaviour among company employees and measures the out come. Control System
Number of Employees
Not Making
Ethical Decision
Strengthen the
Take
standards and
corrective
Policies
Decision
Then Company to Investigate
Why?
Ethical behaviour occurs only when a plan is developed and successfully implemented, policies.
through stronger re-inforcement
of current standards and
21 ETHICAL ISSUES THAT ARISE FOR MANAGERS:The Ethical issues that arise for Managers are indeed for all people, including Employees, Customers, Consumers and Members of the public. Corporate activities affects us all and so the conduct of business is a matter of concern for everyone with a stake in ethical management. The ethical issues are regularity faced by the Managers in the Ordinary Course of their works. There are also major issues debated in the Parliament and scrutinised by the courts, This is because ethical issues in Business are closely tied to important matters of Public Policy and to the Legislative and Judicial Processes of the Government. REASONS FOR ETHICAL PROBLEMS:-
1. Cross Cultural Contradiction:These problems arise and occur because Corporations do business in other societies where ethical standards differ from those at home.
2. Competitive Pressures: When Companies are squeezed by severe competition, Managers sometimes engage in un-ethical activities to beat out a competitor.
3. Personal Gain: -
Personal gain or even greed, causes some ethical problems. Business sometimes employs people whose personal values are less than desirables.
Organisational Goals:-
Ethical conflicts in Business frequently occur when a Company pursues goals or uses methods that are not acceptable to some of the Employees. Managers are the key people to investigate whether a Company will act ethically or un-ethically. As major decision makers and policy makers, they have more opportunities than others to set an ethical time for the Company. HOW TO USE ETHICAL REASONSING:What business needs is a set of guidelines for thinking about ethics. The guidelines should help Corporate managers and employees.
− Identify the nature of the ethical problems. − Decide which course of action is likely to produce the most ethical results. 3. Methods of Ethical Reasoning Are
− Utilitarian − Rights − Justice Utilitarian are comprising benefits and costs where an action is ethical when net benefits exceeds net costs. It’s limitation is, it is difficult to measure some human and social costs. Majority may dis-regard rights of minority. Rights: - The critical determining factor is to respect the basis human Rights, where it is difficult to balance conflicting Rights. Justice: - Here an action is ethical when benefits and costs are fairly distributed. But it is difficult to measure benefits and a cost as these is lack of agreement on fair shares. The levels of Decision - making occurs in 3 distinct levels:-
− Level of the Individual.
− Individuals in the work place require to make a decision about their own response – whether to live with the difficult boss or blow the whistle?
− Level of the Organisation. Problems at the level of the organisation – To bring out some organizational change e.g. Sexual Harassment an individual matter for the person suffering the abuse.
− Level of the Business System. Problems resulting from accepted business practices cannot effectively be addressed by any single organisation, much less a line individual. The Individuals are faced with questions about ethics in their relations with customers, employees and members of the larger society. Frequently the ethical correct course of action is clear and people in Business act as per that. Exceptions occur, when these is uncertainty about ethical obligations in particular situation or when considerations of ethics come into conflict with practical demands of Business e.g. Sales Representative not sure about the extent to which he is obliged to provide information about possible delays in Delivery to Customers. In deciding on an ethical course if action, we can reply to some extent on the rules of right conduct that we employ in everyday life. Deception is wrong (e.g. whether we deceive a friend or a customer) One of the feature that distinguishes business activity is an economic character. In the world of business, we interact with each other not as family members, friends or neighbours but as Buyers and Sellers, employers and Employees and the like Employment is also recognised as a special relation with its own standard of Right and Wrong. Employers are generally entitled to hire and promote whomever they wish and to lay off (or terminate) the workers without regards for the
