01 an Overview

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Business Ethics: An Indian Perspective

1

An Overview


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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 rigours of logicalreasoning as other sciences.

as a science, involves systemising, defending andrecommending concepts of right and wrong behaviour.

.


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Principles of Personal Ethics

Personal ethics refer to the application of values ineverything one does.

Principles of personal ethics include:

1. Concern for the well being of others;

2. Respect for the autonomy of others;

3. Trustworthiness and honesty;

4. Willing compliance to law;

5. Basic justice: being fair;6. Refusing to take unfair advantage;

7. Benevolence: doing good; and

8. Preventing harm to any creature.


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Principles of Professional Ethics

The basic principles people are expected to follow in theirprofessional career are the following:

Impartiality: Objectivity; Trustworthiness and honesty;

Openness: Full Disclosure;

Confidentiality: Trust;

Due Diligence: Duty of care;

Fidelity to professional responsibilities; and

Avoiding potential or apparent conflict of interest


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What is Business Ethics?

Business ethics is the application of general ethical ideasto business behavior.

It is based on the principle of integrity and fairness and concentrateson the benefits to the stakeholders, both internal and external.Stakeholder includes those individuals and groups without which theorganisation does not have an existence. It includes shareholders,creditors, employees, customers, dealers, vendors, government and

the society.


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What is not Business Ethics?

1. Ethics is different from religion

2. Ethics is not synonymous with law

3. Ethical standards are different from cultural traits

4. Ethics is different from feelings

5. Ethics is not a science in the strictest sense of the term

6. Ethics is not just a collection of values


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Code of Conduct and Ethics for Managers

Managers must observe the following ethical values whileperforming their duties:

Impartiality

Responsiveness to public interest

Accountability

Honesty Transparency

Integrity



Evolution of Business Ethics over the yearsThe 1970s saw papers from the academic circle. Businessmenbecame more concerned with their public image and addressedethics more directly.

1974: the first conference held at the University of Kansas.1975: business ethics became institutionalised at manylevels through writings and conferences.1979: three anthologies on business ethics appeared:

(i) Ethical Theory and Business by Tom Beauchamp and NormanBowie;(ii) Ethical Issues in Business: A Philosophical Approach by Thomas

Donaldson and Patricia Werhane; and(iii) Moral Issues in Business by Vincent Berry



Evolution of Business Ethics over the years(contd.)

1980s: the subject was taught in several universities in the US

and Europe. There were also, by this time, many journals of

business ethics, apart from Centres and Societies established topromote ethical practices.

1982: Richard De George brought out Business Ethics, and

Manuel G. Velasquez published his Business Ethics: Concepts

and Cases.



Evolution of Business Ethics over the years(contd.)

1990: business ethics as a management discipline was well-established.

Parallel to these academic pursuits, the late 1980s and early

1990s saw increased concern for consumer rights, quality, safety,

price, customer service and environment in Britain.

Simultaneously with these developments, religion also lent itspowerful voice.



Importance and Need for Business Ethics A business organisation competes in the global market on its own

internal strength, in particular, on the strength of its humanresource, and on the goodwill of its stakeholders.

The value-based management and ethics that an organisation usesin its governance enables it to establish productive relationship withits internal customers, and lasting business relationship with itsexternal customers.

Real type situations (Tata Steel and Infosys) show that use ofethical practices in business creates high returns for companies.



Values and Ethics in BusinessA value is a view of life and judgement of what is desirable. It isvery much part of a persons personality and a groups 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 businessgoals and techniques to specific human ends.



Distinction between Values and Ethics

Values Ethics

Personal in nature (eg. a

belief in providingcustomer satisfaction andbeing a good paymaster)

Generalised value

system (eg. avoidingdiscrimination inrecruitment and adoptingfair business practices).

Offer alternatives tochoose from.

Provides generalguidelines within whichthe management canoperate.


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Why should Businesses act Ethically?The reasons for an organisation to be ethical include:

To protect its own interest,

To protect the interests of the business community as a whole sothat the public will have trust in it.

To keep its commitment to society to act ethically,

To meet stakeholder expectations.


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Why should Businesses act Ethically? (contd.)The reasons for an organisation 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 andcompetitors,

To protect their own reputations,

To protect their own employees, and

To create an environment in which workers can act in waysconsistent with their values.


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Ethical Decision MakingNorman Vincent Peale and Kenneth Blanchards 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.

The Eleventh CommandmentThou shall not be ashamed whenfound, meaning when hauled up for unethical behaviour, if ones

conscience is clear, then there is nothing to be ashamed of.


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How Corporations Observe Ethics in theirOrganisations?

Publish in-house codes of ethics to be strictly followed by all theirassociates

Employ people with a reputation for high standards of ethicalbehaviour at the top levels

Incorporate consideration of ethics into performance reviews.

Give rewards for ethical behaviour.


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How Corporations Observe Ethics in theirOrganisations? (contd.)

SEBI, CII and such other organisations representing corporationsissue 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 andcorporate governance as part of their curriculum.

Conduct an Ethics Audit


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Corporate Governance Ethics

Corporate governance is a set of rules that governs theadministration and management of companies.

Its goalposts are transparency, integrity, full disclosure of financialand non-financial information, and protection of stakeholdersinterests.


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Benefits from Managing Ethics in WorkplaceThe many benefits that arise from managing ethics in the workplaceare:

Attention to Business Ethics improves Society

Ethical practice contributes towards high productivity and strongteam work

Changing situations require ethical education

Ethical practices create strong public image

Strong ethical practices act as an insurance


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Characteristics of an Ethical OrganisationMark Pastin provides the following characteristics of ethicalorganizations:

At ease while interacting with diverse internal and external

stakeholder groups.

Obsessed with fairness.

Individual responsibility, with individuals assuming personalresponsibility for actions of the organisation.

See their activities in terms of purpose.


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Recognising Ethical OrganisationsThere are certain characteristics by which we will be able to identifyan ethical organization:

On the basis of Corporate Excellence

In relation to the Stakeholders

In relation to Corporate Governance

01 an Overview

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