2.Ethics and Values in Business

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RELEVANCE OF ETHICS

AND VALUES IN BUSINESS

August, 2010


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DEFINITION OF ETHICS

Dictionary meaning: system of moral

principles, rules and conduct

The origin of this word is from ETHOS which

means Character

Ethics is defined as the ability to distinguishbetween right and wrong and to act

accordingly


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WHERE DOES ETHICS COMES FROM?

Religion

Environment

Teachers & Parents


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ALL HAVE ETHICS AND VALUES

Whether we derive a code of ethics from religious

beliefs, a study of history and literature, or

personal experience and observation: we can all

agree upon some basic values


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SWAMI VIVEKANANDA AND ETHICS

He was of the view that the basis of Indian

subjectivity lies in the belief of GOD

Supreme Oneness is the rationale of All Ethics

and Morality

He suggested the Fundamental Law of Ethics: Do

not injure others, lover everyone as your own selfbecause the whole Universe is One


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MORE ON ETHICS

Ethics is the degree of faith in Oneself

Ethics is essentially a matter of concern of inner

contents of Individual

Ethical Person is the person of integrity andcharacter who brings the same from the

Organization


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WHAT ARE BUSINESS ETHICS?

Business ethics is defined as a process forintegrating values such as honesty, trust,

transparency and fairness into its policies,

practices and decision making.

Business ethics is therefore inherently linkedwith corporate governance.

The importance of business ethics cannot be

denied.

The old English proverb as you sow so shall

you reap is indicative of the significance of

business ethics.


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BUSINESS ETHICS

Comprises principles and standards thatguide behavior in the world of business

Is right or wrong, acceptable or unacceptable

behaviorwithin

the organization Is determined by key stakeholders


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KEY CAUSES OF UNETHICAL BEHAVIOR

Meeting overly aggressive financial or business

objectives

Meeting schedule pressures

Helping the organization survive Rationalizing that others do it

Resisting competitive threats

Saving jobs


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KEY INFLUENCES ON ETHICAL BEHAVIOR

Personal values

Supervisor influence

Senior management influence

Internal drive to succeed

Performance pressures

Lack of punishment

Friends / co-worker influence


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LARGE COMPANY VS. SME

A firm which applies ethical practices alsoexpects to be dealt ethically.

These expectations and consequent adoption ofethical practices create chain effect in terms ofpromoting ethical practices.

While the larger firms have already developedtheir reputation by adopting these ethics, SMEsaround the world are increasingly becomingaware of the importance of good, trustingrelationships with customers, employees,

suppliers and the community. Moreover, due to their linkages with larger firms

through supply chains SMEs are increasinglyasked about their social and environmentalpolicies when developing their ventures with

large firms.


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WHAT IS UNETHICAL?

Dubious financial deals by managers, accountingscandals of some world firms, including Satyam

Corruption in the companies

Mismanagement in corporate groups

Irresponsible action of high-level executives

Concentrated and vast manipulations

All dominate the headlines and put the economy into

an altogether dubious light

Raise doubts about the competence and the good will

of the corporates


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COMMON UNETHICAL BEHAVIORS

REPORTED BY EMPLOYEES

sexual harassment

lying on reports or

falsifying records

conflicts of interest

theft

lying to supervisors

discrimination

drug or alcohol abuse

improper accounting

procedures

violation of

environmental laws

gift/entertainmentviolations


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SUCCESS AND ETHICS -

A CONTRADICTION ONLY AT FIRST SIGHT

An enterprise can only survive if is accepted by

its social environment

It has to strive for credibility

It has to fulfill the demands of its influencegroups

To be successful in todays world, the company

has follow ethical practices


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SITUATION 1


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SITUATION 2


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SITUATION 3


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SITUATION 4


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WHISTLE-BLOWING


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REQUIREMENTS FOR ETHICS IN AN

ORGANIZATION

Clear Vision

Open Communication

Ethical Team

Commitment to ethics Equitable (Justice to all)

Morally correct

Good and fair

Appropriate to situation


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WHO IS RESPONSIBLE FOR CREATING

ETHICS IN ORGANIZATIONS?

The creation of an ethical organizational culture

resides with leaders and followers

Leadership by nature demands that leaders be

the front runners in establishing an ethicalculture


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HOWTO MANAGE ETHICS IN ORGANIZATIONS?

Top Management

Code of Ethics

Ethics Committees

Ethics Training Programs Ethics and Law


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WHY ARE ETHICS IMPORTANT?


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SUMMARY-ETHICS ARE IMPORTANT? Investors use corporate practices and values as

primary considerations in their decision-making

As customers are becoming increasingly aware of theirrights, they value ethical practices.

Adopting ethics can help to build reputation of

businesses Promoting reputation can help in building customer

loyalty and increase in revenue

Attracting talented workforce and employees as wellas improved performance of existing employees

increasing productivity Compliance with regulations e.g. labour laws and

environment etc

Collaboration with other firms both domestically andinternationally


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RELEVANCE OF ETHICS TO BUSINESS IN SME

SMEs in the developing countries lack awarenessand understanding of the importance of business

ethics and its advantages

Some of these advantages may not be visible to

these SMEs in the short-term e.g. theseenterprises would argue that reputation or brand

management is not important for them

This is a result of absence of long-term vision and

focus on survival in short-term The reason is obvious: SMEs are more vulnerable

to shocks and are focused on surviving in the

short-term


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CONCLUSION

2.Ethics and Values in Business

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