Business Ethics. Evolution of Thoughts First Phase License Quota Permit Raj- (Independence- late 1960s) Second Phase- Socialistic frenzy (1970- mid.

Business Ethics

Evolution of Thoughts First Phase License Quota Permit Raj-

(Independence- late 1960’s)

Second Phase- Socialistic frenzy (1970- mid 1980’s)

Third Phase- Economic Reforms, 1991

Reasons for Evolution of BE Globalization and Decentralization of

business Growth of Media- Co. are being held

increasingly accountable for their ethical conduct

International Agreements and Actions- to fight against corruption and bribery around the world

Global Initiatives Global Sullivan Principles- Includes

Corporations, Higher Education and Civic Involvement

SA8000- created in 1997, by SAI and CEP is a standard based on commitment to establishing a cross country standard for workplace. Focuses on Labor Rights.

United Nations Global Compact- Kofi Annan (July 31,1999) at Davos, CSR, 9 principles- Human Rights,Labour standards & Environment.

Caux Principles The Caux Round Table consisted of

group Of International Executives. Shared a belief that business

organizations can be powerful force for +ve change

Two basic ethical ideals: KYOSEI and HUMAN DIGNITY

Kyosie and Human DignityKYOSEI- means “ living and working

together for the human good”

Human Dignity can be defined as “value of each person as an end”

Shared values, including commitment to shared prosperity are important to global as well as communities of smaller scale

Foundation for actions by Business Leaders Principle 1: The Responsibilities of

Business: beyond Shareholders towards Stakeholders

Principle 2: The Economic and Social Impact of Businesses: towards innovation, justice and world community

…cont Principle 3: Business Behavior:

beyond the letter of the Law towards a spirit of Trust

Principle 4: Respect for Rules Principle 5: Support for Multilateral

Trade Principle 6: Respect for Environment Principle 7: Avoidance of Illicit

Operations

ETHICS AND DECISION MAKING

Ethical Dilemmas

Significant value conflicts among differing interests

Real alternatives that are equally justifiable

Significant consequences on "stakeholders” in the situation

Approaches to Ethical Decision Making

Utilitarian Criteria- Jeremy Benthham,1800. preaches maximum good for maximum no. of people as a result of an action.

Rights Criteria- ‘Right to speech’ ‘Whistle Blowers’

Justice Criteria – in decisions for wages, retrenchments

Ethics of Care- should exercise care

Resolving Ethical dilemma Recognize that there is a moral issue and define the

problem accordingly

Determine the actor who will be affected by the decision. Also determine your role.

Analyze the facts how events happened. This will reduce dilemmas to common patterns which are ultimately manageable

Test for ‘Right versus Right’ paradigms such as Truth versus Loyalty, self versus community, short term versus long term, justice versus mercy.

Resolving Ethical dilemma Apply all three approaches to solving the dilemmas-(i)

utilitarianism i.e. do whatever produces greatest good for the greatest number; (ii) rule based thinking i.e. follow rules only; (iii) care based i.e. do what you would like to be done to you.

Investigate to find a third way out.

Make decisions and take action.

Revisit and reflect on the decision.

Characteristics of an ethical decision

Right – morally correct

Equitable - Just and equal

Good – Highest good for all concerned

Proper – Appropriate and acceptable

Fair – Honesty

Just - Action

Guiding factors for managers in ethical decision making A person’s personal code of ethics

The company’s formal policies, values and culture

The ethical climate in the industry

Government regulations. Morality transcends conformity to law

Behaviour of management in the company

Deep belief to abide by the laws

Ethical conduct/Standards tend to rise due to greater public exposure/image

Ethical Dilemmas at Workplace (Donaldson) Recognizing conflicts of interest and avoiding

them

Deciding if the business gift is just a gift or a bribe

Attaining fairness in employee performance appraisals

Initiating disciplinary action against an employee

Executing an order to take action against staff

Ethical Dilemmas at Workplace (Donaldson) Managing a problem employee

Handling reports of wrong doing on the job

Safeguarding confidential information

Recognizing and balancing the legitimate interest of customers, employees, suppliers, owners and the society in which they live

Sources of Ethical Dilemmas

Face-to-Face Ethics

Corporate Policy Ethics

Functional Area Ethics

Difficulties in Ethical decision making Face dilemmas in deciding a course of action

Confront a distinction between facts and values

Knowledge about the consequences of an action is limited

Antagonist interests frequently use incompatible ethical arguments to justify their intentions

Some ethical standards vary with the passage of time

Difficulties in Ethical decision making Competitive pressures

Individual values in conflict with organizational goals

Cross cultural contradictions

Suggestions for Ethical decision making

Top management can improve behavior

Code of Ethics Interaction with peers and other colleagues

Control System

Stakeholder Analysis for Ethical Decision Making Identification Facts Alternatives Stakeholders Impact Guidance Constraints Comfort Assessment

NASH’S TWELVE POINT PRESCRIPTION – Resolving Ethical Dilemma Have you defined the problem accurately? How would you define the problem if you stood

on the other side of the fence? How did this situation occur in the first place? To whom and to what do you give your loyalty

as a person and as a member of the corporation?

What is your intention in making the decision? How does this intention compare with the

probable results?

NASH’S TWELVE POINT PRESCRIPTION – Resolving Ethical Dilemma Whom could your decision or action injure? Can you discuss the problem with the affected

parties before you make your decision? Are you confident that your problem will be

valid over a long period of time, as it seems now?

Could you discuss without qualm your decision or action with other?

What is the symbolic potential of your action, if understood? If misunderstood?

Under what conditions would you allow exceptions to your stand?

FRAMEWORK FOR ETHICAL THINKING Do what is best for the greatest

number of people [consequence-based thinking]

Follow the applicable universal principle, e.g. do not lie [duty-based thinking]

Do what a good [virtuous] person would do [virtue based thinking].

Four Factors : Ethical Decisions

The end- outcome sought

The means –methods employed

The motive

Foreseeable consequences

Kohlberg’s Moral Development Theory

Level 1Pre-conventional

Stages

Level 2Conventional

Stages

Level 3Post

ConventionalStages

Punishment and Obedience orientation

Instrument and Relativity Orientation

Interpersonal Concordance Orientation

Law and Order Orientation

Social Contract Orientation

Universal Ethical Principles Orientation

Usefulness of Kohlberg’s theory Helps us understand how our moral

capabilities develop Reveals how we can become increasingly

sophisticated and critical in our understanding of moral standards we hold

People generally progress through the stages in the same sequence and not everyone progresses through all the stages

Implies that moral reasoning of people at later stages of moral development are better than their reasoning at earlier steps

Carol Gilligan Moral Development Theory Pre-conventional level: Right conduct is viewed

in a selfish manner solely as what is good for oneself

Conventional level: Importance is on not hurting others and willing to sacrifice one’s own interest and help others. This is a characteristic feature of women

Post-Conventional level: At this level, balances is found between caring about others and pursuing own’s interest

Kohlberg vs. GilliganKohlberg Gilligan

A. Basic AspectsBased on study on men Based on study on men and womenMen give importance to moral rule Women always wants to keep up

personal relationships with all the persons involved in the situation

Ethics of rules and rights Context oriented and ethics of careB. Characteristic Features

Taking a commanding role Shying away from decision makingRigid Human OrientedFactual Emotional Independence Dependence

Code of ethics

Most common way of institutionalizing ethics in the organization

Statements of the norms and beliefs which form the ethical rules of the organization as defined by the middle and top level management

Indicates “This is what we expect you to behave”

Thank You