Bussiness Ethics Responsibility of Stakeholders

Corporate Ethics and responsibility towards Stakeholders

Presented by

Nidhi Garg Tushar Joshi

Nibha Nalin

Sumeet Sourabh sareen

What is Ethics?

• Ethics– standards or moral values that dictate what is

right and wrong– culturally based – formed upon society’s expectations – vary by person, and by situation

3-2

Everyone develops their own “code of ethics”

Principles of Ethics

• Honesty• Respect• Responsibility• Fairness• Care

Business Ethics

Business + Ethics = Business Ethics• Business commonly referred to a commercial

activity aimed at profit motive.• Business ethics refers to moral principles and rules

of conduct which are applied to business. • Business Ethics means conducting all aspects of

business and dealing with all stakeholders in an ethical manner…

Corporate Ethics

• Based on principles of integrity and fairness • Focuses on -

Stakeholders, and employees.

Quality of product and services

Customer satisfaction.

Community and environment

Corporate Ethics are implemented to-

• Define the framework of the acceptable behavior.

• Follow high standards of practice. • Create benchmarks for self evaluation. • Enhance sense of community. • Create transparency in the business

activities. • Foster higher standards of business ethics. • Comply with government laws and norms.

Who is responsible for ethics in the company?

“Everyone”

Approaches to Bring a Code of Corporate Ethics to Life

• Emphasize values, in creating the code of corporate ethics supported by rules.

• Employees should be Educated about the corporate ethics code to make it relevant and real.

• Reinforce the code within and beyond the organization.• Encourage employees to become active participants in

upholding the corporate. ethics code and its values.• Gather feedback, measure effectiveness and

continually improve the code of conduct.

Corporate ethics: the Indian Perspective

• Indian business culture puts a premium on favors, friendship and clanship.

• Friendship is highly valued, whether based on multigenerational family friendships, school friendships or personal friendships.

• The Western concept of conflict of interest does not always mesh well with the Indian value of loyalty.

Corporate Ethics: Individual’s Perspective

• Signs of ethical deterioration.• In business, people have made

immoral millions • In government, public officials

are involved in bribery.• In education, cheating scandals

among students are common.• under-the-table payments for

admission• People believe that they have to

cheat to win. • They believe that nice guys

finish last.

Case: Infosys Technologies

• Have a distinctive work culture and value system.

• Great importance on customer delight, leadership, integrity, transparency, fairness and pursuit of excellence.

• Open door policy. • Value employees and encourage them to

make decisions about their own work. • Treated as a flat organization when it comes

to communication and information sharing

Stakeholders• Anyone who affects or is affected by an

organisationFreeman

• Primary stakeholders - those without whom org cannot survive– shareholders, customers, employees

• Secondary– community, environment, opinion formers

Clarkson

Issues with stakeholders• Stakeholder scanning and identification

• Stakeholder consultation

• Stakeholder engagement

• Approach depends on view of the organisation and the need for a relationship with stakeholders

Stakeholder Typology: One, Two, or Three Attributes

POWER

LEGITIMACY

URGENCY

7

Definitive Stakeholder

5

Dangerous Stakeholder

3

Demanding Stakeholder

6

Dependent Stakeholder

4

Dominant Stakeholder

1

Dormant Stakeholder

2

Discretionary Stakeholder

8

Nonstakeholder

The Management of Stakeholders

• Four strategies– Reactive– Defensive– Accommodative– Proactive

Wartick and Cochran (1985)

• Depends on stage in life cycle• Fits idea of resource dependency

Jawahar and McLaughlin (2001)

Stakeholders of the Organization

Society in General

Strategicpartners

Government

Employees

Customers

Suppliers

LocalCommunity

Owners

Unions

Types of stakeholders

SOCIAL RESPONSIBILITY TOWARDS EMPLOYEES

The company should provide job security to its employees.

Employees should be paid proper and timely wages and other monetary incentives.

The company should take adequate measures to protect the health and life of the employees.

There should be proper grievance procedure to handle employees complaints.

SOCIAL RESPONSIBILITY TOWARDS SHAREHOLDERS

The shareholders expect optimum utilization of their funds.

The management should make a proper disclosure regarding the affairs of the company.

The shareholders expects periodic information about important happenings or developments in the company.

The shareholders expects fair conduct of company meetings.

The shareholders expects a fair return on their investment.

SOCIAL RESPONSIBILITY TOWARDS CUSTOMERS

The company should produce quality goods. The company should charge fair price. The company should make the goods available

regularly and not create artificial shortage to raise prices.

The firm must provide after-sale-service and R&D.

SOCIAL RESPONSIBILITY TOWARDS SOCIETY

The company should take all possible measures to prevent air, water, and soil pollution.

The business firms should make indiscriminate use of the scarce resources in the interest of the society.

The society expects that companies should make efforts to uplift backward areas by starting and developing industries in such areas.

The society expects from business firms to donate generously to various social causes such as eradication of poverty, illiteracy, etc.

SOCIAL RESPONSIBILITY TOWARDS GOVERNMENT

The government expects co-operations and financial assistance from the business sector in implementing socio-economic programs.

The government expects the business sector to pay taxes and duties regularly.

The business firms should strictly observe government’s rules and regulations.

The business firms should avoid seeking unfair favor from government authorities.

The corporate sector should provide assistance to the government during natural calamities.

SOCIAL RESPONSIBILITY TOWARDS SUPPLIERS

The company should maintain good relations with suppliers.

Payment of credit amount must be done on time.

The company should not force the suppliers to provide unreasonable terms.

The companies should not disclose any secret information about its suppliers to others.

SOCIAL RESPONSIBILITY TOWARDS FINANCIAL

INSTITUTIONS

The payment of loans and interest installments must be made on time.

They should not bribe bank officials in sanctioning loans.

Provide regular reports to the financial institutions. They should not convert bank loans into bad debts.

SOCIAL RESPONSIBILITY TOWARDS COMPETITORS

The company should avoid unfair practices, such as duplicating the products of the competitors

Respect the competitors and treat them as challenges and not enemies

They should ensure free entry, and not block entry of competitors

SOCIAL RESPONSIBILITY TOWARDS OWNERS

The number of owners and the roles they carry out differ according to the size of the firm

In small businesses there may be only one owner (sole trader) or perhaps a small number of partners (partnership)

In large firms there are often thousands of shareholders, who each own a small part of the business

SOCIAL RESPONSIBILITY TOWARDS MANAGERS

Organize Make decisions Plan Control They are accountable to the owner(s)

ETHICS & STAKE HOLDER THEORY

• Maximize stake holder value. Develop ethical responsible behavior of managers.

• Managerial decisions should also reflect ethical responsibilities- distribution of benefit and allocations of costs in a manner that is considered right, just by the stake holders..

Stakeholders’ Concerns

Owners and Investors

Examples of ConcernsStakeholder Group

Financial Soundness Consistency in meeting

shareholder expectations Sustained profitability Timely and accurate

disclosure of financial information

Stakeholders’ Concerns (cont.)

Customers


Product/service quality, innovativeness, and availability

Responsible management of defective or harmful products/services

Safety records for products/services

Pricing policies and practices Honest, accurate, and

responsible advertising


Employees


Nondiscriminatory, merit-based hiring and promotion

Wage and salary levels and equitable distribution

Availability of training and development

Workplace safety and privacy


Society


Environmental issues• Environmental sensitivity in

packaging and product design• Recycling efforts and use of

recycled materials• Pollution prevention• Global application of

environmental standards


Society


Community involvement• Percentage of profits

designated for cash contributions

• Innovation and creativity in social welfare

• Product donations• Availability of facilities and

other assets for community use

• Support for employee volunteer efforts

Bussiness Ethics Responsibility of Stakeholders

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