Complete Project on Ethics & Management

8/6/2019 Complete Project on Ethics & Management

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Ethics & Management 1


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Ethi s t 2

GROUP MEMBERS

NAME OF THE MEMBER ROLLNO.

ZOYA KHAN 7

AMREEN NANAVATI 12

DIVYA RAI 18

MINAH SHAIKH 27

ANJALI TRIPATHI 33


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Ethi s t 3

ACKNOWLEDGEMENT

We would firstly like to thank our Institution & sincere thanks to Principal Prof. A. E.

Lakdawala and Vice Principal Prof. Kamala Arunachalam for providing us support and

giving us an opportunity for doing B&I course and completing this project.

We would also like to extent our profound and sincere gratitude to our project guide

Prof.Manasi sinari who has guided our project with her vast fund of knowledge advice and

constant encouragement. We kindly appreciate her implicit and valuable contribution in

drawing up this project.

We also thank all our colleagues without who this project would have not been completed.

Thank you all for your contribution towards the project whether big or small and will

forever be indebted to each and every one of you. We also thanks to all those whom we have

forgotten to mention in this space.


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Ethi s t 4

INDEX

SR. NO. CONTENTS PAGE NO.

1) "What is ethics?" 4

2) What is Business Ethics? 5

3) History of ethics in business 6

4) Importance of Business Ethics in Business 7

5) What Are Business Ethics And Do They AffectYour Company?

9

6) Business ethics from a management perspective 11

7)

Society as a Stakeholder 138) Business Ethics is Now a Management Discipline 15

9) The Management Consulting Competency

Framework

16

10) 9 Benefits of Managing Ethics in the Workplace 17

11) 8 Guidelines for Managing Ethics in the

Workplace20

13) One Description of a Highly Ethical Organization 22

14) Ethics Management Programs: An Overview 23

15) 6 Key Roles and Responsibilities in EthicsManagement

24

16) Codes of Ethics 25

17) Example of fraud 28

18) Ethics Tools: Training 30

19) The Dimensional Management Model 3120) Publics Opinion of Business Ethics 32

21) Conclusion 33

22) Webliography: 33


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Ethi s t 5

"WHAT IS ETHICS?"Ethics involves learning what is right or wrong, and then doing

the right thing -- but "the right thing" is not nearly as

straightforward as conveyed in a great deal of business ethicsliterature. Most ethical dilemmas in the workplace are not simply

a matter of"Should Bob steal from Jack?" or"Should Jack lie tohis boss?"

(Many ethicists assert there's always a right thing to do based on moralprinciple, and others believe the right thing to do depend on the situation --

ultimately it's up to the individual.) Many philosophers consider ethics to be the"science of conduct." Twin Cities consultants Doug Wallace and John Pekelexplain that ethics includes the fundamental ground rules by which we live our

lives. Philosophers have been discussing ethics for at least 2500 years, since the

time ofSocrates and Plato. Many ethicists consider emerging ethical beliefs tobe "state of the art" legal matters, i.e., what becomes an ethical guideline todayis often translated to a law, regulation or rule tomorrow. Values which guidehow we ought to behave are considered moral values, e.g., values such as

respect, honesty, fairness, responsibility, etc. Statements around how thesevalues are applied are sometimes called moral or ethical principles

Three Types of Management Ethics

1. Immoral ManagementA style devoid of ethical principles and active

opposition to what is ethical.

1. Moral ManagementConforms to high standards of ethical behavior.2. Amoral Management

Intentional - does not consider ethical factorsUnintentional - casual or careless about ethical considerations in

business

Definitions

y Ethics involves a discipline that examines good or bad practices withinthe context of a moral duty

y Moralconduct is behavior that is right or wrongy Businessethics include practices and behaviors that are good or bad


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Ethi s t 6

WHAT IS BUSINESS ETHICS?

Business ethics (also known as corporate ethics) is a form of applied

ethics or professional ethics that examines ethical principles and moral or

ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business

organizations as a whole. Applied ethics is a fiel d of ethics that deals withethical questions in many fields such as medical, technical, legal and business

ethics.

Business ethics can be both a normative and a descriptive discipline.

Descriptive ethicsinvolves describing, characterizing and studying morality

What is

Normative ethicsinvolves supplying and justifying moral systems

What should be

As a corporate practice and a career specialization, the field is

primarily normative. In academia descriptive approaches are also taken. The

range and quantity of business ethical issues reflects the degree to which

business is perceived to be at odds with non -economic social values.

Historically, interest in business ethics accelerated dramatically during the

1980s and 1990s, both within majo r corporations and within academia. For

example, today most major corporate websites lay emphasis on commitment topromoting non-economic social values under a variety of headings (e.g. ethics

codes, social responsibility charters). In some cases, corporat ions have

redefined their core values in the light of business ethical considerations

Note that many people react that business ethics, with its continuing

attention to "doing the right thing," only asserts the obvious ("be good,""don't

lie," etc.), and so these people don't take business ethics seriously. For many ofus, these principles of the obvious can go right out the door during times of

stress. Consequently, business ethics can be strong preventative medicine.

Anyway, there are many other benefits of managing ethics in the workplace.


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Ethi s t 7

HISTORY OF ETHICS IN BUSINESS

Business ethics being part of the larger social ethics, always been

affected by the ethics of the epoch. At different epochs of the world, people,

especially the elites of the world, were blind to ethics and morality which wereobviously unethical to the succeeding epoch. History of business, thus, is tainted by and through the history of slavery history of colonialism and later by the

history of cold war. The current discourse of business ethics is the ethicaldiscourse of the post-colonialism and post-world wars. The need for business ethics in

the current epoch had begun gaining attentionsince 1970s. Historically, firms started

highlighting their ethical stature since the late

1980s and early 1990s, as the world witnessed

serious economic and natural disasters because of unethical business practices.The Bhopal disaster and the fall of Enron are

instances of the major disasters triggered by bad corporate ethics. It should be noted that

the idea of business ethics caught the attention of academics, media and

business firms by the end of the overtCold War. Cold Wars, seen through pages

of history were fought through and fought for American business firms abroad.

Ideologically, promotion of firms owned by American nationals were presentedas if it were freedom and the local resistance against the excess of American

firms were labelled communist upraising sponsored by the SovietBlock. .Further, even legitimate criticism against unethical practice of the firmswas presented as if it were infringement into the 'freedom' of

the entrepreneurs by activists backed by communist totalitarians. This scuttledthe discourse of business ethics both at media and academics. Overt violence by business firms has decreased to a great extent in the democratic and media

affluent world of the day, though it has not ceased to exist. The war in Iraq isone of the recent examples of overt violence by corporations. Evidence is the

rise in the amount of and usage and actions of private security firms. Privatesecurity was all but replacing military personnel for movement security, and the

basis for the increase in them was the money that the firms received directly orindirectly from governments and the amount they paid their employees.


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IMP

R

CE

F

INE

E

HICS IN BUSINESS

Pro i ximi ion:

The i t e of ethi i busi ess can be understood by thefactthat ethical businesses tend to make much more profits

than the others. The reason forthis is that customers of

businesses which follow ethics are loyal and satisfied with the services and

product offerings of such businesses. Let us take an example. Suppose, there is

an organi ation named XYZ which manufactures cosmetics. XYZ greatly

believes in the importance of business ethics. When XYZ advertises its

cosmetics in the market, being an ethical organi ation, it will be very truthful

and honestin its communication with the probable customers. It willtell

correctly aboutthe kind ofingredients it has used while manufacturing the

cosmetics. It will notlie or exaggerate aboutthe benefits or uses ofits products

either. So the customers, who buy its cosmetics, know precisely whatthey are

buying and how usefulthat productis going to be forthem. This way, the

product will meettheir expectations and thus, satisfy the customers. When

customers are satisfied, they will become loyalto the company and come back

again for re-purchasing. This will surely increase the profits ofthe organi ation.

Thus, the importance of business ethics is thatit creates loyalty in customers

and maximi es the profits.

E i i n U ili ion o Bu in R our :

In an organi ation, people working atthejuniorlevels often emulate the ones

working atthe top. The same applies with ethics too. Ifthe management or

seniors of an organi ation follow ethical business practices, i.e., they do not

bribe to gettheir way orthey do not cheatthe customers, investors, suppliers,

etc., the employees will follow suit. The employees too will refrain from using

the office property or resources for personal benefits. This will resultin better

and efficient utili ation ofthe business resources.

Cr Goo will in rk :

an organi ation, which is well known forits ethical practices, creates a goodwill

foritselfin the market. Investors or venture capitalists are more willing to put

their money in the businesses which they can trust. Shareholders too, remain

satisfied with the practices of ethical businesses. Thus, the importance of


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Ethi s t 9

business ethics in creating goodwill and building long term relationships cannot

be denied. Also, an ethical business puts greater value on its employees and

thus, employees remain loyal to such an organization too.

E amples of unethical behaviour abound in business stories around the orld. And individuals

itness some form of unethical behaviour in their

or

place every day.

nethical behaviour

here people deliberately intend to harm themselves or others, develops

from and is reinforced by, destructive states of mind, including fear, greed, anger and

jealously. In contract, ethical behaviour enhances the

ell-being of everyone because it is

developed from and reinforced by strong motives and emotions such as love, joy, generosity

and compassion.

Believe it is much more than important, it is a critical, essential and non-

negotiable characteristic of an effective leader. Strong business ethics is apillar of my strategic planning and strategic thinking business coaching efforts

each and every day. Clients are encouraged to develop a set of core values and

guiding principles and publish them for their clients and stakeholders to know

that this is the way they do business. And furthermore, the clients are

continually reminded to make sure the core values are demonstra ted in all that

they do.


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Ethi s t 10

WHAT ARE BUSINESS ETHICS AND

DO THEY AFFECT YOUR COMPANY?

Business Ethics have only come to the forerecently. They state that there is more to business than just making a profit. The new

focus is also on how the business treats theenvironment, reacts with the local community

and works with its staff to build a responsiblecompany that is both sustainable and adds

value to the people that it interacts with.

"Greed is good" is no longer acceptable to most consumers. The consumer is

now better educated with new means at his disposal. High speed internet accessand forums like Academy now mean that good and bad news travels almost atthe speed of thought. They are now demanding more from businesses even

though their own ethics at times might be questionable!

Business ethics are now included in most business courses and the topmanagement schools. The top graduates enter the corporate world ready toincorporate what they have learnt in the classroom.

Businesses need to have specific programmes in place to manage their staff andworkplace in a responsible manner. They must give social welfare a high

priority if they are to maintain their public image. They have to be seen to berecycling their waste and disposing of old e quipment in an environmentally

friendly way.

Businesses now have to be wary of using sweat shop labour in the third world

especially if they treat them badly. Everybody realises that third world countrywages are lower but they expect Western companies to treat their employees

with some respect and dignity. Businesses that employ children are nowfrowned upon even though child labour is the norm in these countries.

Many "watch dogs" now exist that "police" most large companies and reportany blatant abuse of ethics. Most of these have only been set up in the last

twenty years. Most large media organisations also have special reporters whosesole purpose is to identify where breaches are taking place and publicise them.

The top brands in the world need to be extremely careful now. The value of a

brand might have taken decades to build but can be destroyed in a matter ofweeks. An example of this is when Gerald Ratner made a speech to the Institute


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Ethi s t 11

of Directors and in humour referred to a cheap necklace that "e veryone knows is

crap". These comments served to wipe out over a half a billion dollars of thecompanies value and played a major part in the downfall of a once thrivingjewellery retailer in the United Kingdom.

There are now funds that specialise in only investing in ethical businesses. They

refuse to invest in companies that produce weapons or manufacture cigarettes asan example. These funds have taken of spectacularly and have billions ofdollars to invest in the stock markets. Before they invest in a b usiness they send

their fund managers in to investigate the business fully to see if they complywith their guidelines. If the company is not willing to answer all their questions

fully then they might not get approved for investment.

When properly managed and executed the use of business ethics can actually

serve to enhance the profitability of the company concerned. The business can proudly declare their values in brochures, newspapers, internet and television

marketing campaigns. Reputation is the strongest asset that a company has andmaintaining this and the value of their brands is essential to the long term futureof the business.


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Ethi s t 12

BUSINESS ETHICS FROM A MANAGEMENT PERSPECTIVE

Issuessurroundingethical business practiceseffectanentire company,yet

mostoftheresponsibilityforethical behaviouris placedonmanagement'sshoulders.

Business ethics, which is generally defined in terms of the social, communaland environmental responsibilities of business professionals, requires managers

to take into account much more than the bottom line when making business -related decisions. This means that those in supervisory positions need to reflect

on the manners in which their decisions affect employees, associates, theenvironment and society as a whole. While some experts contend that theresponsibility of a firms

management team should focusexclusively on meeting the needs

of its shareholders, it isimportant to keep in mind thatmost times, being socially and

ethically responsible, results inmore profitable business

ventures.

The issue of business ethics

heavily spotlights the abilities

and inabilities of some managers to prevent ethical violations from becomingcostly issues for the company. However it is unrealistic to expect managers toresolve these matters without proper edification of the issues involved. Whilemany managers acknowledge their responsibility to stay informed of changing

issues such as sexual harassment, insidertrading, equal hiring practices and soon, the problem is that they often feel they do not have the authority to

effectively resolve such matters. It is a fact that corporations, and societies thatdesire a prosperous economy are forced to compete with lower salaries,

taxation, safety regulations and standards fo r environmental protection that cansend gross expenditures through the roof. . This makes it extremely difficult for

managers to perform their duties in a manner that benefits both the shareholdersand the whole of humanity.

In order to untie the hands of managers facing ethical dilemmas, discussing

the responsibility of individual corporations or managers is important, howeveropen communications regarding the moral adequacy of the institutional

frameworks within the organizations daily operations is equally essential. It is


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therefore not so much the moral fiber ofindividual managers that needs to be

addressed as itis the ethical structure and overall agenda ofthe company itself.

No matter how ethically sound and socially aware a manageris,

if company policy prevents him from acting as he thinks he should, how much

liability can reasonably be placed in his lap?

Corporations and entire areas of business have developed

numerous systems designed to incorporate ethicalissues into their decision-

making procedures. These guiding principles include industry concerns, health

issues, safety and environmental policies, disclosure responsibilities and a

variety of other pertinentissues. The effects ofthe business operations in

relation to these issues must be examined from a managers perspective in order

to ensure properimplementation. However along with the ability to examine

these issues must come the responsibility to deal with them effectively?

Social and environmentalissues must also be scrutini ed in every level ofthe

organi ation, which would imply thatthe responsibility ofthe effects

of business activities could be included in the normal decision making

procedures ofthe companys managers. When properly executed and inspected,

these factors make up a large portion ofthe criterion that determines the

reputability of a corporation, its managers and its employees.

In accordance with ethical standards, every managerin a corporation is

responsible to those whom his or her actions affect. Consequently, since

managers' decisions can influence so many diverse aspects of not only the

business itself, but of society as a whole, itis criticalthat managements current

level of accountability and responsibility be thoroughly examined.THREEAPPR

ACHES TO MANAGEMENTETHICS


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Ethi s t 14

SOCIETY AS A STAKEHOLDERSince, in a capitalist society, the means of production are privately held by

business firms, society itself is a stakeholder for the large and small business

alike. Small business, as well as large firms, must promote harmonious

relationships between business and government and between business and other

segments of society. It is the responsibility of all business to have a commitment

to raise the standard of living and promote sustainable develo pment. Small

business must strive to contribute to their community and be a good corporate

citizen. Somewhere along the way, the financial firms on Wall Street forgot this

very important lesson of capitalism.

Examples

The near collapse of our economic system really began sometime back with thefinancial failure of firms like Enron. The Enron Corporation was a huge energy

company that went bankrupt in 2001. It employed 22,000 people and hadinnumerable shareholders. It collapsed due to an accounting scan dal, or"cooking the books," perpetuated by its own auditing firm, Arthur Andersen,

one of the premier accounting firms in the U.S., which also collapsed. Tens ofthousands of employees were left without a job and more shareholders were left

with a retirement portfolio full of worthless Enron stock.

Enron was the country's largest bankruptcy until 2008 and Lehman Brothers, ahuge Wall Street financial services firm. Lehman went under primarily due to

the subprime mortgages it made during the 1990s and the e arly 21th century.The bankruptcy ofLehman Brothers began a domino effect on Wall Street. Inorder to prevent massive financial firm failures, the Bush Administration puttogether a huge financial bailout, called TARP, to save most of the other large

Wall Street banks.Since the fall of 2008, we have had many financial firm failures and failures inother business sectors. Failures have not been confined to large businesses.

Small business has had its share of failures, primarily due to the economic

recession that resulted from the collapse of Wall Street and the credit crisis thatresulted.


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Summary

The only way for capitalism to truly prosperis for every business, large

business and small business alike, to subscribe to a doctrine of financial and

business ethics. If business tries to take shortcuts to profits, they will failin the

long run as we've seen during the early part ofthe 2 st century. Small business

plays a crucial role in the American economy. It can make the difference

between success and failure of our economy and financial system.

MORAL MANAGEMENTMODELS AND ACCEPTABLESTAKEHOLDER

THINKING


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Ethi s t 16

BUSINESS ETHICS IS NOWA MANAGEMENT DISCIPLINE

Business ethics has come to be considered a management discipline,especially since the birth of the social responsibility movement in the 1960s. In

that decade, social awareness movements raised expectations of businesses touse their massive financial and social influence to address social problems suchas poverty, crime, environmental protection, equal rights, public health and

improving education. An increasing number of people asserted that becausebusinesses were making a profit from using our country's resources, these

businesses owed it to our country to work to improve socie ty. Many researchers,business schools and managers have recognized this broader constituency, and

in their planning and operations have replaced the word "stockholder" with

"stakeholder," meaning to include employees, customers, suppliers and thewider community.

The emergence of business ethics is similar to other management disciplines.

For example, organizations realized that they needed to manage a more positive

image to the public and so the recent discipline of public relations was born.Organizations realized they needed to better manage their human resources and

so the recent discipline of human resources was born. As commerce becamemore complicated and dynamic, organizations realized they needed more

guidance to ensure their dealings supported t he common good and did not harm

others -- and so business ethics was born.

Note that 90% of business schools now provide some form of training inbusiness ethics. Today, ethics in the workplace can be managed through use of

codes of ethics, codes of conduct, roles of ethicists and ethics committees,policies and procedures, procedures to resolve ethical dilemmas, ethics training,

etc.


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Ethi s t 17

THE MANAGEMENT CONSULTING COMPETENCY FRAMEWORK


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Ethi s t 18

9 BENEFITS OF MANAGING ETHICS IN THEWORKPLACE

Many people are used to reading or hearing of the moral benefits of attention to

business ethics. However, there are other types of benefits, as well. The

following list describes various types of benefits from managing ethics in theworkplace.

1. Attentionto businessethicshassubstantiallyimprovedsociety.A matter of decades ago, children in our country worked 16 -hour days.

Workers limbs were torn off and disabled workers were condemned to povertyand often to starvation. Trusts controlled some markets to the extent that prices

were fixed and small businesses choked out. Price fixing crippled normalmarket forces. Employees were terminated based on personalities. Influencewas applied through intimidation and harassment. Then society reacted and

demanded that businesses place high value on fairness and equal rights. Anti -

trust laws were instituted. Government agencies were established. Unions wereorganized. Laws and regulations were established.2. Ethics programshelpmaintainamoralcourseinturbulenttimes. As noted earlier in this document, Wallace and Pekel explain that attention to

business ethics is critical during times of fundamental change -- times much likethose faced now by businesses, both nonprofits or for-profit. During times of

change, there is often no clear moral compass to guide leaders through complexconflicts about what is right or wrong. Continuing attention to ethics in theworkplace sensitizes leaders and staff to how they want to act -- consistently.

3. Ethics programscultivatestrongteamworkand productivity.

Ethics programs align employee behaviours with those top priority ethicalvalues preferred by leaders of the organization. Usually, an organization findssurprising disparity between its preferred values and the values actuallyreflected by behaviours in the workplace. Ongoing attention and dialogue

regarding values in the workplace builds openness, integrity and community --critical ingredients of strong teams in the workplace. Employees feel strong

alignment between their values and those of the organization. They react with

strong motivation and performance.4. Ethics programssupportemployeegrowthandmeaning.

Attention to ethics in the workplace helps employees face reality, both good and

bad -- in the organization and themselves. Employees feel full confidence theycan admit and deal with whatever comes their way. Bennett, in his article"Unethical Behaviour, Stress Appear Linked" explained that a consultingcompany tested a range of executives and managers. Their most striking

finding: the more emotionally healthy executives, as measured on a battery oftests, the more likely they were to score high on ethics tests.

5. Ethics programsareaninsurance policy -- theyhelp ensurethat policies

arelegal.


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Ethi s t 19

There are an increasing number of lawsuits in regard to personnel matters and to

effects of an organizations services or products on stakeholders. As mentionedearlier in this document, ethical principles are often state -of-the-art legalmatters. These principles are often applied to current, major ethical issues to

become legislation. Attention to ethics ensures highly ethical policies andprocedures in the workplace. Its far better to incur the cost of mechanisms to

ensure ethical practices now than to incur costs of litigation later. A major intentof well-designed personnel policies is to ensure ethical treatment of employees,

e.g., in matters of hiring, evaluating, disciplining, firing, etc. Drake and Drakenote that an employer can be subject to suit for breach of contract f or failure tocomply with any promise it made, so the gap between stated corporate culture

and actual practice has significant legal, as well as ethical implications.6. Ethics programshelp avoidcriminalacts ofomissionandcanlower

fines.

Ethics programs tend to detect ethical issues and violations early on so they canbe reported or addressed. In some cases, when an organization is aware of an

actual or potential violation and does not report it to the appropriate authorities,this can be considered a criminal act, e.g., in business dealings with certain

government agencies, such as the Defence Department. The recent FederalSentencing Guidelines specify major penalties for various types of major ethicsviolations. However, the guideline potentially lowers fines if an organization

has clearly made an effort to operate ethically.7. Ethics programshelpmanagevaluesassociatedwith quality

management,strategic planninganddiversitymanagement -- this benefit

needsfarmoreattention.Ethics programs identify preferred values and ensuring organizational

behaviours are aligned with those values. This effort includes recording the

values, developing policies and procedures to align behaviours with preferredvalues, and then training all personnel about the policies and procedures. Thisoverall effort is very useful for several other programs in the workplace that

require behaviours to be aligned with values, including quality management,strategic planning and diversity management. Total Quality Managementincludes high priority on certain operating values, e.g., trust among

stakeholders, performance, reliability, measurement, and feedback. Eastman and

Polaroid use ethics tools in their quality programs to ensure integrity in theirrelationships with stakeholders. Ethics management techniques are highlyuseful for managing strategic values, e.g., expand market share, reduce costs,

etc. McDonnell Douglas integrates their ethics programs into their strategicplanning process. Ethics management programs are also useful in managingdiversity. Diversity is much more than the colour of peoples skin -- its

acknowledging different values and perspectives. Diversity programs requirerecognizing and applying diverse values and perspectives -- these activities are


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the basis of a sound ethics management program.

8. Ethi programs promote a strong publi image.

Attention to ethics is also strong public relations -- admittedly, managing ethicsshould not be done primarily for reasons of public relations. But, frankly, the

factthat an organi ation regularly gives attention to its ethics can portray a

strong positive to the public. People see those organi ations as valuing people

more than profit, as striving to operate with the utmost ofintegrity and honour.

Aligning behaviour with values is criticalto effective marketing and public

relations programs. Consider how Johnson and Johnson handled the Tylenol

crisis versus how Exxon handled the oil spillin Alaska. Bob Dunn, President

and CEO of San Francisco-based Business for SocialResponsibility, puts it

best: Ethical values, consistently applied, are the cornerstones in building a

commercially successful and socially responsible business.9. Overall benefits ofethi s programs:

Donaldson and Davis, in Business Ethics? Yes, But WhatCan it Do forthe

Bottom Line? explain that managing ethical values in the workplace

legitimi es managerial actions, strengthens the coherence and balance ofthe

organi ations culture, improves trustin relationships between individuals and

groups, supports greater consistency in standards and qualities of products, and

cultivates greater sensitivity to the impact ofthe enterprises values and

messages.


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Ethi s t 21

8 GUIDELINES FOR MANAGING ETHICS IN THEWORKPLACE

The following guidelines ensure the ethics management program is operated in

a meaningful fashion:

1.Recognizethatmanagingethicsisa process. Ethics is a matter of values and associated behaviours. Values are discernedthrough the process of ongoing reflection. The refore, ethics programs may seem

more process-oriented than most management practices. Managers tend to besceptical of process-oriented activities, and instead prefer processes focused ondeliverables with measurements. However, experienced managers reali ze that

the deliverables of standard management practices (planning, organizing,motivating, controlling) are only tangible representations of very process -

oriented practices. For example, the process of strategic planning is much more

important than the plan produced by the process. The same is true for ethics

management. Ethics programs do produce deliverables, e.g., codes, policies andprocedures, budget items, meeting minutes, authorization forms, newsletters,etc. However, the most important aspect from an ethics management program is

the process of reflection and dialogue that produces these deliverables.2. The bottomlineofanethics programisaccomplishing preferred

behavioursintheworkplace.

As with any management practice, the most important outcome is behaviourspreferred by the organization. The best of ethical values and intentions are

relatively meaningless unless they generate fair and just behaviours in theworkplace. That's why practices that generate lists of ethical values, or codes of

ethics, must also generate policies, procedures and training that translate thosevalues to appropriate behaviours.3. The bestwaytohandleethicaldilemmasistoavoidtheiroccurrencein

thefirst place.

That's why practices such as developing codes of ethics and codes of conductare so important. Their development sensitizes employees to ethical

considerations and minimizes the chances of unethical behaviour occurring inthe first place.

4. Makeethicsdecisionsingroups,andmakedecisions public,as

appropriate.

This usually produces better quality decisions by including diverse interests andperspectives, and increases the credibility of the decision process and outcomeby reducing suspicion of unfair bias.

5. Integrateethicsmanagementwithothermanagement practices.

When developing the values statement during strategic planning, include ethicalvalues preferred in the workplace. When developing personnel policies, reflecton what ethical values you'd like to be most prominent in the orga nization'sculture and then design policies to produce these behaviours.


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Ethi s t 22

6. Usecross-functionalteamswhendevelopingandimplementingtheethics

management program.

Its vital that the organizations employees feel a sense of participation andownership in the program if they are to adhere to its ethical values. Therefore,

include employees in developing and operating the program.7. Valueforgiveness.

This may sound rather religious or preachy to some, but its probably the mostimportant component of any management practice. An ethics management

program may at first actually increase the number of ethical issues to be dealtwith because people are more sensitive to their occurrence. Consequently, theremay be more occasions to address people s unethical behaviour. The most

important ingredient for remaining ethical is trying to be ethical. Therefore, helppeople recognize and address their mistakes and then support them to continue

to try operate ethically.

8. Notethattryingtooperateethicallyandmakingafewmistakesis betterthannottryingatall.

Some organizations have become widely known as operating in a highly ethicalmanner, e.g., Ben and Jerrys, Johnson and Johnson, Aveda, Hewlett Packard,

etc. Unfortunately, it seems that when an organization achieves this strongpublic image, it's placed on a pedestal by some business ethics writers. Allorganizations are comprised of people and people are not perfect. However,

when a mistake is made by any of these organizations, the organi zation has along way to fall. In our increasingly critical society, these organizations are

accused of being hypocritical and they are soon pilloried by social critics.

Consequently, some leaders may fear sticking their necks out publicly toannounce an ethics management program. This is extremely unfortunate. It's the

trying that counts and brings peace of mind -- not achieving a heroic status in

society.


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Ethi s t 24

ETHICS MANAGEMENT PROGRAMS: AN OVERVIEW

AboutEthicsManagement ProgramsOrganizations can manage ethics in

their workplaces by establishing an ethics management program. Brian Schrag,

Executive Secretary of the Association for Practical and Professional Ethics,clarifies. "Typically, ethics programs convey corporate values, of ten using

codes and policies to guide decisions and behaviour, and can include extensivetraining and evaluating, depending on the organization. They provide guidance

in ethical dilemmas." Rarely are two programs alike.

"All organizations have ethics programs, but most do not know that they do,"

wrote business ethics professorStephen Brenner in the Journal of BusinessEthics A corporate ethics program is made up of values, policies and activities

which impact the propriety of organization behaviours."

"Balancing competing values and reconciling them is a basic purpose of an

ethics management program. Business people need more practical tools andinformation to understand their values and how to manage them."

BenefitsofManagingEthicsasa Program

There are numerous benefits in formally managing ethics as a program, ratherthan as a one-shot effort when it appears to be needed. Ethics programs:

Establish organizational roles to manage ethics Schedule ongoing assessment of ethics requirements Establish required operating values and behaviours

Align organizational behaviours with operating values Develop awareness and sensitivity to ethical issues

Integrate ethical guidelines to decision making Structure mechanisms to resolving ethical dilemmas

Facilitate ongoing evaluation and updates to the program

Help convince employees that attention to ethics is not just a knee -jerkreaction done to get out of trouble or improve public image


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Ethi s t 25

6 KEY ROLES AND RESPONSIBILITIES IN ETHICS MANAGEMENT

Depending on the size of the organization, certain roles may prove useful inmanaging ethics in the workplace. These can be full -time roles or part-time

functions assumed by someone already in the organization. Small organizationscertainly will not have the resources to implement each the following rolesusing different people in the organization. However, the following functions

points out responsibilities that should be included somewhere in theorganization.

1. Theorganization'schiefexecutivemustfullysupportthe program.If the chief executive isn't fully behind the program, employees will certainly

notice -- and this apparent hypocrisy may cause such cynicism that the

organization may be worse off than having no formal ethics prog ram at all.Therefore, the chief executive should announce the program, and champion its

development and implementation. Most important, the chief executive shouldconsistently aspire to lead in an ethical manner. If a mistake is made, admit it.2. Considerestablishinganethicscommitteeatthe boardlevel.

The committee would be charged to oversee development and operation of theethics management program.

3. Considerestablishinganethicsmanagementcommittee. It would be charged with implementing and administrating an ethics

management program, including administrating and training about policies andprocedures, and resolving ethical dilemmas. The committee should becomprised of senior officers.

4. Considerassigning/developinganethicsofficer. This role is becoming more common, particularly in larger and more

progressive organizations. The ethics officer is usually trained about matters ofethics in the workplace, particularly about resolving ethical dilemmas.

5. Considerestablishinganombudsperson.

The ombudsperson is responsible to help coordinate development of the policiesand procedures to institutionalize moral values in the workplace. This position

usually is directly responsible for resolving ethical dilemmas by interpretingpolicies and procedures.

6. Notethatone personmustultimately beresponsibleformanagingthe

ethicsmanagement program.


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Ethi s t 27

y Maximization of Returns' to share holders is the basic purpose of anybusiness. While making the code of the ethics, the conflicts may arisewhile dealing with this purpose. The protection to the investments and thetimely returns on the investment are always needed.

y Every business organization knows the importance of the customersatisfaction. The promises about the fair pricing, quality, after sales

service made to the customers should always be kept.

y The payments to the supplier should always be on time. No excesshospitality or bribe should be accepted or given.

Society, GovernmentandEnvironment: The compliance with the lawsand the social norms should be maintained. The company's activitiesshould always be environment friendly.

Implementation Process: It always important the code is implementedproperly. It should be seen that the code is reached and understoodproperly by all. Awareness campaigns and the training programs shouldbe run if required.

Scopefor Feedbacks: The feedback is always necessary forimprovement and evaluation of the code. At least annual report should begiven to the board members. Review procedure should be created to

update the codes.

Following factors should be always kept in the mind:

Involvementofthe

SeniorManagement: Every company needs achampion or role model or mentor to guide the corporate ethics program.

A senior person mostly CEO or Chairman should take the responsibilityto lead the ethics program. The board and senior management should

show the enthusiasm and always provide the guidance to the employee. InvolvementoftheEmployee: No program can be successful without

involvement of the grass root employees. It is important to know whatbothers people while making the code of ethics. Each and every personshould know the code of the ethics and should be made to follow it.

PickingThe WellTested Model: A framework which addresses issuesas they affect different constituents should be used. Sometimes thecompetitors should be considered. If the company is globa l then laws andpeople of the other nations must be included in the model. Running theCorporate Ethics Program is not always easy but it's worth running as it

gives returns in the long run.


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Ethi s t 29

EXAMPLE OF FRAUD

One Investment Adviser, no n idely due to hisSaturday-morning radio sho

, induced his clients to turnover more than $4 million. He accomplished this by toutingphony performance figures for a bogus mutual fund calledthe GT

Fund,

hich stood for "Good Till canceled," that

promised "ma imum capital gro

th consistent

ith thepreservation of capital."

nfortunately for the investors,

he used the money to run a typical Ponzi scheme in

hich early investors

ere paid

ithlater victims' money. The money also supported a lavish lifestyle that included his horseracing business and gambling jun

ets. He

as finally arrested and

as ultimately sentenced

to eight years in jail.

A father-and son, ho ere not registered as investment advisers, told clients of theiraccounting firm that they

ould pool investor funds and purchase various securities.

T elve investors ultimately provided $1.7 million. Investigators uncovered massivediversion of investor funds for the personal benefit of the father and son. Victims includedan entire church congregation

here one of them served as treasurer.

oth men

ere found

guilty in state and federal courts.

A registered investment adviser,

ho

as the o

ner of a college planning service,advertised his e pertise in repositioning assets for families see

ing financial aid for their

college-bound children. Offering fraudulent securities and trust agreements he obtained

$293,000 from 14 investors and used the money to pay for personal and business e

pensesincluding a lu ury Mercedes

ith the license plate IPLAN4

. One of his victims as a 19-year-old man

ho lost $15,000 he had received after his father had died from cancer. He

as convicted on one count of mail fraud, sentenced to 24 months in prison plus three yearsof probation, and ordered to ma

e restitution.

A

oman s

indled $1.8 million from 80 individuals she recruited from her income ta preparation service. In league

ith her husband and son, the

oman convinced her carefully

selected clients that they

ould receive returns higher than certificates of deposit from nineseparate limited partnerships in residential mortgage loans that she offered. After pleadingguilty, she

as convicted of securities fraud and money laundering and sentenced to 57

months in federal prison. Her former clients lost everything they invested.

A former pro football player and self-proclaimed investment adviser

ith a history of beingdisciplined for securities violation,

as arrested after a joint

investigation by state and federal agencies. The accused allegedlyran a Ponzi scheme in

hich early investors

ere paid

ith money

provided by later ones, then encouraged to invest ever larger sums.

esidents of several states may have been biled out of as much as


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Ethi s t 30

$30 million. The accused o

ned several lu ury homes and an airplane,

as an avid golfer,and recruited many of his victims from a local country club.

y The relationship bet een business and ethics is intrinsically ent ined. A successfulcompany is one

hich can effectively recognize and cultivate the relationship

hiche! ists bet

een the t

o.

Satyam fraud scandal

Outsourcing firm Satyam " omputer Services has gone from

being India's IT cro#

n je#

el, the country's fourth largest

company#

ith high-profile customers, to being embroiled in

the nation's biggest corporate scandal in living memory

$

amalinga$

aju, the chairman and founder of Satyam, hasbeen arrested and confessed to a 1 billion fraud,

admitting he had made up profits for years. According to

reports, $ aju and his brother % $ ama $ aju, # ho # as the

managing director, hid the deception from the company's

board, senior managers and auditors.

Today, a ne#

board, quic&ly appointed by the government over the

#ee

&end, told investors

and the media it is#

or&ing on a rescue plan that includes bringing in ne

#auditors and a

ne#

layer of top management#

ith government bac&ing.

%ut the company still has no clean

accounting boo&

s, nor has any idea on the amount of#

or&

ing capital the firm.

Management Morality and Emphasis on CSR


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ETHICS TOOLS: TRAINING

The ethics program is essentially useless unless all

staff members are trained about whatitis, how it

works and their roles in it. The nature ofthe systemmay invite suspicion if not handled openly and

honestly. In addition, no matter how fair and up-to-

date is a set of policies; the legal system will often

interpret employee behaviour (ratherthan written policies) as de facto policy.

Therefore, all staff must be aware of and actin full accordance with policies and

procedures (this is true, whether policies and procedures are for ethics programs

or personnel management). This full accordance requires training about policies

and procedures.

. Orient newemployees to the organi ation's ethi s program during new-employee orientation.

2. Reviewtheethi s management program in managementtraining

e periences.

3. Involving staffin review ofcodes is strong ethics training.

4. Involving staffin review ofpolicies (ethics and personnel policies) is

strong ethics training.

5. One ofthe strongestforms ofethics training is practicein resolving

comple ethical dilemmas.Have staff use any ofthe three ethical-dilemma-

resolution methods in this guidebook and apply them to any ofthe real-to-

life ethical dilemmas also listed in this guidebook.6. Includeethical performance as a dimension in performance

appraisals.

7. The bestethics trainer:Bill Goodman, Chief Human Resource Officer at

Aveda, describes, "We start ourtraining even in ourjob ads,"then ads, "but

the besttraineris the behaviour of ourleaders."

8. Give all staffa copy ofthis free "Complete Guideto Ethics


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Management." \

The imensionalManagementMo el(3 MM): reflects that allcomplex systems reflectthe 3DMM this can be seen atthe information

level, society, organi ations, psychology, nanobots activities at sub-chromosome levels, etc. Ethicsis ofthe 27 plans that make up the 3DMM.

Theethics plan (S ) is located atthe 3rd infrastructurallevel i.e.,

Management Style; within the Executive row and Directive column. Whether

the various views on life and ethics recogni e it or not, Ethics remains a

component of 3DMM and willinevitably reflect: a) View of man; b) contribute

to definitions; c) identify actual managed functions, activities, priorities and

behaviour; as well as, d) affectthe other 26 plans atthe Executive, Supervisory,

Functional management atthe three infrastructurallevels: Style, Operation and

Design. When Ethics atthe executive 'S ' levelis denied or compromised, then

substitute 'ethics' may emerge atthe Operational supervisory managementlevel

(e.g., quality control - 'O9'), atthe Design supervisory managementlevel (e.g.,

rules and regulations - 'D6') or other plans.


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Ethi s t 33

PUBLICS OPINION OF BUSINESS ETHICS

y Gallup Poll finds that only 17 percent to 20 percent of the public thoughtthe business ethics of executives to be very high orhigh

y To understand public sentiment towards business ethics, ask threequestions

Has business ethics really deteriorated?Are the media reporting ethical problems more frequently and

vigorously?

Are practices that once were socially acceptable no longer sociallyacceptable?


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Ethi s t 34

CONCLUSION

Ethics are important not only in business but in all aspects of life because it is

an essential part of the foundation on which of a civilized society is build. A

business or society that lacks ethical principles is bound to fail sooner or later.

Knowing what is right is very important to personal and business ethics. Doing

what is right is absolutely critical to personal and business ethics. A strong

unwavering commitment to your core values and guiding principles of your

business or organization will lead to the right ethical decisions and actions. In

the absence of these actions, all one has is good intentions and that simply is not

enough for effective leadership.

WEBLIOGRAPHY:

(http://www.duke.edu/~wgrobin/ethics/surfing.html) (http://www.ethics.ubc.ca/resources/business/)http://managementhelp.org/ethics/ethxgde.htm

Complete Project on Ethics & Management

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