ETHICS
ETHICS ETHICS IS DERIVED FROM GREEK WORD ETHIKOS MEANING CUSTOM
OR CHARACTER.ETHICS IS A CODE OF BEHAVIOUR CONSIDORED
CORRECT.ETHICS INVOLVES THE EVALUATION AND APPLICATION OF CERTAIN
MORAL VALUES THAT A SOCIETY OR CULTURE HAS COME TO ACCEPT AS ITS
NORMS.ETHICS IS A BRANCH OF PHILOSOPHY, IS CONSIDERED A NORMATIVE
SCIENCE BECAUSE IT IS CONCERNED WITH THE NORMS OF HUMAN
CONDUCT.BUSINESS ETHICSBUSINESS-ETHICS IS A SUM TOTAL OF PRINCIPLES
AND CODE OF CONDUCT BUSINESSMEN ARE EXPECTED TO FOLLOW IN DEALING
WITH THEIR STACKEHOLDERS. SUCH AS STOCKHOLDERS, EMPLOYEES,
CUSTOMERS, CREDITORS, LAW ENFORCING AGENCIES ETC.
SINCE BUSINESS-ETHICS IS AN OFFSHUTE OF APPLIED ETHICS, THE
STUDY OF BUSINESS-ETHICS ESSENTIALLY DEALS WITH UNDERSTANDING WHAT
IS RIGHT AND MORALLY GOOD IN BUSINESS
BUSINESS-ETHICS IS THAT SET OF PRINCIPLES & REASONS WHICH
SHOULD GOVERN THE CONDUCT OF BUSINESS AT INDIVIDUAL AND COLLECTIVE
LEVELS.PRINCIPLES OF PERSONAL ETHICSPERSONAL-VALUES ARE THE
CONCEPTION OF WHAT AN INDIVIDUAL OR A GROUP REGARDS AS
DESIRABLE.
PERSONAL-ETHICS REFER TO THE APPLICATION OF THESE VALUES IN ANY
THING ONE DOES. PERSONAL-ETHICS MIGHT ALSO BE CALLED AS
MORALITY.
CON CERN RESPECT FOR THE AUTONOMY OF OTHERS.HONESTY AND THE
WILLINGNESS TO COMPLY WITH THE LAW.FAIRNESS AND ABILITY NOT TO TAKE
UNDUE ADVANTAGE OF OTHERS.BENEVOLENCE AND PREVENTING HARM TO ANY
CREATUREWHY PEOPLE BEHAVE ETHICALLY?MOST PEOPLE WANT TO MAINTAIN
CLEAR CONSCIENCE AND WOULD LIKE TO ACT ETHICALLY UNDER NORMAL
CIRCUMSTANCES.PEOPLE WANT TO AVOID PHYSICAL AND MENTAL INJURIES TO
OTHERS.PEOPLE ARE OBLIGED TO OBEY LAWS OF THE LAND.SOCIAL AND
MATERIAL WELL BEING DEPENDS ON ONES ETHICAL BEHAVIOUR IN THE
SOCIETY.PRINCIPLES OF PROFESSIONAL ETHICSA PROFESSION INVOLVES A
SPECIFIC BRANCH OF ADVANCED LEARNING OR A BRANCH OF SCIENCE
PROFESSION OF DOCTOR, ENGINEER, BUISNESS MANAGER ETC.A PROFESSIONAL
IS ONE WHO IS ENGAGED IN ACTIVITIES OF A SPECIFIC PROFESSION AS
ONES PAID OCCUPATIONBASIC PRINCIPLE
IMIMPARTIALITY: OBJECTIVITY DILIGLNCE / DUTY OPENNESS: FULL
DISCLONURE FIDELITY TO PROFESSIONAL RESPONSIBILITY CONFIDENTIALITY
: TRUST A VOIDING POTANTIAL OR APPARENT CONFLICT OF INTERESTWHAT IS
NOT BUSINESS ETHICSRELIGIONLAWCULTURAL
TRAITSFEELINGSSCIENCECOLLECTION OF VALUESIMPORTANCE AND NEED FOR
BUSINESS ETHICSETHICAL BEHAVIOUR IS NECESSARY TO GAIN TRUST.
TRUST LEADS TO PREDICTABILITY AND EFFIECLCY OF BUSINESS
BUSINESS OF BUSINESS IS ETHICAL BUSINESS
BUSINESS-ETHICS ENABLES US TO ASSESS THE BENEFITS & PROBLEMS
ASSOCIATED WITH DIFFERENT WAYS OF MANAGING ETHICS IN THE
ORGANIZATION.
BUSINESS-ETHICS SEEKS TO IMPROVE WELFARE OF THE SOCIETY.CODE OF
CONDUCT AND ETHICS FOR MANAGERSIN THE EXERCISE OF THEIR DUTIES AND
RESPONSIBILITIES MANAGERS MUST OBSERVE FOLLOWING ETHICAL
VALUES.INTEGRITY : MORALLY UPRIGHTIMPARTIALITY : FAIR AND
UNPREJUDICED RESPONSIVENESS TO PUBLIC INTERESTACCOUNTABILITY :
RESPONSIBLE FOR THEIR ACTION AND ACCOUNTABLE TO ALL STAKEHOLDERS
STOCKHOLDERS, CREDITORS, SUPPLIERS, EMPLOYEES, CONSUMERS,
GOVERNMENT AND SOCIETTY AT LARGE.HONESTY : SINCERE, TRUTHFUL AND
TRUST WORTHYTRANSPARENCY : FRANK, OPEN
DISTINCTION BETWEEN VALUES AND ETHICSVALUES ARE PERSONAL IN
NATURE WHILE ETHICS IS A GENERALIZED VALUE SYSTEM. (e.g. (A) VALUES
A BELIEF IN CUSTOMER SATISFACTION, BEING A GOOD PAY-MASTER ETC. (B)
ETHICS AVOIDING DISCRIMINATION IN RECRUITMENT, ADOPTING FAIR
BUSINESS PRACTICES)
BUSINESS ETHICS CAN PROVIDE THE GENERAL GUIDELINE WITHIN WHICH
MANAGEMENT CAN OPERATE, WHILE VALUES HAVE ALTERNATIVES TO CHOOSE
FROM (e.g. PHILANTHROPY AS BUSINESS POLICY IS OPTIONAL VALUES)
MANAGERS MAY HAVE TO RECONCILE DIVERGENT VALUES (e.g.
STANDARDIZATION V/S PRODUCT VARIETY)
MODIFICATION OF VALUES IS FREQUENTLY REQUIRED FOR BUSINESS
STRATEGY IMPLEMENTATION (THOUGH IT IS DIFFICULT) WHY SHOULD
BUSINESS ACT ETHICALLYTO PROTECT ITS OWN INTERESTTO PROTECT THE
INTEREST OF BUSINESS COMMUNITY AS A WHOLE SO THAT PEOPLE HAVE
CONFIDENCE IN IT.TO KEEP ITS COMMITMENT TO SOCIETY TO ACT
ETHICALLYTO MEET STAKEHOLDERS EXPECTATIONSTO PREVENT HARM TO
GENERAL PUBLICTO BUILD TRUST WITH KEY STAKEHOLDER GROUPSTO PROTECT
THEMSELVES FROM ABUSE OF UNETHICAL EMPLOYEES AND COMPETITORSTO
PROTECT THEIR OWN REPUTATIONTO PROTECT THEIR EMPLOYEES BY PROVIDING
THEM AN ENVIRONMENT FACILITATING OBESRVING THEIR OWN VALUESETHICAL
DECISION MAKINGIS THE DECISION YOU ARE TAKING LEGAL? IF NOT, IT IS
NOT ETHICAL.
IS THE DECISION YOU ARE TAKING FAIR? WIN-WIN- EQUITABLE RISK AND
REWARDS.
IS THERE READINESS FOR ACCEPTANCE OF NEGATIVE CONSEQUENCES OF
SEEMINGLY UNETHICAL BEHAVIOR. IF ONES CONSCIENCE IS CLEAR THERE IS
NOTHING TO BE ASHAMED OF.CHANGING BUSINESS ENVIRONMENT &
ETHICAL CHALLENGESFAST CHANGING, EXTERNAL ENVIRONMENT CALLS FOR
POSITIVE CHANGE IN RESPONSE OF THE ORGANIZATION NEW ETHICAL
ISSUES.
PROCESS OF DECENTRALIZATION LEADS TO NUMBER OF ETHICAL
ISSUES.
CONFLICT BETWEEN ORGANIZATION & INDIVIDUAL GOALS CAUSES
SEVERAL UNETHICAL PRACTICES.
HUGE INFORMATION FROM ALL SOURCES INCREASES POTENTIAL OF ILLEGAL
USE OF PROPERIETORY INFORMATION.CHANGING BUSINESS ENVIRONMENT &
ETHICAL CHALLENGES (CONTD.)McCOY SAYS DEALING WITH VALUES REQUIRES
CONTINUAL MONITORING OF THE SURROUNDING ENVIRONMENT, WEIGHING
ALTERNATIVE CAUSES OF ACTION, BALANCING AND (WHEN POSSIBLE)
INTEGRATING CONFLICTING, RESPONSIBILITIES, SETTING PRIORITIES AMONG
COMPETING GOALS, AND ESTABLISHING CRITERIA FOR DEFINING AND
EVALUATING PERFORMANCE.CORPORATE GOVERNENCERIGVEDA SAYS A BUSINESS
MAN SHOULD BENEFIT FROM BUSINESS LIKE A HONEY BEE WHICH SUCKLES
HONEY FROM THE FLOWER WITHOUT AFFECTING ITS CHARM AND BEAUTY.
ORGANIZATIONS FOLLOWING ETHICAL PRACTICES IN ALL THEIR ACTIVITIES
IN ALL PROBABILITY FOLLOWS BEST CORPORATE GEVERNENCE PRACTICES AS
WELL.CORPORATE GOVERNENCE (CONTD.)SOME PEOPLE DEFINE AS: CORPORATE
GOVERNENCE ARE THE GUIDING PRINIPLES THAT ON ONE HAND TRIES TO
SYNTHESIZE THE SEMINGLY CONFLICTING GOALS AMONG THE INDIVIDUALS,
THE CORPORATION AND THE COMMUNITY AND ON THE OTHER HAND BETWEEN THE
IMMEDIATE BENEFITS TO THE CORPORATION SUCH AS PROFITS AND THE
SECULAR AND LASTING SUBSTANTIVE SOCIAL GAINS.SOME OTHER DEFINE AS :
SET OF RULES THAT GOVERN THE ADMINISTRATION AND MANAGEMENT OF THE
COMPANY.CORPORATE GOVERNENCE (CONTD.)IN ALL FACTS OF CORPORATE
GOVERNANCE THE UNDERLYING GOAL POSTS ARE:TRANSPARENCYINTEGRITYFULL
DISCLOSER OF FINANCIAL AND NONFINANCIAL INFORMATIONPROTECTION OF
STAKEHOLDERS INTERESTCORPORATE GOVERNENCE (ETHICAL) PRACTICESACT
WITH HONESTY AND INTEGRITY AVOIDING ACTUAL AND APPARENT CONFLICT OF
INTEREST IN PERSONAL AND PROFESSIONAL RELATIONSHIPPROVIDE ACCURATE
COMPLETE, TIMELY, RELEVANT INFORMATION, IN REPORTS AND
DOCUMENTSCOMPLY WITH LAW OF THE LANDACT IN GOODFAITH WITHOUT
MISREPRESENTING FACTSPROTACT THE CONFIDENTIALITY OF
INFORMATIONENSURE THAT CONFIDENTIAL INFORMATION IS NOT USED TO
PROMOTE THE PERSONAL BENEFITSSHARE KNOWLEDGE AND MAINTAIN SKILLS
IMPORTANT AND RELEVANT TO STAKEHOLDER NEEDSACHIEVE RESPONSIBLE USE
OF AND CONTROL OVER ALL ASSEST AND RESOURCES EMPLOYED OR
ENTRUSTEDHOW ETHICS CAN MAKE CORPORATE GOVERNENCE MORE
MEANINGFULCOREPORATE GOVERNENCE IS MEANT TO RUN COMPANIES ETHICALLY
IN A MANNER SUCH THAT ALL STAKEHOLDERS i.e. CREDITORS,
DISTRIBUTORS, CUSTOMERS, EMPLOYEES, SOCIETY AT LARGE, GOVT. ETC.
ARE DEALT WITH IN A FAIR MANNER.
GOOD C.G. SHOULD LOOK AT ALL THE STAKEHOLDERS AND NOT JUST
SHAREHOLDERS ALONE.
C.G. NOT TO BE IMPOSED IT SHOULD COME FROM WITHIN
THERE ARE PROVISIONS OF COMPANIES ACT WHICH ARE TO BE ADHERED TO
IN LETTER AS WELL AS SPIRITS
CORRECT DECISIONS IN THE AREAS WHERE LAW IS SILENT OR REGULATORY
FRAMEWORK IS WEAK.
SEBI HAS JURISDICTION ONLY UPTO LIMTED/LISTED
COMPANIES.CHARACTERSTIC OF AN ETHICAL ORGANIZATIONEASY INTERACTION
WITH DIVERSE INTERNAL AND EXTERNAL STAKEHOLDER GROUPS. AND MEETING
THE NEEDS OF STAKEHOLDERS.
OBSESSED WITH FAIRNESS, THEIR GROUND RULES EMPHASIZE THAT THE
OTHER PERSONS INTERESTS COUNT AS MUCH AS THEIR OWN.
INDIVIDUAL TAKE PERSONAL RESPONSIBILITY FOR ACTIONS OF THE
ORGANIZATION.
THEY SEE THEIR ACTIVITIES IN TERMS OF PURPOSE, THE PURPOSE WHICH
TIES THE ORGANIZATION WITH THE ENVIRONMENT, CORPORATE SOCIAL
RESPONSIBILITY.
CORPORATE EXCELLENCE THROUGH ORGANIZATION CULTURE.
MANAGER PERFORMING WELL IN A PRESCRIBED MANNER CORPORATE
GOVERNENCE.
CORPORATE SOCIAL RESPONSIBILITYTHE CLASSICAL ECONOMIC MODEL:
PUBLIC INTEREST WAS SERVED BEST BY INDIVIDUALS PERSUING THEIR
OWN SELF-INTEREST.
THE SOCIAL ECONOMIC MODEL:* BUSINESS AS A SUB SYSTEM OF HIGHLY
INTERDEPENDENT SOCIETY
* COMPANIES HAVE STAKEHOLDERS OTHER THAN STOCKHOLDERS
* STAKEHOLDER AUDIT ALLOWS TO SYSTEMATICALLY IDENTIFY ALL
PARTIES THAT COULD POSSIBILY IMPACTED BY COMPANYS PERFORMANCE
* BUSINESS HAS AN OBLIGATION TO RESPOND TO THE NEEDS OF ALL
STAKEHOLDERS WHILE PURSUING ITS PROFITDEFINITION OF CORPORATE
SOCIAL RESPONSIBILITY IT IS CONTINUING COMMITMENT BY BUSINESS TO
BEHAVE ETHICALLY AND CONTRIBUTE TO ECONOMIC DEVELOPMENT, WHILE
IMPROVING THE QUALITY OF LIFE OF THE WORK-FORCE AND THEIR FAMILIES
AS WELL AS OF THE LOCAL COMMUNITY AND SOCIETY AT LARGE.
COMPANIES TO ANSWER1. QUALITY OF THEIR MANAGEMENT ( PEOPLE &
PROCESSES)2. NATURE AND QUALITY OF THEIR IMPACT ON STAKEHOLDERS
INCLUDING SOCIETY AT LARGETODAYS CORPORATE SOCIAL RESPONSIBILITYTO
BE VOLUNTARILY RESPONSIBLE TO ETHICAL & SOCIAL CONSIDERATIONSIT
IS NOT A LEGAL BINDING UNLIKE CORPORATE ACCOUNTABILITYWHICH MAKES
COMPANY TO ADHERE TO LEGAL AND SOCIAL NORMS.IT IS SET OF
OBLIGATIONS TO PURSUE THOSE POLICIES AND ACTIONS DESIRABLE INTERMS
OF OBJECTIVES AND VALUES OF SOCIETY FOR ITS BETTERMENT.IT IS
OVERALL RELATIONSHIP WITH ALL ITS STAKEHOLDERS ,THESE INCLUDE
CUSTOMERS, EMPLOYEES, COMMUNTIES, OWNERS / INVESTORS, GOVERNMENT,
SUPPLIERS AND COMPETITORSIT CAN BE EXPLAINED BY FOLLOWING
EQUATION:TOTAL CORPORATE SOCIAL RESPONSIBILITY = ECONOMIC + LEGAL /
ETHICAL + PHILAN THROPIC RESPONSIBILITIESTODAYS CORPORATE SOCIAL
RESPONSIBILITY (CONTD.)SOCIALLY RESPONSIBLE FIRM SHOULD STRIVE TO:*
MAKE A PROFIT* OBEY THE LAW* BE ETHICAL* BE A GOOD CORPORATE
CITIZEN
SOCIAL RESPONSBILITY OF BUSINESS IS SOCIETY BASED AND
TEMPORAL(I) SOME SOCETIES HAVE STRONG FORMAL INSTITUTIONS (GOVT.,
BUSINESS, ORGANIZED RELIGION ETC.) WHILE OTHERS HAVE STRONG
INFORMAL INSTITUTIONS ( FAMILY, CLAN, CUSTOMER ETC.)(II)SOCIETY
DEMANDS DIFFERENT ROLES FROM INSTITUTIONS
TO PROTECT, TO ENHANCE AND TO WORK FOR BETTERMENT OF
SOCIETY.Corporate citizenship implies a firms commitment and
business focus to fulfill its social responsibilities as defined by
its stakeholders.23ADVANTAGES OF C.S.R.IMPROVED FINANCIAL
PERFORMANCEENHANCED BRAND IMAGE AND REPUTATIONINCREASED SALES AND
CUSTOMER LOYALTYBETTER ATTRACTION & RETENTION OF
EMPLOYEESREDUCED REGULATORY OVERSIGHTSINNOVATION AND LEARNINGRISK
MANAGEMENTEASIER ACCESS TO CAPITALREDUCED OPERATING COSTSC.S.R. AS
A BUSINESS STRATEGY FOR SUSTAINABLE DEVELOPMENTC.S.R. AS A STRATEGY
REFERS TO ENHANCING STAKE HOLDER VALUE AND DELIVERY OF MEASURABLE
RESULTS TO SOCEITY AT LARGE.
IN CONTEXT OF DEVELOPING SOCIETY C.S.R. IS CAPACITY BUILDING FOR
SUSTAINABLE LIVELIHOODS.
EXTERNALLY IT PROMOTES IMAGE AND GOODWILL, SPECIAL RESPECT
AMONGST PEERS, CUSTOMERS, GOVT. AGENCIES, INVESTORS AND MEDIA, ALL
PROMOTING LONGTERM SHAREHOLDER VALUE AND SUSTAINABLE
DEVELOPMENT.
INTERNALLY IT PROMPTES LOYALTY, TRUST IN ORGANIZATIONAL ETHICS,
DIVERSION FROM MUNDANE THINGS OF DAILY WORK TO MEANING TO EMPLOYEES
LIFE. IT REDUCES ATTRITION RATEIf u cant measure you cannot
manage.25SOCIALLY RESPONSIBLE INVESTINGS.R.I. AS A STRTEGY IS
IMPORTANT BECAUSE(a) S.R.I. COMPANIES OFFER LONG TERM VALUE.(b)
SOCIAL IMPACT ON TOP OF FINANCIAL PERFORMANCE PROVIDES ADDITIONAL
SAFETY AGAINST RISK.
S.R.I. PROVIDES A COMPETITIVE ADVANTAGE AS IT IS ACCEPTABLE TO
THE WIDER ENVIRONMENT IN WHICH COMPANIES COMPETE.
PRACTITIONORS OF S.R.I. STRESS THE FACT THAT IT IS THE
COST-EFFECTIVE WAY TO GAIN COMPETITIVE ADVANTAGE. COMPANIES, IN
THEIR EFFORTS TO ENGAGE IN STRATEIC CSR AIM TO MATCH BUSINESS
OBJECTIVES WITH THE NEEDS OF THE COMMUNITY E.G. COCA-COLA PLANT
HARVESTING RAIN WATER FOR VILLAGERS, IT COMPANY EDUCATING SCHOOL
CHILDREN IN COMPUTERS ETC.