Professional Ethics Prof Ali Sajid PhD Dir IB & M UET Lahore (TI )

SOME TIMELESS INSIGHTS

 SOMEONE WILL ALWAYS BE LOOKING AT YOU AS AN EXAMPLE OF HOW TO BEHAVE. DONT LET HIM DOWN DONT DISMISS A GOOD IDEA SIMPLY BECAUSE YOU DONT LIKE THE SOURCE DONT BE SO CONCERNED WITH YOUR RIGHTS THAT YOU FORGET YOUR MANNERS DO NOT LET A LITTLE DISPUTE INJURE A GREAT FRIENDSHIP
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 DO YOUR HOMEWORK AND KNOW YOUR FACTS BUT REMEMBER IT IS PASSION THAT PERSUADES DO NOT STOP TRAFFIC TO PICK UP A COIN OVERESTIMATE TRAVEL TIME BY 15 PERCENT WHEN YOU SAY, I AM SORRY, LOOK THE PERSON IN THE EYE OBTAIN COUNSEL OF OTHERS
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 PRAY. THERE IS IMMEASURRABLE POWER IN IT REMEMBER THAT EVERYONE IS INFLUENCED BY KINDNESS SUCCEED AT HOME FIRST REMEMBER THE PEOPLE INVOLVED HEAR BOTH SIDES BEFORE JUDGING DEFEND THOSE WHO ARE ABSENT
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 DEVELOP ONE PROFICIENCY A YEAR PLAN TOMORROWS WORK TODAY MAINTAIN A POSITIVE ATTITUDE CULTIVATE A SENSE OF HUMOUR BE ORDERLY IN PERSON AND IN WORK DO NOT FEAR MISTAKES FEAR ONLY THE ABSENCE OF CREATIVE AND CONSTRUCTIVE RESPONSES TO THOSE MISTAKES 7

 FACILITATE THE SUCCESS OF YOUR SUBORDINATES

LISTEN TWICE AS MUCH AS YOU SPEAK

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 Aaj Hum Daar pay tangey gayean gen batoon pur

Kay ejab kull koo waoo nassaboon main maleian Ahmed Faraz

Why study business ethics?

Reports of unethical behavior are on the rise. Individual ethics is not enough. Studying business ethics helps identify ethical issues to key stakeholders.

Why Behave Ethically?

Managers should behave ethically to avoid harming others.
are responsible for protecting and nurturing resources in their charge.
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Managers

Ethics Ethics are standards of right & wrong that influence behavior. Right behavior is considered ethical, & wrong behavior is considered unethical. It is major concern to both managers & employee.
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Ethics is about how we meet the challenge of doing the right thing when that will cost more than we want to pay
The Josephson Institute of Ethics
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 Ethics, Social Responsibility

Ethics: a set of beliefs about right & wrong
principles of conduct governing an individual or a group behavior that is fair and just, over and above obedience to laws and regulations

Ethics guide people in dealings with stakeholders & others, to determine appropriate actions. Managers often must choose between the conflicting interest of stakeholders.
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What is Ethics?

Understanding Right and Wrong Religion Culture Family Media Personal Role models

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What is Ethics?

Developing your own Moral Compass How should I live? Value Conflicts Value of a value Intrinsic Extrinsic

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Ethics?

The Golden Rule Do the same thing to your fellow as you would desire to be done to you.
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Ethical Models
Social Ethics: Legal rules, customs

Organizations Code of Ethics

Professional Ethics: Values in workplace

Individual Ethics: Family influence

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Ethical Decisions
It is difficult to know when a decision is ethical. Here is a good test: Managerial ethics:
If a manager makes a decision falling within usual standards, is willing to personally communicate the decision to stakeholders,

believes friends would approve, then it is likely an ethical decision.

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Ethical Origins
Societal Ethics: standards that members of society use when dealing with each other. Based on values and standards found in societys legal rules, norm, and mores. Codified in the form of law and society customs. Norms dictate how people should behave. Societal ethics vary based on a given society. Strong beliefs in one country may differ elsewhere. Example: bribes are an accepted business practice in some countries. 20

Ethical Origins Professional Ethics: values & standards used by groups of managers in the workplace. Applied when decisions are not clear-cut ethically. Example: physicians and lawyers have professional associations (PMA, Bar Council) that enforce these.
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Individual and Organizational Ethics

Values

basic beliefs about what one should or should not do, and what is and is not important an individuals basic convictions of what is right and wrong
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 Values
Organizational values Traditional virtues as:

Trust, loyalty and commitment, honesty and respect for one another, and avoiding conflicts of interest.
Newer elements such as Innovation, Teamwork, Customer Focus Continuous improvement
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 Individual ethics: Values of an individual resulting from their family& upbringing.

If

behavior is not illegal, people will often disagree on if it is ethical.

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Personal Ethics

Make your ethical decisions now Develop empathy Take time to think Call it what it is Every action & decision has an ethical component Establish a freedom fund

Ethics

of top managers set the tone for firms. Concept of ZUBAN

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Managing Ethics
Ethical questions managers face everyday: Should I accept those tickets to the game? Who knows if I add Rs 500 more to the expense account? My employee has been sending personal faxes from the office Ethical decisions involve: Normative judgments A normative judgment implies that something is good or bad, right or wrong, better or worse. Morality Morality: societys accepted norms of behavior
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Ethical Decisions
Some other issues managers must consider. Should you hold payment to suppliers as long as possible to benefit your firm? This will harm your supplier who is a stakeholder.

Should you pay compensation pay to laid off workers?

This may decrease the stockholder's return.

Should you buy goods from overseas firms that hire children? If you dont the children might not earn enough money to eat.
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Ethics Contributes to Profits

Corporate concern for ethical conduct is increasingly being integrated with strategic planning to maximize profitability. Corporate citizenship is positively associated with: return on investment and assets sales growth Many studies have found a positive relationship between citizenship and performance.

Corporate Stakeholders
Stockholders

Employees

Managers

THE FIRM
Community Suppliers Customers

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Stakeholders
Stakeholders: People or Groups that have an interest in org include employees, customers, shareholders, suppliers, and others. Often want different outcomes & managers must work to satisfy as many as possible.

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Business Ethics & Stake Holders..

Comprises principles and standards that guide behavior in the world of business. Whether a specific behavior is ethical or unethical is often determined by stakeholders: investors employees customers interest groups the legal system the community

Stakeholders Define Ethical Issues in Business

Stakeholders are those who have a stake or claim in some aspect of a companys products, operations, markets, industry and outcomes: customers investors employees suppliers government agencies communities Stakeholders provide tangible and intangible resources critical to a firms success.

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Types of Stakeholders...
Primary stakeholders are those whose continued association is absolutely necessary for a firms survival. employees, customers, investors, governments and communities Secondary stakeholders do not typically engage in transactions with a company and are therefore not essential to its survival. media, trade associations, and special interest groups

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Organizational Culture
Represent values & behaviors common to the org Tend to develop over long periods of time. Ethical codes & Policies provide signals of top mgts desires in orgal culture
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Ethical Dilemmas
where decision you must make requires you to make a right choice knowing full y well that you are:
Leaving an equally right choice undone. Likely to suffer something bad a s a result of that choice. Contradicting a personal ethical principle in making that choice.

Abandoning an ethical value of your community or society in making that choice.

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Some large org - ethics officers, who are responsible for developing & implementing ethics codes. Business ethics, & ethics codes should provide assistance in making ethical decisions. In media, some scandal related to unethical &/or unlawful behaviors.
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Why differentiate between rules/policies/law & ethics?

The difference between an ordinary decision and an ethical one is point where rules no longer serve. Values and judgment play a key role in ethics decisions.

What to Consider When Applying Ethics to Business

Businesses must earn a profit Businesses must balance profits against the needs and desires of society. Maintaining this balance often requires compromise and tradeoffs.

It is ethical to give gift at some countries but unethical to give bribe (gift as condition of acquiring business). In some countries giving bribes is standard business practice.
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Does Ethical Behavior Pay?

Enrons unethical behavior cost many organizations & people great deal of money directly, but it also hurt everyone in stock market, & general economy, as unethical behavior contributed to bear market. Crescent Bank, Altaf Saleem Enron is no longer company it was, & its auditor Arthur Andersen lost many of many of its clients & had to sell parts of its business due to unethical behavior. B o Punjab Scandal Sailkot From individual level, you may say that former Enron CEO Kenneth Lay & other made millions for their unethical behavior. 41

Unfortunately, greed has destroyed leaders. Greed could be lust for Power, resources and Authority Business without morality is sin.
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Few Topics for Consideration

Ethics and Governance Ethics and your org ( Social or Ethical Audit) Code of Ethics of any org Ethics and world religion Ethics and Islam Ethics and Profitability Ethics and Education Ethics and Medicine Ethics in Health Care Ethics and Food Ethical and law/Justice Ethics and CSR Ethics in Telecom Industry

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Ethics in Higher Education Ethics and Entertainment industry Telcom Media and Ehtics Print media and Ethics Freedom of Expression and Ethics

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Ethics in HRM in Industry Ethics in Financial Sector Ethics in Insurance Ethics in Defense Forces Ethics in Research Ethics in Construction Industry Ethics in Tourism and Hotel Industry Impact of Ethics on Org Effectiveness and Productivity Ethics in Auto Mfrg Ethics in Public Sector ( with special Focus on one org) Ethics and Customer Satisfaction Ethics and Environment Ethics in MNCs in Pakistan

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Ethical Decisions
A key ethical issue is how to disperse harm & benefits among stakeholders. If a firm is very profitable for two years, who should receive the profits? Employees, managers & stockholders all want a share. Should we keep the cash for future slowdowns? What is the ethical decision? What about the reverse, when firms must layoff workers. Final point: stockholders are the legal owners of the firm!

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Ethics & Firm

Social Responsibility
The managers duty to nurture, protect & enhance the welfare of stakeholders Extent to which companies should & do channel resources toward improving one or more segments of society other than the firms own stockholders
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Emerging Business Ethics Issues

Ethical Issues are...

problems, situations, or opportunities requiring an individual to choose among actions that may be evaluated as right or wrong, ethical or unethical. Ethical issues arise because of: conflict among personal/organizational values conflicts with societal values

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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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Ethical Issues in Business...

honesty and fairness conflicts of interest fraud discrimination information technology

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Honesty & Fairness...

Honesty relates to truthfulness, integrity and trustworthiness. Fairness relates to being just, equitable and impartial. Breaking or bending laws violates trust. Business should not be played as a game. Lack of rules and poor enforcement lead to unethical behavior.

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Conflicts of Interest...
exist when an individual must choose whether to advance his or her own personal interests, those of the organization, or some other group. The individual must be able to separate personal interests from business dealings. Bribery is a significant concern.

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Fraud...
Any purposeful communication that deceives, manipulates or conceals facts in order to create a false impression is fraud. Most common activities include: accounting fraud misrepresentation of companys financial reports marketing fraud fraud related to creating distributing, promoting and pricing products consumer fraud
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Marketing Fraud
Lying is a major ethical issue with internal and external communications. False advertising relates to: exaggerated claims concealed facts and ambiguous statements lying Unclear or inaccurate labeling of products is also considered fraud.

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Discrimination...
Discrimination among employees or customers based on race, sex, religion or sexual preference Affirmative action programs efforts to recruit, hire, train and promote qualified individuals from groups that have traditionally been discriminated against based on race, gender, or other characteristics such initiatives are required of government contractors, may be part of a settlement agreement with a state or federal agency, or may be determined by court order
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Information Technology...
There are ethical issues related to technology, the Internet or other forms of electronic communication. Specific issues include: monitoring of employees consumer privacy site development and online marketing legal protection of intellectual properties

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How to Identify an Ethical Issue...

An activity approved by most members of the organization and customary in the industry is probably ethical. If the issue withstands open discussion between groups within and outside the organization, it is probably ethical. Covert discussion and destroyed or disguised documents indicate potential problems.

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Views of Ethical Decision-Making

Decisions are Decision makers Decisions made concerned with seek to impose solely on the basis respecting and pro- and enforce rules of outcomes or tecting basic rights fairly and consequences of individuals impartially

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leadership, culture, incentive/ compensation plans help shape individual ethical behavior
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Ethical Leadership
Govt laws & regulations are designed to govern business behavior. However, ethics goes beyond legal requirements. What is considered unethical in some countries is considered ethical in others.
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 Plagiarism Plagiarism is the use (or 'appropriation') of preexisting material by the author of a new work in such a manner that it appears to be claimed to be an original contribution by that author, in particular because of the absence of a citation of the original work. The categories below follow Martin (1994) [would I dare to omit that citation ???] plagiarise an entire work plagiarise a segment of material 'word-for-word' .

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 o o o o o o

This might be from: a text-book a well-known refereed paper an obscure refereed paper an unrefereed paper an unpublished paper a student paper plagiarise by paraphrasing plagiarise a secondary source, i.e. fail to cite a work that has been used as an intermediary source of pre-digested information about an original work (often a 'classic') that is cited in the new work. This can be compounded by failure to consult the original work plagiarise the reference list of a prior work, especially an uncited work plagiarise the argument (as distinct from the text) plagiarise ideas
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Social Responsibility An ethical issue since it involves morality with regards to firms responsibilities Generally clear cut when responsibility is to customers or employees Might include creating jobs for minorities, controlling pollution, or supporting local cultural events
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Traditional View of Social Responsibility

Adam Smith (father of classical economic model) Believed that an invisible hand promoted the public welfare Public interest is best served by individuals pursuing their own self-interests

Perspective still held today by some economists, including Milton Friedman, who carried it even further
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Social Responsibility
Profit Concept Also called Managerial Capitalism Argued that business main objective is to make money Social responsibility must be taken care of by govt Primary responsibility of mgt is to make a profit for its shareholders as long as it obeys laws & engages in open & free competition Moral Minimum Firm should strive for profits as long as it commits no harm
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Social Responsibility
Stakeholder Concept Org must balance all interests of stakeholders Org must ensure rights of these groups (stakeholders) Stakeholders must participate, in some sense, in decisions that substantially affect their welfare Social Power/Social Responsibility Concept Org must behave proactively Business has a certain social responsibility because of the power it wields Be a good corporate citizen

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Social Responsibility Pyramid

Good Corporate Citizen

Do What is Right, Just

Obey the Law

Make Enough Money To Survive

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Levels of Social Responsibility

Reactive (Obstruction)

Defensive

Accommodative Proactive

Low

Level of Social Responsibility

High
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Social Responsiveness
Reactive (Obstructionist) response: managers choose not to be socially responsible. Managers behave illegally and unethically. They hide and cover-up problems. Defensive response: mgrs stay within law but make no attempt to exercise additional social responsibility. Put shareholder interest above all other stakeholders. Mgrs say society should make laws if change is needed.

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Social Responsiveness
Accommodative response: managers realize need for social responsibility. Try to balance the interests of all stakeholders.

Proactive response: managers actively

embrace social responsibility. Go out of their way to learn about & help stakeholders. Good Corporate Citizen
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Why be Responsible?
Managers accrue benefits by being responsible. Workers and society benefit. Quality of life in society will improve. It is the right thing to do.
Whistleblowers: a person reporting illegal or unethical acts. Whistleblowers now protected by law in most cases. Social audit: mgrs specifically take ethics & business into account when making decisions.

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The Social Audit

Profitability
Negative Low Medium High

Social Returns

Negative
Low Medium

High

Favored Strategies
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Arguments For and Against Social Responsiveness

For:
Business is unavoidably involved in social issues Business has the resources to tackle todays complex societal problems

A better society means a better environment for doing business

Corporate social action will prevent government intervention
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Arguments For and Against Social Responsiveness

Against:
Profit maximization ensures the efficient use of societys resources As an economic institution, business lacks the ability to pursue social goals Business already has enough power Since managers are not elected, they are not directly accountable to the people
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Promoting Ethics
There is evidence showing that ethical managers benefit over the long run.
Ethical Control System: a formal system to encourage ethical management. Firms appoint an ethics ombudsman to monitor practices. Ombudsman communicates standards to all employees. Ethical culture: firms increasingly seek to make good ethics part of the norm and organizational culture.
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How Firms Can Improve Their Social Responsiveness (Ethical Performance)

Establish and publish their own Code of Ethics Ombudsmen - (committee, task force) to review the corporate past behavior Protect whistle-blowing - when an employee discloses an illegal, immoral, or unethical action committed by a member of the organization Training programs - ethical sensitivity training Controlling compliance - corporate social audit (or ethics audit) Leadership - demonstrate commitment from leaders Involve personnel at all levels
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Managing Diverse Workforces

The workforce has become much more diverse during the last 30 years. Diversity refers to differences among people such as age, gender, race, religion. Diversity is an ethical and social responsibility issue. Managers need to give all workers equal opportunities. Not following this is against the law and unethical. When all have equal opportunity, the organization benefits.

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Types of Diversity
Figure 5.5
Capabilities Disabilities Socioeconomic background Sexual orientation Religion Ethnicity
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Age

Gender

Race

Managing Diversity
Distributive Justice: dictates members be treated fairly concerning pay raises, promotions, office space and similar issues. These rewards should be assigned based on merit and performance. A legal requirement that is becoming more prevalent in American business.
Procedural Justice: Managers should use fair practices to determine how to distribute outcomes to members. This involves how managers appraise worker performance or decide who to layoff.
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Diversity Makes Business Sense

Diverse employees provide new, different points of view. Customers are also diverse.
Still, some employees may be treated unfairly. Biases: systematic tendencies to use information in ways that result in inaccurate perceptions. People often view those like themselves positively and have biases about others. Social status is a type of bias conferred to people of differing social position. Stereotypes: inaccurate beliefs about a given group.
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Managing Corporate Diversity

Tokenism Prejudices Stereotyping

Barriers In Dealing With Diversity

Ethnocentrism Discrimination

Gender Roles
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Barriers in Dealing with Diversity

Stereotyping: ascribing specific behavioral traits to people on the basis of their apparent membership in a group Prejudice: bias that results from prejudging someone on the basis of some trait Ethnocentrism: tendency to view members of your own group as the center of the universe and other groups less favorably Discrimination: taking specific actions toward or against a person based on the persons group

Tokenism: tendency to appoint a small group of women or minorities to high-profile positions instead of pursuing full workforce representation of the group
Gender Roles: tendency to associate women with certain jobs
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How to Manage Diversity

Increase diversity awareness: managers need to become aware of their own bias.

Understand cultural differences and their impact on working styles.

Practice effective communication with diverse groups. Be sure top management is committed to diversity.

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Sexual Harassment
Damages both the person being harassed and the organization. Both men and women can be victims. Quid pro quo harassment: victim is requested to perform sexual favors to keep a job or win promotion. Hostile work environment harassment: Some members are faced with a hostile, intimidating work environment. Lewd jokes, pornographic displays and remarks.
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Ethics & social responsibility have distinct meanings... Social responsibility is the obligation a business

assumes to maximize its positive effect while minimizing its negative effect on society. Social responsibility consists of the following responsibilities: economic (satisfy investors) legal (obey the law) ethical (expected activities & behaviors) philanthropic (desired activities & behaviors)

Ethical Theories

Virtuous Ethics
Utilitarianism (Ethics for the Greater Good)

Universal Ethics (Duty n Obligation)

Ethical Relativism (Traditions, Personal opinions, circumstances of the moment)

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Avoiding Harassment
Develop and communicate a sexual harassment policy. Point out that these actions are unacceptable.

Set up a fair complaint system to investigate allegations. If there are problems, correct them at once.
Provide harassment training to employees and managers.
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