Aum Amriteshvaryai Namah

Basic Principles

From last class, we saw Ethical behaviour may be the best long-term business strategy

But how do we identify what is the best ethical course of action? Can we adopt this course of action always? What are the other factors that come in the way of acting ethically? Let us use some theory (Basic Principles) to try and answer these questions

Ethics study of morality (this is the definition that is most suited for us as managers) It is an investigation where the subject is morality

Example: Morality says dont cheat; When you decide whether or not to overprice a product, you are studying this moral subject and that is ethics; then

your decision can be ethical/unethical!

So, what then is Morality?

The standards that an individual or a group has about what is right and wrong or good and evil

Moral standards norms about right & wrong actions (Tell the truth)

and the values we place on them (Honesty is the best policy)

Other examples please? Just to clarify this definition

 Non-moral

standards are general standards of conduct, conventions etc

Group One Dont lie Dont copy in exams (dont cheat others) Dont steal Do not kill innocent people Group Two Dont speak harsh words Write neatly & legibly in your answer sheet Pay your taxes Help poor people

Its

childs play to guess which group is moral standards isnt it?

Reminds one of yama & niyama! Why is it always donts? Can you think of some dos?

So, what are the common features of Group One?

1.

Involve serious wrongs or significant benefits to (human) beings

isnt it wrong to kill a squirrel for no purpose?? If it is not bothering you in any way ? Need not be a million human beings (like in Merck case) even if it involves serious injury or benefit to ONE being, it comes under this definition

2.

Are preferred to other values including self-interest, when there is a conflict

between lying in an interview and securing a good job by doing so, moral standards tell you NOT to lie (what you actually do is not relevant here !) these moral standards are without proprietors, like our Vedas no ownership! Please note that Legal norms (laws of the land!) are not included within the ambit of moral standards (and hence, ethics as well)

3.

Not established by law or any other authority

Usually, what is illegal is immoral/unethical too (eg. theft) Sometimes its not Coca Cola was legally banned from operating in this country; now its not!

Universal & Impartially applied

Do not lie applies equally to you & me Conventions may not be universal speak harshly may sometimes be a requirement for a policeman but not for a call center executive Impartial: these are seen by the eyes of an ideal observer sometimes, this has to be balanced with some kind of partiality, arising from legitimate care for certain individuals (more on this in next chapter) Immoral, wrong behaviour; results in loss of selfesteem Non-moral standards: Indecent, Improper, not usually accompanied by guilt or loss of self-esteem

Associated with special emotions/vocabulary

 Lets

examine this table once again in the light of the above:

Characteristics 1. 2. 3. 4. 5. Serious injury/benefits Preferred to other values incl selfinterest Not estd by authority Universal &impartial Special emotions/vocabulary Moral Standards Dont lie Dont copy in exams (Dont cheat others) Dont steal Do not kill innocent people Non-moral Standards Dont speak harsh words Write neatly & legibly in your answer sheet Pay your taxes Help poor people

Ethics is the study/investigation of moral standards in particular situations

how does a moral standard apply in this situation? Is it reasonable to go by this moral standard or not? Is one moral standard more important than another?

Ultimately, you develop a body of morals that you believe holds for you and these affect the choices and decisions you make (in life as well as in business!)
Comes with experience (when properly used) Leads to personal satisfaction and a guiltless life!

Ethics is a normative study an investigation that attempts to reach conclusions about what actions are right/wrong, good/bad; in short, it tells you what ought to be A descriptive study just describes moral standards of a community without reaching conclusions about right/wrong and not prescribing what ought to be

Example: In India, bribery is prevalent

Business ethics is ethics applied to business (in general, organizations of a profit or non-profit nature) Issues that business ethics investigates:

Systemic: Ethical questions raised about the economic, political, legal and other institutions (system) within which business operate (eg. (i) is it okay to liberalize the economy?, (ii) is it right to have APM for petrol?) Corporate: Ethical questions raised about a particular organization (eg. (i) was Mercks decision fair and just to all parties it affected? (ii) Is XYZ companys policy fair to its employees?) Individual: Ethical questions raised about a particular individual(s) within a company and their behaviour and decisions (eg. (i) a manager giving a favourable rating to an undeserving employee (ii) a Business Unit head offering a contract to a higher priced vendor in return for personal favors)

Is it okay to just follow your boss orders and not care about right/wrong? The Loyal Agents Argument is this:

As a loyal agent of his/her employer, a manager has a duty to serve the employer as the employer would want to be served

An employer would want to be served in whatever ways will advance his/her interests
Therefore, as a loyal agent of the employer, the manager has a duty to serve the employer in whatever ways will advance the employers interests

Doesnt this sound funny, perhaps even intimidatory?!! Fundamental flaws in the above argument:

Its based on an unproven moral standard (manager should serve the employer )

It assumes that there are no limits to the managers duties to serve the employer

All employee contracts are based on a law of agency, which specifies the duties of persons agents This law states that in determining whether or not the orders of the [client] to the agent are reasonable business or professional ethics are to be considered in no event would it be implied that an agent has a duty to perform acts which are illegal or unethical

Take-away: You dont need to obey your boss orders ALWAYS

Information Technology Poses some Risks:

Privacy

the first wishes i get on my birthday are from Airtel, HDFC etc everything is tracked your credit card usage, mobile usage, where you eat, what you drink, where you holiday is it all ethical? Is it not intrusion into your privacy? Do you want the whole world to know what all you are doing? Is Social Media Marketing effective? 40% of consumers are annoyed to receive unsolicited messages from brands they don't follow 65% would stop using a brand altogether as a result of irritating social media messages (Recent research) People do not like being bombarded with unsolicited brand messages, esp telling them what they should do about their likes/dislikes

(Intellectual) Property Rights

Software Piracy We all know about pirated software products Many software proposals are copy-paste! Many models are borrowed (openly or on the sly) from other companies/competitors Using companys computer resources for personal use Personal emails, chatting, facebook Internet browsing for non-official purposes

Globalization
All of us know the benefits of globalization But what are the downsides?

World Bank reports that inequality between rich and poor countries has increased (the same WB also says % of poor people in the developing world has come down from 52% to 25% on account of globalization!) Infusion of Western culture at the expense of local culture MNCs rule they play one country against another to get cheaper labor, less stringent laws and lower taxes (Race to the bottom) Eg: India faces threat from China, Philippines, Vietnam etc in the software sector Technologies are brought in before the developing country can handle it Example: Union Carbide disaster

Differences between nations

When different countries have different rules and regulations as well as cultural differences, what to follow (your host country or the local one)?

Coca Colas philosophy: Think Global, Act Local Recent Walmart scandal: refer link http://economictimes.indiatimes.com/news/news-byindustry/services/retail/the-inside-story-walmart-and-the-shadow-ofcorruption/articleshow/18027348.cms

 Which

of Kohlbergs six stages of moral development would you say that Cynthia Cooper had reached? Explain Do her actions and motives support or undermine Carol Gilligans views? What would you say is unique about her or what she did? How does William Damons theory of moral identity apply to Cynthia Cooper?
Lets discuss these concepts thro this case!

some of you may recall Heisenbergs Uncertainty Principle

Reasoning process by which we apply moral standards to (business) situations and issues Kohlbergs 3 levels of Moral Development

Level One: Preconventional Stages

Stage One: Punishment and Obedience Orientation selfcentered, fear of the stick approach Stage Two: Instrumental and Relative Orientation i should not hit him so that he doesnt hit me Living up to conventional norms of family, peers etc Stage Three: Interpersonal Concordance Orientation (phew!): Being good in order to conform to others expectations Stage Four: Law and Order Orientation Obeying the laws of the land (out of respect for nation/society)

Level Two: Conventional Stages

Which stage are you in?

Level Three: Postconventional Stages

Questioning laws, values, conventions etc of society on the basis of his/her own moral beliefs Stage Five: Social Contract Orientation Awareness that people have conflicting moral views Stage Six: Universal Moral Principles Orientation Right action is based on reasonable, consistent & universally applicable moral principles

Gilligans Theory of Female Moral Development

For men, morality is impersonal, impartial and abstract! For women, morality is primarily a matter of caring and responsibility (is it so?)

therefore, moral development in women progresses through better ways of caring and responsibility caring for oneself --- > caring for others --- > caring for others and oneself

Perhaps, the best perspective is men DO care sometimes and women ARE impartial at times!!

Whatever approach you may take, ETHICS starts at the later postconventional stages of moral development This is what we aim to stimulate in ourselves through the case studies and other discussions in forthcoming chapters

dont accept what I say think, discuss, criticize, analyse! (lets create some heat!)

 Research

on Moral Identity

William Damon: Morality is not an important part of the self until middle adolescence the more morality becomes part of you, the stronger will be your motivation to do what is morally right Augusto Blasi: Judgement of right and wrong depend in part on the kind of person we think we are (or want to be)

This is NOT rocket science this is not QMM So, here is the change in our approach:
Two students would present 2-3 topics in one session Faculty will facilitate the discussion by giving examples from his experience After all, we are learning this together, arent we?

Too much ? Consider the following:

You get to do this ONLY ONCE in the whole course why?

21 x 2 = 42 < 57

----------------- Ah! Some maths, at last!

We will have only PLACED students do this (incl those who have opted out of placement!)

By the time your turn comes, hopefully (with Gods Grace) you would be placed too!

Will tell you the sections beforehand, and youll be exempt from a case presentation if it happens on the same day! Lets make the course a bit more fun, engaging!

Another concept: Devils Advocate

Each of you should be an Ethics brand ambassador But, for the class, 3-5 students should play the role of a Devils Advocate question, dispute whatever the faculty/presenters are saying One person per group should play the role of Devils Advocate in a group presentation