Creating a Most Admired Business by Work Ethics Recently, there has been an increasing awareness, and more importantly,

an increasing interest in the field of Business Ethics. This is indeed a welcome trend! In fact, perhaps, there has not been any time in the history of business development where the concepts and an understanding of the nature of business ethics has been so urgently needed, never before had the need for ethical practices in business so widely felt! Business Ethics proves that business can be, and have been, ethical and still make profits. Till the last few decades, Business Ethics was thought of as being a contradiction of terms. The popular concept was that if it is business, then it cannot be ethical, and if it is ethical, it does not represent business at all. This

amounts to saying that business can make profits only through immoral ways, by being unethical! Nothing can be more further from the truth. Thankfully such thoughts are not prevalent any more. There are examples galore where not only have ethical companies made profits, but more importantly, it is only ethical companies which discharged its social responsibilities, that have survived competition and turbulent changes through the years and have contributed to social welfare and have continued to flourish undiminished. Hence, today, more and more interest is being given by corporate houses and business leaders to the application of ethical practices in business dealings. A business or company is considered ethical only if it tries to reach a trade-off between pursuing its economic objectives and its social obligations, i.e., between its commercial

objectives and its welfare obligations. What are obligations of a business is open to interpretations. The list of obligations that a company must perform is long and complex and hence is costly to the company; yet they must be discharged if a company wants to survive and grow in the long run and is not satisfied in making short term profits. While discharging its obligations to the society, the company not only fulfils its own duties, but also paves the way for a stronger and more ethical foundation. In fact, it is unethical for companies NOT to make profits. It is unethical to make losses. A company which cannot make profits and make losses, misutilises scarce national resources, cannot pay back creditors, upsets the economy, promotes inefficiency and most importantly, cannot, at any cost discharge its social responsibilities, meet its welfare

commitments and jeopardises the future of its employees and drives them into the unemployment market. Such a loss-making company becomes nuisance and a burden to the economy and has no right to exist in the market place. Moreover, it has no business to force its employees into economic insecurity, which is highly unethical. Thus, instead of profits being contradictory to ethics, business ethics dictates that the first responsibility of business is to remain profitable and generate revenue for the shareholders and the society. Why business ethics has assumed so great a part in our market economy is partly due to the fact that unethical decisions are not limited only to themselves, but affects a wide range of other situations and have widespread ramifications. One unethical action is like a pebble thrown into a pond of

water, it produces endless ripples in the pond until the water of the entire pond gets disturbed by it. Similarly the single unethical action is not limited to the individual in the company who commits it, but spreads within the entire organisation; one unethical organisation affects the entire industry; and one unethical industry in turn, affects the entire economy and ultimately the entire nation. Since business exists and operate within the society and is a part of a subsystem of society, its functioning must contribute to the welfare of the society. To survive, develop and excel, business must earn social sanction of the society wherein it exists and functions. Without social sanction, a business can not earn loyal customers, cannot operate in the marketplace and will soon wither and die away. Thus, business can earn social sanction

only through being ethical in its dealings, working for the welfare of the society and by discharging its social responsibilities. In spite of India having an ancient culture and philosophy about worklife, we in India have not yet managed to develop our own management styles in consonance with our own cultural ethos and have been systematically importing management systems and styles from foreign countries. Indian tradition and heritage, its culture and philosophy, its ethos and values are a treasure house, where the richest and the rarest of gems are stored. It is ours only for the asking. If we can apply even a few of these gems to the management of the modern organisation, we will be doing a great service, not only to ourselves, or to our organisations, but also to our future generations of entrepreneurs and managers.

Meaning of Business Ethics Business ethics are those principles, practices or philosophies that are concerned with moral judgement and good conduct as they are applicable to business situation. Business ethics refers to right or wrong behavior in business decisions. Business ethics involves morally accepted behavior in business practices. Importance of Business Ethics Customer will be satisfied only if the business follows all the business ethics. Business ethics is needed in order to make members of the business conscious as regards their duties and responsibilities towards consumer and other social groups. Business ethics is needed to make business activities fair to consumers. It checks business

malpractices consumers.

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Business ethics is needed in order to improve the confidence of consumers as regards quality, price, reliability, etc of goods and services supplied. Business ethics is needed in order to protect the interest of all those concerned with business the shareholders, employees, dealers, and suppliers. It avoids their exploitation through unfair trade practices. Business ethics is needed in order to create good image in the society and also for avoiding public criticism. Ethical business gets public support. Business ethics leave a long-lasting impression on the customers and the impression on their minds builds trust,

fetching a business more customers while retaining the older ones. Without following certain ideals in business, one cannot become successful. Success that is attained without a foundation of strong ethics is bound to be short-lived. A business cannot continue to prosper without an ethical base. A few successes can be coincidences or flukes but persistent success can only be a result of a strong foundation of ethics. Public will be ready to invest or lend money only if they are convinced that the organization is following fair business practices. Business in the long run, do require social recognition and support.

Ethics and Law

Ethics concentrates on the Dos whereas Law concentrates on Donts. Ethics is not backed by power but Law is backed by power. Ethics does not use force whereas Law uses force when necessary. Ethics is broad concept whereas Law is narrow concept.

Following things will fall within the ambit of ethics but not of law Look after the aged. Be considerate to your workers. Obey your elders. Do not tell a lie. Do not misguide for personal benefits. Keeping promises

Business Ethics is now a management discipline Ethical issues are there everywhere, at all levels of business activity. Business ethics concern the ground rules of individual company and social behavior. (a) At Stakeholders level Shareholders Ensure capital appreciation Ensure steady and regular dividends Disclose all relevant information Protect minority shareholders interests Not to window dress balance sheets Protect interest in times of mergers, amalgamations and takeovers Banks and Lending institutions

Guarantee safety of borrowed funds Prompt repayment of loans Customers Better quality of goods Goods and services at reasonable price Not to corner stocks and create temporary shortage Not to practice discriminatory pricing Not to make false claims about products in advertisements Employees Security of job Better and safe working conditions Better recommendation Participative management Welfare facilities Suppliers and partners Prompt Payments Fair practices of business

Creating a level playing field Government Complying with rules and regulations Honesty in paying taxes and other dues Acting as partner in progress of the country Society / Community Concern for poor and down trodden No discrimination against any particular section or group Concern for clean environment Preservation of scarce resources for posterity Contributing to better quality of life (b) Internal Policy Level Fair practices relating to recruitment, compensation, lay-offs, perks, promotion, etc.

 Transformational leadership to motivate employees to aim at better and higher things in life Better communication at all levels (c) Personal Policy Level Not to misuse others for personal ends Not to indulge in politics to gain power Not to spoil promotional chances of others Not to use office car, stationary and other property for personal use Not to fall prey to shortcuts and easy money Promise keeping No violence, i.e. preventing or not causing physical harm to others Mutual help Respect for persons and property

Development of Business Ethics 1. Involvement of the senior management Every company needs a champion or role model or mentor to guide the corporate ethics programme. A senior person mostly CEO or Chairman should take the responsibility to lead the ethics programme. The board and senior management should show the enthusiasm and commitment and always provide the guidance to the employees. 2. Involvement of the employees No programme can be successful without involvement of the grass root employees. It is important to know what bothers people while making the code of ethics. Each and every person should know the code of the ethics and should be made to follow it. 3. Corporate codes Corporations have to operate within the ethics and moral principles of the society to which it belongs. Those principles or actions should be selected which are considered as just, normal or fair. In such a situation they are unlikely to be rejected by the employees, the customers, the suppliers, the government and the society.

Corporate Governance
According to SEBI committee, Corporate Governance is the system by which the companies are directed and controlled by the management in the best interest of the stakeholders and others, ensuring greater transparency and better and timely financial reporting. Objectives of Corp Governance To enhance the long term value and economic efficiency of the company. It encompasses all shareholders and integrates all the participants involved in the process. To elevate the reputation of the company and the esteem of its management To attract, employ and retain talent and motivate employees to give their best. A more open and participative style of management ensures free exchange of ideas and frank appreciation at all levels. To create and adopt, code of conduct with wholehearted commitment and improve the moral and ethical standards of performance to the utmost level. To have a right balance, knowledge and competence to set strategies and lead the organization.

To use the resources entrusted to the management, in most economic and efficient productive and effective ways, for the benefit of shareholders as well as for the society at large. To set the high standards of business ethics based upon humanity, honesty and hardwork. To improve the standard of living and life of the society, industry, commerce, services and professionals. To generate accurate and reliable information. To make decision-making process transparent.

Important Issues : Sexual Harassment It is important to know what constitutes sexual harassment. Verbal Sexual or gender-based jokes or teasing or comments about clothing, personal behavior, or a persons body. Requesting sexual favours Pressure for date Graphic description of pornography Obscene phone calls Spreading rumours about a persons personal or sex life

 Turning work discussions into sexual topics (such as by using puns) Non-Verbal Staring or sizing up a persons body Derogatory gestures of a sexual nature Suggestive looks (winking, licking lips) Physical Unwelcome hugging, kissing Standing too close to or brushing against another person, leaning over Patting, stroking, grabbing or pinching Blocking someones path with the purpose of making a sexual advance Stalking Visual Presence of posters, cartoons, drawings, calendars, pinups, pictures,

computer programmes of sexual nature Notes or e-mails containing sexual comments Knick-knacks and other objects of a sexual nature A bill was drafted two and a half years ago to frame a sexual harassment law, but has since faded into oblivion. Whistle Blowing Policy When an employee thinks that his/ her firm is resorting to some act that is unethical or harmful to public, he/she blows the whistle by reporting alleged organizational misconduct to the public or to top executives. Whistle blowing refrains the firm from indulging in unethical and harmful practices.
Corporate Social Responsibility makes business sense

Corporate Social Responsibility (CSR) is a business strategy that works. In a world where brand value and reputation are increasingly seen as a companys most valuable assets, CSR can build the loyalty and trust that ensure a bright sustainable future. In our complex, global society, corporations are becoming increasingly visible. They are not judged on their results but on their behavior too, and this can be an opportunity. By integrating CSR into your business as core value, you are not only making a significant contribution to a better society, but just as importantly you are recognized for doing so. And this has obvious benefits for the company. If one is to be successful in 21st century, one must simultaneously excel in all three elements of sustainable development: Economic Prosperity, CSR and Environmental Stewardship. The right way to approach social responsibility is not in rules and regulations but in a high level ethical code that could be built into an organizations value system. CSR is an approach that helps us to get away from the old idea that economic, social and environmental goals are always and invariably in conflict. What we need to work out is how progress on any one of those fronts can support progress on the others. We want to see business, the voluntary sector, and public bodies all working together, not doing so grudgingly, but because each sees it as advancing its own key interests to do so, as well as advancing the interests of others.
Benefits of CSR are : 1. Enhanced Brand Image and Reputation 2. Increased Trust and Customer Loyalty 3. Sustainable Development