BUSINESS ETHICS

Mahatma Gandhi

Mahatma Gandhi said that seven things will destroy us. Notice that all of them have to
do with social and political conditions. Note also that the antidote of each of these
"deadly sins" is an explicit external standard or something that is based on natural
principles and laws, not on social values.

Wealth Without Work

Pleasure Without Conscience

Knowledge Without Character

Commerce (Business) Without Moralitv (Ethics)

Science Without Humanity

Religion Without Sacrifice

Politics Without PrinciQle

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Effect of Business Education on the students

Businessethics is once again a hot topic as examples of improper businesspractices that violate
commonly accepted ethical norms are brought to our attention. With the increasing number of

scandals business schools find themselves on the defensiye in explaining what they are doing to
help respond to the call to teach "more" business ethics. Despite growing interest in ethics and
ethics training, dissenters from both the business and ,academic communities have raised
questions about whether ethics can or should be taught.

Management education need to ponder more deeply and creatively on how to advance the
awareness, reasoning skills, and core principles of ethical behavior that will help to guide
business leaders as they deal with a changing legal and compliance environment. Business
schools must ground students in the duties and rewards of stewardship, including the concerns of
multiple stakeholders and the responsible use of power.

Recent events at Enron, K-Mart, Adelphia, and Tyson Wd\uldseem to suggest that managers are
still experiencing ethical lapses. These lapses are somewh?t surprising and disappointing given
the heightened focus on ethical considerations within business contexts during the past decade.
One has to increase their understanding of the forces' that ~ shape ethical perceptions by
considering the effects of business school education as well as a number of other individual-level
factors (such as intra-national culture, area of specialization within. business, and gender) that
may exert an influence on ethical perceptions. There is significant effects for business education,
self-reported intra-national culture, area of specialization within business, and gender for some
and/or all areas of ethics examined (i.e., deceit, fraud, self-interest, influence dealing, and
coercion). One of most encouraging findings is that tolerance for unethical behavior appears to
decrease with formal business education. Despite the prevalent stereotype that business students
are only interested in the bottom line or that business schools transform idealistic freshman into
self-serving business graduates, our results suggest otherwise. Given the heightened criticism of

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the ethicality of contemporary managerial behavior, it is heartening to note that, even as adults,
individuals can be positively affected by integration of ethics training.

Ethics can certainly be taught. People can be taught to recognize ethical issues when they arise
and they can be given decision making skills and told wha~ expectations are. But, education isn't
enough. Most people are susceptible to influences from the environments in which they find
themselves. Therefore, organizations and their leaders must create strong ethical cultures in
which ethical behavior is supported and unethical behavior ISseriously disciplined. This happens
by focusing on multiple systems (including reward and disciplinary systems) that all point
employees in the right direction. Senior leaders who deal with the most ambiguous ethical issues
should be thoroughly vetted for their moral courage and ethical leadership.

Pushingcompanies to take ethics seriously - not as a band aid, but as a way to re-envision what it
means to be a great business. Ethics can be taught to adults, even though such training may
never convince a criminal to change their behavior. Particularly when it is done right and has the
backing of the organization, ethics can provide a powerfl,llinfluence
. - through the culture of the.
organization, peer pressure, and the expectations of authority figures - on individual behavior
within organizations.

Business-have become the target of highly visible publicity in the wake of travesties like those at
Enron, WorldCom, and Parmalat. While there have been business scandals throughout the last
century, the recent debacles have brought the focus to ethics and business schools. Some critics
have charged business schools with teaching students to bend the rules to make the numbers.
Others have maintained that business schools glossed over ethical conduct in examining business
transactions and might go so far as to encourage students to bypass policies, procedures, and
even the law, to ensure favorable financial results.

To be sure, business schools cannot be expected to assume total responsibility for ethical
debacles in corporations and throughout the business world. Education is hardly the sole
determinant of human behavior, and responsibility for ethics education is not the exclusive
province of business schools.
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Nonetheless,ethics education has always been part of business curriculam. Whilea number of
businessschools have developed innovativestrategies for engaging students in the challenge of

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providing ethical leadership, the assumption of many faculty and program leaders that the
majority of students are being adequately prepared in 'this domain is highly questionable.
Business School should revitalize their commitment to the centrality of ethical responsibility at
both the individual and corporate levels in preparing business leaders for the twenty-first
century.

From the undergraduate to the master's and doctoral levels, business schools must encourage
students to develop a deep understanding of the myriad challenges surrounding corporate
responsibility and corporate governance; provide them with tools fQr recognizing and responding
to ethical issues, both personally and organizationally; and engage them at an individual level
through analyses of both positive and negative examples,lof everyday conduct in business. All of
us involved.'in business education need to think more deeply and creatively about how to advance
ethical awareness, ethical reasoning skills, and core ethioal principles that will help to guide
business leaders as they respond to a changing legal and compliance environment as well as
complex, confliCting, and sometimes highly problematic interests and opportunities. We must
socialize students in the obligations and rewards of stewardship, including the concerns of
multiple stakeholders and the responsible use of power. Such efforts may require different
approaches for undergraduate, master's, and doctoral students.

Anchored in the premise that the crisis in ethics is not only a challenge but also an opportunity to
strengthen business education, the overarching purpose of this document is to invite and
encourage administrators and faculty in business education to reflect on their current approaches
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to ethics education and what they might do to bolster thisicritical component of the curriculum.

While many schools are already deeply involved in renewing and reinvigorating their commitment
to ethics in business education, assessment and continuous improvement are as important in this
field as in any other. "Making the world a better place" isn't the exclusive province of business
schools; but business schools can-and want to-equip their students to be ethical and successful
managers and leaders.

One sh?uld encourage a renaissance in ethics education and exercise its leadership role to ensure
the commitment of business schools. We must strengthen ethics components of our curricula in
all disciplines to emphasize the importance of individual ifltegrity and corporate responsibility to
business success. Business Schools must offer courses thatl.introduce
I frameworks that may help in

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resolving ethical business and managerial problems; courses that layout the larger societal
context in which business operates; and seminars and workshops that bring executives to campus
to focus on the link between leadership and values. Everyone must work to build a community of
scholars and students in which ethical principles are not platitudes, but reality.

Corporatescandals have rocked the businessworldin recent years and put businessethics in the
spotlight. In business schools, academics are looking at t~ key question of whether ethics can be
taught or not. Despite several years of corporate scandal, . some of it courtesy of top B-school
grads, many MBAprograms are still grappling with the most effective way to teach the sticky
subjects of ethics and leadership. Some have added courses and seminars or encouraged
professors to weave the subject into coursework. Duke's warts-and-all attempt to force students
to think about leadership and ethics in a mock trial format -- and take it from a squishy classroom
concept to somethingcloser to reality -- is one of a handful of out-of-the-ordinary methods B-
schools are trying.

We must socialize students in the obligations and rewards of stewardship, including the concerns
of multiple stakeholders and the responsible use of power.
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Four broad themes that address ethics education:
);> the responsibility of business in society;
,. ethical decision-making;
, ethical leadership; and
);> Corporate governance.

While many other topics could have been included, these four areas are widely viewed as
cornerstones of a comprehensive and viable ethics education curriculum in business schools.

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Mission Statement
One of the hardest things for people to write in a business plan is the mission
statement. Mission statements can tell a lot about your business, so it's
important to take time, look at some mission statement examples, and put effort
into writing a good one.

What is a Mission Statement?

You should think of a mission statement as a cross between a slogan and an

executive summary.

Just as slogans and executive summaries can be used in many ways so too can a
mission statement. An effective mission statement should be able to tell your
company story and ideals in less than 30 seconds.

How should I write a Mission Statement?

Here are some basic guidelines in writing a mission statement:

. A mission statement should say who your company is, what you do, what
you stand for and why you do it.
. An effective mission statement is best developed with input by all the
members of an organization.
. The best mission statements tend to be 3-4 sentences long.
. Avoid saying how great you are, what great quality and what great
service you provide.
. Examine other company's mission statements, but make certain your
statement is you and not some other company. That is why you should
not copy a statement.
. Make sure you actually believe in your mission statement, if you don't,
it's a lie, and your customers will soon realize it.

Vision Statement

When you begin the process of strategic planning, visioning comes first. When
visioning the change, ask yourself, "What is our preferred future?" and be sure
to:

. Draw on the beliefs, mission, and environment of the organization.

. Describe what you want to see in the future.
. Be specific to each organization.
. Be positive and inspiring.
. Do not assume that the system will have the same framework as it does
today.
. Be open to dramatic modifications to current organization, methodology,
teaching techniques, facilities, etc.

Key Components for Your Vision

Incorporate Your Beliefs

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Your vision must be encompassed by your beliefs.

. Your beliefs must meet your organizational goals as well as community

goals.
. Your beliefs are a statement of your values.
. Your beliefs are a public/visible declaration of your expected outcomes.
. Your beliefs must be precise and practical.
. Your beliefs will guide the actions of all involved.
. Your beliefs reflect the knowledge, philosophy, and actions of all.
. Your beliefs are a key component of strategic planning.

Benefits of Visioning

The process and outcomes of visioning may seem vague and superfluous. The
long,-term benefits are substantial, however. Visioning:
. Breaks you out of boundary thinking.
. Provides continuity and avoids the stutter effect of planning fits and
starts. .
. Identifies direction and purpose.
. Alerts stakeholders to needed change.
. Promotes interest and commitment.
. Promotes laser-like focus.
. Encourages openness to unique and creative solutions.
. Encourages and builds confidence.
. Builds loyalty through involvement (ownership).
. Results in efficiency and productivity.

Vision Killers

As you engage in the visioning process, be alert to the following vision killers:

. Tradition
. Fear of ridicule
. Stereotypes of people, conditions, roles and governing councils
. Complacency of some stakeholders
. Fatigued leaders
. Short-term thinking
. "Naysayers"

How are business ethics and corporate social responsibility (CSR

related?
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The terms "business ethics" and "corporate social responsibility" are used
differently by various organizations, companies and media. Other related terms
include: sustainability, governance, corporate responsibility, stakeholder
engagement, corporate citizenship, and environmental, social and governance
(ESG) performance.

All of these terms relate to how a company or organization interacts with a

various stakeholders including shareholders, employees, the environment, civil
society and the community in general.

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Typically at EthicsCentre CAwe refer to "business ethicss" it relates to the
conduct of an organization with its internal stakeholders and business partners.
Business ethics deals with how ethical issues are addressed within the culture of
the organization. Corporate Social Responsibility refers specifically to
relationships with external stakeholders such as representatives of the
community and environment and often relates to businesses role in society.

The twenty-first century has arrived and corporate ethics appears to be evolving
into two separate - but, perhaps, not necessary exclusive - fields: Business
Ethics (BE) and Corporate Social Responsibility (CSR). This article contrasts
some of the defining features of each approach and explores the significance of
BE and CSR for business strategies and practices.

Framework for Analysis

While the extent and nature of BE and CSR programs vary greatly from one
organization to another, this article has taken the following premise as a point of
departure: the primary goal of BE programs is to prevent harm while the
objective of CSR initiatives is to do good. To facilitate the analysis of this
subject, the four following areas of distinction will be examined to establish how
BE and CSR function differently
relation to regulation,
. reactive versus proactive strategy,
. identification of stakeholders, and
. extent of responsibility to stakeholders.

Relation to Regulation
The historical roots of BE and CSR in the World have significant bearing on their
current differences. BE programs were originally implemented in the defense
industry to help companies comply with the increased regulation following a
series of scandals. The 1991 U.S. Federal Sentencing Guidelines provided
additional impetus by mitigating corporate fines for companies with "effective
ethics programs." Hence, the motivation for many BE programs was compliance
with regulatory guidance and company standards of conduct.

BE programs also provide a method of managing risk by developing early

warning mechanisms to identify and address potential problems. These methods
of managing ethical issues prevent harm, first by defining boundaries of
acceptable behavior, then by mitigating such potential damages as monetary
penalties, loss of contracts or loss of reputation.
CSR dates to the 1950s when academics and corporate leaders began to
recognize and articulate the impact of corporations on society. Today, numerous
constituency groups recognize what pervasive effects business has in such areas
as the community and the environment, in addition to the economy. Now more
than ever, demands are being placed on business to have a positive effect in
these areas. The general public's expectations of corporations have risen:
corporations are no longer expected only to obey laws, but also to be
accountable to higher principles and values like economic justice, human rights
and environmental stewardship.

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Reactive or Proactive Strategy
Another distinction between BEand CSR can be drawn from the strategies that
each approach deploys. For example, ethics officers focus on responding to
hotline calls: employee questions and concerns. Therefore, they become
involved in resolving a problem only after it has been identified. While this
reactive strategy does little to prevent a problem, it can succeed in minimizing
the risk of more serious problems. Resolving a problem can, however, lead to
the development and implementation of processes and procedures to help avoid
the problem's reoccurrence.

CSR's approach involves the use of proactive strategies, like creating new
business practices to initiate change. Ironically, by sticking its neck out in the
support of certain causes or values, a CSR company may actually increase rather
than minimize its risk, depending upon which causes or values it elects to
support. Many companies, like the Body Shop and Ben &Jerry's, have also used
CSR as an effective marketing tool to enhance their reputations. Several critics
have reported that companies, including the examples cited above, have used
CSR programs as a means to effectively deflect criticism or public outcry when
they do err.

Identification of Stakeholders
Most business ethics programs are focused internally by making employees
responsible for their behavior with regard to other employees, as well as with
respect to the company's other primary stakeholders. Codes, therefore, often
identify areas of potential harm in the immediate relationship a company has
with shareholders, suppliers and customers. For example, a code might espouse
the principles of honesty and fairness in contract negotiations because their
absence would increase the possibility of harm to the relationship. The CSR
approach typically defines stakeholders more broadly and is more concerned
with the company's responsibility to the community. Such an approach
recognizes a contractual bond between business and society, whereby society
provides essential resources to businesses in exchange for social benefits.

Extent of Responsibility
Once a company has identified its stakeholders, the extent of responsibility it
assumes for these stakeholders varies according to whether a BE or CSR
strategy is employed. A company might implement a BE program to prevent
such employee problems as abuse by managers, sexual harassment and
discrimination. Few companies develop ethics programs with elements that take
responsibility for doing good on behalf of their employees, like reviewing family
benefits or addressing unfair pay scales.
Nike's dealings with its international vendors provide an example of corporate
action with regard to the different levels of responsibilitythat BEand CSR
provide. When problems surfaced regarding the abuse of employees and unfair
wages in the factories producing Nike athletic shoes, human rights activists
pressured Nike to assume responsibility for the employees of its independent
contractors. At that time, Nike's contractors agreed upon a code of conduct and
the monitoring of health and safety standards. Auditing firms were then brought
on board to monitor such issues as unfair wages, work schedules and child labor.
Hence, Nike essentially accepted responsibility for preventing harm to any
worker associated with manufacturing its products.

As pressure and publicity increased through the mid-1990s, Nike extended its
activities. For example, the code, itself, was tightened to surpass local laws to
promote better working conditions with restricted working hours. As part of its

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monitoring and improvement program, the company undertook cultural
sensitivity training for its contractors' expatriate supervisors. And in Pakistan,
Nike took a creative approach to the problem of child labor in factories producing
soccer balls by paying to educate those children rather than letting them work.
Nike thereby broadened its level of responsibility beyond merely preventing
harm to promote child education and better working conditions in the
international communities in which it operates.

Significance for Corporations and Business Leaders

The Millennium Poll on Corporate Social Responsibility (published by Environics
International Ltd., the Prince of Wales Business Leaders Forum and the
Conference Board) surveyed over 25,000 people in 23 countries about their
expectations of companies. [See chart, next page.]

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