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All praises and thanks be to Allah,

Who has sent down to his slave
the Book and has not placed
therein any crookedness.
18:1

Business Ethics

Some timeless insights

Definition
Daily occurrences of ethical dilemmas
Competitive advantage of ethical organizations
Managing morally imperfect people
What is the extent of unethical behaviors at work
What type of organizations and operational areas
have ethical problems
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Business Ethics
Why do good people behave unethically
What are the costs of unethical behavior
What is human nature

SOME TIMELESS
INSIGHTS

It's your attitude, not your

aptitude that will
determine your altitude in
life".

Winners never quit and

quitters never win."

 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
DO NOT LET A LITTLE DISPUTE
INJURE A GREAT FRIENDSHIP
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 OVERESTIMATE TRAVEL TIME BY 15

PERCENT
WHEN YOU SAY, I AM SORRY, LOOK
THE PERSON IN THE EYE

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 REMEMBER THAT EVERYONE

INFLUENCED BY KINDNESS

IS

SUCCEED AT HOME FIRST

HEAR BOTH SIDES BEFORE JUDGING
DEFEND THOSE WHO ARE ABSENT
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 FACILITATE THE SUCCESS OF

YOUR SUBORDINATES
LISTEN TWICE AS MUCH AS YOU
SPEAK

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BUSINESS ETHICS

introduction
No ethics in the society, even in the so
called ethical societies
American Salad Oil Company
Friedmans Philosophy
Ronald Regan/ Margret Thacher
Corporate Scandals

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
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Action sequence

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 study business ethics?

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 corporate citizenship and performance.

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
Enron is no longer company it was, & its auditor
Arthur Andersen lost many of its clients & had to
sell parts of its business due to unethical behavior.
From individual level, you may say that former
Enron CEO Kenneth Lay & other made millions
for their unethical behavior.

Does Ethical Behavior Pay?

Crescent Bank, Altaf Saleem
Mehran Bank Scandal
Bank of Punjab Scandal
Chairman OGRA

Daily occurrence of ethical

dilemmas
Starting the day
Arriving late at work and ending with
unfinished tasks
Dealing with people
Traffic issues
Treating everyone at home

What is ethical
organization?

Competitive advantages of
Ethical Organizations

Attract and retain high quality employees

Attract and retain high quality customers
Attract and retain high quality suppliers
Attract and retain high quality investors
More reliable information
Higher product quality
Need less employee supervision

Managing Morally Imperfect People

Average human being is good but not saint
Manager has to take care of inputs from all
stakeholders
One unethical/illegal decision can ruin
reputation or result in litigation

What is the Extent of Unethical

Behaviour at Work
67% CFOs forced to misrepresent corporate
results
25% middle managers write fraudulent reports
75% employees reported stealing once
33% employees calling sick otherwise
65% MBA students cheated on class assignment
during previous year
Most common types of misconducts

What Types of Organizations and

Operational Areas have Ethical Problems
Every organization, every operational area
Can arise in most admired organizations
like Xerox fined for racial discrimination

Why do good People Behave Unethically

Insufficient knowledge and awareness
Following the bosss directives
Meeting aggressive business or financial
objectives
Helping organization to survive
Meeting scheduled pressures
Wanting to be team player

What is Human Nature

Social philosophers- neither good nor bad
Psychologists- babies born with natural
desire to experience happiness
Ways to pursue pleasure can be ethical or
unethical
Other influences

Islamic perspective

What babies know about right

and wrong
Research at Yale Universitys Infant
Cognition Center indicates that even very
young children have a rudimentary sense
of right and wrong. Infants and toddlers act
on their sense of morality more often than
you might expect.

What babies know about right

and wrong
In one experiment, 1-year-olds watched a
puppet show in which one puppet slid a
ball to other puppets. One of the other
puppets returned the ball, but the third
puppet took the ball and ran away. After the
show, researchers placed the puppets in
front of the children with a pile of treats
next to each puppet.

What babies know about right

and wrong
Researchers then asked the children to
take away a treat from one of the puppets.
The children almost always took the treat
from the naughty puppet, the one who ran
away with the ball. One little boy even took
the treat and then smacked the naughty
puppets head.

What babies know about right

and wrong
Other experiments have shown that babies
as young as 5 months old almost always
prefer a character who helps another
character and shun a character who
hinders another. They also prefer a neutral
character to one who hinders another.

What babies know about right

and wrong
And, perhaps most striking, when children
watch a bad guy being either rewarded or
punished for his behavior by another
character, they almost always prefer the
character who punishes the bad guy.

A CASE STUDY
The battle over dividends: Dodge
versus Ford Motor Co.
In 1916, Henry Ford stopped paying special
dividends to his stockholders and his Ford Motor
Company amassed a cash surplus of $60 million.
Ford announced his intention to use this extra cash
to build more plants to increase output, while
increasing worker pay and cutting prices for
consumers.

A CASE STUDY
My ambition is to employ still more men, to
spread the benefits of this industrial system
to the greatest possible number, to help
them build up their lives and their homes,
Ford said. To do this we are putting the
greatest share of our profits back in the
business. The companys stockholders
didnt necessarily agree with Fords vision,

A CASE STUDY
and two of them John and Horace Dodge
sued Ford Motor Company to force it to
resume paying special dividends. The case
made it to the Michigan Supreme Court.
What can be the likely outcome?

A CASE STUDY
The Michigan Supreme Court refused to
interfere in Fords expansion plans but
upheld a lower court ruling and ordered the
release of $19 million in special dividends
to stockholders. Notably, the court said, A
business corporation is organized and
carried on primarily for the profit of the
stockholders.

A CASE STUDY
The powers of the directors are to be employed for
that end . . . But the court also noted that
directors have discretion to be exercised in good
faith to use their best judgment in deciding on
the infinite details of business, including the
wages which shall be paid to employees, the
number of hours they shall work, the conditions
under which the labor shall be carried on, and the
prices for which products shall be offered to the
public.

A CASE STUDY
The Dodge brothers used the money they
earned from their Ford shares to start their
own automotive company, the Dodge
Brothers Company now a part of
Chrysler.

DO LEGAL AND ETHICAL HAVE SAME

MEANING?

HOW TO AVOID SSLIPPERY SLOPE

Communicate the companys values to
employees in regular communication
vehicles, such as employee newsletters.
Reward employees for outstanding ethical
behavior.
Protect and reward employees who speak
up against unethical behavior.

HOW TO AVOID SSLIPPERY SLOPE

Apply punishments fairly, without regard to
whether the offender is a high performer.
Stress long-term sustainability over shortterm performance measures.
Be as transparent as possible in all facets
of the companys operations, including
those related to finances

THANK YOU VERY MUCH

ANY QUESTION?

 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
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
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
HEAR BOTH SIDES BEFORE JUDGING
DEFEND THOSE WHO ARE ABSENT

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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

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