Business Ethics

Fundamentals

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Introduction
Business Ethics
The value of what should be done and
what should not be done from the
business point of view
Publics interest in business ethics
increased during the last four decades
Publics interest in business ethics
spurred by the media
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Introduction
Inventory of Ethical Issues in
Business
Employee-Employer Relations
Employer-Employee Relations
Company-Customer Relations
Company-Shareholder Relations
Company-Community/Public Interest
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Business Ethics: What Does It Really

Mean?Business Ethics:Today vs. Earlier
Period
Expected and Actual Levels
of Business Ethics

Societys
Expectations
of Business
Ethics
Ethical
Problem
Actual
Business
Ethics

Ethical Problem

1950s

Time

Early 2000s
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Business Ethics: What Does It

Really Mean?

Definitions
Ethics involves a discipline that
examines good or bad practices
within the context of a moral duty
Moral conduct is behavior that is
right or wrong
Business ethics include practices
and behaviors that are good or bad
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Business Ethics: What Does It

Really Mean?

Two Key Branches of Ethics

Descriptive ethics involves describing,
characterizing and studying morality
What is
Normative ethics involves supplying and
justifying moral systems
What should be

Ethical issues for business

Product safety standards
Advertising contents
Working environment
Unauthorized payments
Employees privacy
Environmental issues

origin of Ethics
Ethics is a Greek word, it means
Character or manners.
Ethics is subjective while morality is
objective.
Ethics is about sense of belongingness to
society of business. Formed with a
limited vision for economic generation
but should resolve conflict with society
by servicing the community.
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Meaning of Ethics

Character
of a man

Decided by

Conduct
of a person

Leads to

Series of
Actions

Good or
Bad,
Right or
Considered As wrong,
Moral or
Immoral
Taken
together

By which
we can
Judge
again

Known as
Moral
Judgement
Moral
Standards

Requires

Objective of Ethics
Studies human behavior and makes evaluative
assessment about them as moral or immoral
Establishes moral standards and norms of behavior
Makes judgment upon human behavior based on
these standards and norms
Prescribes
moral
behavior
and
makes
recommendations about how
to or how not to
behave
Expresses an opinion or attitude about human
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conduct in general

Business Ethics
When business people speak about business ethics they
usually mean one of three things:
1.
Avoid breaking the criminal law in ones work related
activity
2.
Avoid action that may result in civil law suits against the
company
3.

Avoid actions that are bad for the company image

Businesses are especially concerned with these three things

since they involve loss of money and company reputation.

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3D of Ethics.
UNITARIAN VIEW OF ETHICS
Business is a part of moral structure and
moral ethics.
SEPARATISTS VIEWS OF ETHICS
Morality and ethics has no role in business.
Society and law deals with ethics and
morality.
INTEGRATED VIEW OF ETHICS
Ethical behavior and business should be
integrated in a new era called Business Ethics.
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Views on relationship
Business & Ethics

between

Unitarian View: Business & morality cannot be separated

and it must play by the rules of ethics of the community.

Moral Structure

Business

Moral Ethics

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Separatist view of Ethics

Proposed by Adam Smith and Milton Friedman: Business
is a distinct entity and does not include ethics and
morality

Business

Ethics

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Integration view of ethics

Proposed by Talcott Parsons
Law

Government

Business

Market Systems

Morality
&
Ethics

Business
Ethics

Society
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Ethical Consciousness
Stage 6 corporate citizenship

Stage 5
Stake holder concept

Ethical standards
Vary between cultures
And countries.
More evident
From /amongst
Entrepreneurs/
Corporations.

Stage 4 Profit Maximization in

the long term

Long term profitability and

Attractiveness of Orgn
Is key to
Stage 3 Profit Maximization
competitive strategy
In the short term.
Both attractiveness & competiti
Position can be shaped
Stage 2 Anything for Profit
i.e. challenging and exciting
Stage 1 Jungle Law

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Stake holder concept

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Ethics and morality

Ethics is about field or domain of enquiry while
morality is the object of enquiry.
Ethics or behavior accepted with in a group is
recorded as credos espoused value of
group/Orgn. When espoused value become
practiced values, then the group is said to be
Ethical Organization.
Ethical theories can be classified into three subject
areas: Meta ethics
Normative ethics
Applied ethics.
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Details of 3 Ethical theories

Meta Ethics
Deals with entire scale of ethical
issues:- moral values of humans
It is the branch ofethicsthat focuses
on how we understand, know about,
and what we mean when we talk about
what is right and what is wrong.
Addresses questions such as "Whatis
goodness?" and "How can we tell what
is good from what is bad?.
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Details of 3 Ethical theories

Applied Ethics:Applied ethicsis, in the words of Brenda Almond,
co-founder of the Society for Applied Philosophy,
"the philosophical examination, from a moral
standpoint, of particular issues in private and
public life that are matters of moral judgment".
It is thus a term used to describe attempts to use
philosophical methods to identify the morally
correct course of action in various fields of human
life
E.g. BIOETHICS, BUSINESS ETHICS,
ENVIRONMENTAL ETHICS
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Applied Ethics contd..

There are six domains to help improve organizations
and social issues at the national and global level:
Decision ethics, or ethical theories and ethical
decision processes
Professional ethics, or ethics to improve
professionalism
Clinical ethics, or ethics to improve our basic health
needs
Business ethics, or individual based morals to
improve ethics in an organization
Organizational ethics, or ethics among
organizations
Social ethics, or ethics among nations and as one 21
global unit

Details of 3 Ethical theories

Normative theories
That which guides and controls human conduct. Sets
out certain standards that determine what is right
and what is wrong.
Golden principle behind this
WE SHOULD TREAT OTHERS THE SAME WAY
THAT WE WANT OTHERS TO TREAT US
There are Three leading theories of Normative
ethics1. STOCK HOLDERS THEORY
2. STAKE HOLDERS THEORY
3. SOCIAL CONTRACT THEORY

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Sources of Ethical Norms

Fellow Workers

Fellow Workers

Family

Regions of
Country

Profession
The Individual

Friends

The Law

Conscience
Employer

Religious
Beliefs

Society at Large

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3 Models of Management Ethics

1. Immoral ManagementA style
devoid of ethical principles and active
opposition to what is ethical.
2. Moral ManagementConforms to
high standards of ethical behavior.
3. Amoral Management
Intentional - does not consider ethical
factors
Unintentional - casual or careless about
ethical considerations in business

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3 Models of Management Ethics

Three Types Of Management Ethi

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Three Approaches to Management Ethics

6-18
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Making Moral Management Actionable

Important Factors
Senior management
Ethics training
Self-analysis

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Developing Moral Judgment

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Developing Moral Judgment

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Developing Moral Judgment

External Sources of a
Managers Values

Religious values
Philosophical values
Cultural values
Legal values
Professional values
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Developing Moral Judgment

Internal Sources of a
Managers Values

Respect for the authority structure

Loyalty
Conformity (TRADITIONAL VALUES)
Performance
Results
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Elements of Moral Judgment

Moral imagination
Moral identification and ordering
Moral evaluation
Tolerance of moral disagreement and
ambiguity
Integration of managerial and moral
competence
A sense of moral obligation
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Common Unethical Acts...

Lying and withholding needed information

Abusive or intimidating behavior
Misreporting time worked
Discrimination and sexual harassment
Stealing
Breaking environmental and safety laws
Falsifying records
Drug or alcohol abuse
Giving or accepting bribes

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Why Misconduct Is Not

Reported...

Belief that nothing will be done

Fear of retaliation

Fear
of
being
troublemaker

viewed

as

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Why ethical behavior is important???

Business is a subsystem of society
Reduction in cost of friction with
social environment
Important for organizations leaders
because they influence the ethical
climate for the rest.
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Why Ethical problems occur?

Personal gain
Individual values widely
organizational goals

differ

with

Managers values and attitudes

Competitive pressures
Cross-Cultural contradictions

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Encouraging Ethical Conduct

Ethics Training
Key features of effective ethics
training programs
Top management support.
Open discussion.
A clear focus on ethical issues.
Integration of ethics into the organization.
A mechanism for anonymously reporting
ethical violations.
Reward ethical conduct.
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Encouraging Ethical Conduct (contd

Whistle-Blowing

The reporting of perceived unethical matters.

Reducing the fear of retaliation against
whistleblowers
Anonymous hotlines and web sites
Personal, confidential guidance

Ethical Advocate

An ethics specialist who plays a role of critical

questioner in top-managements decisionmaking.
Serves as the Board of directors social
conscience.
Helps prevent groupthink and blind conformity
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Encouraging Ethical Conduct

(contd)
Code of Ethics
Published statement of moral expectations for
employee conduct
Requirements for an effective ethics code
Must describe specific practices as
unethical
(e.g., kickbacks, payoffs, gifts, falsification
of records, and misleading product claims).
Must be firmly supported and fairly
enforced by
top management.
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Role of the Business Officer

Employee/Staff rely on you to explain the
rule/policy
Be able to say no and explain why
Ethical leadership
Be the example, not the exception
Ethics are what you would you do, if you
were sure no one would see you.
Be consistent
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THANK YOU

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