Business Ethics

• You think you are leading a good life?

• Can you get a good sleep after spending a

typical day?

• How do you know what is right or wrong?

 Ethics

• Derived from the word ‘ethos’

• Meaning: “the characteristic spirit or attitudes

of a community, people, or system.”

• To do “good”, not just for owners, but for all

the concerned parties
 Ethics
• The study of moral obligation involving the
distinction between right and wrong.

• Business Ethics: right or wrong in the

workplace – value management.
 Business Ethics
Four different levels of business ethics have been identified based on what type
of business and how their actions are evaluated.

1. The society level, which defines ethical behavior and assesses the effect of
business on society.
2. The industry level, which suggests that different industries have their own
set of ethical standards (e.g., chemical industry vs. pharmaceutical industry)
3. The company level, under which different companies have their own set of
ethical standards
4. The individual manager level, at which each manager and other corporate
participants are responsible for their own ethical behavior

CONSEQUENTLY, one feasible way to judge ethical behavior is to focus on

determinants of business ethics and behavior such as corporate culture,
incentives, opportunities, and choices.
Business is not
just business
these days, its
something more!
 ‘Ego was the Genesis of our Troubles’

“Karmayogi was my father Dhirubhai Ambani’s

other name, said Anil Ambani. He was a man of
action. But as a true follower of the Bhagavad
Gita, he acted not for himself but for humanity.
In the true spirit of nishkam karma, he remained
free from attachment to the fruits of his action.
 ‘Ego was the Genesis of our Troubles’

Among the many human failings, the one that is

most destructive of trust is arrogance, which is
rooted in the illusory reality of ‘I’ or ‘Ego’. Ego is the
source of all our troubles. It is, as the divine text
puts it, the feeling of separateness, the sense of
duality, the idea of being distinct and different from
others. It is an obsessive sense of ownership.
 ‘Ego was the Genesis of our Troubles’

My father never considered himself as an owner; he

had no obsession or ego of holding the business. To
all the troubles that happened in the years that
followed, were because we (brothers) somehow
could not follow the nishkam-dharma. But my
thoughts today are focused on performing my duty.
 ‘Ego was the Genesis of our Troubles’

To act without attachment, or to act without the

desires of fruits. May the eternal light guides us,
ever humble, towards people’s benefit.”

- Published in the Times of India, 4

December, 2004
What are the six principles of business ethics and
conduct?

 Comply with a written code of business conduct.

 Provide sufficient training to all personnel within their
organization regarding personal responsibility under the code.
 Encourage internal reporting of violations of the code with
the promise of no retaliation for such reporting.
 Self-govern their activities by implementing controls to
monitor compliance with all applicable laws and regulations.
 Share their best practices in implementing the DII principles
through participation in an annual Best Practices Forum.
 Be accountable to the public, particularly through the
completion of an annual Public Accountability Questionnaire.
 Ethical Dilemmas faced by Companies

• Many decisions are driven by the fear of

negative consequences

• Or, sometimes by the feelings as, ‘I cannot do

this…’ , ‘its against the law…’ , or ‘people will
not like me if I do this…’
 Ethical Dilemmas faced by Companies

• And then there are situations when the

person has a free choice.

• A situation demanding a choice out of two or

many options and all the options have no
particular negative consequences attached.
 Business Ethics Myths
• Ethics can’t be managed.
• Being legal = being ethical.
• Managing ethics has little practical relevance.
 Ethics in Business

• Not a separable concept. Though the need for

studying it separately is now felt.

• Ethics are required to make informed

decisions that are morally correct.

• An ethical business is liked by all stakeholders

 The Costs of Being Unethical

• Failure to address ethical issues can cause

both legal and monetary losses.

• “Bad ethics is bad Business” – all short term

gains seldom pay in the end.

• Plus, no one will like you!

 Need for Human Values

• Values: Beliefs that guide individual’s actions.

• Inculcated by family, peer group, educational

institutions, environment and the work place.

• Values apply to individuals and institutions,

both business and non-business.
 Promoting Ethical Climate in Business

• Organizational objectives and policies should

be clearly laid down so that every member
works strictly towards those

• Ethical actions of top managers will promote

ethical behavior throughout the organization
 Promoting Ethical Climate in Business

• Imposing penalties and threats for non-

conformance to ethical behavior.

• Educational institutions can offer courses in

business ethics to create the ethically
consciousness managers
 Basic Principles of Indian Ethos in
Management

• Each soul is potentially divine

• Holistic Management

• The third-eye approach by managers

• Karma Yoga
Basic Principles of Indian Ethos in
Management

Swami Bhagavad Other

Vivekananda Gita Scriptures
 Benefits of Managing Ethics in the
Workplace
• Improves society.
• Maintains a moral course in turbulent times.
• Cultivates employee teamwork, productivity,
morale and development.
• Acts as an insurance policy.
• Establishes values for quality management,
strategic planning and diversity management.
• Promotes strong public image.
• It is the RIGHT thing to do!
Business Ethics
 The Role of Ethics in Business

Unethical and/or Illegal

• Accounting fraud

• Deceptive advertising

• Unfair competitive practices

• Internet theft
 Recognizing an Ethical Issue in an
Organization

An identifiable problem, situation, or

opportunity that requires a person to choose
from among several actions that may be
evaluated as right or wrong, ethical or unethical.
 Recognizing an Ethical Issue in an
Organization

How to judge

Examine the situation from your stakeholders’

position, including customers and competitors
Observed Unethical Practices
 Personal Ethics
25,000 high school students:
• 62% cheated on exams at least once

• 35% copied documents from Internet

• 27% shoplifted

• 23% cheated to win at sports

 “The simple step of a simple
courageous man is to not take
part in the lie, not to support
deceit. Let the lie come into
the world, even dominate the
world, but not through me.”

-- Alexander Solzhenitsyn