Description
Running a business involves number of factors outside the scope of making money, of which ethics is definitely one. As your business grows you impact on the lives and circumstances of people through bringing jobs, creating wealth and inspiring others to grow their businesses. An important part of engaging in this process is for understanding your business ethics, which if not up to scratch can leave you with a bad reputation and can even ruin your business, not to mention alienating employees, suppliers and the local community.
Ethics is something of a subjective topic, but is of immense importance. From the way in which sales and marketing is handled through to product development and customer service, and even to some extent finance, ethics has a significant role to play in ensuring business success and ultimately living up to the corporate social responsibility. Thus adopting a ethics-specific approach to doing business is critical towards ensuring a legitimate business model with long term potential.
Therefore, study of business ethics is vital; because an educated person not educated in ethics is a menace to society.
William Giabbai has the right idea. If I say "red" how do you know what shade of red I am talking about? Ethics is all about helping you understand the expectations of others. Sometimes this is a legal concept (i.e. engineering has a code of ethics to which you are required to adhere to) while other times it simply suggest a set of behavioral patterns.
Regardless, most of it could be considered common sense. Yet, as my "red" example pointed out, sometimes what you think is the proper definition or expectation may not be the same as what others think.
I believe that you understand that business ethics is important but you can't understand why you have to study it because ethics is something that comes with you and not something that can be learned. If so, you're right. The problem is not everyone has the same concept of ethics. So, what you have to learn is how to implement business ethics in a way that people do things not because someone told them to but because they "feel" they have to do them.
UNIVERSITY OF MUMBAI RESEARCH PROJECT ON
“THE ROLE OF ETHICS IN MODERN WORKING ENVIRONMENT; CASE STUDY ON THE TATA WAY”
SUBMITTED BY SHIKHA SINGH SENGAR T.Y.BMS (SEMESTER V)
UNDER THE GUIDANCE OF PROF. MINU SINGH
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF BACHELORS OF MANAGEMENT STUDIES (BMS)
ICLES’ MOTILAL JHUNJHUNWALA COLLEGE VASHI NAVI MUMBAI ACADEMIC YEAR 2012-2013
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ACKNOWLEDGEMENT
I would take this opportunity to thank the teaching faculty of Department of Management Studies of ICLES’ MJ college and also to the University of Mumbai for providing me an opportunity to study and work on ‘The role of Ethics in Modern Working Environment; Case study on The Tata Way.’ This has been a huge learning experience for me to showcase my views which will not only prove to be useful for my academic profile but will also help me to adjust in the various dynamic situations at the corporate level. First of all I would like to thank our Principal, Dr. Jyoti Marwah and a special thanks to the Head of Department of BMS and BMM Prof. Dr. Kamala Rajiv for giving me the freedom in doing this project and for her suggestions. I would like to give sincere and heartily thanks to Prof. Minu Singh for helping me to gather information and guiding me throughout the making of this project in every possible way. Without her I wouldn’t have been so confident. Her opinions and views helped me to shape up this project. Lastly special thanks to my Mom for staying awake with me till 4am and for providing me the necessary funds and also few of my friends who extended helping hand by their constant support and assistance to make this project worth presenting before you.
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DECLARATION
To, The Principal, ICLES’ Motilal Jhunjhunwala College, Amlendu Roye Marg, Sec 9A, Vashi, Navi Mumbai – 400706.
Respected Ma’am, I, the undersigned hereby declare that the project report entitled “THE ROLE OF ETHICS IN MODERN WORKING ENVIRONMENT; CASE STUDY ON THE TATA WAY” is an original work developed and submitted by me under the guidance of Prof. Minu Singh. The empirical findings in this report are not copied from any report and are true and best of my knowledge. DATE: PLACE: ROLL NO:
______________________________ Signature of Student (Shikha Singh Sengar) TYBMS
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PRETEXT
Running a business involves number of factors outside the scope of making money, of which ethics is definitely one. As your business grows you impact on the lives and circumstances of people through bringing jobs, creating wealth and inspiring others to grow their businesses. An important part of engaging in this process is for understanding your business ethics, which if not up to scratch can leave you with a bad reputation and can even ruin your business, not to mention alienating employees, suppliers and the local community. Ethics is something of a subjective topic, but is of immense importance. From the way in which sales and marketing is handled through to product development and customer service, and even to some extent finance, ethics has a significant role to play in ensuring business success and ultimately living up to the corporate social responsibility. Thus adopting a ethics-specific approach to doing business is critical towards ensuring a legitimate business model with long term potential. Therefore, study of business ethics is vital; because an educated person not educated in ethics is a menace to society. William Giabbai has the right idea. If I say "red" how do you know what shade of red I am talking about? Ethics is all about helping you understand the expectations of others. Sometimes this is a legal concept (i.e. engineering has a code of ethics to which you are required to adhere to) while other times it simply suggest a set of behavioral patterns. Regardless, most of it could be considered common sense. Yet, as my "red" example pointed out, sometimes what you think is the proper definition or expectation may not be the same as what others think. I believe that you understand that business ethics is important but you can't understand why you have to study it because ethics is something that comes with you and not something that can be learned. If so, you're right. The problem is not everyone has the same concept of ethics. So, what you have to learn is how to implement business ethics in a way that people do things not because someone told them to but because they "feel" they have to do them.
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INDEX
SR.NO 1. CHAPTER 1 TOPIC PG.NO 8 – 11
1.1 General Introduction of the Project 1.2 Objective of study 1.3 Scope of study 1.4 Statement of Hypothesis 1.5 Research Methodology
8 9 10 10 11
2.
CHAPTER 2
12 - 16
2.1 What is ethics? 2.2 Ethics in organization 2.3 Corporate ethics 2.4 History of corporate ethics
12 14 15 16 17 – 21
3.
CHAPTER 3
3.1 Introduction 3.2 Importance of ethics in modern working environment 3.2 How the ethics have made their place in the modern working environment? 3.3 BEE the change
17 17 18
21
4
CHAPTER 4
22 – 26
4.1 Ethics in modern workplace 4.2 Five benefits of managing workplace ethics
22 23
5
4.3 Examples of business ethics in the workplace 4.4 Business values and ethical values
24 26 27 – 29
5.
CHAPTER 5
5.1 Traditional vs Modern ethics 5.3 Examples of modern and traditional ethical thinking 6 CHAPTER 6
27 28 30 – 40
6.1 Ethical issues facing HR 6.2 Ethical issues facing the General Business Community 6.3 Ethical issues facing the Accounting profession 6.4 Ethical issues within Organizations 6.5 Ethical issues facing Sales and Marketing 6.6 Ethical issues in Production 6.7 Ethical issues within Trade unions 6.8 How to handle ethical issues in the workplace? 6.9 How to contrast the difference between ethical and unethical values within an organization?
30 31 32 34 35 36 36 37 39
7.
CHAPTER 7
41 – 43
7.1 Ethical companies are stronger and last longer. 7.2 Ethics in business are just a passing fad.
41 42 44 – 57
8.
CHAPTER 8 CASE STUDY ON THE TATA WAY
8.1 Tata empire - Introduction 8.2 Core values and purpose 8.3 Ethical values incorporated in the conduct of business – The Tata way 8.4 Ethical behaviour in Tata
45 47 48 53
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8.5 Providing a safe and healthy workplace 8.6 Four pillar concept
56 57 58 – 66
9.
CHAPTER 9
9.1 Gift policy 9.2 Policy for sports personals 9.3 Whistle blower policy 9.4 Tata Code of Conduct
58 59 59 60 67 – 68 69 – 78
10.
CHAPTER 10 RECENT NEWS ARTICLES
11.
CHAPTER 11.1 QUESTIONNAIRE 11.2 SURVEY FEEDBACK
12.
CHAPTER CONCLUSION
79
13.
BIBLIOGRAPHY
80
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CHAPTER 1
1.1 GENERAL INTRODUCTION OF THE PROJECT
Perceived trustworthiness is a large part of ethical businesses’ popularity because in times of economic instability people look to organizations that feel like ‘a safer pair of hands’. They are more likely to be big on high levels of customer service and service levels in general which helps customers feel valued and trusted. They also offer positive social impact and take a ‘more than profit approach’ to their work, which means that they are not purely driven by their bottom line. This doesn’t mean to say that ethical businesses aren’t profitable, far from it in fact as adopting a more ethically minded approach is increasingly good for business; it’s just a more considered way of working that is now more sustainable for the future than traditional business practices. A genuinely ethical business can come in many different shapes and sizes – what sets them apart is the way their ethical focus underpins everything they do. It is also reflected in the way they talk about their work. The public has become weary of grand claims, which can, when investigated further, amount to little more than fancy marketing. So it is essential that any claims a company makes can stand the test of time. Any business can become more ethical irrelevant of the industry sector, its size or any other characteristics. The end goal is to create a company that not only contributes more to society but also enhances competitiveness, helps to build greater trust in your brand and means your business is better prepared for the future.
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1.2 OBJECTIVES OF THE STUDY
? To study and understand the ethical importance in the modern working environment. ? To analyze the changing ethical trends in corporate. ? To study ethical barriers and issues. ? To understand the working of an ethical company. ? To analyze working class people feedbacks on their company’s ethical standards.
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1.3 THE SCOPE OF STUDY:
There are many underlying influences both internal & external from the social environment. Perfect prediction of human behavior is never possible, but properly designed research and understanding of etiquettes can help in the working of the corporate culture. Business ethics is simply another form of decision making complying with legal regulations and maximizing profits. It is the measure of behavior in the corporate world based on standards of right and wrong. The modern workplace is changing rapidly and accordingly the importance of ethics. Today the corporate world is very challenging which is making it difficult to work with ethics. So to incorporate it in all the levels of management, it’s very important to understand the importance of ethics in the modern working environment. Ethics is something of a subjective topic, but is of immense importance. From the way in which sales and marketing is handled through to product development and customer service, and even to some extent finance, ethics has a significant role to play in ensuring business success and ultimately living up to the corporate social responsibility. Thus adopting an ethics-specific approach to doing business is critical towards ensuring a legitimate business model with long term potential.
1.4 STATEMENT OF HYPOTHESIS
Hypothesis 1: Ethical companies are stronger and last longer.
Hypothesis 2: Ethics in business are just a passing fad.
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1.5 RESEARCH METHODOLOGY:
? Primary data (Raw data)
Primary data is that data which is collected for the first time. It is original in nature in the shape of raw material. For the purpose of collection of primary data, a well structured and self administered questionnaire was filled by respondents (survey). The questionnaire comprises of questions about the ethical policies in their respective companies and their awareness about it. This primary data helps gain perceptive information and also helps in analysis and interpretations in this project. Following methods were used during the preparation of this project: 1. Direct personal observation. 2. Indirect oral interviews. 3. Mailed questionnaire method. 4. Feedback survey ?
Secondary data
Secondary data is data which is already been collected by someone before. It is secondary in nature and in the shape of finished products. Secondary data are collected as to have accurate results and facts. Required secondary data is collected from: 1. Newspaper articles. 2. Business Management books and business magazines. 3. Published interviews and research work of scholars 4. Websites and blogs. ?
Detailed case study related to good ethics in workplace. For that I have taken the Tata group of companies which is listed in the Forbes magazine 2012 for the best Indian ethical company.
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CHAPTER 2
2.1 INTRODUCTION: WHAT IS ETHICS?
Some years ago, sociologist Raymond Baumhart asked business people, "What do ethics mean to you?" Among their replies were the following: "Ethics has to do with what my feelings tell me is right or wrong." "Ethics has to do with my religious beliefs." "Being ethical is doing what the law requires." "Ethics consists of the standards of behavior our society accepts."
"I don't know what the word means."
These replies might be typical of our own. The meaning of "ethics" is hard to pin down, and the views many people have about ethics are shaky. Many people tend to equate ethics with their
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feelings. But being ethical is clearly not a matter of following one's feelings. Nor should one identify ethics with religion. Most religions, of course, advocate high ethical standards. Yet if ethics were confined to religion, then ethics would apply only to religious people.
Being ethical is also not the same as following the law. The law mostly forces ethical standards to which most citizens but ethics cannot be forced. Finally, being ethical is not the same as doing "whatever society accepts." In any society, most people accept standards that are, in fact, ethical. But standards of behavior in society can deviate from what is ethical. An entire society can become ethically corrupt. Nazi Germany is a good example of a morally corrupt society.
Well then, what is ethics? Ethics is two things. First, ethics refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from rape, stealing, murder, assault, slander, and fraud. Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.
Secondly, ethics refers to the study and development of one's ethical standards. As mentioned above, feelings, laws, and social norms can deviate from what is ethical. So it is necessary to constantly examine one's standards to ensure that they are reasonable and well-founded. Ethics also means, then, the continuous effort of studying our own moral beliefs and our moral conduct, and striving to ensure that we, and the institutions we help to shape, live up to standards that are reasonable and solidly-based.
Ethics is something of a subjective topic, but is of immense importance. From the way in which sales and marketing is handled through to product development and customer service, and even to some extent finance, ethics has a significant role to play in ensuring business success and ultimately living up to the corporate social responsibility. Thus adopting a ethics-specific approach to doing business is critical towards ensuring a legitimate business model with long term potential.
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2.2 ETHICS IN ORGANIZATIONS
From debates over drug-testing to analyses of scandals on Wall Street, attention to ethics in business organizations has never been greater. Yet, much of the attention given to ethics in the workplace overlooks some critical aspects of organizational ethics.
When talking about ethics in organizations, one has to be aware that there are two ways of approaching the subject--the "individualistic approach" and what might be called the "communal approach." Each approach incorporates a different view of moral responsibility and a different view of the kinds of ethical principles that should be used to resolve ethical problems.
More often than not, discussions about ethics in organizations reflect only the "individualistic approach" to moral responsibility. According to this approach, every person in an organization is morally responsible for his or her own behavior, and any efforts to change that behavior should focus on the individual.
But there is another way of understanding responsibility, which is reflected in the "communal approach." Here individuals are viewed not in isolation, but as members of communities that are partially responsible for the behavior of their members. So, to understand and change an individual's behavior we need to understand and try to change the communities to which they belong.
Any adequate understanding of, and effective solutions to, ethical problems arising in organizations requires that we take both approaches into account. Recent changes in the way we approach the "problem of the alcoholic" serve as a good example of the interdependence of individual and communal approaches to problems. Not so long ago, many people viewed an alcoholic as an individual with problems. Treatment focused on helping the individual deal with his or her problem. Today, however, the alcoholic is often seen as part of a dysfunctional family system that reinforces alcoholic behavior. In many cases, the behavior of the alcoholic requires that we change the entire family situation.
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These two approaches also lead to different ways of evaluating moral behavior. Once again, most discussions of ethical issues in the workplace take an individualistic approach. They focus on promoting the good of the individual: individual rights, such as the right to freedom of expression or the right to privacy, are held paramount. The communal approach, on the other hand, would have us focus on the common good, enjoining us to consider ways in which actions or policies promote or prohibit social justice or ways in which they bring harm or benefits to the entire community.
Our values will lead us to choose those policies or actions that will protect the interests and rights of the individual. But perhaps the greatest challenge in discussions of ethics in organizations is to find ways in which organizations can be designed to promote the interests of both.
2.3 CORPORATE ETHICS
Corporate ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Corporate ethics has both normative and descriptive dimensions. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns. Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporations promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters. Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
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Governments use laws and regulations to point business behavior in what they perceive to be beneficial directions. Ethics implicitly regulates areas and details of behavior that lie beyond governmental control. The emergence of large corporations with limited relationships and sensitivity to the communities in which they operate accelerated the development of formal ethics regimes.
2.4 HISTORY OF CORPORATE ETHICS
Business ethical norms reflect the norms of each historical period. As time passes norms evolve, causing accepted behaviors to become objectionable. Business ethics and the resulting behavior evolved as well. Business was involved in slavery, colonialism and the cold war. The term 'business ethics' came into common use in the United States in the early 1970s. By the mid-1980s at least 500 courses in business ethics reached 40,000 students, using some twenty textbooks and at least ten casebooks along supported by professional societies, centers and journals of business ethics. The Society for Business Ethics was started in 1980. European business schools adopted business ethics after 1987 commencing with the European Business Ethics Network (EBEN). In 1982 the first single-authored books in the field appeared. The idea of business ethics caught the attention of academics, media and business firms by the end of the Cold War. However, legitimate criticism of business practices was attacked for infringing the "freedom" of entrepreneurs and critics were accused of supporting communists. In India, firms started highlighting their ethical stature in the late 1980s and early 1990s, possibly trying to distance themselves from the business scandals of the day, such as the savings and loan crisis. Even established firms as well as newly opened firms were incorporating ethical policies to maintain a proper code of conduct in the organization since the 20 th century.
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CHAPTER 3
3.1 MODERN WORKING ENVIRONMENT
The modern work environment is undergoing major changes in organization, and technology with significant effects on the employee. Companies expect that their employees will cope efficiently with changes at work; adaptability is seen more and more as an essential ability of today´s employees. Individual adaptability is broadly defined as the degree to which individuals cope with, respond to, and/or support changes that affect their (work) role.
3.2
IMPORTANCE
OF
ETHICS
IN
MODERN
WORKING ENVIRONMENT
In today's business climate, ethics plays an important role in the workplace. Ethics is vital to creating the company culture of an organization. An organization uses ethics to decide how it wants to do business and how its reputation is viewed from an outsider’s perspective. If unscrupulous acts are allowed, or even encouraged, then those types of personalities dominate during the hiring process. Eventually it permeates throughout the entire organization and can cause adverse affects on business including poor customer service, inadequate product quality, unethical accounting practices, and ineffective human resource policies. Good ethical practices can prevent these things from happening.
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The manager's role is to support the ethical standards of the organization. This involves two distinct tasks. First, the manager has to lead by example and promote the ethical standards that employees can be proud of. Second, the manager has to be the enforcer or whistle-blower when witnessing unethical behavior. Allowing it to happen or turning a blind eye to it will only undermine the foundation on which the firm is built.
3.3 HOW THE ETHICS HAVE MADE THEIR PLACE IN THE MODERN WORKKING ENVIRONMENT?
Ten Commandments of work ethics With changing workplace environment, it is necessary to change workplace ethics too! The behavioral rules that worked in the 20th century just won’t work now. Here are the new commandments of ethics at the workplace. Today, the workplace is more of a community center; there's a lot more going on in every office than mere work. And that is where ethics in the workplace become important. It is not enough to get in the good books of your employers, but it extremely imperative to be comfortable with colleagues and even the subordinates. Obviously, workplace ethics will differ from one employment location to another. However, there are some ground similarities that can be observed. Based on this, we can formulate some 'safe' rules that would work for almost every work ambiance. So here are the work ethics commandments. The First Commandment - Thou shalt not criticize thy boss. This is one workplace ethic that has remained unchanged for ages. The boss is always right. Okay, he or she might be a terrible boss, but as long as you are working with them, they are always right. However, with changing times, bosses are becoming more accessible to their employees. Some of them even love taking inputs from their workers and improve their businesses. But, it is advisable to keep your mouth close till asked. Another thing to avoid is maligning your boss and indulging in back-speak in the office cafeteria.
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The Second Commandment - Thou shalt not rub thy colleagues the wrong way. Gone are the days when people were not even interested in what was going on in their next cubicle. Today, you cannot avoid befriending your colleagues at your workplace. Just be sure that you do not indulge in activities that create a bad impression of yourself on your colleagues. Put in a genuine good word when they deserve it, and do not criticize when they do error. That way you will never go wrong.
The Third Commandment - Thou shalt not comment on thy colleagues' personal affairs. Respect your colleagues' private space and they will respect yours. Do not read their personal chats over their shoulder and do not be interested in their mail that is directed to the workplace. Even if a colleague breaks out about their family or personal affairs, try not to be over-zealous in offering advice.
The Fourth Commandment - Thou shalt not compare thyself with thy colleagues. In the machinery of your workplace, all employees are differently sized instruments in the machine. Everyone has been assigned a post in the company because of some unique talent. That means, you should not compare yourself with how others work. Don't ever begin cribbing with your employers when someone gets a promotion and you don't. It will certainly happen with you if you deserve it.
The Fifth Commandment - Thou shalt not be a nosey parker. In today's workplace environment, one of the biggest work ethics is to keep your nose stuck in your own affairs. Do not involve yourself in assignments meant for others, and never show off that you can do a particular job better than them. Instead, try excelling in the work assigned to you. If you show off your superiority to others, your colleagues will definitely have a bad eye pointing at you.
The Sixth Commandment - Thy attire shalt speak for itself. Keep your attire matching your status, and do not break the dress code of work, however flimsy it might be. It helps when you are dealing with outside clients. Keeping semi-formal attire at least is the need of the day.
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The Seventh Commandment - Thou shalt not bring thy family in thy workplace. It is ridiculous to speak about your family to your colleagues. Everyone has a family, and they are most interested in what happens with their folks, but it is nothing short of moronic to discuss your family woes at the workplace. An unwritten rule of workplace ethics is that you will never bring your family visiting your workplace, unless they are invited.
The Eighth Commandment - Thou shalt invite thy colleagues to thy homestead. You must keep your family out of the workplace as much as possible, but it is good work ethics to invite your colleagues over to dinner sometime. You can bond there and even do some constructive planning together. But, you must not jump in and invite everyone. Take your time, understand how friendly the people in your workplace are, and then subtly begin the invitations.
The Ninth Commandment - Thou shalt take credit only where it is due, and shalt not be modest about it. When there's an appraisal, make sure your work gets noticed. Inform the right people that it is your work in advance, so that when the time comes, you get the nod. A subtle approach is required to make your presence felt in the workplace. At the same time, you should always acknowledge your subordinates' good work.
The
Tenth
Commandment
-
Thou
shalt
always
keep
thyself
informed.
The final rule of ethics in the workplace is to always be informed in what is going on in your business. It does not pay if you are the one always sitting mute below the corner in the front office, or if you are the one dozing shamelessly when a business talk is going on. People will think funny about you if you suddenly pop up and ask them what's going on. If you are informed about your workplace affairs, it will also help you to behave better and put up a generally good impression at the workplace.
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3.4 BEE THE CHANGE
Rules that govern a beehive can work wonders if replicated at the modern workplace. To understand ethics what can be the best example then ‘Bees’. Use the bee as the social guide. They are part of a complicated process that brings us the honey we so enjoy. Try adopting their work ethics, and see where it can take you.
DIVIDE DUTIES
DUTY COMES FIRST, RIGHTS NEXT
COOPERATE
6 LESSONS
BE PUNCTUAL BE LOYAL
WORK HARD
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CHAPTER 4
4.1 ETHICS IN MODERN WORKPLACE
"Workplace ethics set the standard for right and wrong, making policies more efficient and the workplace more orderly."
When it comes to workplace ethic, it is not as simple as stealing-is-not-allowed thing. Ethics in the workplace typically rests on the fundamental foundations of a business, e.g. goals, products, services, yet not limited to these. Although workplace ethics became a topic brewing debates and with increasing popularity it is not a 20th century phenomenon. In fact, it was Cicero who first discussed this topic some 2,000 years ago, in his book "On Duties". Managers and executives only revolutionized ethics in the workplace as commerce became more complex and dynamic, and because of the social responsibility movement that began in the 1960's. One of the most important responsibilities that we place on the leaders of organizations is upholding the highest standards of ethical behavior. In a nutshell, this comes down to doing the right thing even when the wrong thing might also have some attraction. Work-place ethics are most often related to decision-making processes. Most leaders face the opportunity to choose between alternative courses of action in their work situations and other aspects of their lives. Work-place ethics refer to choosing the option that is determined to be the moral or legal “right” choice, even if the other alternative(s) are very attractive and even if you can “get away with” the less ethical choice.
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4.2 FIVE BENEFITS OF MANAGING WORKPLACE ETHICS
1. Attention to workplace ethics has improved society significantly.
Decades ago, even children up to the age 17 were forced to work longer hours in a day; workers worked till they were physically worn out, and the incapacitated were condemned to starvation and poverty. Additionally, market prices control was rampant and held only by a few, killing small businesses and crippled natural economic forces. These and many more unreasonable and inhuman conditions brought society to react and demand for fairness and equality. Thus were born what is now called ethics in the workplace.
2. Ethics programs allow morality to prevail even in turbulent times. In times of fundamental change when executives need to iron out complex conflicts and there are no clear moral compass from which to base decisions on, continuing attention to your organization's ethics program gives staff members and the management with a headlight on the right things to do.
3. Ethics programs promote teamwork and productivity. Ethics programs put employees in tune with the top priority ethical values in your organization, thereby helping build openness, integrity, and community, which are critical to building strong bonds within teams.
4. Ethics programs aim to support employee growth and self-worth A study revealed that emotionally healthier executives perform better in their posts. Likewise, employees who are given clear-cut company ethical guidelines are more confident to do their jobs and deal with any challenges in the workplace.
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5. Ethics programs set policies as legal. There are an increasing number of lawsuits regarding personnel matters that affect a company's products and services, and many of these are ironically avoidable. Ethical principles are legal entirely legal matters which are then applied to ethical issues in the workplace to become legislations. Legal policies are easier to enforce with lesser or no reactions coming from employees.
4.3 EXAMPLES OF BUSINESS ETHICS IN THE WORKPLACE
Employees face ethical dilemmas every day in the workplace. They might be tempted to leave work early, take credit for the work of others or lie to a potential client to get him to sign the insurance policy, order the service or purchase the product that they are selling. The key to fostering strong business ethics at your company is to create an ethics policy that clearly spells out what is acceptable and unacceptable behavior.
Cheating the Company A solid ethics policy should clearly outline the procedure employees should follow if they need to take time off, leave early or start late. If you don't spell out these procedures, employees might be tempted to handle these matters on their own. They might claim to be meeting a client at the end of the workday when instead they are leaving early to catch a cricket match on TV. They might claim to be at a workshop for the first half of the day when instead they are sneaking in some extra sleep. Make sure your ethics policy contains a provision telling your employees how they can request time off even for personal matters. Open communication is a far better alternative than the sneaking around required when employees try to cloak the reasons for their late starts or absences.
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Working with Clients Your ethics policy also should make it clear that your workers must treat clients and customers fairly and honestly. This means prohibiting employees from lying to potential clients or providing them with misleading information. Employees shouldn't hide the true price of a service, policy or product in an effort to trick customers into signing up. They also shouldn't promise more than their service or product can deliver. Employees should never bully or harass potential clients. Your ethics policy should state how often your workers can contact potential customers, at what times of the day and what exactly they can and cannot say during their conversations.
Abusive Behavior Any effective ethics policy forbids abusive behavior in your workplace. This kind of behavior can take many forms. Employees might engage in sexual harassment, bully other workers, tell inappropriate or offensive jokes, display pornography on their computer screens or steal from coworkers or the company. Your ethics policy must explicitly state that all such actions are forbidden at work. It also needs to spell out the punishments or repercussions of such actions.
Undue Credit Some employees might try to raise in your company by taking credit for work that others employees actually performed. This can have a negative impact on morale if it goes unquestioned. Make sure your ethics policy prohibits this behavior, too. Take seriously employee complaints that their fellow workers are stealing their ideas or taking credit for the reports, proposals or sales they complete.
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4.4 BUSINESS VALUES AND ETHICAL VALUES
BUSINESS VALUES
• • • • • • Customer Service Quality Innovation Reliability Efficiency Value for money
ETHICAL VALUES
• • • • • • Integrity Honesty Openness Respect Fairness Responsibility
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CHAPTER 5
5.1 TRADITIONAL VS. MODERN ETHICS
Surprisingly, both modern and traditional ethics are the faces of the same coin. So one should not try to antagonize them, but see them as they are – not two contrasting values, but values linked and intertwined since the dawn of modern ethics. Modern ethics could very well be perceived as a logical and natural development spurred by traditional ethics. Since times change and there is nothing we can do about it, so do our ethical ideas and notions. What was wrong yesterday is right now, and what was right yesterday is wrong today. This happens because our thinking evolves but it does not mean that ethics has lost its meaning. So always, keep in mind changing times when you think about ethical dilemmas. Without philosophy, there would be no ethics, as it is well known that ethics is one of the most important branches of philosophy. We are talking about the study of various values and customs of a person or a group of persons plus their use of different concepts, two of them being the concepts of what are right and what is wrong. Traditional ethics were more emotional and less rational / political. Modern ethics evolved from traditional ethics, still studying what was good or bad, right or wrong. However, this time, we are talking about a more rational approach as opposed to what was a purely emotional one. Empirical criteria became the criteria of choice. The connection between the two is the object of study of ethics itself. Only the criteria by which the judging is made have changed.
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5.2 SOME EXAMPLES OF MODERN AND TRADITIONAL ETHICAL THINKING
We can see an example of how these ways of thinking operate in our attitudes toward smoking. We have banned most public smoking in our modern culture. We now realize that public smoking harms those who inhale the smoke unintentionally. We are concerned that allowing people to smoke freely will cause harm to other people. So we ban smoking in public and designate special areas for smoking. So it is not the smoking that is the problem. People should be free to smoke as long as they take care not to harm others. A more traditional approach might see smoking as harmful to one's health. Smoking is wrong because it limits one's potential to live a good and full life. Modern ethical thinking is not concerned about this as long as no one else is hurt but traditional ethical thinking is also concerned with the individual actor. If an act does not contribute to the overall well being and happiness of the person acting as specified by the divinely ordained nature of the human person then that act is wrong. Traditional ethics are mainly concerned about what kind of person one is becoming through one's habitual activity. For traditional ethics, the moral task of life is to develop the right kind of habits that will lead to a flourishing life. Modern ethics is only concerned with whether or not an individual act violates a specific ethical norm. For modern ethics, the moral task of life is to conform to a set of ethical rules. We can look at a simple example: eating a slice of cake. There is nothing wrong with this act. It does not violate a moral norm and hurts no one. Looking at this from a traditional perspective, there is nothing wrong with enjoying a slice of cake. In fact, enjoying pleasurable things in moderation is a part of the good life. The problem comes in with multiple acts of cake eating repeated over time. If a habit of excessive cake eating develops, this can be harmful to one's health. If a person becomes gluttonous, then this is not a full human life and is wrong. The person has not become a good sort of person. From a modern perspective, the act of eating cake is not wrong and no matter how many times it is repeated it will not be wrong. If a person wants to pursue cake eating as their version of the good life, he or she is free to do so as long as they do not hurt anyone (and they do not ask the state to pay for their medical expenses when they become unhealthy). So we can see how these different perspectives on ethical thinking play out in our analysis of various ethical issues.
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Conclusion
Both traditional and modern ethical thinking may be used to justify the same set of ethical norms. However, the differences and justification of these norms has an effect on how we apply these norms and how we view what constitutes a flourishing human life. Further, because modern ethical thinking elevates human reason as the ultimate authority in adjudicating ethical issues, it is more prone to relativism. It lacks the absolute divine authority of traditional ethical thinking.
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CHAPTER 6
SOME MAJOR ETHICAL ISSUES
6.1 ETHICAL ISSUES FACING HR
Organizational ethics are rules and standards that guide workplace behavior and moral principles. Many organizations establish a "code of ethics" that sets company expectations regarding ethical issues such as privacy, conflict of interest, discrimination and harassment and workplace diversity. Human resources personnel are charged with setting standards that promote ethical behavior in the workplace.
Discrimination and Harassment Human resources professionals must ensure the organization remains compliant with antidiscrimination and harassment laws. Employee discrimination and harassment on the basis of race, gender or religion is an ethical issue human resources personnel face daily. Laws that prohibit discriminatory behavior such as the Civil Rights Act helps HR representatives develop training and awareness programs to prevent discrimination and harassment in the workplace. These laws also establish procedures human resources may use to report and discipline workers who display inappropriate discriminatory behavior. Privacy Human resources are involved in most aspects of employee relations including hiring, firing, compensation, benefits and leaves. Human resources representatives have access to extremely sensitive information. Keeping this information private is an ethical matter faced by the HR. Human resources personnel has an obligation to maintain the confidentiality of an employee's personal data.
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Diversity Workplace diversity encompasses the various qualities, characteristics and experiences that distinguish one worker from another. These characteristics can be differences in race, gender, age, social status or other traits that make an individual unique. Treating a person differently because of these differences poses an ethical issue that faces human resources. HR personnel implement policies that promote diversity in the workplace and welcome the differences of the entire workforce. Safety Employee safety is an issue facing human resources personnel. The department must prevent and correct potentially dangerous situations. Human resources must promptly act on hazardous conditions that present safety concerns in the workplace. The department is also responsible for identifying potentially dangerous employees and ensuring they do not harm themselves or others within the organization.
6.2 ETHICAL ISSUES FACING THE GENERAL BUSINESS COMMUNITY
Most industries face the same ethical dilemmas. These ethical issues cover a variety of issues such as employee pay rates and discouraging harassment in the workplace. Companies choosing to confront these ethical dilemmas may earn the praise or ire of consumers depending on the policies these companies adopt. Accounting Practice Ethics In the wake of corporate scandals involving unethical accounting practices from publicly traded companies such as Satyam Computers, many consumers are justifiably distrustful of investing in businesses. Accountants and financial advisers must avoid skirting ethical boundaries when making financial reports to the federal government and investors to help repair the wide rift between business investment and consumers.
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Social Networking Ethics Comments regarding employers or coworkers posted on social networking websites are costing employees jobs across the country. The ethical and legal challenges surrounding the use of social media and its consequences in the workplace affects the business industry as a whole because employers across the nation are setting policies regarding employee use of these websites while working and even what these workers can say when off the clock. Harassment in the Workplace Maintaining professional workplace relationships between employees is a continuing challenge for employers regardless of the industry. This challenge can become more difficult when the image companies choose to project has a significant sexual charge. This creates an ethical dilemma about what images companies use to sell products and the conduct expected of employees in the workplace. Paying Employees Equally Even though federal and state laws require workers to receive equal pay for performing similar work regardless of gender, race, age, ethnicity, disability or religion, the problem still persists in many industries. According to the National Committee on Pay Equity, as of 2010 a $10,784 gap in annual salary still persists between men and women nationwide. The ethical dilemma arises when some companies choose to men higher wages than women while at the same time espousing messages of equality and fair play.
6.3 ETHICAL ISSUES FACING THE ACCOUNTING PROFESSION
An accountant working in the public or private sector must remain impartial and loyal to ethical guidelines when reviewing a company or individual's financial records for reporting purposes. An accountant frequently encounters ethical issues regardless of the industry and must remain continually vigilant to reduce the chances of outside forces manipulating financial records, which could lead to both ethical and criminal violations.
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Pressure from Management The burden for public companies to succeed at high levels may place undue stress and pressure on accountants creating balance sheets and financial statements. The ethical issue for these accountants becomes maintaining true reporting of company assets, liabilities and profits without giving in to the pressure placed on them by management or corporate officers. Unethical accountants could easily alter company financial records and maneuver numbers to paint false pictures of company successes. This may lead to short-term prosperity, but altered financial records will ultimately spell the downfall of companies when the Securities and Exchange Commission discovers the fraud.
Accountant as Whistleblower An accountant may face the ethical dilemma of reporting discovered accounting violations to the Financial Accounting Standards Board. While it is an ethical accountant's duty to report such violations, the dilemma arises in the ramifications of the reporting. Government review of company financial records and the bad press caused by an accounting scandal could cause the company's rapid decline and may lead to the layoff of thousands of employees. Executives and other corporate officers could also face criminal prosecution, leading to heavy fines and prison time.
The Effects of Greed Greed in the business and finance world leads to shaving ethical boundaries and stepping around safeguards in the name of making more money. An accountant can never let the desire to earn a better living and acquire more possessions get in the way of ensuring that she follows ethical guidelines for financial reporting. An accountant who keeps her eyes on her own bank account more than on her company's balance sheet becomes a liability to the company and may cause real accounting violations, resulting in sanctions from the SEC.
Omission of Financial Records A corporate officer or other executive may ask an accountant to omit or leave out certain financial figures from a balance sheet that may paint the business in a bad light to the public and investors. Omission may not seem like a significant breach of accounting ethics to an accountant because it does not involve direct manipulation of numbers or records. This is precisely why an accountant must remain ethically vigilant to avoid falling into such a trap.
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6.4 ETHICAL ISSUES WITHIN ORGANIZATIONS
Though the ethical dilemmas faced by certain companies may be specific to their industry or company, other types of ethical issues are common to all types of companies. Handling ethical decisions with wisdom is especially important for small businesses, given the potentially devastating effects these companies may face if such issues aren't handled correctly. Health and Safety One area of ethical consideration for employers is how to balance expense control with the health and safety interests of employees. Manufacturing plants and other workplaces where employees use dangerous equipment or engage in physically demanding work should have strong safety standards that not only meet federal requirements, but that also make eliminating accidents a priority. Even standard office workplaces pose health risks to employees who are asked to sit or stand all day. Unfortunately, certain organizations opt to cut corners on safety controls, equipment and training to save money. This is both unethical and potentially damaging in the long run if major accidents occur. Technology Advancements in technology and the growth of the Internet in the early 21st century have produced a slew of ethical dilemmas for companies. Company leaders have to balance the privacy and freedom of workers while also maintaining standards that require that company technology use is for legitimate business purposes. Certain companies go so far as to monitor all online use and email communication from employee computers and work accounts. A company may have this right, but its leaders need to understand the potential concern about privacy and autonomy among employees. Transparency Prominent business and accounting scandals have made it imperative that companies operate with openness and transparency. For public corporations, this includes honest, accurate and complete reporting on mandated financial accounting reports. For large and small businesses, transparency includes communicating messages, including marketing messages, that aren't open to misinterpretation and that clearly represent the intentions of the company and its messages. Being caught in a lie or avoiding full disclosure may cause irreparable harm to small businesses.
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Fair Working Conditions Companies are generally expected to provide fair working conditions for their employees in the business environment, but being responsible with employee treatment typically means higher labor costs and resource utilization. Fair pay and benefits for work are more obvious elements of a fair workplace. Another important element is provision of a nondiscriminatory work environment, which again may have costs involved for diversity management and training.
6.5 ETHICAL ISSUES FACING SALES AND MARKETING
Ethics in marketing deals with the principles, values or ideals by which marketers and marketing institutions ought to act. Marketing can influence individual’s perceptions and interactions with other people, implying an ethical responsibility to avoid distorting those perceptions and interactions. General marketing in terms of pricing Marketing ethics involves pricing practices, including illegal actions such as price fixing and legal actions including price discrimination and price skimming. Pricing must be fair and distribution should be done accordingly.
Advertising Advertising has raised objections about attack ads, subliminal messages, inappropriate product advertising and cheap marketing in schools and colleges. Some advertising are made to confuse the consumers. Even the company is not clear about what really they want to showcase.
Transparency The company must not fake it. They should maintain a transparent business and must not keep their consumers and employees in the dark. Transparent business helps the company to generate goodwill.
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6.6 ETHICAL ISSUES IN PRODUCTION
This area of business ethics usually deals with the duties of a company to ensure that products and production processes do not needlessly cause harm. Since few goods and services can be produced and consumed with zero risk, determining the ethical course can be problematic. In some case consumers demand products that harm them, such as tobacco products. Production may have environmental impact including pollution, habitat destruction and urban sprawl. The downstream effects of technologies nuclear power, genetically modified food and mobile phones may not be well understood. While the precautionary principle may prohibit introducing new technology whose consequences are not fully understood, that principle would have prohibited most new technology introduced since the industrial revolution. Product testing protocols have been attacked for violating the rights of both humans and animals.
6.7 ETHICAL ISSUES WITHIN TRADE UNIONS
Unions for example, may push employers to establish due process for workers, but may also cost jobs by demanding unsustainable compensation and work rules. Unionized workplaces may confront union busting and strike breaking and face the ethical implications of work rules that advantage some workers over others.
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6.8 HOW TO HANDLE ETHICAL ISSUES IN THE WORKPLACE?
Morality and values-based dilemmas in the workplace are, at best, difficult to handle when employees have to choose between what’s right and what’s wrong according to their own principles. Forward-thinking employers who implement workplace ethics policies are usually wellprepared for the potential conflicts of interest that arise due to the diversity of opinion, values and culture in the workforce. However, handling ethical issues in the workplace requires a steady and cautious approach to matters which can potentially be dangerous or illegal.
Step 1 Develop a workplace policy based on your company’s philosophy, mission statement and code of conduct. Incorporate the policy into your performance management program to hold employees accountable for their actions and alert them to their responsibilities to uphold professional standards throughout their job performance and interaction with peers and supervisors. Revise your employee handbook to include the policy and provide copies of the revised handbook to employees. Obtain signed acknowledgement forms from employees that indicate they received and understand the workplace ethics policy.
Step 2
Provide workplace ethics training to employees. Utilize varied instruction methods to engage employees in learning how to address and resolve ethical dilemmas. Experiential learning, or roleplay, is an effective way to facilitate workplace ethics training. Examples of workplace ethics simulations involve scenarios about the misappropriation of company funds, personal values related to improper workplace relationships and the organization’s compliance with regulatory controls.
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Step 3 Designate an ombudsperson in charge of handling employees’ informal concerns pertaining to workplace ethics. Consider whether your organization also needs an ethics hotline, which is a confidential service employees may contact whenever they encounter workplace dilemmas that put them into uncomfortable or threatening positions. Confidential hotlines are an effective way to assure employees’ anonymity, which is a concern for employees whose alerts are considered “whistle blowing” actions.
Step 4
Research the federal, state and municipal labor and employment laws pertaining to whistle blowing. Refrain from making employment decisions, such as termination or suspension, in connection with whistle blowing or an employee’s right to protected activity under whistle blowing laws or public policy. Seek legal advice for employee reports of workplace ethics issues that increase your organization’s liability under federal, state or municipal employment law. Under the Texas Whistleblower Act, for example, public-sector employees may be entitled to damages if an employer engages in retaliatory actions based on an employee who, in good faith, files a complaint related to workplace ethics. The Act grants "[a] public employee who claims that his suspension, termination, or other adverse personnel action was in retaliation for his good faith reporting of violations of the law the right to sue for damages and other relief."
Step 5
Apply your workplace policy consistently when addressing workplace issues and employee concerns about workplace ethics. Use the same business principles in every circumstance, regardless of the perceived seriousness or the level of employees involved. Communicate the same expectations for all employees – whether they are in executive positions or front-line production roles – and approach every issue with equal interpretation of the company policy.
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6.9
HOW
TO
CONTRAST &
THE
DIFFERENCE VALUES
BETWEEN
ETHICAL
UNETHICAL
WITHIN AN ORGANIZATION?
Establishing an ethical value system in an organization or business requires a formal statement of the ethical values of the group and training employees and members to follow those values. Organizational values determine the rules governing the behavior of group members. Developing a program to demonstrate the contrast between ethical and unethical values and behavior establishes the first step in creating a company culture emphasizing and reinforcing ethical standards.
Step 1
Develop a policy outlining mandated appropriate ethical values and acceptable actions. Invite the group's membership and elected, volunteer or appointed officers to meet to brainstorm the language and the components of the official value statement. Make rough drafts of the commonly held values from these brainstorming sessions.
Step 2
Edit the ethical policy into a document that incorporates an overall mission statement and contains a narrative to indicate the ethical values endorsed by the organization. Hold a vote to ask the group's officers and membership to formally endorse the document.
Step 3
Incorporate the ethical policy in organization handbooks and formal staff documents. Issue a handbook to each member of the organization and require a signature from each member stating the member understands the policy. Develop a video or interactive online presentation demonstrating
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the values statements presented in the handbook. If staff members lack the skills to develop the presentations, hire a professional firm to complete the project.
Step 4
Ask the organization's officers and membership to meet again to create a list of specific examples of appropriate ethical and inappropriate unethical behaviors. Incorporate specific behaviors related to the organization. Encouraging the recruitment of diverse members to the organization, for example, presents an ethical value. Discriminating against potential members based on age, gender, cultural differences, race or religion illustrates unethical values within an organization. Direct officers and members to explore ethical questions directly related to the specific organization.
Step 5
Mandate that staff, employees and members of the organization, especially new hires, meet yearly to brush up on the ethical policy. Direct the discussion to a survey of the ways members might subvert the ethical code. Explore possible deterrents to unethical behavior.
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CHAPTER 7
7.1 HYPOTHESIS 1: ETHICAL COMPANIES ARE STRONGER AND LAST LONGER
Overwhelmingly, people who run ethical companies believe it that it is simply the right thing to do. James Burke, Johnson & Johnson chief executive officer, felt strongly that "those businesses who are the most consistently ethical in their behavior will, on average, be more successful." "You get what you reward. Profits are not our No. 1 motive. Our No. 1 motive is to do it right and efficiently, and the profits will follow." Ethics deal with the complex matter of moral behavior. Under corporate ethics, the most pressing issues facing the companies are: ? ? ? ? ? corporate social responsibility; employee rights; whistle-blowing; ethical business conduct; business and the environment
Businesses can no longer consider these concerns as options. Whole industries lose credibility by public perceptions of unethical conduct by a single mistake just like in the case of Satyam scam. The adherence to an ethical ideology takes conscious and continuous reflection on what that means. Every business decision must be judged against the backdrop of core values and purpose. Every ethical dilemma means that whatever action taken, even doing nothing at all, will incur a degree of harm to someone. Writing up core values and purpose does not ensure success. Success depends on whether top management believes in the core values and purpose, makes decisions on the basis of them, conducts all business according to them, treats all stakeholders relative to them and instills them in employees' day-to-day business activities. In other words, the company must "practice what it preaches."
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7.2 HYPOTHESIS 2: ETHICS IN BUSINESS ARE JUST A PASSING FAD
Ethics are really necessity for business concern. Business depends on relation between people, who can be affected by the way of their business concepts and strategies, profit is not only a thing which can help your business to grow and survive, and more is the requirement that is moral values. Nowadays many entrepreneurs are getting success only because of their ideas and ethics. Ethics of business includes both profit as well as moral values. One should not go for a loss in business seeing only the moral ethics; also one should not give up his values and look only for profit. There are variety of business activities which are strictly based on profit like real estate constructions where selling is done seeing the standard of the consumer. But others like commercialized hospitals should be based on moral values at first then profit. What is really important to know is that making profit is not losing moral values; rather if you make profit in your business you can do several works which will enhance you as a person as well as social being. There are many businesses which degrade one's moral ethics like black marketing, smuggling etc but otherwise business is so run by certain sense of ethics. Ethics alone won't make a name a brand but it is an essential element in the whole mix. Without Ethics, a company or a business won't be able to sustain itself for a longer term and will sooner than later collapse. Not that there are no unethical brands or companies in the market, but they offer some value preposition that is making them sustain and grow in the market. It's not just a passing fad, but lies at the very foundation of a long lasting brand. Ethics can play primary role in every organization. Organization ethical values can be reflected into company vision and mission. If take the non-profit organization like trusts/ society, the name itself shows ethics of the organization, but most of the trusts are doing unethical things which will give individual benefits. Ethics in business is an important factor. But we can say that most of the manufacturers have put aside their ethics. We can find that from the quality of goods at present. If we buy a pen, it doesn't work properly or the ink in the pen may leak. Most of the pens are of this type. If we buy a
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shampoo, the hair ball can be seen on the bathroom floor after we wash our head. This is nothing but unethical practice of adulteration. Similarly, when we look up the costs of the products, the cost remains the same, where as the quantity is reduced and packed as two packages. So, we can definitely say that ethics in business is a passing fad. Unethical practices can be done for achieving a short term goal of business, because in this competitive market a company won't survive without doing it and I believe every companies does that up to a certain extent. But a company should not make unethical practices as its base for such a long time because if they do someday it will come out in front of people and reputation can be severely hampered, as we have seen many cases in the past. Business is not just earning "MULA"(money), it is way beyond it. The management should ponder their thoughts over the ethical use of each and every resource so as to gain market recognition, as well as to each necessary profit through ethical means. Thus the loyalty factors of various brands are also at stake. Ethics is really important for any business to grow for a long time. As we can see present scenario Samsung has pitifully use the patents of Apple and thus have to suffer, even SATYAM has the same result while taking the path of unethically. So ethics is really important in business and one should follow it lawfully. Ethics in business are not just a passing fad. For everything we do in life there are some ethics to be followed. Like that there are ethics to be followed in business also. This gives a way for profit and fame. A business without fame and faith cannot get succeed. So there is a way for achieving these are to follow ethics. Adding smartness to the ethics leads to constant success. It's truly said that if you want to walk quick, then walk alone. But if you want to walk far, walk together. And this togetherness is not just about persons, it's about the ideals, conscience and above all humanity. Yes, profit is the main motive of doing business but for a long term growth, ethical practices are a must for any business to survive. Bad practices can make quick money but it's also sure that it would be taken ever more quickly again.
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CHAPTER 8
CASE STUDY
The Tata way
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8.1 TATA EMPIRE
The Tata group comprises over 100 operating companies in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The group has operations in more than 80 countries across six continents, and its companies export products and services to 85 countries. The total revenue of Tata companies, taken together, was $100.09 billion (around Rs475, 721 crores) in 2011-12, with 58 percent of this coming from business outside India. Tata companies employ over 450,000 people worldwide. The Tata name has been respected in India for more than 140 years for its adherence to strong values and business ethics. Every Tata company or enterprise operates independently. Each of these companies has its own board of directors and shareholders, to whom it is answerable. There are 32 publicly listed Tata enterprises and they have a combined market capitalization of about $76.37 billion (as on December 13, 2012), and a shareholder base of 3.8 million. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels. Tata Steel is among the top ten steelmakers, and Tata Motors is among the top five commercial vehicle manufacturers, in the world. TCS is a leading global software company, with delivery centers in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Global Beverages is the second-largest player in tea in the world. Tata Chemicals is the world’s second-largest manufacturer of soda ash and Tata Communications is one of the world’s largest wholesale voice carriers. In tandem with the increasing international footprint of Tata companies, the Tata brand is also gaining international recognition. Brand Finance, a UK-based consultancy firm, valued the Tata brand at $16.3 billion and ranked it 45th among the top 500 most valuable global brands in their Brand Finance® Global 500 March 2012 report. In 2010, Business Week magazine ranked Tata
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17th among the '50 Most Innovative Companies' list. Tata is also one of the two companies ranked in the Forbes Magazine 2012 for the most ethical conduct of business in the whole world. Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the spirit of nationalism. It pioneered several industries of national importance in India: steel, power, hospitality and airlines. In more recent times, its pioneering spirit has been showcased by companies such as TCS, India’s first software company, and Tata Motors, which made India’s first indigenously developed car, the Indica, in 1998 and recently unveiled the world’s lowest-cost car, the Tata Nano. Tata companies have always believed in returning wealth to the society they serve. Two-thirds of the equity of Tata Sons, the Tata promoter holding company, is held by philanthropic trusts that have created national institutions for science and technology, medical research, social studies and the performing arts. The trusts also provide aid and assistance to non-government organizations working in the areas of education, healthcare and livelihoods. Tata companies also extend social welfare activities to communities around their industrial units. The combined development-related expenditure of the trusts and the companies amounts to around 3 percent of the group's net profits in 2011. Going forward, Tata is focusing on new technologies and innovation to drive its business in India and internationally. The Nano car is one example, as is the Eka supercomputer (developed by another Tata company), which in 2008 was ranked the world’s fourth fastest. Anchored in India and wedded to traditional values and strong ethics, Tata companies are building multinational businesses that will achieve growth through excellence and innovation, while balancing the interests of shareholders, employees and civil society.
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8.2 VALUES AND PURPOSE
Purpose “At the Tata group we are committed to improving the quality of life of the communities we serve. We do this by striving for leadership and global competitiveness in the business sectors in which we operate. Our practice of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. We are committed to protecting this heritage of leadership with trust through the manner in which we conduct our business.”
Core values Tata has always been values-driven. These values continue to direct the growth and business of Tata companies. The five core Tata values underpinning the way they do business are:
?
Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.
?
Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.
?
Excellence: We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide.
?
Unity: We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.
?
Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.
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8.3
ETHICAL
VALUES
INCORPORATED
IN
CONDUCT OF BUSINESS — THE TATA WAY
In the public mind, business ethics is mainly connected with financial integrity. Tata’s are not the only ones to pursue ethical values in business but their eminent position and tradition stretching well over a 100 years makes them distinctive and worthy of study. The best ethical leaders are those who are not swept off by their work, but take time to extend their human touch to their staff when they are in need. "Values are estimations not of worth but of worth whileness. There is a deep backward- and forward-looking quality to values. If value is what makes us wealthy, values, we assume and regularly assert, are what make us human. An ethical value is all about making people human." Business ethics even covers how a person in business deals with his colleagues; staff and workers; shareholders; customers; the community; the government; environment; and the nation and its interest.
LEADERS WITH A DIFFERENCE
Jamsetji Nusserwanji Tata
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J.R.D. Tata
Mr. Ratan Tata
JAMSETJI TATA'S VISION
Jamsetji Tata believed in practicing the ethical essence of his faith rather than attend to the rituals. Prophet Zarathustra's main teachings of "good thoughts, good words, and good deeds" were inscribed in Jamsetji Tata's mind and heart before he inscribed them in his motto "Humata, Hukta, Huvarashta".
More than 100 years ago, he said: "We do not claim to be more unselfish, more generous and more philanthropic than other people, but we think we started on sound and straightforward business principles, considering the interests of the shareholders our own, and the health and welfare of the employees, the sure foundation of our prosperity." On the issue of environment, the awakening came during his visits to American steel plants in 1902. He was impressed by the technology but repulsed by the living conditions of the workers.
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He wrote to his son, Dorab, from there about his own dreams for a steel city of the future. "Be sure to lay wide streets, planted with shady trees, every other of a quick growing variety. Be sure there is plenty of space for lawns and gardens, reserve large areas for football, hockey and parks. Earmark areas for Hindu temples, Mohammedan mosques and Christian churches."
Jamsetji Tata had visualized it all even before the site of the steel plant was discovered five years later at Sakchi in Bihar. When the steel city came up, his successors did plant trees of an alternate variety on both sides of the streets and reserved and earmarked areas as he had advised.
FORTUNE FOR SCIENCE
As for his concern for the nation, Jamsetji offer to give almost half his fortune — 14 buildings and four landed properties — to the University of Research (later to be the Indian Institute of Science) came from his love to lift a subdued agricultural India to one as advanced as the nations of the West he regularly visited. Swami Vivekananda journal, Prabuddha Bharata, wrote enthusiastically: "We are not aware of any project at once so opportune and so far reaching as beneficial as this was ever mooted in India... '' Of his four grand pioneering schemes — the University of Research, a steel plant, a hydro-electric plant, and a world-class hotel, only one did Jamsetji live to see fulfilled — the Taj Mahal Palace Hotel. It was an uphill task for his successors to turn his dream into reality, wading through problem after problem.
Only their gratitude and loyalty to him in response to Jamsetji vision, plus the affection and care he bestowed on every one of them, enabled the schemes to fructify. Gratitude and loyalty as part of ethical values has to work both ways from the boss to his officers and, in return, from them to the company.
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`IT IS A CITY'
In 1923, at a time when finances were running short, a shareholder accused the Tata’s of wasting money on building sanitary hutments and other facilities for workers. R. D. Tata, a nephew of Jamsetji, who was close to him, said: "Gentlemen, people who ask these questions are sadly lacking in imagination. We are not putting up a row of workmen's huts in Jamshedpur — we are building a city." A noble vision strengthens the conviction to walk along ethical lines.
In 1924, there was a telegram from Jamshedpur that there was no money to pay workers their salaries. Sir Dorabji Tata went with R. D. Tata to the Imperial Bank (now the State Bank of India) and pledged his entire personal fortune of Rs 1 crore for a public limited company in which the Tata’s could not have held more than 11 per cent. How many would do that today? Mercifully, the company turned around.
ON MORAL TERMS
J. R. D. Tata had started the Tata Airlines with an English pilot, Neville Vincent, who, under the contract, was entitled to one-third share of the profits. The profit in the first year was Rs 60,000 and the contract was for five years. But, by 1937, the profit had risen to Rs 6 lakhs. At the time of renewal of the contract, the legal adviser to the Tata’s told JRD that they were not bound to renew the contract on the same terms.
JRD knew in his heart that it was not fair to the man who, with him, was responsible for establishing the airline. So he went to another solicitor who felt that though the Tata’s were legally not bound by the same terms, morally they were. JRD, who was not even the Chairman, assured the pilot that the terms would be the same as before but without the consent of the of the other codirectors which was not right and fair towards the co-directors but was morally and emotionally fair to the English pilot.
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The Tata’s had not expanded in the 1960s and the 1970s as some other groups had, he replied firmly: "I have often thought about that. If we had done some of the things that some other groups have done, we would have been twice as big as we are today. But we did not, and I would not have it any other way."
NO COMPROMISES
Mr. Ratan Tata has held fast to these standards. When the managing director of a Tata company told him that, in his company, straight financial dealings would not work, Mr. Ratan Tata told him that the Tata’s would rather exit the company than compromise. As the MD left his room, Mr. Ratan Tata thought the MD would quit. Instead, six months later, Mr. Tata returned to show him much better results. In an epilogue to the 2004 edition of The Creation of Wealth, Mr. Ratan Tata writes: "I would hope that my successors would never compromise and turn to soft options to meet their ends."
Of course, though ethics is more than not giving or taking bribes, the staff expect from those who are their business leaders, in return for their work, due appreciation, gratitude, steadfastness and fairness. The best ethical leaders are those who are not swept off by their work, but take time to extend their human touch to their staff when they are in need. JRD once told me, "To lead men you have got to lead them with affection." And he lived what he said.
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8.4 ETHICAL BEHAVIOUR IN TATA
Ethical behavior is intrinsic to the way they conduct business and is part of their legacy since the foundation of the Tata Group. Jamsetji Tata, who believed that business, must operate in a way that respects the rights of all its stakeholders and creates an overall benefit for society.
Tata believes in adopting the best practices in terms of corporate governance that have been and continue to be developed. The company conducts all aspects of its business with full transparency and accountability.
RISK MANAGEMENT
The Group regularly reviews and updates its risk management system to address the complex risks faced across global business. Their risk management process is assured through the Group’s corporate assurance and risk management function with reporting to the Group chief financial officer and reports and recommendations made to the audit committee of the Board.
BUSINESS ETHICS AND OUR CODE OF CONDUCT
“We do not tolerate corrupt or fraudulent practices. We expect honesty, integrity and transparency in all aspects of our business from our employees, contractors and other business counterparts.”
Their ethical principles are clearly and unambiguously articulated in the Tata Code of Conduct, to which all Tata Group companies subscribe. Originally written in 1998, the Code was updated in 2008 to better reflect changing expectations within society and the increasingly global scale of the Group’s activities.
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HUMAN RIGHTS
The Tata Steel Group is proud of its longstanding reputation as a fair and caring employer, and respects all human rights both within and outside the workplace. The Tata Code of Conduct stipulates that all employees have a personal responsibility to help preserve the human rights of everyone at work and in the wider community.
ETHICAL TIN SOURCING
Our European packaging business produces tinplate for a global market. We include ethical sourcing protocols in our tin supplier contracts and make a constant effort to have reliable and auditable information concerning the origin of the acquired minerals so we can avoid the use of conflict minerals.
We are cooperating in the tin supply chain with the International Tin Research Institute (ITRI) and are also involved in activities led by the Dutch Sustainable Trade Initiative (IDH). We also work with NGOs such as the Dutch Friends of the Earth.
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8.5
PROVIDING
A
SAFE
AND
HEALTHY
WORKPLACE
The Tata group makes sure that their employees and contractors return home from work safely each day and are more important than anything else. They are committed to ensuring zero harm to their employees, contractors and the communities in which they operate. This is integral to their business process and is laid down in their health and safety policies, standards and working procedures.
Their journey towards safety excellence was initiated with guidance from DuPont, a world leader in safety, and from other companies recognized for their high standards in health and safety including Australian-based BlueScope Steel.
They aspire to be the health and safety benchmark for the steel industry globally, and their goal is to achieve a lost time injury frequency (LTIF) rate of 0.4 or lower by 2012.
WORKING TOGETHER
Every Tata Group board meeting includes a detailed review of health and safety issues. A boardlevel Safety, Health and Environment Committee provide overall leadership in SH&E matters throughout our global business. Each of the Group’s regional businesses has a well-established and comprehensive health and safety policy, with supporting principles, standards and procedures, and a Tata Steel group-wide health and safety policy has been introduced from January 2011. Clear objectives for process safety, occupational safety and health are embedded within the health and safety management plans of each business. In October 2009, the World Steel Association (world steel) recognized Tata Steel for demonstrating excellence in health and safety, particularly in relation to its contract workforce programme. The construction of the new blast furnace at Jamshedpur recorded 35 million accident-free hours.
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In India, we have established safety committees involving employees at all levels, helping to ingrain a strong sense of personal responsibility across functions. These have contributed significantly to the formulation and upgrading of policies, strategies and standards. Our lost time injury frequency rate in India has improved from 3.5 to 0.56 in the last four years, and we are determined to continue to drive it lower. Tata group has a Health and Safety Management System (HSMS) consisting of a comprehensive array of tools, standards and procedures. The HSMS encompasses 15 fundamental principles including accountability, management of change, and audit and review, and is based on industry best practice. In Thailand and China, a programme called Safety Excellence Journey was rolled out during the year at the Group’s wire mills, as well as some of Tata group’s associated companies such as Tayo Rolls (cast iron and steel roll manufacturer), TRF (material handling solutions company), and The Tinplate Company (packaging steel). Measures taken to date include the continuous active involvement of senior management, safety training, establishment of a safety council, and formation of risk containment groups to identify and contain high-risk activities. STOP (Solve This Ongoing Problem) teams observe safety behaviour and interact with employees on safety.
MINING
Tata group strives constantly to improve and extend our systems for managing the significant safety risks associated with the extraction of raw materials as we expand global operations to enhance our raw materials self-sufficiency. Underground operations pose particular safety and health risks. Mine locations, by their very nature, are remote. Miners work in confined spaces and deploy explosives to extract minerals. We have adopted best mine rescue procedures at all our mining units. The Tata Safety Excellence Management and Review process is used to proactively assess risks and hazards and control them through multi-level safety action plans. The mining division’s safety goals are in line with zero fatality in its operations and a lost time injury frequency rate of 0.4 or better by 2012.
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8.6 FOUR PILLAR CONCEPT
"We do not claim to be more unselfish, more generous or more philanthropic than others, but we think, we started on sound and straightforward business principles considering the interest of the shareholders, our own health and welfare of our employees... the sure foundation of our prosperity" – J.N. Tata
A strong focus on Value Creation and Corporate Citizenship has helped the Tata Group build an enviable corporate reputation founded in honest and transparent approaches. The values and principles, which have Governed Tata’s business for a century, have been deployed through the implementation of the Tata Code of Conduct (TCOC, often referred to as the 'Code'), which was first formally articulated in 1998. This was intended to serve as a guide to each employee on the values, ethics and business principles expected of him or her in personal and professional conduct. The Management of Business Ethics is effectively instituted today in Tata group through its four pillars concept.
? Leadership ? System and Processes ? Training and Awareness ? Measurement
In 2008, in line with changing times and the globalization of the Tata Group, the Code was updated in consultation with group companies around the world. The revised Code of Conduct was adopted by the Tata Group Board in October 2008. It addresses contemporary issues of concern for global business along with the importance of implementing a sustainability protocol. July is celebrated as ‘Ethics Month’ every year, with numerous programmes and activities. The effectiveness of all initiatives is measured by various internal and external surveys and the results of these studies are proactively incorporated in the existing system.
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CHAPTER 9
ETHICAL POLICIES
Tata group upholds the importance of a fair and transparent approach in everything it does by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour in all its business processes and transactions.
Committed to following the principles of fair practice and business ethics to the core, Tata has adopted the Tata Code of Conduct, which lays down the principles and standards that should govern the actions of the Company and the employees. A number of relevant policies have also been formulated and implemented towards the practical application of TCOC.
9.1 GIFT POLICY Tata recognizes that exchange of gifts with people with whom we do business with is not unusual and is considered acceptable. The receipt and giving of gifts is part of normal social exchange. Such exchange is neither irregular nor is it unusual. However, the need is recognized for a stated policy setting caps on the value of such gifts and for defining circumstances under which it would be acceptable or not acceptable to retain gifts. The cardinal principle would be that gifts should not be given or received either to obtain favours / preferential treatment or in return for favours/ preferential treatment. The policy will apply to all employees of Tata group as well as its subsidiary and associate companies.
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9.2 POLICY FOR SPORTS PERSONALS The company recognizes the value of contributions made by our employees in the field of sports, at the State and National and International levels. While such sports activities outside the company are beneficial and are to be encouraged.
9.3 WHISTLE BLOWER POLICY The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. Towards this end, the Company has adopted the Tata Code of Conduct which lays down the principles and standards that should govern the actions of the Company and their employees. Any actual or potential violation of the Code, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the Code cannot be undermined. Every employee of a Tata Company shall promptly report to the management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of his or any other Tata Company.”
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9.4 TATA CODE OF CONDUCT
This comprehensive document serves as the ethical road map for Tata employees and companies, and provides the guidelines by which the group conducts its businesses.
Clause 1 National Interest A Tata company’s management practices and business conduct shall benefit the country, localities and communities in which it operates, to the extent possible and affordable, and shall be in accordance with the laws of the land.
Clause 2 Financial reporting and records A Tata company shall prepare and maintain its accounts fairly and accurately and in accordance with the accounting and financial reporting standards which represent the generally accepted guidelines, principles, standards, laws and regulations of the country in which the company conducts its business affairs.
Clause 3 Competition A Tata company shall fully support the development and operation of competitive open markets and shall promote the liberalization of trade and investment in each country and market in which it operates. Specifically, no Tata company or employee shall engage in restrictive trade practices, abuse of market dominance or similar unfair trade activities.
Clause 4 Equal opportunities employer A Tata company shall provide equal opportunities to all its employees and all qualified applicants for employment without regard to their race, caste, religion, colour, ancestry, marital status, gender, sexual orientation, age, nationality, ethnic origin or disability.
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Clause 5 Gifts and donations A Tata company and its employees shall neither receive nor offer or make, directly or indirectly, any illegal payments, remuneration, gifts, donations or comparable benefits that are intended, or perceived, to obtain uncompetitive favours for the conduct of its business. However, a Tata company and its employees may, with full disclosure, accept and offer nominal gifts, provided such gifts are customarily given.
Clause 6 Government agencies A Tata company shall comply with government procurement regulations and shall be transparent in all its dealings with government agencies.
Clause 7 Political non-alignment A Tata company shall be committed to and support the constitution and governance systems of the country in which it operates. The company shall not support any specific political party or candidate for political office.
Clause 8 Health, safety and environment A Tata company shall strive to provide a safe, healthy, clean and ergonomic working environment for its people. It shall prevent the wasteful use of natural resources and be committed to improving the environment, particularly with regard to the emission of greenhouse gases, and shall endeavour to offset the effect of climate change in all spheres of its activities. A Tata company, in the process of production and sale of its products and services, shall strive for economic, social and environmental sustainability.
Clause 9 Quality of products and services
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A Tata company shall be committed to supply goods and services of world class quality standards, backed by after-sales services consistent with the requirements of its customers, while striving for their total satisfaction. The quality standards of the company’s goods and services shall meet applicable national and international standards. A Tata company shall display adequate health and safety labels, caveats and other necessary information on its product packaging.
Clause 10 Corporate citizenship A Tata company shall be committed to good corporate citizenship, not only in the compliance of all relevant laws and regulations but also by actively assisting in the improvement of quality of life of the people in the communities in which it operates. The company shall not treat these activities as optional, but should strive to incorporate them as an integral part of its business plan.
Clause 11 Cooperation of Tata companies A Tata company shall cooperate with other Tata companies including applicable joint ventures, by sharing knowledge and physical, human and management resources, and by making efforts to resolve disputes amicably, as long as this does not adversely affect its business interests and shareholder value. In the procurement of products and services, a Tata company shall give preference to other Tata companies, as long as they can provide these on competitive terms relative to third parties.
Clause 12 Public representation of the company and the group The Tata group honours the information requirements of the public and its stakeholders. In all its public appearances, with respect to disclosing company and business information to public constituencies such as the media, the financial community, employees, shareholders, agents, franchisees, dealers, distributors and importers, a Tata company or the Tata group shall be represented only by specifically authorised directors and employees.
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Clause 13 Third party representation Parties which have business dealings with the Tata group but are not members of the group, such as consultants, agents, sales representatives, distributors, channel partners, contractors and suppliers, shall not be authorized to represent a Tata company without the written permission of the Tata company.
Clause 14 Use of the Tata brand The use of the Tata name and trademark shall be governed by manuals, codes and agreements to be issued by Tata Sons. The use of the Tata brand is defined in and regulated by the Tata Brand Equity and Business Promotion agreement. No third party or joint venture shall use the Tata brand to further its interests without specific authorization.
Clause 15 Group policies A Tata company shall recommend to its board of directors the adoption of policies and guidelines periodically formulated by Tata Sons.
Clause 16 Shareholders A Tata Company shall be committed to enhancing shareholder value and complying with all regulations and laws that govern shareholder rights. The board of directors of a Tata company shall duly and fairly inform its shareholders about all relevant aspects of the company’s business, and disclose such information in accordance with relevant regulations and agreements.
Clause 17 Ethical conduct Every employee of a Tata company, including full-time directors and the chief executive, shall exhibit culturally appropriate deportment in the countries they operate in, and deal on behalf of the
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company with professionalism, honesty and integrity, while conforming to high moral and ethical standards. Such conduct shall be fair and transparent and be perceived to be so by third parties.
Clause 18 Regulatory compliance Employees of a Tata company, in their business conduct, shall comply with all applicable laws and regulations, in letter and spirit, in all the territories in which they operate. If the ethical and professional standards of applicable laws and regulations are below that of the Code, then the standards of the Code shall prevail. Directors of a Tata company shall comply with applicable laws and regulations of all the relevant regulatory and other authorities. As good governance practice they shall safeguard the confidentiality of all information received by them by virtue of their position.
Clause 19 Concurrent employment Consistent with applicable laws, an employee of a Tata company shall not, without the requisite, officially written approval of the company, accept employment or a position of responsibility (such as a consultant or a director) with any other company, nor provide freelance services to anyone, with or without remuneration. In the case of a full-time director or the chief executive, such approval must be obtained from the board of directors of the company.
Clause 20 Conflict of interest An employee or director of a Tata company shall always act in the interest of the company, and ensure that any business or personal association which he / she may have does not involve a conflict of interest with the operations of the company and his / her role therein. An employee, including the executive director (other than independent director) of a Tata company, shall not accept a position of responsibility in any other non-Tata company or not-for-profit organization without specific sanction.
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Clause 21 Securities transactions and confidential information An employee of a Tata company and his / her immediate family shall not derive any benefit or counsel, or assist others to derive any benefit, from access to and possession of information about the company or group or its clients or suppliers. An employee of a Tata company shall also respect and observe the confidentiality of information pertaining to other companies, their patents, intellectual property rights, trademarks and inventions; and strictly observe a practice of nondisclosure.
Clause 22 Protecting company assets The assets of a Tata company shall not be misused; they shall be employed primarily and judiciously for the purpose of conducting the business for which they are duly authorised. These include tangible assets such as equipment and machinery, systems, facilities, materials and resources, as well as intangible assets such as information technology and systems, proprietary information, intellectual property, and relationships with customers and suppliers.
Clause 23 Citizenship The involvement of a Tata employee in civic or public affairs shall be with express approval from the chief executive of his / her company, subject to this involvement having no adverse impact on the business affairs of the company or the Tata group.
Clause 24 Integrity of data furnished Every employee of a Tata company shall ensure, at all times, the integrity of data or information furnished by him/her to the company. He/she shall be entirely responsible in ensuring that the confidentiality of all data is retained and in no circumstance transferred to any outside person/party in the course of normal operations without express guidelines from or, the approval of the management.
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Clause 25 Reporting concerns Every employee of a Tata company shall promptly report to the management, and / or third-party ethics helpline, when she / he becomes aware of any actual or possible violation of the Code or an event of misconduct, act of misdemeanor or act not in the company’s interest. Such reporting shall be made available to suppliers and partners, too. Any Tata employee can choose to make a protected disclosure under the whistleblower policy of the company, providing for reporting to the chairperson of the audit committee or the board of directors or specified authority. Such a protected disclosure shall be forwarded, when there is reasonable evidence to conclude that a violation is possible or has taken place, with a covering letter, which shall bear the identity of the whistleblower. The company shall ensure protection to the whistleblower and any attempts to intimidate him / her would be treated as a violation of the Code.
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CHAPTER 10
RECENT NEWS ARTICLES
Ratan Tata positive on India says outlook “not as bad.”
Tata, who was awarded an honorary Doctorate of Business from the University of New South Wales, said he feels that the fabric of Indian values and ethics was "slowly deteriorating", especially in the business community. MELBOURNE, NOV 28: Tata Group head Ratan Tata has said that though India had many changes of government, the outlook “might not be as bad” as one might think. However, Tata, who was awarded an honorary Doctorate of Business from the University of New South Wales, said he feels that the fabric of Indian values and ethics was “slowly deteriorating”, especially in the business community. He made it clear that his group, India’s largest conglomerate, was based on strong ethics and would not participate in corruption and bribery. “India (may have) had many changes of government, but the outlook ‘might not be as bad as you might think...I would have hope’,” The Australian daily quoted him as saying.
Ratan Regime - Too good to ignore those ethical deviations?
Despite the prediction of Mayan Calendar, the world did not meet its end by 2012. But in a way, 2012 is putting an end to the glorious innings of the legendary - Ratan Naval Tata. By December end, the Tata Group will have Cyrus Mistry at its helm while RNT will be the Chairman Emeritus
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of Tata Sons. In the 21 year tenure of RNT, the group's revenue had gone leaps and bounds and it was successful in identifying new business opportunities. At the same time, the group also got entangled into some controversies. Tata’s are not the only ones who pursue ethical values in business. But, given the group's value systems and tradition stretching over a hundred years, the expectation of the public and commoner like me are much more than from any of its peers. Tatas had achieved such a stature without actively pursuing political management. The business environment in India is changing and hence the operating environment for business enhancement required a change. Despite the group possessing a distinct corporate culture of honesty and integrity, the immense pressure of doing business in growing India cannot be ignored. Even though these issues have brought the group image down a little bit, the group still possesses much better image among its peers
Ratan Tata led the Group brilliantly, successfully: India Inc
Describing Ratan Tata as a true Indian corporate leader, India Inc today said he led the Tata Group brilliantly and attained global heights which showed it is possible to do business in an ethical way. Ratan Tata, an iconic corporate leader, retired as Chairman of the $100-billion Tata Group today after a 50-year run, on his 75th birthday. Adi Godrej, CII President and Chairman of Godrej Group said: "Ratan Tata led the Tata Group brilliantly and successfully in expanding and globalizing it." Industry chamber Assoc ham termed Tata as a true Indian business leader who went on to attain global heights in the corporate world and wished him a good and more rewarding life ahead. Tata has shown the guts which reflect that it is possible to do business in a clean and ethical way. Last week, Assoc ham came up with a CEOs survey spread across several cities, including London and New York, which placed the Tata’s as the best known Indian global brand.
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CHAPTER 11
11.1 QUESTIONNAIRE
Response Started: Friday, January 4, 2013 10:07:42 PM
IP Address: 61.16.186.117
Collector: New Email Invitation (Email Invitation)
1. What is the importance of ethics in today's modern working environment and how can you explain the modern working environment? In any organization, upholding ethics promotes a better working environment, and at the same time a good reputation for the business. Both of which contribute to high work productivity and profits. The place irrespective of size contribute to each other in substantial amount, helps to grow each other, that is work place and the employee, understand each other in terms of professionalism, give enough space to individual motivation, and a healthy team work helps to dedicate potential is an the modern working environment. 2. Do you think ethical companies are more profitable and successful in the long run or short run?
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A true understanding of the right and the wrong and the ability to distinguish between them is ethics. Ethics is an important part of life and running a successful business is no exception to this. To become successful, a business needs to be driven by strong ethical values. The mindset of a businessman creates a mindset for his/her company, which in turn sets the work culture of the business organization. For a business to prosper and maintain its wealth, it ought to be founded on certain ethical principles. A business that is based on ethics can run successfully for long years. Moneymakers who do not heed to ethical values can only earn a short-lived success. To last long in the market, business ethics is essential. 3. According to you, which is the most ethical and unethical company in India? TATA group companies are most ethical company in India, whereas some small and medium scale companies and major too are unethical as their employee cultural is worst. 4. How safe and stable do you feel at your employer's workplace? At my workplace, I feel very safe and stable, we have some policies and procedures which are strictly followed by everyone, and bosses are very nice and soft spoken with the employees. My organization takes care of safety and hygiene at workplace, always do motivation by way of conducting various programs. 5. How knowledgeable are you about the company's ethical standards? My organization has sent us code of conduct in which all policies and procedures are mentioned about the company. 6. Does your workplace follow a proper code of conduct? Of course, each and every employee of our company follows rules and regulations applied by the company; after all it is beneficiary for both organization as well as an individual. 7. Are there proper policies to maintain the ethical standards or established code of conduct? Yes, all the policies and procedures are designed well by keeping in mind beneficiary for company and employees.
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8. Is your employer's work environment positive, neither positive nor negative, or negative? Also rate it on the scale of 1 to 10. I will rate my work environment 10, its on 17th floor, good view, fully air-conditioned, totally hygienic. 9. Do you face ethical challenges while adjusting with the modern working environment in your organization? Sometimes, but we have manage them well balanced. 10. What are your suggestions to have a more ethical working environment? Try to maintain below commandments to have more ethical working environment: 1) Do not criticize the boss. 2) Put in a genuine good word for colleagues when they deserve it, and do not criticize when they do error. 3) Do not comment on colleagues personal affairs. 4) Do not compare one with others. 5) Do not involve yourself in assignments meant for others, and never show off that you can do a particular job better than them. 6) Keep your attire matching your status, and do not break the dress code of work, 7)do not bring family in workplace unless they are invited, try to avoid sharing family affairs. 8) Invite colleagues at home 9) When there's an appraisal, make sure your work gets noticed. Inform the right people that it is your work in advance, so that when the time comes, you get the nod. 10) He final rule of ethics in the workplace is to always be informed in what is going on in your business.
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Response Started: Saturday, December 29, 2012 10:26:58 AM
IP Address: 120.61.63.251
Collector: New Facebook Collector
1. What is the importance of ethics in today's modern working environment and how can you explain the modern working environment? Ethics concern an individual's moral judgments about right and wrong. Decisions taken within an organization may be made by individuals or groups, but whoever makes them will be influenced by the culture of the company. The decision to behave ethically is a moral one; employees must decide what they think is the right course of action. This may involve rejecting the route that would lead to the biggest short-term profit. 2. Do you think ethical companies are more profitable and successful in the long run or short run? Yes... 3. According to you, which is the most ethical and unethical company in India? You have very good example of Godrej & Boyce Mfg. Ltd. for Ethical Company. No idea about unethical company 4. How safe and stable do you feel at your employer's workplace? It’s a stress free and friendly environment where your ideas and suggestions are of more concern and taken into consideration 5. How knowledgeable are you about the company's ethical standards?
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Godrej enjoys the patronage and trust of around 500 million Indians every single day. Our customers mean the world to us. We are happy only when we see a delighted customer smile. With 7 major companies with interests in real estate, FMCG, industrial engineering, appliances, furniture, security and agro care – to name a few – our turnover crosses 3.3 billion dollars*. You think of Godrej as such an integral part of India – like the bhangara or the kurta – that you may be surprised to know that 26% of our business is done overseas. Our presence in more than 60 countries ensures that our customers are at home with Godrej no matter where they go. With brands you can believe in, service excellence you can count on and the promise of brighter living for every customer, Godrej knows what makes India tick today. Today, we are at a point in Godrej’s history when our amazing past is meeting up with its spectacular future head on. Godrej is learning and relishing being young again. So I think it has grown up very well in 115 years 6. Does your workplace follow a proper code of conduct? Yes 7. Are there proper policies to maintain the ethical standards or established code of conduct? Yes 8. Is your employer's work environment positive, neither positive nor negative, or negative? Also rate it on the scale of 1 to 10. It is positive, will rate it 8.5 out of 10 9. Do you face ethical challenges while adjusting with the modern working environment in your organization? Yes. At first it’s difficult for the modern generation to adjust with the ethical standards. But I think it’s only for the benefits of the customer as well as the employee 10. What are your suggestions to have a more ethical working environment? It should not be totally ethical environment. Maybe modern ideas or ethics can also help in improvising.
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Response Started: Sunday, December 30, 2012 6:53:16 AM
IP Address: 122.179.169.69
Collector: New Email Invitation
1. What is the importance of ethics in today's modern working environment and how can you explain the modern working environment? Today’s modern working environment is dynamic and business ethics helps the organization to sustain in the changing era. 2. Do you think ethical companies are more profitable and successful in the long run or short run? Ethical companies are more profitable and successful in the long run. Profits might be less in the beginning but helps to prevail in the long run. 3. According to you, which is the most ethical and unethical company in India? I guess Tata is the most ethical company in India and reliance highly unethical. Even Satyam scam is an example of unethical business. 4. How safe and stable do you feel at your employer's workplace? I feel very safe and stable at my workplace. Sometimes there are problems of grapevine in the office. 5. How knowledgeable are you about the company's ethical standards? I have a proper knowledge about the company's ethical standards and I follow it.
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6. Does your workplace follow a proper code of conduct? Yes 7. Are there proper policies to maintain the ethical standards or established code of conduct? Yes 8. Is your employer's work environment positive, neither positive nor negative, or negative? Also rate it on the scale of 1 to 10. It’s positive. Rating will be around 8. 9. Do you face ethical challenges while adjusting with the modern working environment in your organization? Yes off course. 10. What are your suggestions to have a more ethical working environment? First the top management should inculcate it properly, and then only the whole organization will follow it.
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11.2 SURVEY (Conducted from 50 employees)
1. Are you aware of business ethics?
Yes 83% No 17%
2. Do you think ethics is important in business?
Yes 76%
No 24%
3. Do you think ethical companies are stronger and last longer?
Yes 83% No 17%
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4. With a dynamic business environment, do you think ethics today is a passing fad?
Yes 57% No 43%
5. Are you aware of your workplace ethics or code of conduct?
Yes 93% No 7%
6. Do you think your company is highly ethical?
Yes 51% No 49%
7. Do you yourself indulge in unethical practices sometimes?
Yes 43% No 57%
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8. Do you feel the modern approach in ethics has resulted in more ethical practices in business?
Yes 69%
No 31%
9. After a lot of business scams coming up, do you think that today the employers, employees and customers are ethically inter-related?
Yes 91% No 9%
10. Do you think the companies should maintain a proper code of conduct and must follow proper ethical policies?
Yes 97% No 3%
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CHAPTER 12 CONCLUSION
Everyone agrees that business managers must understand finance and marketing. But is it necessary for them to study ethics? Managers who answer in the negative generally base their thinking on a very basic concept. They may simply say that they have no reason to be ethical. They see why they should make a profit, and most agree they should do so legally. But why should they be concerned about ethics, as long as they are making money and staying out of jail? Other managers recognize that they should be ethical but identify their ethical duty with making a legal profit for the firm. They see no need to be ethical in any further sense, and therefore no need for any background beyond business and law. A third group of managers’ grant that ethical duty goes further than what is required by law. But they still insist that there is no point in studying ethics. Character is formed in childhood, not while reading a college text or sitting in class. These arguments are confused and mistaken on several levels. To see why, it is best to start with the question raised by the first one: why should business people be ethical? Although ethics is not the same as self interest, business executives often want to be assured that it is the same. They want to make certain that “one can do well by doing good,” meaning that one can succeed in business by being ethical. There is no denying that one can often do well by doing good. An ethical company is more likely to build a good reputation, which is more likely to bring financial rewards over the long term. But good behavior cannot be grounded in tangible reward alone. People who are interested only in reward will behave ethically when it suits their purpose, but they will go astray whenever the incentives change. The task of business ethics is to identify the duties that business people have as business people. One can begin with the most basic ones mentioned by Economist Milton Friedman: the duty to obey the law and the “rules of the game,” which provide for “open and free competition without deception or fraud.” Ethics not only should be studied alongside management, but the two fields are closely related. Business management is all about making the right decisions. Ethics is all about making the right decisions. So what is the difference between the two? Management is concerned with how decisions affect the company, while ethics is concerned about how decisions affect everything. Management operates in the specialized context of the firm, while ethics operates in the general context of the world. Management is therefore part of ethics. A business manager cannot make the right decisions without understanding management in particular as well as ethics in general. Business ethics is management carried out in the real world. This is why business managers should study ethics.
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CHAPTER 13 BIBLIOGRAPHY
? Times of India archives ? Times of India (Ascent) ? The ethical business guide – Blue rocket & good folk ? Business ethics by Sheth Publication ? Why business ethics? – John Hooker ? www.wikipedia.org ? dictionary.reference.com/ethics ? humanresources.about.com/od/businessethics/qt/workplace-ethics.htm ? www.scu.edu/ethics/publications/iie/v2n1/ ? www.tata.in ? yahoo.answers.in
….THANK YOU….
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doc_325910031.pdf
Running a business involves number of factors outside the scope of making money, of which ethics is definitely one. As your business grows you impact on the lives and circumstances of people through bringing jobs, creating wealth and inspiring others to grow their businesses. An important part of engaging in this process is for understanding your business ethics, which if not up to scratch can leave you with a bad reputation and can even ruin your business, not to mention alienating employees, suppliers and the local community.
Ethics is something of a subjective topic, but is of immense importance. From the way in which sales and marketing is handled through to product development and customer service, and even to some extent finance, ethics has a significant role to play in ensuring business success and ultimately living up to the corporate social responsibility. Thus adopting a ethics-specific approach to doing business is critical towards ensuring a legitimate business model with long term potential.
Therefore, study of business ethics is vital; because an educated person not educated in ethics is a menace to society.
William Giabbai has the right idea. If I say "red" how do you know what shade of red I am talking about? Ethics is all about helping you understand the expectations of others. Sometimes this is a legal concept (i.e. engineering has a code of ethics to which you are required to adhere to) while other times it simply suggest a set of behavioral patterns.
Regardless, most of it could be considered common sense. Yet, as my "red" example pointed out, sometimes what you think is the proper definition or expectation may not be the same as what others think.
I believe that you understand that business ethics is important but you can't understand why you have to study it because ethics is something that comes with you and not something that can be learned. If so, you're right. The problem is not everyone has the same concept of ethics. So, what you have to learn is how to implement business ethics in a way that people do things not because someone told them to but because they "feel" they have to do them.
UNIVERSITY OF MUMBAI RESEARCH PROJECT ON
“THE ROLE OF ETHICS IN MODERN WORKING ENVIRONMENT; CASE STUDY ON THE TATA WAY”
SUBMITTED BY SHIKHA SINGH SENGAR T.Y.BMS (SEMESTER V)
UNDER THE GUIDANCE OF PROF. MINU SINGH
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF BACHELORS OF MANAGEMENT STUDIES (BMS)
ICLES’ MOTILAL JHUNJHUNWALA COLLEGE VASHI NAVI MUMBAI ACADEMIC YEAR 2012-2013
1
ACKNOWLEDGEMENT
I would take this opportunity to thank the teaching faculty of Department of Management Studies of ICLES’ MJ college and also to the University of Mumbai for providing me an opportunity to study and work on ‘The role of Ethics in Modern Working Environment; Case study on The Tata Way.’ This has been a huge learning experience for me to showcase my views which will not only prove to be useful for my academic profile but will also help me to adjust in the various dynamic situations at the corporate level. First of all I would like to thank our Principal, Dr. Jyoti Marwah and a special thanks to the Head of Department of BMS and BMM Prof. Dr. Kamala Rajiv for giving me the freedom in doing this project and for her suggestions. I would like to give sincere and heartily thanks to Prof. Minu Singh for helping me to gather information and guiding me throughout the making of this project in every possible way. Without her I wouldn’t have been so confident. Her opinions and views helped me to shape up this project. Lastly special thanks to my Mom for staying awake with me till 4am and for providing me the necessary funds and also few of my friends who extended helping hand by their constant support and assistance to make this project worth presenting before you.
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DECLARATION
To, The Principal, ICLES’ Motilal Jhunjhunwala College, Amlendu Roye Marg, Sec 9A, Vashi, Navi Mumbai – 400706.
Respected Ma’am, I, the undersigned hereby declare that the project report entitled “THE ROLE OF ETHICS IN MODERN WORKING ENVIRONMENT; CASE STUDY ON THE TATA WAY” is an original work developed and submitted by me under the guidance of Prof. Minu Singh. The empirical findings in this report are not copied from any report and are true and best of my knowledge. DATE: PLACE: ROLL NO:
______________________________ Signature of Student (Shikha Singh Sengar) TYBMS
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PRETEXT
Running a business involves number of factors outside the scope of making money, of which ethics is definitely one. As your business grows you impact on the lives and circumstances of people through bringing jobs, creating wealth and inspiring others to grow their businesses. An important part of engaging in this process is for understanding your business ethics, which if not up to scratch can leave you with a bad reputation and can even ruin your business, not to mention alienating employees, suppliers and the local community. Ethics is something of a subjective topic, but is of immense importance. From the way in which sales and marketing is handled through to product development and customer service, and even to some extent finance, ethics has a significant role to play in ensuring business success and ultimately living up to the corporate social responsibility. Thus adopting a ethics-specific approach to doing business is critical towards ensuring a legitimate business model with long term potential. Therefore, study of business ethics is vital; because an educated person not educated in ethics is a menace to society. William Giabbai has the right idea. If I say "red" how do you know what shade of red I am talking about? Ethics is all about helping you understand the expectations of others. Sometimes this is a legal concept (i.e. engineering has a code of ethics to which you are required to adhere to) while other times it simply suggest a set of behavioral patterns. Regardless, most of it could be considered common sense. Yet, as my "red" example pointed out, sometimes what you think is the proper definition or expectation may not be the same as what others think. I believe that you understand that business ethics is important but you can't understand why you have to study it because ethics is something that comes with you and not something that can be learned. If so, you're right. The problem is not everyone has the same concept of ethics. So, what you have to learn is how to implement business ethics in a way that people do things not because someone told them to but because they "feel" they have to do them.
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INDEX
SR.NO 1. CHAPTER 1 TOPIC PG.NO 8 – 11
1.1 General Introduction of the Project 1.2 Objective of study 1.3 Scope of study 1.4 Statement of Hypothesis 1.5 Research Methodology
8 9 10 10 11
2.
CHAPTER 2
12 - 16
2.1 What is ethics? 2.2 Ethics in organization 2.3 Corporate ethics 2.4 History of corporate ethics
12 14 15 16 17 – 21
3.
CHAPTER 3
3.1 Introduction 3.2 Importance of ethics in modern working environment 3.2 How the ethics have made their place in the modern working environment? 3.3 BEE the change
17 17 18
21
4
CHAPTER 4
22 – 26
4.1 Ethics in modern workplace 4.2 Five benefits of managing workplace ethics
22 23
5
4.3 Examples of business ethics in the workplace 4.4 Business values and ethical values
24 26 27 – 29
5.
CHAPTER 5
5.1 Traditional vs Modern ethics 5.3 Examples of modern and traditional ethical thinking 6 CHAPTER 6
27 28 30 – 40
6.1 Ethical issues facing HR 6.2 Ethical issues facing the General Business Community 6.3 Ethical issues facing the Accounting profession 6.4 Ethical issues within Organizations 6.5 Ethical issues facing Sales and Marketing 6.6 Ethical issues in Production 6.7 Ethical issues within Trade unions 6.8 How to handle ethical issues in the workplace? 6.9 How to contrast the difference between ethical and unethical values within an organization?
30 31 32 34 35 36 36 37 39
7.
CHAPTER 7
41 – 43
7.1 Ethical companies are stronger and last longer. 7.2 Ethics in business are just a passing fad.
41 42 44 – 57
8.
CHAPTER 8 CASE STUDY ON THE TATA WAY
8.1 Tata empire - Introduction 8.2 Core values and purpose 8.3 Ethical values incorporated in the conduct of business – The Tata way 8.4 Ethical behaviour in Tata
45 47 48 53
6
8.5 Providing a safe and healthy workplace 8.6 Four pillar concept
56 57 58 – 66
9.
CHAPTER 9
9.1 Gift policy 9.2 Policy for sports personals 9.3 Whistle blower policy 9.4 Tata Code of Conduct
58 59 59 60 67 – 68 69 – 78
10.
CHAPTER 10 RECENT NEWS ARTICLES
11.
CHAPTER 11.1 QUESTIONNAIRE 11.2 SURVEY FEEDBACK
12.
CHAPTER CONCLUSION
79
13.
BIBLIOGRAPHY
80
7
CHAPTER 1
1.1 GENERAL INTRODUCTION OF THE PROJECT
Perceived trustworthiness is a large part of ethical businesses’ popularity because in times of economic instability people look to organizations that feel like ‘a safer pair of hands’. They are more likely to be big on high levels of customer service and service levels in general which helps customers feel valued and trusted. They also offer positive social impact and take a ‘more than profit approach’ to their work, which means that they are not purely driven by their bottom line. This doesn’t mean to say that ethical businesses aren’t profitable, far from it in fact as adopting a more ethically minded approach is increasingly good for business; it’s just a more considered way of working that is now more sustainable for the future than traditional business practices. A genuinely ethical business can come in many different shapes and sizes – what sets them apart is the way their ethical focus underpins everything they do. It is also reflected in the way they talk about their work. The public has become weary of grand claims, which can, when investigated further, amount to little more than fancy marketing. So it is essential that any claims a company makes can stand the test of time. Any business can become more ethical irrelevant of the industry sector, its size or any other characteristics. The end goal is to create a company that not only contributes more to society but also enhances competitiveness, helps to build greater trust in your brand and means your business is better prepared for the future.
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1.2 OBJECTIVES OF THE STUDY
? To study and understand the ethical importance in the modern working environment. ? To analyze the changing ethical trends in corporate. ? To study ethical barriers and issues. ? To understand the working of an ethical company. ? To analyze working class people feedbacks on their company’s ethical standards.
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1.3 THE SCOPE OF STUDY:
There are many underlying influences both internal & external from the social environment. Perfect prediction of human behavior is never possible, but properly designed research and understanding of etiquettes can help in the working of the corporate culture. Business ethics is simply another form of decision making complying with legal regulations and maximizing profits. It is the measure of behavior in the corporate world based on standards of right and wrong. The modern workplace is changing rapidly and accordingly the importance of ethics. Today the corporate world is very challenging which is making it difficult to work with ethics. So to incorporate it in all the levels of management, it’s very important to understand the importance of ethics in the modern working environment. Ethics is something of a subjective topic, but is of immense importance. From the way in which sales and marketing is handled through to product development and customer service, and even to some extent finance, ethics has a significant role to play in ensuring business success and ultimately living up to the corporate social responsibility. Thus adopting an ethics-specific approach to doing business is critical towards ensuring a legitimate business model with long term potential.
1.4 STATEMENT OF HYPOTHESIS
Hypothesis 1: Ethical companies are stronger and last longer.
Hypothesis 2: Ethics in business are just a passing fad.
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1.5 RESEARCH METHODOLOGY:
? Primary data (Raw data)
Primary data is that data which is collected for the first time. It is original in nature in the shape of raw material. For the purpose of collection of primary data, a well structured and self administered questionnaire was filled by respondents (survey). The questionnaire comprises of questions about the ethical policies in their respective companies and their awareness about it. This primary data helps gain perceptive information and also helps in analysis and interpretations in this project. Following methods were used during the preparation of this project: 1. Direct personal observation. 2. Indirect oral interviews. 3. Mailed questionnaire method. 4. Feedback survey ?
Secondary data
Secondary data is data which is already been collected by someone before. It is secondary in nature and in the shape of finished products. Secondary data are collected as to have accurate results and facts. Required secondary data is collected from: 1. Newspaper articles. 2. Business Management books and business magazines. 3. Published interviews and research work of scholars 4. Websites and blogs. ?
Detailed case study related to good ethics in workplace. For that I have taken the Tata group of companies which is listed in the Forbes magazine 2012 for the best Indian ethical company.
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CHAPTER 2
2.1 INTRODUCTION: WHAT IS ETHICS?
Some years ago, sociologist Raymond Baumhart asked business people, "What do ethics mean to you?" Among their replies were the following: "Ethics has to do with what my feelings tell me is right or wrong." "Ethics has to do with my religious beliefs." "Being ethical is doing what the law requires." "Ethics consists of the standards of behavior our society accepts."
"I don't know what the word means."
These replies might be typical of our own. The meaning of "ethics" is hard to pin down, and the views many people have about ethics are shaky. Many people tend to equate ethics with their
12
feelings. But being ethical is clearly not a matter of following one's feelings. Nor should one identify ethics with religion. Most religions, of course, advocate high ethical standards. Yet if ethics were confined to religion, then ethics would apply only to religious people.
Being ethical is also not the same as following the law. The law mostly forces ethical standards to which most citizens but ethics cannot be forced. Finally, being ethical is not the same as doing "whatever society accepts." In any society, most people accept standards that are, in fact, ethical. But standards of behavior in society can deviate from what is ethical. An entire society can become ethically corrupt. Nazi Germany is a good example of a morally corrupt society.
Well then, what is ethics? Ethics is two things. First, ethics refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from rape, stealing, murder, assault, slander, and fraud. Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.
Secondly, ethics refers to the study and development of one's ethical standards. As mentioned above, feelings, laws, and social norms can deviate from what is ethical. So it is necessary to constantly examine one's standards to ensure that they are reasonable and well-founded. Ethics also means, then, the continuous effort of studying our own moral beliefs and our moral conduct, and striving to ensure that we, and the institutions we help to shape, live up to standards that are reasonable and solidly-based.
Ethics is something of a subjective topic, but is of immense importance. From the way in which sales and marketing is handled through to product development and customer service, and even to some extent finance, ethics has a significant role to play in ensuring business success and ultimately living up to the corporate social responsibility. Thus adopting a ethics-specific approach to doing business is critical towards ensuring a legitimate business model with long term potential.
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2.2 ETHICS IN ORGANIZATIONS
From debates over drug-testing to analyses of scandals on Wall Street, attention to ethics in business organizations has never been greater. Yet, much of the attention given to ethics in the workplace overlooks some critical aspects of organizational ethics.
When talking about ethics in organizations, one has to be aware that there are two ways of approaching the subject--the "individualistic approach" and what might be called the "communal approach." Each approach incorporates a different view of moral responsibility and a different view of the kinds of ethical principles that should be used to resolve ethical problems.
More often than not, discussions about ethics in organizations reflect only the "individualistic approach" to moral responsibility. According to this approach, every person in an organization is morally responsible for his or her own behavior, and any efforts to change that behavior should focus on the individual.
But there is another way of understanding responsibility, which is reflected in the "communal approach." Here individuals are viewed not in isolation, but as members of communities that are partially responsible for the behavior of their members. So, to understand and change an individual's behavior we need to understand and try to change the communities to which they belong.
Any adequate understanding of, and effective solutions to, ethical problems arising in organizations requires that we take both approaches into account. Recent changes in the way we approach the "problem of the alcoholic" serve as a good example of the interdependence of individual and communal approaches to problems. Not so long ago, many people viewed an alcoholic as an individual with problems. Treatment focused on helping the individual deal with his or her problem. Today, however, the alcoholic is often seen as part of a dysfunctional family system that reinforces alcoholic behavior. In many cases, the behavior of the alcoholic requires that we change the entire family situation.
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These two approaches also lead to different ways of evaluating moral behavior. Once again, most discussions of ethical issues in the workplace take an individualistic approach. They focus on promoting the good of the individual: individual rights, such as the right to freedom of expression or the right to privacy, are held paramount. The communal approach, on the other hand, would have us focus on the common good, enjoining us to consider ways in which actions or policies promote or prohibit social justice or ways in which they bring harm or benefits to the entire community.
Our values will lead us to choose those policies or actions that will protect the interests and rights of the individual. But perhaps the greatest challenge in discussions of ethics in organizations is to find ways in which organizations can be designed to promote the interests of both.
2.3 CORPORATE ETHICS
Corporate ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Corporate ethics has both normative and descriptive dimensions. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns. Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporations promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters. Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
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Governments use laws and regulations to point business behavior in what they perceive to be beneficial directions. Ethics implicitly regulates areas and details of behavior that lie beyond governmental control. The emergence of large corporations with limited relationships and sensitivity to the communities in which they operate accelerated the development of formal ethics regimes.
2.4 HISTORY OF CORPORATE ETHICS
Business ethical norms reflect the norms of each historical period. As time passes norms evolve, causing accepted behaviors to become objectionable. Business ethics and the resulting behavior evolved as well. Business was involved in slavery, colonialism and the cold war. The term 'business ethics' came into common use in the United States in the early 1970s. By the mid-1980s at least 500 courses in business ethics reached 40,000 students, using some twenty textbooks and at least ten casebooks along supported by professional societies, centers and journals of business ethics. The Society for Business Ethics was started in 1980. European business schools adopted business ethics after 1987 commencing with the European Business Ethics Network (EBEN). In 1982 the first single-authored books in the field appeared. The idea of business ethics caught the attention of academics, media and business firms by the end of the Cold War. However, legitimate criticism of business practices was attacked for infringing the "freedom" of entrepreneurs and critics were accused of supporting communists. In India, firms started highlighting their ethical stature in the late 1980s and early 1990s, possibly trying to distance themselves from the business scandals of the day, such as the savings and loan crisis. Even established firms as well as newly opened firms were incorporating ethical policies to maintain a proper code of conduct in the organization since the 20 th century.
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CHAPTER 3
3.1 MODERN WORKING ENVIRONMENT
The modern work environment is undergoing major changes in organization, and technology with significant effects on the employee. Companies expect that their employees will cope efficiently with changes at work; adaptability is seen more and more as an essential ability of today´s employees. Individual adaptability is broadly defined as the degree to which individuals cope with, respond to, and/or support changes that affect their (work) role.
3.2
IMPORTANCE
OF
ETHICS
IN
MODERN
WORKING ENVIRONMENT
In today's business climate, ethics plays an important role in the workplace. Ethics is vital to creating the company culture of an organization. An organization uses ethics to decide how it wants to do business and how its reputation is viewed from an outsider’s perspective. If unscrupulous acts are allowed, or even encouraged, then those types of personalities dominate during the hiring process. Eventually it permeates throughout the entire organization and can cause adverse affects on business including poor customer service, inadequate product quality, unethical accounting practices, and ineffective human resource policies. Good ethical practices can prevent these things from happening.
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The manager's role is to support the ethical standards of the organization. This involves two distinct tasks. First, the manager has to lead by example and promote the ethical standards that employees can be proud of. Second, the manager has to be the enforcer or whistle-blower when witnessing unethical behavior. Allowing it to happen or turning a blind eye to it will only undermine the foundation on which the firm is built.
3.3 HOW THE ETHICS HAVE MADE THEIR PLACE IN THE MODERN WORKKING ENVIRONMENT?
Ten Commandments of work ethics With changing workplace environment, it is necessary to change workplace ethics too! The behavioral rules that worked in the 20th century just won’t work now. Here are the new commandments of ethics at the workplace. Today, the workplace is more of a community center; there's a lot more going on in every office than mere work. And that is where ethics in the workplace become important. It is not enough to get in the good books of your employers, but it extremely imperative to be comfortable with colleagues and even the subordinates. Obviously, workplace ethics will differ from one employment location to another. However, there are some ground similarities that can be observed. Based on this, we can formulate some 'safe' rules that would work for almost every work ambiance. So here are the work ethics commandments. The First Commandment - Thou shalt not criticize thy boss. This is one workplace ethic that has remained unchanged for ages. The boss is always right. Okay, he or she might be a terrible boss, but as long as you are working with them, they are always right. However, with changing times, bosses are becoming more accessible to their employees. Some of them even love taking inputs from their workers and improve their businesses. But, it is advisable to keep your mouth close till asked. Another thing to avoid is maligning your boss and indulging in back-speak in the office cafeteria.
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The Second Commandment - Thou shalt not rub thy colleagues the wrong way. Gone are the days when people were not even interested in what was going on in their next cubicle. Today, you cannot avoid befriending your colleagues at your workplace. Just be sure that you do not indulge in activities that create a bad impression of yourself on your colleagues. Put in a genuine good word when they deserve it, and do not criticize when they do error. That way you will never go wrong.
The Third Commandment - Thou shalt not comment on thy colleagues' personal affairs. Respect your colleagues' private space and they will respect yours. Do not read their personal chats over their shoulder and do not be interested in their mail that is directed to the workplace. Even if a colleague breaks out about their family or personal affairs, try not to be over-zealous in offering advice.
The Fourth Commandment - Thou shalt not compare thyself with thy colleagues. In the machinery of your workplace, all employees are differently sized instruments in the machine. Everyone has been assigned a post in the company because of some unique talent. That means, you should not compare yourself with how others work. Don't ever begin cribbing with your employers when someone gets a promotion and you don't. It will certainly happen with you if you deserve it.
The Fifth Commandment - Thou shalt not be a nosey parker. In today's workplace environment, one of the biggest work ethics is to keep your nose stuck in your own affairs. Do not involve yourself in assignments meant for others, and never show off that you can do a particular job better than them. Instead, try excelling in the work assigned to you. If you show off your superiority to others, your colleagues will definitely have a bad eye pointing at you.
The Sixth Commandment - Thy attire shalt speak for itself. Keep your attire matching your status, and do not break the dress code of work, however flimsy it might be. It helps when you are dealing with outside clients. Keeping semi-formal attire at least is the need of the day.
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The Seventh Commandment - Thou shalt not bring thy family in thy workplace. It is ridiculous to speak about your family to your colleagues. Everyone has a family, and they are most interested in what happens with their folks, but it is nothing short of moronic to discuss your family woes at the workplace. An unwritten rule of workplace ethics is that you will never bring your family visiting your workplace, unless they are invited.
The Eighth Commandment - Thou shalt invite thy colleagues to thy homestead. You must keep your family out of the workplace as much as possible, but it is good work ethics to invite your colleagues over to dinner sometime. You can bond there and even do some constructive planning together. But, you must not jump in and invite everyone. Take your time, understand how friendly the people in your workplace are, and then subtly begin the invitations.
The Ninth Commandment - Thou shalt take credit only where it is due, and shalt not be modest about it. When there's an appraisal, make sure your work gets noticed. Inform the right people that it is your work in advance, so that when the time comes, you get the nod. A subtle approach is required to make your presence felt in the workplace. At the same time, you should always acknowledge your subordinates' good work.
The
Tenth
Commandment
-
Thou
shalt
always
keep
thyself
informed.
The final rule of ethics in the workplace is to always be informed in what is going on in your business. It does not pay if you are the one always sitting mute below the corner in the front office, or if you are the one dozing shamelessly when a business talk is going on. People will think funny about you if you suddenly pop up and ask them what's going on. If you are informed about your workplace affairs, it will also help you to behave better and put up a generally good impression at the workplace.
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3.4 BEE THE CHANGE
Rules that govern a beehive can work wonders if replicated at the modern workplace. To understand ethics what can be the best example then ‘Bees’. Use the bee as the social guide. They are part of a complicated process that brings us the honey we so enjoy. Try adopting their work ethics, and see where it can take you.
DIVIDE DUTIES
DUTY COMES FIRST, RIGHTS NEXT
COOPERATE
6 LESSONS
BE PUNCTUAL BE LOYAL
WORK HARD
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CHAPTER 4
4.1 ETHICS IN MODERN WORKPLACE
"Workplace ethics set the standard for right and wrong, making policies more efficient and the workplace more orderly."
When it comes to workplace ethic, it is not as simple as stealing-is-not-allowed thing. Ethics in the workplace typically rests on the fundamental foundations of a business, e.g. goals, products, services, yet not limited to these. Although workplace ethics became a topic brewing debates and with increasing popularity it is not a 20th century phenomenon. In fact, it was Cicero who first discussed this topic some 2,000 years ago, in his book "On Duties". Managers and executives only revolutionized ethics in the workplace as commerce became more complex and dynamic, and because of the social responsibility movement that began in the 1960's. One of the most important responsibilities that we place on the leaders of organizations is upholding the highest standards of ethical behavior. In a nutshell, this comes down to doing the right thing even when the wrong thing might also have some attraction. Work-place ethics are most often related to decision-making processes. Most leaders face the opportunity to choose between alternative courses of action in their work situations and other aspects of their lives. Work-place ethics refer to choosing the option that is determined to be the moral or legal “right” choice, even if the other alternative(s) are very attractive and even if you can “get away with” the less ethical choice.
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4.2 FIVE BENEFITS OF MANAGING WORKPLACE ETHICS
1. Attention to workplace ethics has improved society significantly.
Decades ago, even children up to the age 17 were forced to work longer hours in a day; workers worked till they were physically worn out, and the incapacitated were condemned to starvation and poverty. Additionally, market prices control was rampant and held only by a few, killing small businesses and crippled natural economic forces. These and many more unreasonable and inhuman conditions brought society to react and demand for fairness and equality. Thus were born what is now called ethics in the workplace.
2. Ethics programs allow morality to prevail even in turbulent times. In times of fundamental change when executives need to iron out complex conflicts and there are no clear moral compass from which to base decisions on, continuing attention to your organization's ethics program gives staff members and the management with a headlight on the right things to do.
3. Ethics programs promote teamwork and productivity. Ethics programs put employees in tune with the top priority ethical values in your organization, thereby helping build openness, integrity, and community, which are critical to building strong bonds within teams.
4. Ethics programs aim to support employee growth and self-worth A study revealed that emotionally healthier executives perform better in their posts. Likewise, employees who are given clear-cut company ethical guidelines are more confident to do their jobs and deal with any challenges in the workplace.
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5. Ethics programs set policies as legal. There are an increasing number of lawsuits regarding personnel matters that affect a company's products and services, and many of these are ironically avoidable. Ethical principles are legal entirely legal matters which are then applied to ethical issues in the workplace to become legislations. Legal policies are easier to enforce with lesser or no reactions coming from employees.
4.3 EXAMPLES OF BUSINESS ETHICS IN THE WORKPLACE
Employees face ethical dilemmas every day in the workplace. They might be tempted to leave work early, take credit for the work of others or lie to a potential client to get him to sign the insurance policy, order the service or purchase the product that they are selling. The key to fostering strong business ethics at your company is to create an ethics policy that clearly spells out what is acceptable and unacceptable behavior.
Cheating the Company A solid ethics policy should clearly outline the procedure employees should follow if they need to take time off, leave early or start late. If you don't spell out these procedures, employees might be tempted to handle these matters on their own. They might claim to be meeting a client at the end of the workday when instead they are leaving early to catch a cricket match on TV. They might claim to be at a workshop for the first half of the day when instead they are sneaking in some extra sleep. Make sure your ethics policy contains a provision telling your employees how they can request time off even for personal matters. Open communication is a far better alternative than the sneaking around required when employees try to cloak the reasons for their late starts or absences.
24
Working with Clients Your ethics policy also should make it clear that your workers must treat clients and customers fairly and honestly. This means prohibiting employees from lying to potential clients or providing them with misleading information. Employees shouldn't hide the true price of a service, policy or product in an effort to trick customers into signing up. They also shouldn't promise more than their service or product can deliver. Employees should never bully or harass potential clients. Your ethics policy should state how often your workers can contact potential customers, at what times of the day and what exactly they can and cannot say during their conversations.
Abusive Behavior Any effective ethics policy forbids abusive behavior in your workplace. This kind of behavior can take many forms. Employees might engage in sexual harassment, bully other workers, tell inappropriate or offensive jokes, display pornography on their computer screens or steal from coworkers or the company. Your ethics policy must explicitly state that all such actions are forbidden at work. It also needs to spell out the punishments or repercussions of such actions.
Undue Credit Some employees might try to raise in your company by taking credit for work that others employees actually performed. This can have a negative impact on morale if it goes unquestioned. Make sure your ethics policy prohibits this behavior, too. Take seriously employee complaints that their fellow workers are stealing their ideas or taking credit for the reports, proposals or sales they complete.
25
4.4 BUSINESS VALUES AND ETHICAL VALUES
BUSINESS VALUES
• • • • • • Customer Service Quality Innovation Reliability Efficiency Value for money
ETHICAL VALUES
• • • • • • Integrity Honesty Openness Respect Fairness Responsibility
26
CHAPTER 5
5.1 TRADITIONAL VS. MODERN ETHICS
Surprisingly, both modern and traditional ethics are the faces of the same coin. So one should not try to antagonize them, but see them as they are – not two contrasting values, but values linked and intertwined since the dawn of modern ethics. Modern ethics could very well be perceived as a logical and natural development spurred by traditional ethics. Since times change and there is nothing we can do about it, so do our ethical ideas and notions. What was wrong yesterday is right now, and what was right yesterday is wrong today. This happens because our thinking evolves but it does not mean that ethics has lost its meaning. So always, keep in mind changing times when you think about ethical dilemmas. Without philosophy, there would be no ethics, as it is well known that ethics is one of the most important branches of philosophy. We are talking about the study of various values and customs of a person or a group of persons plus their use of different concepts, two of them being the concepts of what are right and what is wrong. Traditional ethics were more emotional and less rational / political. Modern ethics evolved from traditional ethics, still studying what was good or bad, right or wrong. However, this time, we are talking about a more rational approach as opposed to what was a purely emotional one. Empirical criteria became the criteria of choice. The connection between the two is the object of study of ethics itself. Only the criteria by which the judging is made have changed.
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5.2 SOME EXAMPLES OF MODERN AND TRADITIONAL ETHICAL THINKING
We can see an example of how these ways of thinking operate in our attitudes toward smoking. We have banned most public smoking in our modern culture. We now realize that public smoking harms those who inhale the smoke unintentionally. We are concerned that allowing people to smoke freely will cause harm to other people. So we ban smoking in public and designate special areas for smoking. So it is not the smoking that is the problem. People should be free to smoke as long as they take care not to harm others. A more traditional approach might see smoking as harmful to one's health. Smoking is wrong because it limits one's potential to live a good and full life. Modern ethical thinking is not concerned about this as long as no one else is hurt but traditional ethical thinking is also concerned with the individual actor. If an act does not contribute to the overall well being and happiness of the person acting as specified by the divinely ordained nature of the human person then that act is wrong. Traditional ethics are mainly concerned about what kind of person one is becoming through one's habitual activity. For traditional ethics, the moral task of life is to develop the right kind of habits that will lead to a flourishing life. Modern ethics is only concerned with whether or not an individual act violates a specific ethical norm. For modern ethics, the moral task of life is to conform to a set of ethical rules. We can look at a simple example: eating a slice of cake. There is nothing wrong with this act. It does not violate a moral norm and hurts no one. Looking at this from a traditional perspective, there is nothing wrong with enjoying a slice of cake. In fact, enjoying pleasurable things in moderation is a part of the good life. The problem comes in with multiple acts of cake eating repeated over time. If a habit of excessive cake eating develops, this can be harmful to one's health. If a person becomes gluttonous, then this is not a full human life and is wrong. The person has not become a good sort of person. From a modern perspective, the act of eating cake is not wrong and no matter how many times it is repeated it will not be wrong. If a person wants to pursue cake eating as their version of the good life, he or she is free to do so as long as they do not hurt anyone (and they do not ask the state to pay for their medical expenses when they become unhealthy). So we can see how these different perspectives on ethical thinking play out in our analysis of various ethical issues.
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Conclusion
Both traditional and modern ethical thinking may be used to justify the same set of ethical norms. However, the differences and justification of these norms has an effect on how we apply these norms and how we view what constitutes a flourishing human life. Further, because modern ethical thinking elevates human reason as the ultimate authority in adjudicating ethical issues, it is more prone to relativism. It lacks the absolute divine authority of traditional ethical thinking.
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CHAPTER 6
SOME MAJOR ETHICAL ISSUES
6.1 ETHICAL ISSUES FACING HR
Organizational ethics are rules and standards that guide workplace behavior and moral principles. Many organizations establish a "code of ethics" that sets company expectations regarding ethical issues such as privacy, conflict of interest, discrimination and harassment and workplace diversity. Human resources personnel are charged with setting standards that promote ethical behavior in the workplace.
Discrimination and Harassment Human resources professionals must ensure the organization remains compliant with antidiscrimination and harassment laws. Employee discrimination and harassment on the basis of race, gender or religion is an ethical issue human resources personnel face daily. Laws that prohibit discriminatory behavior such as the Civil Rights Act helps HR representatives develop training and awareness programs to prevent discrimination and harassment in the workplace. These laws also establish procedures human resources may use to report and discipline workers who display inappropriate discriminatory behavior. Privacy Human resources are involved in most aspects of employee relations including hiring, firing, compensation, benefits and leaves. Human resources representatives have access to extremely sensitive information. Keeping this information private is an ethical matter faced by the HR. Human resources personnel has an obligation to maintain the confidentiality of an employee's personal data.
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Diversity Workplace diversity encompasses the various qualities, characteristics and experiences that distinguish one worker from another. These characteristics can be differences in race, gender, age, social status or other traits that make an individual unique. Treating a person differently because of these differences poses an ethical issue that faces human resources. HR personnel implement policies that promote diversity in the workplace and welcome the differences of the entire workforce. Safety Employee safety is an issue facing human resources personnel. The department must prevent and correct potentially dangerous situations. Human resources must promptly act on hazardous conditions that present safety concerns in the workplace. The department is also responsible for identifying potentially dangerous employees and ensuring they do not harm themselves or others within the organization.
6.2 ETHICAL ISSUES FACING THE GENERAL BUSINESS COMMUNITY
Most industries face the same ethical dilemmas. These ethical issues cover a variety of issues such as employee pay rates and discouraging harassment in the workplace. Companies choosing to confront these ethical dilemmas may earn the praise or ire of consumers depending on the policies these companies adopt. Accounting Practice Ethics In the wake of corporate scandals involving unethical accounting practices from publicly traded companies such as Satyam Computers, many consumers are justifiably distrustful of investing in businesses. Accountants and financial advisers must avoid skirting ethical boundaries when making financial reports to the federal government and investors to help repair the wide rift between business investment and consumers.
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Social Networking Ethics Comments regarding employers or coworkers posted on social networking websites are costing employees jobs across the country. The ethical and legal challenges surrounding the use of social media and its consequences in the workplace affects the business industry as a whole because employers across the nation are setting policies regarding employee use of these websites while working and even what these workers can say when off the clock. Harassment in the Workplace Maintaining professional workplace relationships between employees is a continuing challenge for employers regardless of the industry. This challenge can become more difficult when the image companies choose to project has a significant sexual charge. This creates an ethical dilemma about what images companies use to sell products and the conduct expected of employees in the workplace. Paying Employees Equally Even though federal and state laws require workers to receive equal pay for performing similar work regardless of gender, race, age, ethnicity, disability or religion, the problem still persists in many industries. According to the National Committee on Pay Equity, as of 2010 a $10,784 gap in annual salary still persists between men and women nationwide. The ethical dilemma arises when some companies choose to men higher wages than women while at the same time espousing messages of equality and fair play.
6.3 ETHICAL ISSUES FACING THE ACCOUNTING PROFESSION
An accountant working in the public or private sector must remain impartial and loyal to ethical guidelines when reviewing a company or individual's financial records for reporting purposes. An accountant frequently encounters ethical issues regardless of the industry and must remain continually vigilant to reduce the chances of outside forces manipulating financial records, which could lead to both ethical and criminal violations.
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Pressure from Management The burden for public companies to succeed at high levels may place undue stress and pressure on accountants creating balance sheets and financial statements. The ethical issue for these accountants becomes maintaining true reporting of company assets, liabilities and profits without giving in to the pressure placed on them by management or corporate officers. Unethical accountants could easily alter company financial records and maneuver numbers to paint false pictures of company successes. This may lead to short-term prosperity, but altered financial records will ultimately spell the downfall of companies when the Securities and Exchange Commission discovers the fraud.
Accountant as Whistleblower An accountant may face the ethical dilemma of reporting discovered accounting violations to the Financial Accounting Standards Board. While it is an ethical accountant's duty to report such violations, the dilemma arises in the ramifications of the reporting. Government review of company financial records and the bad press caused by an accounting scandal could cause the company's rapid decline and may lead to the layoff of thousands of employees. Executives and other corporate officers could also face criminal prosecution, leading to heavy fines and prison time.
The Effects of Greed Greed in the business and finance world leads to shaving ethical boundaries and stepping around safeguards in the name of making more money. An accountant can never let the desire to earn a better living and acquire more possessions get in the way of ensuring that she follows ethical guidelines for financial reporting. An accountant who keeps her eyes on her own bank account more than on her company's balance sheet becomes a liability to the company and may cause real accounting violations, resulting in sanctions from the SEC.
Omission of Financial Records A corporate officer or other executive may ask an accountant to omit or leave out certain financial figures from a balance sheet that may paint the business in a bad light to the public and investors. Omission may not seem like a significant breach of accounting ethics to an accountant because it does not involve direct manipulation of numbers or records. This is precisely why an accountant must remain ethically vigilant to avoid falling into such a trap.
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6.4 ETHICAL ISSUES WITHIN ORGANIZATIONS
Though the ethical dilemmas faced by certain companies may be specific to their industry or company, other types of ethical issues are common to all types of companies. Handling ethical decisions with wisdom is especially important for small businesses, given the potentially devastating effects these companies may face if such issues aren't handled correctly. Health and Safety One area of ethical consideration for employers is how to balance expense control with the health and safety interests of employees. Manufacturing plants and other workplaces where employees use dangerous equipment or engage in physically demanding work should have strong safety standards that not only meet federal requirements, but that also make eliminating accidents a priority. Even standard office workplaces pose health risks to employees who are asked to sit or stand all day. Unfortunately, certain organizations opt to cut corners on safety controls, equipment and training to save money. This is both unethical and potentially damaging in the long run if major accidents occur. Technology Advancements in technology and the growth of the Internet in the early 21st century have produced a slew of ethical dilemmas for companies. Company leaders have to balance the privacy and freedom of workers while also maintaining standards that require that company technology use is for legitimate business purposes. Certain companies go so far as to monitor all online use and email communication from employee computers and work accounts. A company may have this right, but its leaders need to understand the potential concern about privacy and autonomy among employees. Transparency Prominent business and accounting scandals have made it imperative that companies operate with openness and transparency. For public corporations, this includes honest, accurate and complete reporting on mandated financial accounting reports. For large and small businesses, transparency includes communicating messages, including marketing messages, that aren't open to misinterpretation and that clearly represent the intentions of the company and its messages. Being caught in a lie or avoiding full disclosure may cause irreparable harm to small businesses.
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Fair Working Conditions Companies are generally expected to provide fair working conditions for their employees in the business environment, but being responsible with employee treatment typically means higher labor costs and resource utilization. Fair pay and benefits for work are more obvious elements of a fair workplace. Another important element is provision of a nondiscriminatory work environment, which again may have costs involved for diversity management and training.
6.5 ETHICAL ISSUES FACING SALES AND MARKETING
Ethics in marketing deals with the principles, values or ideals by which marketers and marketing institutions ought to act. Marketing can influence individual’s perceptions and interactions with other people, implying an ethical responsibility to avoid distorting those perceptions and interactions. General marketing in terms of pricing Marketing ethics involves pricing practices, including illegal actions such as price fixing and legal actions including price discrimination and price skimming. Pricing must be fair and distribution should be done accordingly.
Advertising Advertising has raised objections about attack ads, subliminal messages, inappropriate product advertising and cheap marketing in schools and colleges. Some advertising are made to confuse the consumers. Even the company is not clear about what really they want to showcase.
Transparency The company must not fake it. They should maintain a transparent business and must not keep their consumers and employees in the dark. Transparent business helps the company to generate goodwill.
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6.6 ETHICAL ISSUES IN PRODUCTION
This area of business ethics usually deals with the duties of a company to ensure that products and production processes do not needlessly cause harm. Since few goods and services can be produced and consumed with zero risk, determining the ethical course can be problematic. In some case consumers demand products that harm them, such as tobacco products. Production may have environmental impact including pollution, habitat destruction and urban sprawl. The downstream effects of technologies nuclear power, genetically modified food and mobile phones may not be well understood. While the precautionary principle may prohibit introducing new technology whose consequences are not fully understood, that principle would have prohibited most new technology introduced since the industrial revolution. Product testing protocols have been attacked for violating the rights of both humans and animals.
6.7 ETHICAL ISSUES WITHIN TRADE UNIONS
Unions for example, may push employers to establish due process for workers, but may also cost jobs by demanding unsustainable compensation and work rules. Unionized workplaces may confront union busting and strike breaking and face the ethical implications of work rules that advantage some workers over others.
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6.8 HOW TO HANDLE ETHICAL ISSUES IN THE WORKPLACE?
Morality and values-based dilemmas in the workplace are, at best, difficult to handle when employees have to choose between what’s right and what’s wrong according to their own principles. Forward-thinking employers who implement workplace ethics policies are usually wellprepared for the potential conflicts of interest that arise due to the diversity of opinion, values and culture in the workforce. However, handling ethical issues in the workplace requires a steady and cautious approach to matters which can potentially be dangerous or illegal.
Step 1 Develop a workplace policy based on your company’s philosophy, mission statement and code of conduct. Incorporate the policy into your performance management program to hold employees accountable for their actions and alert them to their responsibilities to uphold professional standards throughout their job performance and interaction with peers and supervisors. Revise your employee handbook to include the policy and provide copies of the revised handbook to employees. Obtain signed acknowledgement forms from employees that indicate they received and understand the workplace ethics policy.
Step 2
Provide workplace ethics training to employees. Utilize varied instruction methods to engage employees in learning how to address and resolve ethical dilemmas. Experiential learning, or roleplay, is an effective way to facilitate workplace ethics training. Examples of workplace ethics simulations involve scenarios about the misappropriation of company funds, personal values related to improper workplace relationships and the organization’s compliance with regulatory controls.
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Step 3 Designate an ombudsperson in charge of handling employees’ informal concerns pertaining to workplace ethics. Consider whether your organization also needs an ethics hotline, which is a confidential service employees may contact whenever they encounter workplace dilemmas that put them into uncomfortable or threatening positions. Confidential hotlines are an effective way to assure employees’ anonymity, which is a concern for employees whose alerts are considered “whistle blowing” actions.
Step 4
Research the federal, state and municipal labor and employment laws pertaining to whistle blowing. Refrain from making employment decisions, such as termination or suspension, in connection with whistle blowing or an employee’s right to protected activity under whistle blowing laws or public policy. Seek legal advice for employee reports of workplace ethics issues that increase your organization’s liability under federal, state or municipal employment law. Under the Texas Whistleblower Act, for example, public-sector employees may be entitled to damages if an employer engages in retaliatory actions based on an employee who, in good faith, files a complaint related to workplace ethics. The Act grants "[a] public employee who claims that his suspension, termination, or other adverse personnel action was in retaliation for his good faith reporting of violations of the law the right to sue for damages and other relief."
Step 5
Apply your workplace policy consistently when addressing workplace issues and employee concerns about workplace ethics. Use the same business principles in every circumstance, regardless of the perceived seriousness or the level of employees involved. Communicate the same expectations for all employees – whether they are in executive positions or front-line production roles – and approach every issue with equal interpretation of the company policy.
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6.9
HOW
TO
CONTRAST &
THE
DIFFERENCE VALUES
BETWEEN
ETHICAL
UNETHICAL
WITHIN AN ORGANIZATION?
Establishing an ethical value system in an organization or business requires a formal statement of the ethical values of the group and training employees and members to follow those values. Organizational values determine the rules governing the behavior of group members. Developing a program to demonstrate the contrast between ethical and unethical values and behavior establishes the first step in creating a company culture emphasizing and reinforcing ethical standards.
Step 1
Develop a policy outlining mandated appropriate ethical values and acceptable actions. Invite the group's membership and elected, volunteer or appointed officers to meet to brainstorm the language and the components of the official value statement. Make rough drafts of the commonly held values from these brainstorming sessions.
Step 2
Edit the ethical policy into a document that incorporates an overall mission statement and contains a narrative to indicate the ethical values endorsed by the organization. Hold a vote to ask the group's officers and membership to formally endorse the document.
Step 3
Incorporate the ethical policy in organization handbooks and formal staff documents. Issue a handbook to each member of the organization and require a signature from each member stating the member understands the policy. Develop a video or interactive online presentation demonstrating
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the values statements presented in the handbook. If staff members lack the skills to develop the presentations, hire a professional firm to complete the project.
Step 4
Ask the organization's officers and membership to meet again to create a list of specific examples of appropriate ethical and inappropriate unethical behaviors. Incorporate specific behaviors related to the organization. Encouraging the recruitment of diverse members to the organization, for example, presents an ethical value. Discriminating against potential members based on age, gender, cultural differences, race or religion illustrates unethical values within an organization. Direct officers and members to explore ethical questions directly related to the specific organization.
Step 5
Mandate that staff, employees and members of the organization, especially new hires, meet yearly to brush up on the ethical policy. Direct the discussion to a survey of the ways members might subvert the ethical code. Explore possible deterrents to unethical behavior.
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CHAPTER 7
7.1 HYPOTHESIS 1: ETHICAL COMPANIES ARE STRONGER AND LAST LONGER
Overwhelmingly, people who run ethical companies believe it that it is simply the right thing to do. James Burke, Johnson & Johnson chief executive officer, felt strongly that "those businesses who are the most consistently ethical in their behavior will, on average, be more successful." "You get what you reward. Profits are not our No. 1 motive. Our No. 1 motive is to do it right and efficiently, and the profits will follow." Ethics deal with the complex matter of moral behavior. Under corporate ethics, the most pressing issues facing the companies are: ? ? ? ? ? corporate social responsibility; employee rights; whistle-blowing; ethical business conduct; business and the environment
Businesses can no longer consider these concerns as options. Whole industries lose credibility by public perceptions of unethical conduct by a single mistake just like in the case of Satyam scam. The adherence to an ethical ideology takes conscious and continuous reflection on what that means. Every business decision must be judged against the backdrop of core values and purpose. Every ethical dilemma means that whatever action taken, even doing nothing at all, will incur a degree of harm to someone. Writing up core values and purpose does not ensure success. Success depends on whether top management believes in the core values and purpose, makes decisions on the basis of them, conducts all business according to them, treats all stakeholders relative to them and instills them in employees' day-to-day business activities. In other words, the company must "practice what it preaches."
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7.2 HYPOTHESIS 2: ETHICS IN BUSINESS ARE JUST A PASSING FAD
Ethics are really necessity for business concern. Business depends on relation between people, who can be affected by the way of their business concepts and strategies, profit is not only a thing which can help your business to grow and survive, and more is the requirement that is moral values. Nowadays many entrepreneurs are getting success only because of their ideas and ethics. Ethics of business includes both profit as well as moral values. One should not go for a loss in business seeing only the moral ethics; also one should not give up his values and look only for profit. There are variety of business activities which are strictly based on profit like real estate constructions where selling is done seeing the standard of the consumer. But others like commercialized hospitals should be based on moral values at first then profit. What is really important to know is that making profit is not losing moral values; rather if you make profit in your business you can do several works which will enhance you as a person as well as social being. There are many businesses which degrade one's moral ethics like black marketing, smuggling etc but otherwise business is so run by certain sense of ethics. Ethics alone won't make a name a brand but it is an essential element in the whole mix. Without Ethics, a company or a business won't be able to sustain itself for a longer term and will sooner than later collapse. Not that there are no unethical brands or companies in the market, but they offer some value preposition that is making them sustain and grow in the market. It's not just a passing fad, but lies at the very foundation of a long lasting brand. Ethics can play primary role in every organization. Organization ethical values can be reflected into company vision and mission. If take the non-profit organization like trusts/ society, the name itself shows ethics of the organization, but most of the trusts are doing unethical things which will give individual benefits. Ethics in business is an important factor. But we can say that most of the manufacturers have put aside their ethics. We can find that from the quality of goods at present. If we buy a pen, it doesn't work properly or the ink in the pen may leak. Most of the pens are of this type. If we buy a
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shampoo, the hair ball can be seen on the bathroom floor after we wash our head. This is nothing but unethical practice of adulteration. Similarly, when we look up the costs of the products, the cost remains the same, where as the quantity is reduced and packed as two packages. So, we can definitely say that ethics in business is a passing fad. Unethical practices can be done for achieving a short term goal of business, because in this competitive market a company won't survive without doing it and I believe every companies does that up to a certain extent. But a company should not make unethical practices as its base for such a long time because if they do someday it will come out in front of people and reputation can be severely hampered, as we have seen many cases in the past. Business is not just earning "MULA"(money), it is way beyond it. The management should ponder their thoughts over the ethical use of each and every resource so as to gain market recognition, as well as to each necessary profit through ethical means. Thus the loyalty factors of various brands are also at stake. Ethics is really important for any business to grow for a long time. As we can see present scenario Samsung has pitifully use the patents of Apple and thus have to suffer, even SATYAM has the same result while taking the path of unethically. So ethics is really important in business and one should follow it lawfully. Ethics in business are not just a passing fad. For everything we do in life there are some ethics to be followed. Like that there are ethics to be followed in business also. This gives a way for profit and fame. A business without fame and faith cannot get succeed. So there is a way for achieving these are to follow ethics. Adding smartness to the ethics leads to constant success. It's truly said that if you want to walk quick, then walk alone. But if you want to walk far, walk together. And this togetherness is not just about persons, it's about the ideals, conscience and above all humanity. Yes, profit is the main motive of doing business but for a long term growth, ethical practices are a must for any business to survive. Bad practices can make quick money but it's also sure that it would be taken ever more quickly again.
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CHAPTER 8
CASE STUDY
The Tata way
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8.1 TATA EMPIRE
The Tata group comprises over 100 operating companies in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The group has operations in more than 80 countries across six continents, and its companies export products and services to 85 countries. The total revenue of Tata companies, taken together, was $100.09 billion (around Rs475, 721 crores) in 2011-12, with 58 percent of this coming from business outside India. Tata companies employ over 450,000 people worldwide. The Tata name has been respected in India for more than 140 years for its adherence to strong values and business ethics. Every Tata company or enterprise operates independently. Each of these companies has its own board of directors and shareholders, to whom it is answerable. There are 32 publicly listed Tata enterprises and they have a combined market capitalization of about $76.37 billion (as on December 13, 2012), and a shareholder base of 3.8 million. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels. Tata Steel is among the top ten steelmakers, and Tata Motors is among the top five commercial vehicle manufacturers, in the world. TCS is a leading global software company, with delivery centers in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Global Beverages is the second-largest player in tea in the world. Tata Chemicals is the world’s second-largest manufacturer of soda ash and Tata Communications is one of the world’s largest wholesale voice carriers. In tandem with the increasing international footprint of Tata companies, the Tata brand is also gaining international recognition. Brand Finance, a UK-based consultancy firm, valued the Tata brand at $16.3 billion and ranked it 45th among the top 500 most valuable global brands in their Brand Finance® Global 500 March 2012 report. In 2010, Business Week magazine ranked Tata
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17th among the '50 Most Innovative Companies' list. Tata is also one of the two companies ranked in the Forbes Magazine 2012 for the most ethical conduct of business in the whole world. Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the spirit of nationalism. It pioneered several industries of national importance in India: steel, power, hospitality and airlines. In more recent times, its pioneering spirit has been showcased by companies such as TCS, India’s first software company, and Tata Motors, which made India’s first indigenously developed car, the Indica, in 1998 and recently unveiled the world’s lowest-cost car, the Tata Nano. Tata companies have always believed in returning wealth to the society they serve. Two-thirds of the equity of Tata Sons, the Tata promoter holding company, is held by philanthropic trusts that have created national institutions for science and technology, medical research, social studies and the performing arts. The trusts also provide aid and assistance to non-government organizations working in the areas of education, healthcare and livelihoods. Tata companies also extend social welfare activities to communities around their industrial units. The combined development-related expenditure of the trusts and the companies amounts to around 3 percent of the group's net profits in 2011. Going forward, Tata is focusing on new technologies and innovation to drive its business in India and internationally. The Nano car is one example, as is the Eka supercomputer (developed by another Tata company), which in 2008 was ranked the world’s fourth fastest. Anchored in India and wedded to traditional values and strong ethics, Tata companies are building multinational businesses that will achieve growth through excellence and innovation, while balancing the interests of shareholders, employees and civil society.
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8.2 VALUES AND PURPOSE
Purpose “At the Tata group we are committed to improving the quality of life of the communities we serve. We do this by striving for leadership and global competitiveness in the business sectors in which we operate. Our practice of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. We are committed to protecting this heritage of leadership with trust through the manner in which we conduct our business.”
Core values Tata has always been values-driven. These values continue to direct the growth and business of Tata companies. The five core Tata values underpinning the way they do business are:
?
Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.
?
Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.
?
Excellence: We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide.
?
Unity: We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.
?
Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.
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8.3
ETHICAL
VALUES
INCORPORATED
IN
CONDUCT OF BUSINESS — THE TATA WAY
In the public mind, business ethics is mainly connected with financial integrity. Tata’s are not the only ones to pursue ethical values in business but their eminent position and tradition stretching well over a 100 years makes them distinctive and worthy of study. The best ethical leaders are those who are not swept off by their work, but take time to extend their human touch to their staff when they are in need. "Values are estimations not of worth but of worth whileness. There is a deep backward- and forward-looking quality to values. If value is what makes us wealthy, values, we assume and regularly assert, are what make us human. An ethical value is all about making people human." Business ethics even covers how a person in business deals with his colleagues; staff and workers; shareholders; customers; the community; the government; environment; and the nation and its interest.
LEADERS WITH A DIFFERENCE
Jamsetji Nusserwanji Tata
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J.R.D. Tata
Mr. Ratan Tata
JAMSETJI TATA'S VISION
Jamsetji Tata believed in practicing the ethical essence of his faith rather than attend to the rituals. Prophet Zarathustra's main teachings of "good thoughts, good words, and good deeds" were inscribed in Jamsetji Tata's mind and heart before he inscribed them in his motto "Humata, Hukta, Huvarashta".
More than 100 years ago, he said: "We do not claim to be more unselfish, more generous and more philanthropic than other people, but we think we started on sound and straightforward business principles, considering the interests of the shareholders our own, and the health and welfare of the employees, the sure foundation of our prosperity." On the issue of environment, the awakening came during his visits to American steel plants in 1902. He was impressed by the technology but repulsed by the living conditions of the workers.
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He wrote to his son, Dorab, from there about his own dreams for a steel city of the future. "Be sure to lay wide streets, planted with shady trees, every other of a quick growing variety. Be sure there is plenty of space for lawns and gardens, reserve large areas for football, hockey and parks. Earmark areas for Hindu temples, Mohammedan mosques and Christian churches."
Jamsetji Tata had visualized it all even before the site of the steel plant was discovered five years later at Sakchi in Bihar. When the steel city came up, his successors did plant trees of an alternate variety on both sides of the streets and reserved and earmarked areas as he had advised.
FORTUNE FOR SCIENCE
As for his concern for the nation, Jamsetji offer to give almost half his fortune — 14 buildings and four landed properties — to the University of Research (later to be the Indian Institute of Science) came from his love to lift a subdued agricultural India to one as advanced as the nations of the West he regularly visited. Swami Vivekananda journal, Prabuddha Bharata, wrote enthusiastically: "We are not aware of any project at once so opportune and so far reaching as beneficial as this was ever mooted in India... '' Of his four grand pioneering schemes — the University of Research, a steel plant, a hydro-electric plant, and a world-class hotel, only one did Jamsetji live to see fulfilled — the Taj Mahal Palace Hotel. It was an uphill task for his successors to turn his dream into reality, wading through problem after problem.
Only their gratitude and loyalty to him in response to Jamsetji vision, plus the affection and care he bestowed on every one of them, enabled the schemes to fructify. Gratitude and loyalty as part of ethical values has to work both ways from the boss to his officers and, in return, from them to the company.
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`IT IS A CITY'
In 1923, at a time when finances were running short, a shareholder accused the Tata’s of wasting money on building sanitary hutments and other facilities for workers. R. D. Tata, a nephew of Jamsetji, who was close to him, said: "Gentlemen, people who ask these questions are sadly lacking in imagination. We are not putting up a row of workmen's huts in Jamshedpur — we are building a city." A noble vision strengthens the conviction to walk along ethical lines.
In 1924, there was a telegram from Jamshedpur that there was no money to pay workers their salaries. Sir Dorabji Tata went with R. D. Tata to the Imperial Bank (now the State Bank of India) and pledged his entire personal fortune of Rs 1 crore for a public limited company in which the Tata’s could not have held more than 11 per cent. How many would do that today? Mercifully, the company turned around.
ON MORAL TERMS
J. R. D. Tata had started the Tata Airlines with an English pilot, Neville Vincent, who, under the contract, was entitled to one-third share of the profits. The profit in the first year was Rs 60,000 and the contract was for five years. But, by 1937, the profit had risen to Rs 6 lakhs. At the time of renewal of the contract, the legal adviser to the Tata’s told JRD that they were not bound to renew the contract on the same terms.
JRD knew in his heart that it was not fair to the man who, with him, was responsible for establishing the airline. So he went to another solicitor who felt that though the Tata’s were legally not bound by the same terms, morally they were. JRD, who was not even the Chairman, assured the pilot that the terms would be the same as before but without the consent of the of the other codirectors which was not right and fair towards the co-directors but was morally and emotionally fair to the English pilot.
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The Tata’s had not expanded in the 1960s and the 1970s as some other groups had, he replied firmly: "I have often thought about that. If we had done some of the things that some other groups have done, we would have been twice as big as we are today. But we did not, and I would not have it any other way."
NO COMPROMISES
Mr. Ratan Tata has held fast to these standards. When the managing director of a Tata company told him that, in his company, straight financial dealings would not work, Mr. Ratan Tata told him that the Tata’s would rather exit the company than compromise. As the MD left his room, Mr. Ratan Tata thought the MD would quit. Instead, six months later, Mr. Tata returned to show him much better results. In an epilogue to the 2004 edition of The Creation of Wealth, Mr. Ratan Tata writes: "I would hope that my successors would never compromise and turn to soft options to meet their ends."
Of course, though ethics is more than not giving or taking bribes, the staff expect from those who are their business leaders, in return for their work, due appreciation, gratitude, steadfastness and fairness. The best ethical leaders are those who are not swept off by their work, but take time to extend their human touch to their staff when they are in need. JRD once told me, "To lead men you have got to lead them with affection." And he lived what he said.
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8.4 ETHICAL BEHAVIOUR IN TATA
Ethical behavior is intrinsic to the way they conduct business and is part of their legacy since the foundation of the Tata Group. Jamsetji Tata, who believed that business, must operate in a way that respects the rights of all its stakeholders and creates an overall benefit for society.
Tata believes in adopting the best practices in terms of corporate governance that have been and continue to be developed. The company conducts all aspects of its business with full transparency and accountability.
RISK MANAGEMENT
The Group regularly reviews and updates its risk management system to address the complex risks faced across global business. Their risk management process is assured through the Group’s corporate assurance and risk management function with reporting to the Group chief financial officer and reports and recommendations made to the audit committee of the Board.
BUSINESS ETHICS AND OUR CODE OF CONDUCT
“We do not tolerate corrupt or fraudulent practices. We expect honesty, integrity and transparency in all aspects of our business from our employees, contractors and other business counterparts.”
Their ethical principles are clearly and unambiguously articulated in the Tata Code of Conduct, to which all Tata Group companies subscribe. Originally written in 1998, the Code was updated in 2008 to better reflect changing expectations within society and the increasingly global scale of the Group’s activities.
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HUMAN RIGHTS
The Tata Steel Group is proud of its longstanding reputation as a fair and caring employer, and respects all human rights both within and outside the workplace. The Tata Code of Conduct stipulates that all employees have a personal responsibility to help preserve the human rights of everyone at work and in the wider community.
ETHICAL TIN SOURCING
Our European packaging business produces tinplate for a global market. We include ethical sourcing protocols in our tin supplier contracts and make a constant effort to have reliable and auditable information concerning the origin of the acquired minerals so we can avoid the use of conflict minerals.
We are cooperating in the tin supply chain with the International Tin Research Institute (ITRI) and are also involved in activities led by the Dutch Sustainable Trade Initiative (IDH). We also work with NGOs such as the Dutch Friends of the Earth.
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8.5
PROVIDING
A
SAFE
AND
HEALTHY
WORKPLACE
The Tata group makes sure that their employees and contractors return home from work safely each day and are more important than anything else. They are committed to ensuring zero harm to their employees, contractors and the communities in which they operate. This is integral to their business process and is laid down in their health and safety policies, standards and working procedures.
Their journey towards safety excellence was initiated with guidance from DuPont, a world leader in safety, and from other companies recognized for their high standards in health and safety including Australian-based BlueScope Steel.
They aspire to be the health and safety benchmark for the steel industry globally, and their goal is to achieve a lost time injury frequency (LTIF) rate of 0.4 or lower by 2012.
WORKING TOGETHER
Every Tata Group board meeting includes a detailed review of health and safety issues. A boardlevel Safety, Health and Environment Committee provide overall leadership in SH&E matters throughout our global business. Each of the Group’s regional businesses has a well-established and comprehensive health and safety policy, with supporting principles, standards and procedures, and a Tata Steel group-wide health and safety policy has been introduced from January 2011. Clear objectives for process safety, occupational safety and health are embedded within the health and safety management plans of each business. In October 2009, the World Steel Association (world steel) recognized Tata Steel for demonstrating excellence in health and safety, particularly in relation to its contract workforce programme. The construction of the new blast furnace at Jamshedpur recorded 35 million accident-free hours.
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In India, we have established safety committees involving employees at all levels, helping to ingrain a strong sense of personal responsibility across functions. These have contributed significantly to the formulation and upgrading of policies, strategies and standards. Our lost time injury frequency rate in India has improved from 3.5 to 0.56 in the last four years, and we are determined to continue to drive it lower. Tata group has a Health and Safety Management System (HSMS) consisting of a comprehensive array of tools, standards and procedures. The HSMS encompasses 15 fundamental principles including accountability, management of change, and audit and review, and is based on industry best practice. In Thailand and China, a programme called Safety Excellence Journey was rolled out during the year at the Group’s wire mills, as well as some of Tata group’s associated companies such as Tayo Rolls (cast iron and steel roll manufacturer), TRF (material handling solutions company), and The Tinplate Company (packaging steel). Measures taken to date include the continuous active involvement of senior management, safety training, establishment of a safety council, and formation of risk containment groups to identify and contain high-risk activities. STOP (Solve This Ongoing Problem) teams observe safety behaviour and interact with employees on safety.
MINING
Tata group strives constantly to improve and extend our systems for managing the significant safety risks associated with the extraction of raw materials as we expand global operations to enhance our raw materials self-sufficiency. Underground operations pose particular safety and health risks. Mine locations, by their very nature, are remote. Miners work in confined spaces and deploy explosives to extract minerals. We have adopted best mine rescue procedures at all our mining units. The Tata Safety Excellence Management and Review process is used to proactively assess risks and hazards and control them through multi-level safety action plans. The mining division’s safety goals are in line with zero fatality in its operations and a lost time injury frequency rate of 0.4 or better by 2012.
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8.6 FOUR PILLAR CONCEPT
"We do not claim to be more unselfish, more generous or more philanthropic than others, but we think, we started on sound and straightforward business principles considering the interest of the shareholders, our own health and welfare of our employees... the sure foundation of our prosperity" – J.N. Tata
A strong focus on Value Creation and Corporate Citizenship has helped the Tata Group build an enviable corporate reputation founded in honest and transparent approaches. The values and principles, which have Governed Tata’s business for a century, have been deployed through the implementation of the Tata Code of Conduct (TCOC, often referred to as the 'Code'), which was first formally articulated in 1998. This was intended to serve as a guide to each employee on the values, ethics and business principles expected of him or her in personal and professional conduct. The Management of Business Ethics is effectively instituted today in Tata group through its four pillars concept.
? Leadership ? System and Processes ? Training and Awareness ? Measurement
In 2008, in line with changing times and the globalization of the Tata Group, the Code was updated in consultation with group companies around the world. The revised Code of Conduct was adopted by the Tata Group Board in October 2008. It addresses contemporary issues of concern for global business along with the importance of implementing a sustainability protocol. July is celebrated as ‘Ethics Month’ every year, with numerous programmes and activities. The effectiveness of all initiatives is measured by various internal and external surveys and the results of these studies are proactively incorporated in the existing system.
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CHAPTER 9
ETHICAL POLICIES
Tata group upholds the importance of a fair and transparent approach in everything it does by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour in all its business processes and transactions.
Committed to following the principles of fair practice and business ethics to the core, Tata has adopted the Tata Code of Conduct, which lays down the principles and standards that should govern the actions of the Company and the employees. A number of relevant policies have also been formulated and implemented towards the practical application of TCOC.
9.1 GIFT POLICY Tata recognizes that exchange of gifts with people with whom we do business with is not unusual and is considered acceptable. The receipt and giving of gifts is part of normal social exchange. Such exchange is neither irregular nor is it unusual. However, the need is recognized for a stated policy setting caps on the value of such gifts and for defining circumstances under which it would be acceptable or not acceptable to retain gifts. The cardinal principle would be that gifts should not be given or received either to obtain favours / preferential treatment or in return for favours/ preferential treatment. The policy will apply to all employees of Tata group as well as its subsidiary and associate companies.
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9.2 POLICY FOR SPORTS PERSONALS The company recognizes the value of contributions made by our employees in the field of sports, at the State and National and International levels. While such sports activities outside the company are beneficial and are to be encouraged.
9.3 WHISTLE BLOWER POLICY The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. Towards this end, the Company has adopted the Tata Code of Conduct which lays down the principles and standards that should govern the actions of the Company and their employees. Any actual or potential violation of the Code, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the Code cannot be undermined. Every employee of a Tata Company shall promptly report to the management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of his or any other Tata Company.”
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9.4 TATA CODE OF CONDUCT
This comprehensive document serves as the ethical road map for Tata employees and companies, and provides the guidelines by which the group conducts its businesses.
Clause 1 National Interest A Tata company’s management practices and business conduct shall benefit the country, localities and communities in which it operates, to the extent possible and affordable, and shall be in accordance with the laws of the land.
Clause 2 Financial reporting and records A Tata company shall prepare and maintain its accounts fairly and accurately and in accordance with the accounting and financial reporting standards which represent the generally accepted guidelines, principles, standards, laws and regulations of the country in which the company conducts its business affairs.
Clause 3 Competition A Tata company shall fully support the development and operation of competitive open markets and shall promote the liberalization of trade and investment in each country and market in which it operates. Specifically, no Tata company or employee shall engage in restrictive trade practices, abuse of market dominance or similar unfair trade activities.
Clause 4 Equal opportunities employer A Tata company shall provide equal opportunities to all its employees and all qualified applicants for employment without regard to their race, caste, religion, colour, ancestry, marital status, gender, sexual orientation, age, nationality, ethnic origin or disability.
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Clause 5 Gifts and donations A Tata company and its employees shall neither receive nor offer or make, directly or indirectly, any illegal payments, remuneration, gifts, donations or comparable benefits that are intended, or perceived, to obtain uncompetitive favours for the conduct of its business. However, a Tata company and its employees may, with full disclosure, accept and offer nominal gifts, provided such gifts are customarily given.
Clause 6 Government agencies A Tata company shall comply with government procurement regulations and shall be transparent in all its dealings with government agencies.
Clause 7 Political non-alignment A Tata company shall be committed to and support the constitution and governance systems of the country in which it operates. The company shall not support any specific political party or candidate for political office.
Clause 8 Health, safety and environment A Tata company shall strive to provide a safe, healthy, clean and ergonomic working environment for its people. It shall prevent the wasteful use of natural resources and be committed to improving the environment, particularly with regard to the emission of greenhouse gases, and shall endeavour to offset the effect of climate change in all spheres of its activities. A Tata company, in the process of production and sale of its products and services, shall strive for economic, social and environmental sustainability.
Clause 9 Quality of products and services
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A Tata company shall be committed to supply goods and services of world class quality standards, backed by after-sales services consistent with the requirements of its customers, while striving for their total satisfaction. The quality standards of the company’s goods and services shall meet applicable national and international standards. A Tata company shall display adequate health and safety labels, caveats and other necessary information on its product packaging.
Clause 10 Corporate citizenship A Tata company shall be committed to good corporate citizenship, not only in the compliance of all relevant laws and regulations but also by actively assisting in the improvement of quality of life of the people in the communities in which it operates. The company shall not treat these activities as optional, but should strive to incorporate them as an integral part of its business plan.
Clause 11 Cooperation of Tata companies A Tata company shall cooperate with other Tata companies including applicable joint ventures, by sharing knowledge and physical, human and management resources, and by making efforts to resolve disputes amicably, as long as this does not adversely affect its business interests and shareholder value. In the procurement of products and services, a Tata company shall give preference to other Tata companies, as long as they can provide these on competitive terms relative to third parties.
Clause 12 Public representation of the company and the group The Tata group honours the information requirements of the public and its stakeholders. In all its public appearances, with respect to disclosing company and business information to public constituencies such as the media, the financial community, employees, shareholders, agents, franchisees, dealers, distributors and importers, a Tata company or the Tata group shall be represented only by specifically authorised directors and employees.
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Clause 13 Third party representation Parties which have business dealings with the Tata group but are not members of the group, such as consultants, agents, sales representatives, distributors, channel partners, contractors and suppliers, shall not be authorized to represent a Tata company without the written permission of the Tata company.
Clause 14 Use of the Tata brand The use of the Tata name and trademark shall be governed by manuals, codes and agreements to be issued by Tata Sons. The use of the Tata brand is defined in and regulated by the Tata Brand Equity and Business Promotion agreement. No third party or joint venture shall use the Tata brand to further its interests without specific authorization.
Clause 15 Group policies A Tata company shall recommend to its board of directors the adoption of policies and guidelines periodically formulated by Tata Sons.
Clause 16 Shareholders A Tata Company shall be committed to enhancing shareholder value and complying with all regulations and laws that govern shareholder rights. The board of directors of a Tata company shall duly and fairly inform its shareholders about all relevant aspects of the company’s business, and disclose such information in accordance with relevant regulations and agreements.
Clause 17 Ethical conduct Every employee of a Tata company, including full-time directors and the chief executive, shall exhibit culturally appropriate deportment in the countries they operate in, and deal on behalf of the
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company with professionalism, honesty and integrity, while conforming to high moral and ethical standards. Such conduct shall be fair and transparent and be perceived to be so by third parties.
Clause 18 Regulatory compliance Employees of a Tata company, in their business conduct, shall comply with all applicable laws and regulations, in letter and spirit, in all the territories in which they operate. If the ethical and professional standards of applicable laws and regulations are below that of the Code, then the standards of the Code shall prevail. Directors of a Tata company shall comply with applicable laws and regulations of all the relevant regulatory and other authorities. As good governance practice they shall safeguard the confidentiality of all information received by them by virtue of their position.
Clause 19 Concurrent employment Consistent with applicable laws, an employee of a Tata company shall not, without the requisite, officially written approval of the company, accept employment or a position of responsibility (such as a consultant or a director) with any other company, nor provide freelance services to anyone, with or without remuneration. In the case of a full-time director or the chief executive, such approval must be obtained from the board of directors of the company.
Clause 20 Conflict of interest An employee or director of a Tata company shall always act in the interest of the company, and ensure that any business or personal association which he / she may have does not involve a conflict of interest with the operations of the company and his / her role therein. An employee, including the executive director (other than independent director) of a Tata company, shall not accept a position of responsibility in any other non-Tata company or not-for-profit organization without specific sanction.
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Clause 21 Securities transactions and confidential information An employee of a Tata company and his / her immediate family shall not derive any benefit or counsel, or assist others to derive any benefit, from access to and possession of information about the company or group or its clients or suppliers. An employee of a Tata company shall also respect and observe the confidentiality of information pertaining to other companies, their patents, intellectual property rights, trademarks and inventions; and strictly observe a practice of nondisclosure.
Clause 22 Protecting company assets The assets of a Tata company shall not be misused; they shall be employed primarily and judiciously for the purpose of conducting the business for which they are duly authorised. These include tangible assets such as equipment and machinery, systems, facilities, materials and resources, as well as intangible assets such as information technology and systems, proprietary information, intellectual property, and relationships with customers and suppliers.
Clause 23 Citizenship The involvement of a Tata employee in civic or public affairs shall be with express approval from the chief executive of his / her company, subject to this involvement having no adverse impact on the business affairs of the company or the Tata group.
Clause 24 Integrity of data furnished Every employee of a Tata company shall ensure, at all times, the integrity of data or information furnished by him/her to the company. He/she shall be entirely responsible in ensuring that the confidentiality of all data is retained and in no circumstance transferred to any outside person/party in the course of normal operations without express guidelines from or, the approval of the management.
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Clause 25 Reporting concerns Every employee of a Tata company shall promptly report to the management, and / or third-party ethics helpline, when she / he becomes aware of any actual or possible violation of the Code or an event of misconduct, act of misdemeanor or act not in the company’s interest. Such reporting shall be made available to suppliers and partners, too. Any Tata employee can choose to make a protected disclosure under the whistleblower policy of the company, providing for reporting to the chairperson of the audit committee or the board of directors or specified authority. Such a protected disclosure shall be forwarded, when there is reasonable evidence to conclude that a violation is possible or has taken place, with a covering letter, which shall bear the identity of the whistleblower. The company shall ensure protection to the whistleblower and any attempts to intimidate him / her would be treated as a violation of the Code.
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CHAPTER 10
RECENT NEWS ARTICLES
Ratan Tata positive on India says outlook “not as bad.”
Tata, who was awarded an honorary Doctorate of Business from the University of New South Wales, said he feels that the fabric of Indian values and ethics was "slowly deteriorating", especially in the business community. MELBOURNE, NOV 28: Tata Group head Ratan Tata has said that though India had many changes of government, the outlook “might not be as bad” as one might think. However, Tata, who was awarded an honorary Doctorate of Business from the University of New South Wales, said he feels that the fabric of Indian values and ethics was “slowly deteriorating”, especially in the business community. He made it clear that his group, India’s largest conglomerate, was based on strong ethics and would not participate in corruption and bribery. “India (may have) had many changes of government, but the outlook ‘might not be as bad as you might think...I would have hope’,” The Australian daily quoted him as saying.
Ratan Regime - Too good to ignore those ethical deviations?
Despite the prediction of Mayan Calendar, the world did not meet its end by 2012. But in a way, 2012 is putting an end to the glorious innings of the legendary - Ratan Naval Tata. By December end, the Tata Group will have Cyrus Mistry at its helm while RNT will be the Chairman Emeritus
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of Tata Sons. In the 21 year tenure of RNT, the group's revenue had gone leaps and bounds and it was successful in identifying new business opportunities. At the same time, the group also got entangled into some controversies. Tata’s are not the only ones who pursue ethical values in business. But, given the group's value systems and tradition stretching over a hundred years, the expectation of the public and commoner like me are much more than from any of its peers. Tatas had achieved such a stature without actively pursuing political management. The business environment in India is changing and hence the operating environment for business enhancement required a change. Despite the group possessing a distinct corporate culture of honesty and integrity, the immense pressure of doing business in growing India cannot be ignored. Even though these issues have brought the group image down a little bit, the group still possesses much better image among its peers
Ratan Tata led the Group brilliantly, successfully: India Inc
Describing Ratan Tata as a true Indian corporate leader, India Inc today said he led the Tata Group brilliantly and attained global heights which showed it is possible to do business in an ethical way. Ratan Tata, an iconic corporate leader, retired as Chairman of the $100-billion Tata Group today after a 50-year run, on his 75th birthday. Adi Godrej, CII President and Chairman of Godrej Group said: "Ratan Tata led the Tata Group brilliantly and successfully in expanding and globalizing it." Industry chamber Assoc ham termed Tata as a true Indian business leader who went on to attain global heights in the corporate world and wished him a good and more rewarding life ahead. Tata has shown the guts which reflect that it is possible to do business in a clean and ethical way. Last week, Assoc ham came up with a CEOs survey spread across several cities, including London and New York, which placed the Tata’s as the best known Indian global brand.
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CHAPTER 11
11.1 QUESTIONNAIRE
Response Started: Friday, January 4, 2013 10:07:42 PM
IP Address: 61.16.186.117
Collector: New Email Invitation (Email Invitation)
1. What is the importance of ethics in today's modern working environment and how can you explain the modern working environment? In any organization, upholding ethics promotes a better working environment, and at the same time a good reputation for the business. Both of which contribute to high work productivity and profits. The place irrespective of size contribute to each other in substantial amount, helps to grow each other, that is work place and the employee, understand each other in terms of professionalism, give enough space to individual motivation, and a healthy team work helps to dedicate potential is an the modern working environment. 2. Do you think ethical companies are more profitable and successful in the long run or short run?
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A true understanding of the right and the wrong and the ability to distinguish between them is ethics. Ethics is an important part of life and running a successful business is no exception to this. To become successful, a business needs to be driven by strong ethical values. The mindset of a businessman creates a mindset for his/her company, which in turn sets the work culture of the business organization. For a business to prosper and maintain its wealth, it ought to be founded on certain ethical principles. A business that is based on ethics can run successfully for long years. Moneymakers who do not heed to ethical values can only earn a short-lived success. To last long in the market, business ethics is essential. 3. According to you, which is the most ethical and unethical company in India? TATA group companies are most ethical company in India, whereas some small and medium scale companies and major too are unethical as their employee cultural is worst. 4. How safe and stable do you feel at your employer's workplace? At my workplace, I feel very safe and stable, we have some policies and procedures which are strictly followed by everyone, and bosses are very nice and soft spoken with the employees. My organization takes care of safety and hygiene at workplace, always do motivation by way of conducting various programs. 5. How knowledgeable are you about the company's ethical standards? My organization has sent us code of conduct in which all policies and procedures are mentioned about the company. 6. Does your workplace follow a proper code of conduct? Of course, each and every employee of our company follows rules and regulations applied by the company; after all it is beneficiary for both organization as well as an individual. 7. Are there proper policies to maintain the ethical standards or established code of conduct? Yes, all the policies and procedures are designed well by keeping in mind beneficiary for company and employees.
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8. Is your employer's work environment positive, neither positive nor negative, or negative? Also rate it on the scale of 1 to 10. I will rate my work environment 10, its on 17th floor, good view, fully air-conditioned, totally hygienic. 9. Do you face ethical challenges while adjusting with the modern working environment in your organization? Sometimes, but we have manage them well balanced. 10. What are your suggestions to have a more ethical working environment? Try to maintain below commandments to have more ethical working environment: 1) Do not criticize the boss. 2) Put in a genuine good word for colleagues when they deserve it, and do not criticize when they do error. 3) Do not comment on colleagues personal affairs. 4) Do not compare one with others. 5) Do not involve yourself in assignments meant for others, and never show off that you can do a particular job better than them. 6) Keep your attire matching your status, and do not break the dress code of work, 7)do not bring family in workplace unless they are invited, try to avoid sharing family affairs. 8) Invite colleagues at home 9) When there's an appraisal, make sure your work gets noticed. Inform the right people that it is your work in advance, so that when the time comes, you get the nod. 10) He final rule of ethics in the workplace is to always be informed in what is going on in your business.
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Response Started: Saturday, December 29, 2012 10:26:58 AM
IP Address: 120.61.63.251
Collector: New Facebook Collector
1. What is the importance of ethics in today's modern working environment and how can you explain the modern working environment? Ethics concern an individual's moral judgments about right and wrong. Decisions taken within an organization may be made by individuals or groups, but whoever makes them will be influenced by the culture of the company. The decision to behave ethically is a moral one; employees must decide what they think is the right course of action. This may involve rejecting the route that would lead to the biggest short-term profit. 2. Do you think ethical companies are more profitable and successful in the long run or short run? Yes... 3. According to you, which is the most ethical and unethical company in India? You have very good example of Godrej & Boyce Mfg. Ltd. for Ethical Company. No idea about unethical company 4. How safe and stable do you feel at your employer's workplace? It’s a stress free and friendly environment where your ideas and suggestions are of more concern and taken into consideration 5. How knowledgeable are you about the company's ethical standards?
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Godrej enjoys the patronage and trust of around 500 million Indians every single day. Our customers mean the world to us. We are happy only when we see a delighted customer smile. With 7 major companies with interests in real estate, FMCG, industrial engineering, appliances, furniture, security and agro care – to name a few – our turnover crosses 3.3 billion dollars*. You think of Godrej as such an integral part of India – like the bhangara or the kurta – that you may be surprised to know that 26% of our business is done overseas. Our presence in more than 60 countries ensures that our customers are at home with Godrej no matter where they go. With brands you can believe in, service excellence you can count on and the promise of brighter living for every customer, Godrej knows what makes India tick today. Today, we are at a point in Godrej’s history when our amazing past is meeting up with its spectacular future head on. Godrej is learning and relishing being young again. So I think it has grown up very well in 115 years 6. Does your workplace follow a proper code of conduct? Yes 7. Are there proper policies to maintain the ethical standards or established code of conduct? Yes 8. Is your employer's work environment positive, neither positive nor negative, or negative? Also rate it on the scale of 1 to 10. It is positive, will rate it 8.5 out of 10 9. Do you face ethical challenges while adjusting with the modern working environment in your organization? Yes. At first it’s difficult for the modern generation to adjust with the ethical standards. But I think it’s only for the benefits of the customer as well as the employee 10. What are your suggestions to have a more ethical working environment? It should not be totally ethical environment. Maybe modern ideas or ethics can also help in improvising.
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Response Started: Sunday, December 30, 2012 6:53:16 AM
IP Address: 122.179.169.69
Collector: New Email Invitation
1. What is the importance of ethics in today's modern working environment and how can you explain the modern working environment? Today’s modern working environment is dynamic and business ethics helps the organization to sustain in the changing era. 2. Do you think ethical companies are more profitable and successful in the long run or short run? Ethical companies are more profitable and successful in the long run. Profits might be less in the beginning but helps to prevail in the long run. 3. According to you, which is the most ethical and unethical company in India? I guess Tata is the most ethical company in India and reliance highly unethical. Even Satyam scam is an example of unethical business. 4. How safe and stable do you feel at your employer's workplace? I feel very safe and stable at my workplace. Sometimes there are problems of grapevine in the office. 5. How knowledgeable are you about the company's ethical standards? I have a proper knowledge about the company's ethical standards and I follow it.
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6. Does your workplace follow a proper code of conduct? Yes 7. Are there proper policies to maintain the ethical standards or established code of conduct? Yes 8. Is your employer's work environment positive, neither positive nor negative, or negative? Also rate it on the scale of 1 to 10. It’s positive. Rating will be around 8. 9. Do you face ethical challenges while adjusting with the modern working environment in your organization? Yes off course. 10. What are your suggestions to have a more ethical working environment? First the top management should inculcate it properly, and then only the whole organization will follow it.
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11.2 SURVEY (Conducted from 50 employees)
1. Are you aware of business ethics?
Yes 83% No 17%
2. Do you think ethics is important in business?
Yes 76%
No 24%
3. Do you think ethical companies are stronger and last longer?
Yes 83% No 17%
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4. With a dynamic business environment, do you think ethics today is a passing fad?
Yes 57% No 43%
5. Are you aware of your workplace ethics or code of conduct?
Yes 93% No 7%
6. Do you think your company is highly ethical?
Yes 51% No 49%
7. Do you yourself indulge in unethical practices sometimes?
Yes 43% No 57%
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8. Do you feel the modern approach in ethics has resulted in more ethical practices in business?
Yes 69%
No 31%
9. After a lot of business scams coming up, do you think that today the employers, employees and customers are ethically inter-related?
Yes 91% No 9%
10. Do you think the companies should maintain a proper code of conduct and must follow proper ethical policies?
Yes 97% No 3%
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CHAPTER 12 CONCLUSION
Everyone agrees that business managers must understand finance and marketing. But is it necessary for them to study ethics? Managers who answer in the negative generally base their thinking on a very basic concept. They may simply say that they have no reason to be ethical. They see why they should make a profit, and most agree they should do so legally. But why should they be concerned about ethics, as long as they are making money and staying out of jail? Other managers recognize that they should be ethical but identify their ethical duty with making a legal profit for the firm. They see no need to be ethical in any further sense, and therefore no need for any background beyond business and law. A third group of managers’ grant that ethical duty goes further than what is required by law. But they still insist that there is no point in studying ethics. Character is formed in childhood, not while reading a college text or sitting in class. These arguments are confused and mistaken on several levels. To see why, it is best to start with the question raised by the first one: why should business people be ethical? Although ethics is not the same as self interest, business executives often want to be assured that it is the same. They want to make certain that “one can do well by doing good,” meaning that one can succeed in business by being ethical. There is no denying that one can often do well by doing good. An ethical company is more likely to build a good reputation, which is more likely to bring financial rewards over the long term. But good behavior cannot be grounded in tangible reward alone. People who are interested only in reward will behave ethically when it suits their purpose, but they will go astray whenever the incentives change. The task of business ethics is to identify the duties that business people have as business people. One can begin with the most basic ones mentioned by Economist Milton Friedman: the duty to obey the law and the “rules of the game,” which provide for “open and free competition without deception or fraud.” Ethics not only should be studied alongside management, but the two fields are closely related. Business management is all about making the right decisions. Ethics is all about making the right decisions. So what is the difference between the two? Management is concerned with how decisions affect the company, while ethics is concerned about how decisions affect everything. Management operates in the specialized context of the firm, while ethics operates in the general context of the world. Management is therefore part of ethics. A business manager cannot make the right decisions without understanding management in particular as well as ethics in general. Business ethics is management carried out in the real world. This is why business managers should study ethics.
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CHAPTER 13 BIBLIOGRAPHY
? Times of India archives ? Times of India (Ascent) ? The ethical business guide – Blue rocket & good folk ? Business ethics by Sheth Publication ? Why business ethics? – John Hooker ? www.wikipedia.org ? dictionary.reference.com/ethics ? humanresources.about.com/od/businessethics/qt/workplace-ethics.htm ? www.scu.edu/ethics/publications/iie/v2n1/ ? www.tata.in ? yahoo.answers.in
….THANK YOU….
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