Description
This is a presentation describes what is ethics, what are the constructive actions encouraged by ethics.
C S R
Business Ethics
Nature and Scope
Nature and Scope of Business Ethics The word „ethics? has originated either from Latin word „Ethicus? or the Greek word „Ethicos?. Both these words originated from the word „ethos? which means character. Ethics is a system of moral principles, rules and conduct. As a science of moral principles, ethics gives guidelines such as “what is right? and “what is wrong?”. Ethical problems are faced by people in all the countries and at all times. In all organizations, family business and religions, situations arise that demand right decisions. Centuries ago, Duryodhana said in Mahabharata : “I know what is right but I am not able to act accordingly, I also know what is wrong but I am not able to restrain myself doing it.”
The famous Indian philosopher Kautilya says, “We are shaped by our thoughts. We become what we think, when the mind is pure, joy follows like a shadow that never leaves”. Ethics can be described as philosophy in action. Business ethics is a branch of ethics dealing with application of ethical principles in business. The human beings have freedom of action to communicate good or bad to the world. While good acts are performed, people are happy and period of good activity is called the golden era. Ethics encourages constructive actions. There are three types of constructive actions: 1. Certain obligatory actions to be performed by every individual, such as good quality products, fair price and customer care; the non-performance of these activities bring disgrace.
2.
Certain activities are to be prohibited such as false weighing, inferior quality, holding stock and high prices. 3. Certain other actions, called optional actions bring goodness and welfare to all. For example, handling a grievance of a customer, training in safe usage of equipment, car for a test drive etc. Tamil poet Tiruvalluvar says, “When prosperity comes to a good man from a good family, it is like village tank being filled with water, it helps everyone?. Indian philosophers strongly believe that ethical action is the supreme governing force of the universe. The world survives because of ethical action. As for ethical values and deeds are concerned, they are more or less instinctive in humans rather than acquired, but in modern days, ethical training has become a necessity due to various reasons.
Business ethics is simply applying the basic principles of ethics to the field of business which is the major area of making profits. Business ethics demonstrates that profits can be made on a sustainable basis by following certain norms and respecting other. Organizational goals have to be combined to achieve mutual benefits. An effective team can be limit based on ethical practices. Short-cuts can bring benefits in the short-run bit only good values bring long-run and sustainable results. In short, a good enterprise can succeed if it takes care of all the stakeholders in terms of their interests. In this sense, it is holistic and benefits all. Business ethics is concerned with a code of ethics and not merely a code of conduct. In course of time, a right code of ethics gets internalised as a normative value.
Three Principles of Business Ethics 1. Standardisation All the rules should be allocable to all standardisation is the secret of success for the implementation of ethical practices, in other words, favouratism and partiality should be discouraged. Double standards have to be given up. Standardisation promotes a uniform standard for all and, hence, everybody will be happy with the administration. There is no place for ill-will or frustration. 2. Workable The rules of business ethics should be practical and workable so that tangible benefits can be experienced. The benefits of business ethics should be made available to all the stakeholders. The rules of the business should not suffer from a theoretical bias and work for practical
3.
purposes. Ethics is for everybody and should be a concern of primary importance. Driven from the Top Business ethics should be always driven from the top. Business ethics can work only if the top management is seriously committed to it. Unless and until, the top management is committed to ethical considerations, the implementation of ethical programmes would be difficult to be implemented.
Morals and Ethics Morals deal with the right behaviour of individuals. Ethics deal with right character in a given situation. Both are closely related to each other. Some of the basic morals like helping others, treating all equally and not cheating others are converted in terms of good business practices. Morals form the foundation of ethics which can be applied to business. The following agreements reveal the relationship between morals and ethics. 1. All moral standards aim at the development of positive standards. Ethical standards also aim at the betterment of the ethical practices in organizations. 2. If the moral standards are not followed, there will be serious and disastrous consequences like crimes, corruption and fraud.
3.
4.
5.
6.
If ethical standards are not adopted, there will be fall in the values and decline in the efficiency of business enterprises. Both morals and ethical standards can be established only with the active and sincere participation of the people. Both morals and ethics give more priority to public welfare rather than private welfare. Both strongly hold the view that society should over-ride self interest. A balance has to strike between ethical demands and strategic interests. Both morals and ethics are not only positive sciences but also normative sciences. A positive science explains “what it is” but a normative science explains “what it ought to be”. Both morals and ethical standards are based on impartial considerations bringing long-term benefits. Both discourage short-term gains and partial benefits.
Types of Ethics There are three important types of ethics, namely, transactional ethics, participatory ethics and recognition ethics. 1. Transactional Ethics : Man is a social animal. He has to act and react with others through different transactions. The practice of ethics in all these transactions is called as transactional ethics. All involved parties should reciprocate ethical practices. The common good ethical interests are binding all the people. It is a win-win approach from all prospective. Let us take the example of a medical doctor. He examines the patients, gives the right type of treatment and charges moderately. The patients are also reciprocating on getting the treatment from this doctor and promote a word-of-mouth communication. The principle of honesty is the basic
2.
(a) (b) (c)
(d)
principle in transactional ethics. The interest of both the parties is taken care of. Participatory Ethics : It is an important part of business ethics. Guided by common good, all the participants follow some ethical practices. The important features of participatory ethics are: All the parties like consumers, producers and employees maintain some basic ethical standards. The level of participation depends on the degree of motivation in the society. Participation comes from external forces and inner commitment. This can take place only through the process of creating ethical awareness. The level of participation has to be watched by all the groups leading to mutual checks and balances.
Special attention has to be given to the least powerful and marginalised sections of society. (e) The growth of participation indicates the level of social development. It is the growth of solidarity in an angle of individualism. Many social-economic problems of developed countries are solved by the ethical practices. 3. Recognition Ethics : As human beings, people are endowed with the ability to understand the problems of others. This quality leads to the recognition of individuals, institutions and societies, conflicting situations can be solved by the correct recognition of the situation. This requires a correct perspective and empathy. The strong is helping the weak. The learned is helping the lesser learned. The experienced is helping the new entrant. Compensation is given to victims.
Characteristics of Business Ethics 1. Each and every person is individually responsible for the ethical or unethical decisions. The way in which the person is brought up, the values learnt and the working atmosphere decides the ethical standards of the people. Many times, uneducated people are more ethical than the so-called educated people. 2. Ethical decisions are voluntary in nature and people have the freedom of choice and free-will. The conscience of people may vary from time to time and place to place. The freedom of choice is left to the individual to follow a good practice or not. It is the free-will that makes the successful implementation of ethical standards and practices. 3. Ethical decisions differ from person to person, time to time and place to place. Due to socio-economic changes, the ethical decisions also change. What was considered as
4.
5.
6.
good at one time is considered bad at another point of time. Many decades ago, the customer care was not given prominence. In the modern age, customer care is given utmost importance. Ethical decisions affect in a widespread way. Ethical decisions affect all the stakeholders like shareholders, employees and customers. These ethical decisions spread to other business firms across the region, nation and even the globe. Ethical decisions involve a trade-off between the cost and benefits received. Some ethical decisions may be costly in the short run but these decisions may bring good benefits in the long run. For example, social responsibility of business brings a lot of benefits to the business firms in the long run. The effects of ethical decisions cannot be predicted. Ethical decisions are made by taken into account certain
7.
8.
variables like the growth of the population, prevailing business and present attitudes. In course of time, these variables are bound to change. For example, disclosure norms like disclosure of many business results are accepted as good business practices in modern days. These ideas were not encouraged in traditional times. The lower level managers are pressurised to compromise their ethical standards. In fact, many young people join the business organisations with the great ideals and ethical standards. Unfortunately, in course of time, their standards are diluted due to pressures from different sides. Unfortunately, they fall in line with others. In most organisations, people experience ethical dilemmas. Dilemma means choice between two opinions. When values are in conflict, an ethical examination can help the managers. Deadlines, sales goals, career advancement
9.
and lack of information are the risks of ethical conduct. These risks have to be managed effectively. In fact, ethics has to be taught to the managers at the corporate doors. The managers should be given opportunities for analysing the various real or hypothetical situations. Apart from increasing sensitivity to moral issues, it will build moral courage also. This ethical training will boost the moral climate of the firm. The managers should be trained to follow some quick ethical tests, like the following: Is it right? Is it fair? Who gets the benefit? Who gets hurt? What will you feel about this decision after five years?
10. Ethics have to be imparted from very early age both at home and in schools. The values have to be built with education. Importance has to be given to both the means and ends. The managers should be trained to get others? feedback before acting or deciding.
Myths of Business Ethics 1. Ethics is a personal and individual affair. 2. 3. 4. Business and ethics do not go hand-in-hand. Ethical values differ in developed and developing countries. Good business means good ethics.
Source of Ethics
• • • Religion Cultural experience Philosophical System (Philosophy is the study of nature and meaning of existence) Legal System
•
•
Societal value system
Factors influencing Business ethics in an organization 1. Leadership
2. 3. Strategy and Performance Environment
4.
5.
Corporate culture
Individual characteristics
Importance of Business Ethics 1. Social concern - effect of business
2. 3. Social Responsibility – giving back Improves organizational effectiveness – build trust
4.
5. 6.
Healthy competition – society at large, wins.
Benefit for all stakeholders Avoidance of whistle-blowing.
Reasons for the existing unethical business practices in India 1. Business community prefer to earn money by exploiting consumers rather than by raising efficiency, reducing cost and avoiding wastages. 2. Indian consumers accept unethical practices and suffer but do not react aggressively and collectively. This attitude of accepting injustice silently is one cause responsible for unethical business practices continuing in India. 3. Absence of well organized consumer movement at the national level is one more cause responsible for the presence of unethical business practices. Consumers are not united. They do not have adequate consumer education and guidance. As a result, they accept unethical practices. 4. Many consumer protection laws are not executed properly. As a result, unethical business practices are used even when laws are against such practices.
5. 6. 7.
Lack of proper education and training of businessmen. Limited interest of political parties in consumer protection. Inadequate support of the government to consumer movement for its rapid growth. But growing market competition, economic reforms, globalization, growing consumer awareness are the major reasons due to which the intensity of unethical business practices is reducing in India in recent years. Risk and Cost associated with unethical business practices 1. Severely damaged company brand and image. 2. Decreased productivity 3. Increased misconduct and conflict internally. 4. Employee Turnover 5. Disregarding stakeholders and eventual bankruptcy.
Professional Ethics A professional is one who has a thorough knowledge of a particular area of operation. One should have a thorough knowledge and practical skills. One should be able to implement certain tasks with care, confidence and upright conduct. A good professional should have innovative thinking, a passion for ethical accuracy and practical vision. Ethical practices have to be followed in the execution of professional skills and services. A professional should be humble and humane without any professional arrogance.
“A Professional is one who gives money’s worth and whose clients feel that they are in safe hands”
Abraham Lincoln’s letter to the teacher of his son
“Teach him for every scoundrel, there is a hero; that for every selfish politician, there is a dedicated leader. Teach him that for every enemy there is a friend. Teach him to learn to lose and also enjoy winning. Teach him it is far more honourable to fail than to cheat. Teach him to be gentle with gentle people, and tough with the tough. Teach him to listen to all and filter the truth. Teach him how to laugh when he is sad. Let him have the courage to be impatient, let him have the patience to be brave.”
Thank you
doc_595474599.ppt
This is a presentation describes what is ethics, what are the constructive actions encouraged by ethics.
C S R
Business Ethics
Nature and Scope
Nature and Scope of Business Ethics The word „ethics? has originated either from Latin word „Ethicus? or the Greek word „Ethicos?. Both these words originated from the word „ethos? which means character. Ethics is a system of moral principles, rules and conduct. As a science of moral principles, ethics gives guidelines such as “what is right? and “what is wrong?”. Ethical problems are faced by people in all the countries and at all times. In all organizations, family business and religions, situations arise that demand right decisions. Centuries ago, Duryodhana said in Mahabharata : “I know what is right but I am not able to act accordingly, I also know what is wrong but I am not able to restrain myself doing it.”
The famous Indian philosopher Kautilya says, “We are shaped by our thoughts. We become what we think, when the mind is pure, joy follows like a shadow that never leaves”. Ethics can be described as philosophy in action. Business ethics is a branch of ethics dealing with application of ethical principles in business. The human beings have freedom of action to communicate good or bad to the world. While good acts are performed, people are happy and period of good activity is called the golden era. Ethics encourages constructive actions. There are three types of constructive actions: 1. Certain obligatory actions to be performed by every individual, such as good quality products, fair price and customer care; the non-performance of these activities bring disgrace.
2.
Certain activities are to be prohibited such as false weighing, inferior quality, holding stock and high prices. 3. Certain other actions, called optional actions bring goodness and welfare to all. For example, handling a grievance of a customer, training in safe usage of equipment, car for a test drive etc. Tamil poet Tiruvalluvar says, “When prosperity comes to a good man from a good family, it is like village tank being filled with water, it helps everyone?. Indian philosophers strongly believe that ethical action is the supreme governing force of the universe. The world survives because of ethical action. As for ethical values and deeds are concerned, they are more or less instinctive in humans rather than acquired, but in modern days, ethical training has become a necessity due to various reasons.
Business ethics is simply applying the basic principles of ethics to the field of business which is the major area of making profits. Business ethics demonstrates that profits can be made on a sustainable basis by following certain norms and respecting other. Organizational goals have to be combined to achieve mutual benefits. An effective team can be limit based on ethical practices. Short-cuts can bring benefits in the short-run bit only good values bring long-run and sustainable results. In short, a good enterprise can succeed if it takes care of all the stakeholders in terms of their interests. In this sense, it is holistic and benefits all. Business ethics is concerned with a code of ethics and not merely a code of conduct. In course of time, a right code of ethics gets internalised as a normative value.
Three Principles of Business Ethics 1. Standardisation All the rules should be allocable to all standardisation is the secret of success for the implementation of ethical practices, in other words, favouratism and partiality should be discouraged. Double standards have to be given up. Standardisation promotes a uniform standard for all and, hence, everybody will be happy with the administration. There is no place for ill-will or frustration. 2. Workable The rules of business ethics should be practical and workable so that tangible benefits can be experienced. The benefits of business ethics should be made available to all the stakeholders. The rules of the business should not suffer from a theoretical bias and work for practical
3.
purposes. Ethics is for everybody and should be a concern of primary importance. Driven from the Top Business ethics should be always driven from the top. Business ethics can work only if the top management is seriously committed to it. Unless and until, the top management is committed to ethical considerations, the implementation of ethical programmes would be difficult to be implemented.
Morals and Ethics Morals deal with the right behaviour of individuals. Ethics deal with right character in a given situation. Both are closely related to each other. Some of the basic morals like helping others, treating all equally and not cheating others are converted in terms of good business practices. Morals form the foundation of ethics which can be applied to business. The following agreements reveal the relationship between morals and ethics. 1. All moral standards aim at the development of positive standards. Ethical standards also aim at the betterment of the ethical practices in organizations. 2. If the moral standards are not followed, there will be serious and disastrous consequences like crimes, corruption and fraud.
3.
4.
5.
6.
If ethical standards are not adopted, there will be fall in the values and decline in the efficiency of business enterprises. Both morals and ethical standards can be established only with the active and sincere participation of the people. Both morals and ethics give more priority to public welfare rather than private welfare. Both strongly hold the view that society should over-ride self interest. A balance has to strike between ethical demands and strategic interests. Both morals and ethics are not only positive sciences but also normative sciences. A positive science explains “what it is” but a normative science explains “what it ought to be”. Both morals and ethical standards are based on impartial considerations bringing long-term benefits. Both discourage short-term gains and partial benefits.
Types of Ethics There are three important types of ethics, namely, transactional ethics, participatory ethics and recognition ethics. 1. Transactional Ethics : Man is a social animal. He has to act and react with others through different transactions. The practice of ethics in all these transactions is called as transactional ethics. All involved parties should reciprocate ethical practices. The common good ethical interests are binding all the people. It is a win-win approach from all prospective. Let us take the example of a medical doctor. He examines the patients, gives the right type of treatment and charges moderately. The patients are also reciprocating on getting the treatment from this doctor and promote a word-of-mouth communication. The principle of honesty is the basic
2.
(a) (b) (c)
(d)
principle in transactional ethics. The interest of both the parties is taken care of. Participatory Ethics : It is an important part of business ethics. Guided by common good, all the participants follow some ethical practices. The important features of participatory ethics are: All the parties like consumers, producers and employees maintain some basic ethical standards. The level of participation depends on the degree of motivation in the society. Participation comes from external forces and inner commitment. This can take place only through the process of creating ethical awareness. The level of participation has to be watched by all the groups leading to mutual checks and balances.
Special attention has to be given to the least powerful and marginalised sections of society. (e) The growth of participation indicates the level of social development. It is the growth of solidarity in an angle of individualism. Many social-economic problems of developed countries are solved by the ethical practices. 3. Recognition Ethics : As human beings, people are endowed with the ability to understand the problems of others. This quality leads to the recognition of individuals, institutions and societies, conflicting situations can be solved by the correct recognition of the situation. This requires a correct perspective and empathy. The strong is helping the weak. The learned is helping the lesser learned. The experienced is helping the new entrant. Compensation is given to victims.
Characteristics of Business Ethics 1. Each and every person is individually responsible for the ethical or unethical decisions. The way in which the person is brought up, the values learnt and the working atmosphere decides the ethical standards of the people. Many times, uneducated people are more ethical than the so-called educated people. 2. Ethical decisions are voluntary in nature and people have the freedom of choice and free-will. The conscience of people may vary from time to time and place to place. The freedom of choice is left to the individual to follow a good practice or not. It is the free-will that makes the successful implementation of ethical standards and practices. 3. Ethical decisions differ from person to person, time to time and place to place. Due to socio-economic changes, the ethical decisions also change. What was considered as
4.
5.
6.
good at one time is considered bad at another point of time. Many decades ago, the customer care was not given prominence. In the modern age, customer care is given utmost importance. Ethical decisions affect in a widespread way. Ethical decisions affect all the stakeholders like shareholders, employees and customers. These ethical decisions spread to other business firms across the region, nation and even the globe. Ethical decisions involve a trade-off between the cost and benefits received. Some ethical decisions may be costly in the short run but these decisions may bring good benefits in the long run. For example, social responsibility of business brings a lot of benefits to the business firms in the long run. The effects of ethical decisions cannot be predicted. Ethical decisions are made by taken into account certain
7.
8.
variables like the growth of the population, prevailing business and present attitudes. In course of time, these variables are bound to change. For example, disclosure norms like disclosure of many business results are accepted as good business practices in modern days. These ideas were not encouraged in traditional times. The lower level managers are pressurised to compromise their ethical standards. In fact, many young people join the business organisations with the great ideals and ethical standards. Unfortunately, in course of time, their standards are diluted due to pressures from different sides. Unfortunately, they fall in line with others. In most organisations, people experience ethical dilemmas. Dilemma means choice between two opinions. When values are in conflict, an ethical examination can help the managers. Deadlines, sales goals, career advancement
9.
and lack of information are the risks of ethical conduct. These risks have to be managed effectively. In fact, ethics has to be taught to the managers at the corporate doors. The managers should be given opportunities for analysing the various real or hypothetical situations. Apart from increasing sensitivity to moral issues, it will build moral courage also. This ethical training will boost the moral climate of the firm. The managers should be trained to follow some quick ethical tests, like the following: Is it right? Is it fair? Who gets the benefit? Who gets hurt? What will you feel about this decision after five years?
10. Ethics have to be imparted from very early age both at home and in schools. The values have to be built with education. Importance has to be given to both the means and ends. The managers should be trained to get others? feedback before acting or deciding.
Myths of Business Ethics 1. Ethics is a personal and individual affair. 2. 3. 4. Business and ethics do not go hand-in-hand. Ethical values differ in developed and developing countries. Good business means good ethics.
Source of Ethics
• • • Religion Cultural experience Philosophical System (Philosophy is the study of nature and meaning of existence) Legal System
•
•
Societal value system
Factors influencing Business ethics in an organization 1. Leadership
2. 3. Strategy and Performance Environment
4.
5.
Corporate culture
Individual characteristics
Importance of Business Ethics 1. Social concern - effect of business
2. 3. Social Responsibility – giving back Improves organizational effectiveness – build trust
4.
5. 6.
Healthy competition – society at large, wins.
Benefit for all stakeholders Avoidance of whistle-blowing.
Reasons for the existing unethical business practices in India 1. Business community prefer to earn money by exploiting consumers rather than by raising efficiency, reducing cost and avoiding wastages. 2. Indian consumers accept unethical practices and suffer but do not react aggressively and collectively. This attitude of accepting injustice silently is one cause responsible for unethical business practices continuing in India. 3. Absence of well organized consumer movement at the national level is one more cause responsible for the presence of unethical business practices. Consumers are not united. They do not have adequate consumer education and guidance. As a result, they accept unethical practices. 4. Many consumer protection laws are not executed properly. As a result, unethical business practices are used even when laws are against such practices.
5. 6. 7.
Lack of proper education and training of businessmen. Limited interest of political parties in consumer protection. Inadequate support of the government to consumer movement for its rapid growth. But growing market competition, economic reforms, globalization, growing consumer awareness are the major reasons due to which the intensity of unethical business practices is reducing in India in recent years. Risk and Cost associated with unethical business practices 1. Severely damaged company brand and image. 2. Decreased productivity 3. Increased misconduct and conflict internally. 4. Employee Turnover 5. Disregarding stakeholders and eventual bankruptcy.
Professional Ethics A professional is one who has a thorough knowledge of a particular area of operation. One should have a thorough knowledge and practical skills. One should be able to implement certain tasks with care, confidence and upright conduct. A good professional should have innovative thinking, a passion for ethical accuracy and practical vision. Ethical practices have to be followed in the execution of professional skills and services. A professional should be humble and humane without any professional arrogance.
“A Professional is one who gives money’s worth and whose clients feel that they are in safe hands”
Abraham Lincoln’s letter to the teacher of his son
“Teach him for every scoundrel, there is a hero; that for every selfish politician, there is a dedicated leader. Teach him that for every enemy there is a friend. Teach him to learn to lose and also enjoy winning. Teach him it is far more honourable to fail than to cheat. Teach him to be gentle with gentle people, and tough with the tough. Teach him to listen to all and filter the truth. Teach him how to laugh when he is sad. Let him have the courage to be impatient, let him have the patience to be brave.”
Thank you
doc_595474599.ppt