Description
Business Ethics
Business Ethics
2
Organizational Behaviour - Business Ethic 10/8/2012
What is Ethic
• Greek word “Ethos” – refers to character
• A code of conduct for personal behaviour
• Driving force – guide – value content • A moral Code based on generally accepted standards
3
Organizational Behaviour - Business Ethic 10/8/2012
Ethics & Related Terms
• Ethics & Morality – A morality is a set of rules to guide the actions of individual human being. • Ethics & Religion – Ethics get idea from religion and thorough experiments it approves them as “code of conduct”.
• Ethics & Value – Moral values are deep seated ideas and feeling that manifest themselves as behavior or conduct.
• Ethics & Law – Law is a code of conduct which the authority in power prescribes for society. Knowledge +Law = Ethics
4
Organizational Behaviour - Business Ethic 10/8/2012
Morals Vs. Ethics
• Morals defines personal character. • Morals are unchanging • Ethics defines a social system where morals are applied. • Ethics are society dependent
Morals and Ethics of a criminal defense lawyer:
•Lawyer’s personal moral code likely finds murder immoral and guilty however ethics demand the accused client be defended as vigorously as possible.
5
Organizational Behaviour - Business Ethic 10/8/2012
Religion Vs. Ethics
• Religion is a way of life with rigid principles. • Ethics are a code of acceptable, moral conduct based on the conceptions of right and wrong generally accepted in a given society at that time • Ethics derives it's authority from the implied or explicit consensus of the people.
• Religion derives it's authority from an unverifiable supernatural source
Comparison of Religion and Ethics is a comparison of Revelation and Reason. When ethics and religion collide, nobody wins; when religion and ethics find room for robust discussion and agreement, we maximize the prospects for constructive choices in our society.
6
Organizational Behaviour - Business Ethic 10/8/2012
Values Vs. Ethics
• Values can be defined as those things that are important to or valued by someone. Values are the embodiment of what an organization stands for, and should be the basis for the behavior of its members • Ethics are a code of acceptable, moral conduct based on the conceptions of right and wrong generally accepted in a given society at that time
Values determine what is right and what is wrong, and doing what is right or wrong is what we mean by Ethics. To behave ethically is to behave in a manner consistent with what is right or moral
7
Organizational Behaviour - Business Ethic 10/8/2012
Law Vs. Ethics
• Law is formal set of rules and standard, mostly in written form. • It is associated with significant legitimate power & authority • Defaulters to the rules and regulation are punishable • Law is obedience to the enforceable
• Ethics is far less formal and sometimes not even written down • It is associated with set of Values which is to be observed morally • Punishment for defaulters in ethics only if it is “noticed”. • Ethics is obedience to the unenforceable
8
Organizational Behaviour - Business Ethic 10/8/2012
Business Ethics
• Business Ethics are not different from ethic in normal sense • It is ethic applied in conduct of business activities • According to PETER DRUCKER “There is neither a separate ethic of business and nor is one needed.” • What is ethical other walks of life is ethical in business and vice a versa. • In other words “Controlling greed in the face of unrestricted profit opportunity is business ethics”
9
Organizational Behaviour - Business Ethic 10/8/2012
3 C’s of Business Ethics
• Compliance: ? Laws ? Principles of morality ? Policy of the company
• Contribution: (Business can make to the Society)
? The core values
? Quality of Product/Services ? Employment ? Usefulness of activities to surrounding activities
• Consequences of business activity:
? Toward environment inside and outside the organization ? Social responsibility towards shareholders, Bankers, customers & Employees of organization
? Good public image
10
Organizational Behaviour - Business Ethic 10/8/2012
Need of business ethics
Drive home that business is: • Not only for growth of businessman, also for long term growth of business. • Long term creation of wealth,
• Creation of better social image, and build investor confidence • To function as responsible corporate citizen in the country
12
Organizational Behaviour - Business Ethic 10/8/2012
Importance of business ethics
• Ethics correspond to basic human dignity • It creates credibility in public • It gives management credibility with the employees • It helps in better decision making • Law cannot “spirit” society, but ethics can
13
Organizational Behaviour - Business Ethic 10/8/2012
Principles of business ethics
• Take care of
? ?
• • • •
stakeholders, owners, employees, customers, suppliers community and environment Fair dealings and fair practices in business Avoid exploitation of consumers Encourage healthy competition Accept social responsibility
14
Organizational Behaviour - Business Ethic 10/8/2012
Factors causing unethical behaviour
• Competition – Managers trying to meet goals and have to cut corners at that moment this acute competition at national and international level becomes unavoidable reason for unethical conduct. • High Expectation – Increasing pressure to earn more profit and to cope with the enlarge requirement and expectations from stakeholders. • Ambiguous Situations – Such situations create ethical dilemma to the manager and selection of an alternative which gives them higher returns at the cost of loosing integrity. • Political Corruption – Most of the political parties demand gifts, donations and bribes from the business men for their political Gain. • Unethical Growth – Now a days people want to become rich in short while even by doing unethical acts, where money and success are the major motivators .
15
Organizational Behaviour - Business Ethic 10/8/2012
Common Unethical Practices
Duplication of Original Brands Inadequacy and insufficiency in warranty offering time and service. Not Producing Quality products Product Safety Unauthorized manufacturing of Hazardous product Differentiation in pricing. Excessive markup prices Misleading and deceptive advertisement False promises No fairness, transparency in relation with suppliers and retailers • Artificial scarcity • • • • • • • • • •
16
Organizational Behaviour - Business Ethic 10/8/2012
Important factors of building an ethical infrastructure
• Commitment from Top Management
? Ethical behaviour should be fully supported by top management ? They must set examples in front of the employees from their own level. ? Separate ethics committee which oversee the development and operations of ethics program. ? To establish and encourage ethical conduct formal codes of ethic for organization must be framed. ? Code of ethics states an organization’s basic and primary values and the ethical rules. ? A good corporate code of values and conduct should include certain managerial and employee guideline for making ethical decisions Some e.g. Of code of ethics are:
? Do not use abusive language ? Manage personal finance well ? Demonstrate courtesy, respect, honesty & Fairness
• Code of Conduct/Ethics
17
Organizational Behaviour - Business Ethic 10/8/2012
Important factors of building an ethical infrastructure
• Ethics Training – There is a great need of ethics training to convert values in to practices, sometimes employee may think that they know each and every aspect about ethics, ethical decision making but they might be unaware of ideas of actual evaluation process, implementation and consequences of the decision making.
• Whistle Blowing – Reporting of any misconduct or unethical activity. The employee must tell of the illegal act to some one outside the company. It must be a government or law enforcement agency. Employee who blow whistles on their employer are protected by law. •It can be of 2 type Internal – Report the wrong doing to higher authorities in the same organization. •External – Report the Wrong doing to external bodies (Govt. or Private)
18
Organizational Behaviour - Business Ethic 10/8/2012
Ethical Dilemma
It is a complex situation in which business men face lots of choices no clear cut answer • It is a debate between two moral principles • Debate to decide what is right and what is wrong • There is no real answer to an ethical dilemma
19
Organizational Behaviour - Business Ethic 10/8/2012
Example On the Job Ethical Dilemmas
Ramesh Yadav was a marketing officer in a MNC. this company use to follow the American system of contributing equally irrespective of their designation.
Once, his boss Mr. Anil Sharma invited some office employees out for lunch to celebrate Diwali party. Each employee equally contributed Rs. 175/- for the lunch and the bill was paid by Mr. Sharma (Boss).
Two days after the lunch Ramesh found out that his boss Mr. Sharma had billed the company for the entire lunch. Now Mr. Ramesh is in ethical dilemmas how to handle the situation.
20
Resolving Ethical Dilemmas
The situation can be analyzed in the following framework, 1) What is my self interest in this situation? 2) Do I have all the facts in a given situation? 3) What are the justifications against my action?
Organizational Behaviour - Business Ethic
• Dilemmas that presents themselves to managers have to be solved rationally by applying intellect
4) What is the interest of other people involved in the situation? 5) Am I breaking any laws or not? 6) What will be the consequences of particular conduct?
6) What are the alternative courses of action?
7) Whom should I speak to before acting in a certain manner?
Resolving Ethical Dilemmas
3 possible perspectives to decide between what is ethical and what is not – • 1) Survival of the fittest – Those factors which preserves only the most efficient & cost effective practices • 2) Law – Law can be relied upon frequently to pronounce what not to do.
• 3) Ethical Principles – Such as the greatest good for the greatest number ie benefits to a smaller group may have to be sacrificed to assure good to a larger one
22
Organizational Behaviour - Business Ethic 10/8/2012
Corporate Social Responsibility (CSR)
A concept whereby companies integrate social and environmental concerns into their business
operations and in their interaction with their
stakeholders (employees, customers, shareholders, investors, local communities, government),on a voluntary basis.
23
Organizational Behaviour - Business Ethic 10/8/2012
24
Organizational Behaviour - Business Ethic 10/8/2012
Benefits of Social Responsibility
• • • • • Increased business leads Increased reputation Increased loyal Customer base Increased staff morale and skills development Improved relationships with the local community, partners and clients • Innovation in processes, products and services • Managing the risks a company faces
25
Organizational Behaviour - Business Ethic 10/8/2012
Corporate Social Responsibility and India
• CSR activities and programs are now integral part of organizational objectives. • Since liberalization Indian companies has come to term with CSR and its wider ramification. • Oil India Ltd (PSU) – It is an oil drilling company which is associated with community and society development, by providing low cost housing, building school and colleges offering monetary help to financially weaker students • NTPC is the first PSU in the country to have develop a comprehensive R&R policy.
26
Organizational Behaviour - Business Ethic 10/8/2012
WHAT TATA DID TO THE VICTIMS OF 26 TERRORISTS ATTACK ???
"CORPORATE SOCIAL RESPONSIBILITY"? The Tata Gesture as an Industralist Icon !!
1.
TH
/11
Relief and assistance to all those who were injured and killed
2. A psychiatric cell was established in collaboration with Tata Institute of Social Sciences to counsel those who needed such help.
3. Employee outreach centers were opened where all help, food, water, sanitation, first aid and counseling was provided. 1600 employees were covered by this facility.
27
Organizational Behaviour - Business Ethic 10/8/2012
WHAT TATA DID TO THE VICTIMS OF 26 ATTACK ???
"CORPORATE SOCIAL RESPONSIBILITY"? The Tata Gesture as an Industralist Icon !!
TH
/11 TERRORISTS
4.In a record time of 20 days, a new trust was created by the Tatas for the purpose of relief of employees. 5.What is unique is that even the other people, the railway employees, the police staff, the pedestrians who had nothing to do with Tatas were covered by compensation. Each one of them was provided subsistence allowance of Rs. 10K per month for all these people for 6 months. 6. Tata will take responsibility of life education of 46 children of the victims of the terror. 7. The settlement for every deceased member ranged from Rs. 36 to 85 lacs [One lakh rupees translates to approx 2200 US $ ] in addition to the following benefits:
28
Organizational Behaviour - Business Ethic 10/8/2012
Good Business Ethics build a Strong Brand
29
Organizational Behaviour - Business Ethic 10/8/2012
Case Study: Toyota Motors Corp
Toyota’s Management Approach: Tree Metaphor
30
Organizational Behaviour - Business Ethic 10/8/2012
Case Study: Toyota Motors Corp
• Toyota Motors Corp on June 29th 2011 conducted voluntary safe recall for close to 9.53 million cars world wide. • Due to technical glitches in gas pedal Toyota cars could lead to sudden acceleration, causing danger to life of driver and other car passengers.
• Toyota’s case offers a number of valuable lessons for other business people and companies to consider.
• Followed are few pointers for your reference:
31
Organizational Behaviour - Business Ethic 10/8/2012
Case Study: Toyota Motors Corp
• Aggressive growth can create unmanageable risk
• Get the facts quickly and manage your risks aggressively
• Your supply chain is only as strong as your weakest link • Accept Responsibility • Take the Long View
32
Organizational Behaviour - Business Ethic 10/8/2012
Ethics: Take you a long way…
• Welcome to the world of ethical dilemmas!
• “Burn me once, shame on you; burn me twice, shame on me,”
• How does ethics effect your professional life:
• • • • Helps you, create a good reputation as a professional Helps you grow strength to strength Helps you develop a trust amongst your peers and business partners Helps you do the right thing
33
Organizational Behaviour - Business Ethic 10/8/2012
Who is responsible for Ethics in an Organization?
“ EVERYONE”
THANK YOU
doc_482648106.ppt
Business Ethics
Business Ethics
2
Organizational Behaviour - Business Ethic 10/8/2012
What is Ethic
• Greek word “Ethos” – refers to character
• A code of conduct for personal behaviour
• Driving force – guide – value content • A moral Code based on generally accepted standards
3
Organizational Behaviour - Business Ethic 10/8/2012
Ethics & Related Terms
• Ethics & Morality – A morality is a set of rules to guide the actions of individual human being. • Ethics & Religion – Ethics get idea from religion and thorough experiments it approves them as “code of conduct”.
• Ethics & Value – Moral values are deep seated ideas and feeling that manifest themselves as behavior or conduct.
• Ethics & Law – Law is a code of conduct which the authority in power prescribes for society. Knowledge +Law = Ethics
4
Organizational Behaviour - Business Ethic 10/8/2012
Morals Vs. Ethics
• Morals defines personal character. • Morals are unchanging • Ethics defines a social system where morals are applied. • Ethics are society dependent
Morals and Ethics of a criminal defense lawyer:
•Lawyer’s personal moral code likely finds murder immoral and guilty however ethics demand the accused client be defended as vigorously as possible.
5
Organizational Behaviour - Business Ethic 10/8/2012
Religion Vs. Ethics
• Religion is a way of life with rigid principles. • Ethics are a code of acceptable, moral conduct based on the conceptions of right and wrong generally accepted in a given society at that time • Ethics derives it's authority from the implied or explicit consensus of the people.
• Religion derives it's authority from an unverifiable supernatural source
Comparison of Religion and Ethics is a comparison of Revelation and Reason. When ethics and religion collide, nobody wins; when religion and ethics find room for robust discussion and agreement, we maximize the prospects for constructive choices in our society.
6
Organizational Behaviour - Business Ethic 10/8/2012
Values Vs. Ethics
• Values can be defined as those things that are important to or valued by someone. Values are the embodiment of what an organization stands for, and should be the basis for the behavior of its members • Ethics are a code of acceptable, moral conduct based on the conceptions of right and wrong generally accepted in a given society at that time
Values determine what is right and what is wrong, and doing what is right or wrong is what we mean by Ethics. To behave ethically is to behave in a manner consistent with what is right or moral
7
Organizational Behaviour - Business Ethic 10/8/2012
Law Vs. Ethics
• Law is formal set of rules and standard, mostly in written form. • It is associated with significant legitimate power & authority • Defaulters to the rules and regulation are punishable • Law is obedience to the enforceable
• Ethics is far less formal and sometimes not even written down • It is associated with set of Values which is to be observed morally • Punishment for defaulters in ethics only if it is “noticed”. • Ethics is obedience to the unenforceable
8
Organizational Behaviour - Business Ethic 10/8/2012
Business Ethics
• Business Ethics are not different from ethic in normal sense • It is ethic applied in conduct of business activities • According to PETER DRUCKER “There is neither a separate ethic of business and nor is one needed.” • What is ethical other walks of life is ethical in business and vice a versa. • In other words “Controlling greed in the face of unrestricted profit opportunity is business ethics”
9
Organizational Behaviour - Business Ethic 10/8/2012
3 C’s of Business Ethics
• Compliance: ? Laws ? Principles of morality ? Policy of the company
• Contribution: (Business can make to the Society)
? The core values
? Quality of Product/Services ? Employment ? Usefulness of activities to surrounding activities
• Consequences of business activity:
? Toward environment inside and outside the organization ? Social responsibility towards shareholders, Bankers, customers & Employees of organization
? Good public image
10
Organizational Behaviour - Business Ethic 10/8/2012
Need of business ethics
Drive home that business is: • Not only for growth of businessman, also for long term growth of business. • Long term creation of wealth,
• Creation of better social image, and build investor confidence • To function as responsible corporate citizen in the country
12
Organizational Behaviour - Business Ethic 10/8/2012
Importance of business ethics
• Ethics correspond to basic human dignity • It creates credibility in public • It gives management credibility with the employees • It helps in better decision making • Law cannot “spirit” society, but ethics can
13
Organizational Behaviour - Business Ethic 10/8/2012
Principles of business ethics
• Take care of
? ?
• • • •
stakeholders, owners, employees, customers, suppliers community and environment Fair dealings and fair practices in business Avoid exploitation of consumers Encourage healthy competition Accept social responsibility
14
Organizational Behaviour - Business Ethic 10/8/2012
Factors causing unethical behaviour
• Competition – Managers trying to meet goals and have to cut corners at that moment this acute competition at national and international level becomes unavoidable reason for unethical conduct. • High Expectation – Increasing pressure to earn more profit and to cope with the enlarge requirement and expectations from stakeholders. • Ambiguous Situations – Such situations create ethical dilemma to the manager and selection of an alternative which gives them higher returns at the cost of loosing integrity. • Political Corruption – Most of the political parties demand gifts, donations and bribes from the business men for their political Gain. • Unethical Growth – Now a days people want to become rich in short while even by doing unethical acts, where money and success are the major motivators .
15
Organizational Behaviour - Business Ethic 10/8/2012
Common Unethical Practices
Duplication of Original Brands Inadequacy and insufficiency in warranty offering time and service. Not Producing Quality products Product Safety Unauthorized manufacturing of Hazardous product Differentiation in pricing. Excessive markup prices Misleading and deceptive advertisement False promises No fairness, transparency in relation with suppliers and retailers • Artificial scarcity • • • • • • • • • •
16
Organizational Behaviour - Business Ethic 10/8/2012
Important factors of building an ethical infrastructure
• Commitment from Top Management
? Ethical behaviour should be fully supported by top management ? They must set examples in front of the employees from their own level. ? Separate ethics committee which oversee the development and operations of ethics program. ? To establish and encourage ethical conduct formal codes of ethic for organization must be framed. ? Code of ethics states an organization’s basic and primary values and the ethical rules. ? A good corporate code of values and conduct should include certain managerial and employee guideline for making ethical decisions Some e.g. Of code of ethics are:
? Do not use abusive language ? Manage personal finance well ? Demonstrate courtesy, respect, honesty & Fairness
• Code of Conduct/Ethics
17
Organizational Behaviour - Business Ethic 10/8/2012
Important factors of building an ethical infrastructure
• Ethics Training – There is a great need of ethics training to convert values in to practices, sometimes employee may think that they know each and every aspect about ethics, ethical decision making but they might be unaware of ideas of actual evaluation process, implementation and consequences of the decision making.
• Whistle Blowing – Reporting of any misconduct or unethical activity. The employee must tell of the illegal act to some one outside the company. It must be a government or law enforcement agency. Employee who blow whistles on their employer are protected by law. •It can be of 2 type Internal – Report the wrong doing to higher authorities in the same organization. •External – Report the Wrong doing to external bodies (Govt. or Private)
18
Organizational Behaviour - Business Ethic 10/8/2012
Ethical Dilemma
It is a complex situation in which business men face lots of choices no clear cut answer • It is a debate between two moral principles • Debate to decide what is right and what is wrong • There is no real answer to an ethical dilemma
19
Organizational Behaviour - Business Ethic 10/8/2012
Example On the Job Ethical Dilemmas
Ramesh Yadav was a marketing officer in a MNC. this company use to follow the American system of contributing equally irrespective of their designation.
Once, his boss Mr. Anil Sharma invited some office employees out for lunch to celebrate Diwali party. Each employee equally contributed Rs. 175/- for the lunch and the bill was paid by Mr. Sharma (Boss).
Two days after the lunch Ramesh found out that his boss Mr. Sharma had billed the company for the entire lunch. Now Mr. Ramesh is in ethical dilemmas how to handle the situation.
20
Resolving Ethical Dilemmas
The situation can be analyzed in the following framework, 1) What is my self interest in this situation? 2) Do I have all the facts in a given situation? 3) What are the justifications against my action?
Organizational Behaviour - Business Ethic
• Dilemmas that presents themselves to managers have to be solved rationally by applying intellect
4) What is the interest of other people involved in the situation? 5) Am I breaking any laws or not? 6) What will be the consequences of particular conduct?
6) What are the alternative courses of action?
7) Whom should I speak to before acting in a certain manner?
Resolving Ethical Dilemmas
3 possible perspectives to decide between what is ethical and what is not – • 1) Survival of the fittest – Those factors which preserves only the most efficient & cost effective practices • 2) Law – Law can be relied upon frequently to pronounce what not to do.
• 3) Ethical Principles – Such as the greatest good for the greatest number ie benefits to a smaller group may have to be sacrificed to assure good to a larger one
22
Organizational Behaviour - Business Ethic 10/8/2012
Corporate Social Responsibility (CSR)
A concept whereby companies integrate social and environmental concerns into their business
operations and in their interaction with their
stakeholders (employees, customers, shareholders, investors, local communities, government),on a voluntary basis.
23
Organizational Behaviour - Business Ethic 10/8/2012
24
Organizational Behaviour - Business Ethic 10/8/2012
Benefits of Social Responsibility
• • • • • Increased business leads Increased reputation Increased loyal Customer base Increased staff morale and skills development Improved relationships with the local community, partners and clients • Innovation in processes, products and services • Managing the risks a company faces
25
Organizational Behaviour - Business Ethic 10/8/2012
Corporate Social Responsibility and India
• CSR activities and programs are now integral part of organizational objectives. • Since liberalization Indian companies has come to term with CSR and its wider ramification. • Oil India Ltd (PSU) – It is an oil drilling company which is associated with community and society development, by providing low cost housing, building school and colleges offering monetary help to financially weaker students • NTPC is the first PSU in the country to have develop a comprehensive R&R policy.
26
Organizational Behaviour - Business Ethic 10/8/2012
WHAT TATA DID TO THE VICTIMS OF 26 TERRORISTS ATTACK ???
"CORPORATE SOCIAL RESPONSIBILITY"? The Tata Gesture as an Industralist Icon !!
1.
TH
/11
Relief and assistance to all those who were injured and killed
2. A psychiatric cell was established in collaboration with Tata Institute of Social Sciences to counsel those who needed such help.
3. Employee outreach centers were opened where all help, food, water, sanitation, first aid and counseling was provided. 1600 employees were covered by this facility.
27
Organizational Behaviour - Business Ethic 10/8/2012
WHAT TATA DID TO THE VICTIMS OF 26 ATTACK ???
"CORPORATE SOCIAL RESPONSIBILITY"? The Tata Gesture as an Industralist Icon !!
TH
/11 TERRORISTS
4.In a record time of 20 days, a new trust was created by the Tatas for the purpose of relief of employees. 5.What is unique is that even the other people, the railway employees, the police staff, the pedestrians who had nothing to do with Tatas were covered by compensation. Each one of them was provided subsistence allowance of Rs. 10K per month for all these people for 6 months. 6. Tata will take responsibility of life education of 46 children of the victims of the terror. 7. The settlement for every deceased member ranged from Rs. 36 to 85 lacs [One lakh rupees translates to approx 2200 US $ ] in addition to the following benefits:
28
Organizational Behaviour - Business Ethic 10/8/2012
Good Business Ethics build a Strong Brand
29
Organizational Behaviour - Business Ethic 10/8/2012
Case Study: Toyota Motors Corp
Toyota’s Management Approach: Tree Metaphor
30
Organizational Behaviour - Business Ethic 10/8/2012
Case Study: Toyota Motors Corp
• Toyota Motors Corp on June 29th 2011 conducted voluntary safe recall for close to 9.53 million cars world wide. • Due to technical glitches in gas pedal Toyota cars could lead to sudden acceleration, causing danger to life of driver and other car passengers.
• Toyota’s case offers a number of valuable lessons for other business people and companies to consider.
• Followed are few pointers for your reference:
31
Organizational Behaviour - Business Ethic 10/8/2012
Case Study: Toyota Motors Corp
• Aggressive growth can create unmanageable risk
• Get the facts quickly and manage your risks aggressively
• Your supply chain is only as strong as your weakest link • Accept Responsibility • Take the Long View
32
Organizational Behaviour - Business Ethic 10/8/2012
Ethics: Take you a long way…
• Welcome to the world of ethical dilemmas!
• “Burn me once, shame on you; burn me twice, shame on me,”
• How does ethics effect your professional life:
• • • • Helps you, create a good reputation as a professional Helps you grow strength to strength Helps you develop a trust amongst your peers and business partners Helps you do the right thing
33
Organizational Behaviour - Business Ethic 10/8/2012
Who is responsible for Ethics in an Organization?
“ EVERYONE”
THANK YOU
doc_482648106.ppt