Description
It covers topics like ethics and law, characteristics of moral manager, characteristics of immoral manager, business ethics, ethical issues in strategy
Governance Mechanisms
Ownership Concentration
Board of Directors
Executive Compensation Market for Corporate Control
Governance Mechanisms Inside a Company relationships also exist between Important agency
levels of management within a company. Internal agency problems can be reduced by:
?
?
?
Strategic control systems ? To establish standards against which performance can be measured ? To create systems for measuring and monitoring performance ? To compare actual performance against targets ? To evaluate results and take corrective actions Balanced Scorecard model approach is used to drive future performance Employee incentives ? Employee stock options and stock ownership plans ? Compensation tied to attainment of superior efficiency, quality, innovation, and responsiveness to customers
A Balanced Scorecard Approach
Ethics and Strategy & Corporate Social Responsibility
Code of moral principles and values that govern behavior of individuals and organizations with respect to what is right or wrong
What is Ethics?
A code of moral standards of conduct for what is ?good? and ?right? as opposed to what is ?bad? or ?wrong?.
Ethics anddetermines ethical behavior the Law ? Over time, society
? Law represents an ethical minimum ? Ethics represents a standard that exceeds the legal
minimum ? Ethical behaviour is value driven ? Formally, it can be enforced via laws
Frequent Overlap
Ethics
Law
Influences on Ethical Behavior
3 Categories of Management Morality
Moral manager
Makes ethical behaviour a personal goal
Managerial ethical & moral principles
Immoral manager
Chooses to behave unethically
Amoral manager
Fails to consider ethics
Characteristics of a Moral Manager
? Dedicated to high standards of ethical behavior in ? Own actions ? How the company’s business is to be conducted ? Considers it important to ? Demonstrate ethical leadership ? Pursues business success ? Within confines of both letter and spirit of laws ? With a habit of operating well above what laws require
Characteristics of an Immoral Manager
? Actively opposes ethical behavior in business
? Willfully ignores ethical principles in making decisions
? Views legal standards as barriers to overcome ? Pursues own self-interests ? Is an example of capitalistic greed ? Ignores interests of others ? Focuses only on bottom line – making one’s numbers ? Will trample on others to avoid being trampled upon
Characteristics of an Intentionally Amoral Manager
? Believes business and ethics should not be mixed
since different rules apply to
? Business activities ? Other realms of life ? Does not factor ethical considerations into own
actions since business activity lies outside sphere of moral judgment ? Views ethics as inappropriate for tough, competitive business world ? Concept of right and wrong is lawyer-driven (what can we get by with or without running afoul of the law)
Characteristics of an unintentionally Amoral Manager
? Is blind to or casual about ethics of decision-making and
business actions
? Displays lack of concern regarding whether ethics applies
to company actions
? Sees self as well-intentioned or personally ethical ? Typical beliefs ? Do what is necessary to comply with laws and
regulations
? Government provides legal framework stating what
society will put up with—if it is not illegal, it is allowed
Developing Moral Judgment
6-23
Moral Reasoning
Business Ethics : Today vs. Earlier Period
Society’s Expectations of Business Ethics
Ethical Problem Actual Business Ethics
Ethical Problem
1950s
Time
Early 2000s
Ethics, Economics, and Law
Business Ethics in the Global Community
? Notions of right and wrong, fair and unfair, moral and
immoral, ethical and unethical exist in all societies
? Two schools of thought ? Ethical universalism
? Holds that human nature is the same everywhere
and ethical rules are cross-cultural
? Ethical relativism
? Holds that different societal cultures and
customs give rise to divergent values and ethical principles of right and wrong
Cross-Culture Variability in Ethical Standards
? Apart from certain universal basics –
? ? ? ? ?
Honesty Trustworthiness Fairness Avoiding unnecessary harm Respecting the environment –
variations exist in what societies generally agree to be right and wrong in the conduct of business activities ? Factors affecting cross-cultural variability
? ? ? ?
Religious beliefs Historic traditions Social customs Prevailing political and economic doctrines
? Cross-country variations also exist in the degree to which
certain behaviors are considered unethical
? What constitutes ethical or unethical conduct can vary according
Ethical vs. Unethical Conduct
to
? Time ? Circumstance ? Local cultural norms ? Religion
? There is no objective way to prove that some cultures are
correct and others wrong about proper business ethics ? Therefore, there is merit in the ethical relativism view that proper business ethics has to be viewed in the context of each country’s societal norms
Ethics and Strategy
Business ethics are the accepted principles of right
or wrong governing the conduct of businesspeople.
?
Ethical dilemmas occur when: ? There is no agreement over what the accepted principles are ? None of the available alternatives seem ethically acceptable
? Behaving ethically goes beyond staying within the law
An ethical strategy is one that does not violate the accepted principles.
Ethical issues are due to a potential conflict between the goals of the enterprise, or the goals of the individual managers, and the rights of important stakeholders:
?
Ethical Issues in Strategy
? ? ? ? ? ?
Self-dealing Managers feather their nest with corporate monies Information manipulation Distort or hide information to enhance competitive or personal situation Anticompetitive behavior Actions aimed at harming actual or potential competitors Opportunistic exploitation Of other players in the value chain in which the firm is embedded Substandard working conditions Underinvest in working conditions or pay below market wages Environmental degradation Directly or indirectly take actions that result in environmental harm Corruption Companies pay bribes to gain access to lucrative business contracts.
Approaches to Managing a Company’s Ethical Conduct
Unconcerned or non-issue approach
Damage control approach
Compliance approach Ethical culture approach
Characteristics of Unconcerned Approach
? The business of business is business, not
ethics ? If the law permits ?unethical behavior,? why stand on ethical principles ? Companies are usually out to make greatest possible profit at any cost ? Strategies used, while legal, may embrace elements that are ethically shady
Characteristics of Damage Control Approach
? Protect ourselves if something goes wrong
? Companies often make some concession to window-
dressing ethics
? If I can explain it away, its OK ? Executives may look the other way when shady behavior
occurs
Characteristics of Compliance Approach
? Emphasis is on securing broad compliance to ethical
standards and measuring degree to which ethical standards are upheld
? Driving force behind commitment to eradicate
unethical behavior stems from a desire to ? Avoid cost and damage associated with unethical conduct or ? Gain favor from stakeholders from having a highly regarded reputation for ethical behavior
Characteristics of Ethical Culture Approach
? Top executives believe high ethical principles must ? Be deeply ingrained in the corporate culture ? Function as guides for ?how we do things around here? ? Company seeks to gain employee buy-in to ? Company’s ethical standards ? Business principles ? Corporate values ? Ethical principles in company’s code of ethics are ? Integral to day-to-day operations ? Promoted as ?business as usual? ? Strategy must be ethical ? Employees must display ethical behaviors in executing the
strategy
Milton Friedman
is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
"there
Corporate Social Responsibility
Management’s decisions and actions that will enhance the welfare & interest of the organisation And the Society
Being a good corporate citizen
Stakeholders and their Expectations
? Employees-salary, security, benefits
? Investors – profits and return on their investments
? Customers- quality, availability, price, safety ? Government- taxes, employment ? Suppliers – expect to get paid on time, loyalty ? Society at large – community development, maintain
the environment
Why CSR?
? The Case ?In Favor Of? Corporate ? The Case ?Against? Corporate
Social Responsibility ? Responsibility Increases longrun profits ? Improves public image ? Helps avoid government regulation ? Businesses have resources and ethical obligations to act responsibly
Social Responsibility ? Reduces business profits Creates higher business costs ? Dilutes business purpose Gives too much social power to business
Moral management of organisational stakeholders
The Pyramid of CSR
Social Responsibility
What CSR should a company do?
? Prioritise Social Issues ? Generic Social Issues
Neither affected by a company’s operations, nor affect company’s long term competitiveness ? Value Chain Social Impacts That are affected by company’s activities ? Social Dimensions of Competitive context That affect company’s drivers for competitiveness
From Responsive to Strategic CSR
? Responsive CSR
1. Acting as a good corporate citizen 2. Mitigating harm arising from a firm’s value chain activities
? Strategic CSR
The initiatives whose social and business benefits are large and distinctive
Changing paradigm
? From peripheral activity to business
imperative ? From ad-hoc contributions to strategic approach to building community partnership ? CSR to be an integral part of long term business strategy
A company can do good – and still do well
In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence?.
?
J N Tata
Founder, Tata Group
doc_512946096.pptx
It covers topics like ethics and law, characteristics of moral manager, characteristics of immoral manager, business ethics, ethical issues in strategy
Governance Mechanisms
Ownership Concentration
Board of Directors
Executive Compensation Market for Corporate Control
Governance Mechanisms Inside a Company relationships also exist between Important agency
levels of management within a company. Internal agency problems can be reduced by:
?
?
?
Strategic control systems ? To establish standards against which performance can be measured ? To create systems for measuring and monitoring performance ? To compare actual performance against targets ? To evaluate results and take corrective actions Balanced Scorecard model approach is used to drive future performance Employee incentives ? Employee stock options and stock ownership plans ? Compensation tied to attainment of superior efficiency, quality, innovation, and responsiveness to customers
A Balanced Scorecard Approach
Ethics and Strategy & Corporate Social Responsibility
Code of moral principles and values that govern behavior of individuals and organizations with respect to what is right or wrong
What is Ethics?
A code of moral standards of conduct for what is ?good? and ?right? as opposed to what is ?bad? or ?wrong?.
Ethics anddetermines ethical behavior the Law ? Over time, society
? Law represents an ethical minimum ? Ethics represents a standard that exceeds the legal
minimum ? Ethical behaviour is value driven ? Formally, it can be enforced via laws
Frequent Overlap
Ethics
Law
Influences on Ethical Behavior
3 Categories of Management Morality
Moral manager
Makes ethical behaviour a personal goal
Managerial ethical & moral principles
Immoral manager
Chooses to behave unethically
Amoral manager
Fails to consider ethics
Characteristics of a Moral Manager
? Dedicated to high standards of ethical behavior in ? Own actions ? How the company’s business is to be conducted ? Considers it important to ? Demonstrate ethical leadership ? Pursues business success ? Within confines of both letter and spirit of laws ? With a habit of operating well above what laws require
Characteristics of an Immoral Manager
? Actively opposes ethical behavior in business
? Willfully ignores ethical principles in making decisions
? Views legal standards as barriers to overcome ? Pursues own self-interests ? Is an example of capitalistic greed ? Ignores interests of others ? Focuses only on bottom line – making one’s numbers ? Will trample on others to avoid being trampled upon
Characteristics of an Intentionally Amoral Manager
? Believes business and ethics should not be mixed
since different rules apply to
? Business activities ? Other realms of life ? Does not factor ethical considerations into own
actions since business activity lies outside sphere of moral judgment ? Views ethics as inappropriate for tough, competitive business world ? Concept of right and wrong is lawyer-driven (what can we get by with or without running afoul of the law)
Characteristics of an unintentionally Amoral Manager
? Is blind to or casual about ethics of decision-making and
business actions
? Displays lack of concern regarding whether ethics applies
to company actions
? Sees self as well-intentioned or personally ethical ? Typical beliefs ? Do what is necessary to comply with laws and
regulations
? Government provides legal framework stating what
society will put up with—if it is not illegal, it is allowed
Developing Moral Judgment
6-23
Moral Reasoning
Business Ethics : Today vs. Earlier Period
Society’s Expectations of Business Ethics
Ethical Problem Actual Business Ethics
Ethical Problem
1950s
Time
Early 2000s
Ethics, Economics, and Law
Business Ethics in the Global Community
? Notions of right and wrong, fair and unfair, moral and
immoral, ethical and unethical exist in all societies
? Two schools of thought ? Ethical universalism
? Holds that human nature is the same everywhere
and ethical rules are cross-cultural
? Ethical relativism
? Holds that different societal cultures and
customs give rise to divergent values and ethical principles of right and wrong
Cross-Culture Variability in Ethical Standards
? Apart from certain universal basics –
? ? ? ? ?
Honesty Trustworthiness Fairness Avoiding unnecessary harm Respecting the environment –
variations exist in what societies generally agree to be right and wrong in the conduct of business activities ? Factors affecting cross-cultural variability
? ? ? ?
Religious beliefs Historic traditions Social customs Prevailing political and economic doctrines
? Cross-country variations also exist in the degree to which
certain behaviors are considered unethical
? What constitutes ethical or unethical conduct can vary according
Ethical vs. Unethical Conduct
to
? Time ? Circumstance ? Local cultural norms ? Religion
? There is no objective way to prove that some cultures are
correct and others wrong about proper business ethics ? Therefore, there is merit in the ethical relativism view that proper business ethics has to be viewed in the context of each country’s societal norms
Ethics and Strategy
Business ethics are the accepted principles of right
or wrong governing the conduct of businesspeople.
?
Ethical dilemmas occur when: ? There is no agreement over what the accepted principles are ? None of the available alternatives seem ethically acceptable
? Behaving ethically goes beyond staying within the law
An ethical strategy is one that does not violate the accepted principles.
Ethical issues are due to a potential conflict between the goals of the enterprise, or the goals of the individual managers, and the rights of important stakeholders:
?
Ethical Issues in Strategy
? ? ? ? ? ?
Self-dealing Managers feather their nest with corporate monies Information manipulation Distort or hide information to enhance competitive or personal situation Anticompetitive behavior Actions aimed at harming actual or potential competitors Opportunistic exploitation Of other players in the value chain in which the firm is embedded Substandard working conditions Underinvest in working conditions or pay below market wages Environmental degradation Directly or indirectly take actions that result in environmental harm Corruption Companies pay bribes to gain access to lucrative business contracts.
Approaches to Managing a Company’s Ethical Conduct
Unconcerned or non-issue approach
Damage control approach
Compliance approach Ethical culture approach
Characteristics of Unconcerned Approach
? The business of business is business, not
ethics ? If the law permits ?unethical behavior,? why stand on ethical principles ? Companies are usually out to make greatest possible profit at any cost ? Strategies used, while legal, may embrace elements that are ethically shady
Characteristics of Damage Control Approach
? Protect ourselves if something goes wrong
? Companies often make some concession to window-
dressing ethics
? If I can explain it away, its OK ? Executives may look the other way when shady behavior
occurs
Characteristics of Compliance Approach
? Emphasis is on securing broad compliance to ethical
standards and measuring degree to which ethical standards are upheld
? Driving force behind commitment to eradicate
unethical behavior stems from a desire to ? Avoid cost and damage associated with unethical conduct or ? Gain favor from stakeholders from having a highly regarded reputation for ethical behavior
Characteristics of Ethical Culture Approach
? Top executives believe high ethical principles must ? Be deeply ingrained in the corporate culture ? Function as guides for ?how we do things around here? ? Company seeks to gain employee buy-in to ? Company’s ethical standards ? Business principles ? Corporate values ? Ethical principles in company’s code of ethics are ? Integral to day-to-day operations ? Promoted as ?business as usual? ? Strategy must be ethical ? Employees must display ethical behaviors in executing the
strategy
Milton Friedman
is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
"there
Corporate Social Responsibility
Management’s decisions and actions that will enhance the welfare & interest of the organisation And the Society
Being a good corporate citizen
Stakeholders and their Expectations
? Employees-salary, security, benefits
? Investors – profits and return on their investments
? Customers- quality, availability, price, safety ? Government- taxes, employment ? Suppliers – expect to get paid on time, loyalty ? Society at large – community development, maintain
the environment
Why CSR?
? The Case ?In Favor Of? Corporate ? The Case ?Against? Corporate
Social Responsibility ? Responsibility Increases longrun profits ? Improves public image ? Helps avoid government regulation ? Businesses have resources and ethical obligations to act responsibly
Social Responsibility ? Reduces business profits Creates higher business costs ? Dilutes business purpose Gives too much social power to business
Moral management of organisational stakeholders
The Pyramid of CSR
Social Responsibility
What CSR should a company do?
? Prioritise Social Issues ? Generic Social Issues
Neither affected by a company’s operations, nor affect company’s long term competitiveness ? Value Chain Social Impacts That are affected by company’s activities ? Social Dimensions of Competitive context That affect company’s drivers for competitiveness
From Responsive to Strategic CSR
? Responsive CSR
1. Acting as a good corporate citizen 2. Mitigating harm arising from a firm’s value chain activities
? Strategic CSR
The initiatives whose social and business benefits are large and distinctive
Changing paradigm
? From peripheral activity to business
imperative ? From ad-hoc contributions to strategic approach to building community partnership ? CSR to be an integral part of long term business strategy
A company can do good – and still do well
In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence?.
?
J N Tata
Founder, Tata Group
doc_512946096.pptx