Business Ethics

Ethics refers to the basic principles of moral values that are expected to be
followed by every citizen in civilized society. Any organization whether profit
making or service oriented needs to abide by ethical principle so that the entire
nation is benefitted. While every one talks about business ethics its contents and
boundaries are not easy to determine. It may be safe to assume that ethics involves
some hand features, like duties and rights, that are mandatory for all and soft
components, like values aspirations best practices that are desirable but not
compulsory and can vary from one organization and person to the next.

Generally sparking law and regulations just set a minimal ethical standard
required for the orderly working of societies. The distinction between what is
ethically compelling and not mandatory by law and what is just desirable is hard to
pinpoint and is changing. It often depends on cultural settings and specific
scenarios.

It not only is limited to refusing to pay bribes clearly corruption is a part of

the package indeed one of the most significant and harmful hazards of unethical
behaviors.

Business Ethics includes employment issues, incentives plans performance

appraisal race & disability safety and health, reliability, respect for everyone’s
dignity, transparency and of course abiding by current laws including tax, labor
market and fair competition regulations. Making ethical decisions in one of the
many gray areas challenging business today which requires an analysis that is hard
to conduct.

The impact of recession has led to job of being less secure, incomes may be
reduced the future uncertain and people are reluctant to take risks in their careers
same holds true for companies. Companies are trying to reduce costs. They are
looking for cheaper options. These all are unethical behavior.

Categories of Business Ethics

Business ethics includes corporate social responsibility corporate

governance. It also includes various forms of corruption in governments and
business. Ethical issues also relate to human resource issues sued as equal
opportunities in the wok plane, discrimination.
Whistle blowing and codes of conduct. The trends also induce the attitude of
western countries emerging countries.

Nepotism, bribery the scandals are all pant of business ethics. People moving
towards organic farming and the production of organic food is the ethical
responsibility of individual.

Issues in individual thinking and morality is also raising questions. Are people
ethical in their thinking and behavioural pattern in the workplace.

Unethical business practices

The organizations usually exploit the employees by underpaying them some

of the organizations even indulge in selling substandard products to their
customers. The biggest example can be citied to the case of honey manufacturing
companies. They all used chemicals exceeding their limits.

Organizations resorting to non transparent actives. The rules, regulations are not
clearly stated to the employees.

Favoritism to the kiths & kins to certain workforce to certain section of the society
during recruitment selections promotion. Employees too indulge by accepting
bribery leaking company documents. Employees reporting to duty drunk.

Whistle blowing –

When an employees tells the media police or employer about ill legal
activity taking place in the organization. It provides on early warning system that
can alert colleagues employees or police before it is too late.

Though it may be considered unethical if is done with malafide intention but it is

rampant it today’s scenario. All the countries do not have a legal protection act.
Legal protection for whistleblowing differs from country to country.

The US Lloyd –La Follette Act of 1912 was the First law to protect whist blowing.
The US congress passed the Sarbanes Oxley Act of 2002 granting sweeping legal
protection to whist blowers in publicly traded companies. The US whistleblowers
Protection Act of 1989, amended in 1994, protects federal employees who make
public interest disclosures. In the UK, the Public interest disclosure Act 1998
provides a framework of legal protection for individuals who disclose information
so as to expose malpractice and matters of similar concern.
Most of the countries like Australia south Korea, Argentina, Canada are in the
process of enacting whistleblowers protection legislation.

Unfortunately India has no law to protect whistleblowers. This has led to the tragic
death of Satyendra Dubey, Project Director at the National Highways Authority of
India who exposed corruption in highway building project. He was assassinated in
Gaya Bihar in 2003 same tragic fate was met with Manjunath who was a marketing
Manager for the IOC.

He was shot dead in 2005 by a petrol pump owner from Uttar Pradesh. Later the
Manjunath Shanmugan Integrity Award was instituted to honor those who have
reputed and worked to rectify corruption in the prevailing system.

Developing an ethical system in the organization:-

The first important step is to prevent unethical process in the organization.

The organization should have code of conduct clearly defining an organization’s
values, thinking and behavior patterns. Management should prove its commitment
to organizational values on a daily basis and not just with word with deeds.
Company officials should become actively involved I participating in relevant
meetings. Codes come to life in organizations when they are embraced by the top
down. This sends a positive signal that management has not endorsed code of
conduct merely for preservation.

There should be compliance officers and ethical helpdesk to assist employees and
to clarify issues in their decision making processes. The compliance officers
should demonstrate that the organization’s trust based and transparent environment
supports each individuals ethical decision making process.

The employees should be given training session regarding code of conduct. Their
should be periodic review regarding internal & external guidelines & standards.
The employees need assistance to clarify issues in their decision making process.
Specific support may be provided by compliance officers, their collaborators, a
dedicated help desk and eventually, the company’s CEO or an external
ombudsman.
Detection & Response:-

There should be early detection of standard infringement. The more

transparent process are, the more detectable infringement are, the less probable
they will become.

The organization should have transparent ‘OCTAPACE’ values [openness,

conformation, Trust, Authenticity, Proactive, Authority, Collaboration,
empowerment]

An ethical cultural can only prevail in the organization and be deep rooted when its
members are aware that code violations will be detected and punished timely and
adequately.

HOT LINE

Most of the renowned companies have a hotline for employees (and often outsiders
as well) to anonymously report alleged cases of wrong doing.

All the reports should be properly looked into and audited.

Proper Audits should be done from time to time regarding company’s code of
conduct and its associated policies and procedures.

When the organization responds to its policies, code of conduct and takes action
against violation of code of conduct it boosts the morale of the employees. The
message is instrumental for widespread engagement as it prevents employees from
viewing the code as a meaningless endeavor.

The Moral of the Moment:-

So the moral of this moment is to understand that maintaining business

ethics in a tough economy is not as easy as following a system of moral principles.
We all need to be on guard when our inner voice of ethical guidance is countered
by another voice that tries to rationalize a set of behavior that we know are not
right. In recent years, the large number of corporate scandals reputation like Enron,
WorldCom, salmons, ABB, have brought about many harsh outcomes including
widespread social punishment for unethical behavior, weaking competitiveness
that can lead to organizational demise.
The CEOs and top management need to ponder whether to embrace ethical
behavior before or after a scandal hits their organization will help to become more
wiser and stronger and meet the hardships of life.

Nidhi Pandey

Visiting Faculty

IIPM, Lucknow