Business Ethics

Business Ethics

Business ethics covers wide range from labor

practices, free and fair trade, health concerns,
euthanasia to animal welfare, environmental
concerns to genetic modification and many other
areas.
 Personal Ethics and Personal Values

Personal values are the conception of what an

individual or a group regards as desirable.
Personal ethics are the ones which reflects the
expectations of any person in the society.
 Principles of Business Ethics

Concern and respect for the autonomy of others.

Honesty and the willingness to comply with the law
of land.
Fairness and the ability of not to take undue
advantage of others.
Benevolence and preventing harm to any creature.
 Stakeholder’s Interest

Business Ethics is based on the principle of integrity

and fairness and concentrates on the benefits to its
stakeholders.
 IMPORTANCE OF ETHICS

Ethics concern an individual's moral judgements about

right and wrong.
Decisions taken within an organisation 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.
 BENEFITS OF BUSINESS ETHICS

attract customers to the firm's products, thereby

boosting sales and profits
make employees want to stay with the business,
reduce labour turnover and therefore increase
productivity
attract more employees wanting to work for the
business, reduce recruitment costs and enable the
company to get the most talented employees
attract investors and keep the company's share price
high, thereby protecting the business from takeover.
 Classification of Ethics

ETHICS
Systematic study of
moral conduct

Normative Ethics Applied Ethics Meta-Ethics

Study of moral standards Study of special Cognitive study of the
to determine right & issues-Business ultimate principles of
wrong Ethics ethics, their origin and
meaning
Scope-general moral Scope-specific human Conceptual Scope-
science science Philosophy
 Evolution of Ethics over the years..!!

Been part of theological discussion since 1960’s.

Before 1970’s, Some writers dealt with business and
ethics. ( Prominent name: Raymond Baumhart)
Professors in B-schools wrote about CSR, the
handmaid of ethics.
Normal Bowie gave origin of business ethics on
November,1974
 Contd..

In 1982, Richard de George brought out book on

business ethics along with many other authors.
Many journals were being published.
By the year 1990, Business ethics as a management
discipline was well-established.
 Importance and need of Business Ethics

A business organization competes in the global

market on its own internal strength, in particular, on
the strength of its human resource and on the
goodwill of its stakeholders.
Real type situations (Tata Steel and Infosys) show
that use of ethical practices in business creates high
returns for companies.
 Contd…

Business of Business is Business.

Business of Business is Ethical Business.

 Roots of Unethical Behavior

Pressure to balance work and family 52%

Poor communication 51%
Poor leadership 51%
Lack of management support 48%
Pressure to meet sales or profits 46%
No. of reasons why businesses should act ethically
To protect its own interest
To keep its commitment to society to act ethically
To meet stakeholders expectations
To protect themselves from abuse of unethical
employees and competitors
To protect their own employees
 Ethically Decision- Making

Ethical decision-making refers to the process of

evaluating and choosing among alternatives in a manner
consistent with ethical principles.
 In making ethical decisions, it is necessary to perceive
and eliminate unethical options and select the
best ethical alternative.

 Is your decision fair?

 Is it a win-win situation for all?
 Is your decision legal? If it is not legal, it is not ethical.
 Corporate Governance Ethics

 Corporate governance is a set of rules that governs

the administration and management of
companies.
 Its goalposts are transparency, integrity, full
disclosure of financial and non-financial
information, and protection of stakeholders’
interests.
 Benefits of Managing Ethics in workplace

Attention to Business Ethics has substantially improved

society.
 Ethical practice contributes towards high productivity
and strong team work.
 Changing situations require ethical education.
 Ethical practices create strong public image.
 Strong ethical practices act as an insurance.
 Characteristics of an Ethical organizations

Mark Pastin provides the following characteristics

of ethical organizations:
 At ease while interacting with diverse internal and
external stakeholder groups.
 Obsessed with fairness.
 Individual responsibility, with individuals
assuming personal responsibility for actions of the
organization.
 See their activities in terms of purpose.
 Recognizing Ethical Organizations

There are certain characteristics by which we will

be able to identify an ethical organization:
 On the basis of corporate excellence
 In relation to the stakeholders
 In relation to corporate governance