Managing

Business Ethics
By

Prof Neha Sajnani

 Why be ethical in Business ?

• Consider why you should be ethical. Sometimes it’s easier and

more lucrative to act unethically in business. So why act
ethically? For the same reasons you stop at red lights when
driving, even when no one else seems to be on the road.
Following the rules makes doing business safer for everyone,
including yourself. However, often being ethical goes beyond
established rules and laws.
 What is workplace Ethics ?
• Workplace ethics is a group of moral principles, standards of behavior, or set of
values regarding proper conduct in the workplace.

• Workplace ethics are most often related in decision making processes.

• It is the most important responsibility that we place on the leaders of

organization in upholding the highest standards of ethical behavior.

• Ethics at workplace refer to choosing the option that is determined to be the

moral or right choice.
 Managing Business Ethics

• 1. Organization and its employees

• 2. Organization and its natural environment
• 3. Ethics in Marketing, Finance and Business
• 4. Ethics in Global Context
 How to promote ethical behavior in Workplace
1. Clear, specific standards of conduct are the foundation of an ethical
workplace. So put these in writing and not assume them. Post them in
common areas and publish them in Employee Handbook.
2. Put these values into practice by starting at the top, and executive
officers must set the tone for the rest of the company.
3. When hiring new employees, evaluate their value system, and educate
new hires about the company’s policies during orientation.
4. Provide ongoing ethics training, and develop the skills employees
need to perform efficiently.
5. If you have to address misconduct, discipline violators promptly and
consistently, regardless of seniority.
 Importance of Employee ethics in an
Organization
• Employee ethics are a set of principles that forms the rules of conduct
for a group of people, such as a business.
• Ethics focus on day-to-day behavior and decision making.
• Ethical businesses are more successful than their industry competitors.
• Companies with strong ethics programs, such as Wipro, TATA Steel Ltd.
typically have stable and high stock prices.
• Employee ethics apply to people at all levels of the organizations and
help to determine the success of the organization
• Examples of ethical behavior in the workplace include
respecting all colleagues,
customers and vendors,
choosing to work with suppliers that source materials responsibly and
complying with the company's code of conduct policy.
 Unethical Behavior
• Unethical employee behaviors often include
• taking home office supplies,
• overreporting hours worked or
• miles driven for business and
• taking excessive breaks or sick days.
• Using company technology for personal reasons,
• such as cyber loafing – surfing the internet, shopping online and social
networking – is another form of unethical behavior. Promoting and
supporting the importance of workplace ethics reduces these behaviors.
Problems faced by Walmart and the Solutions
taken
• Problem 1 - Walmart has ben criticized for its low wages and benefits.
• Solution – Walmart raised pay tied to Performance in about one third of its
stores.

• Problem 2 - Walmart has been accused of failing to provide health insurance for
more than 60% of its employees
• Solution – Walmart improved its health benefits package by offering lower
deductibles and implementing a generic prescription plan estimated to save
employees $ 25 million
• Walmart estimates that ¾ th of its employees have insurance
 Continued
• Problem 3 – Several Walmart contractors ha dhired the undocumented workers from
Mexico, Eastern Europe and other countries (illegal immigrants)
• Solution – Walmart paid $11 million settlement claiming that the company did not
know that their contractors used illegal immigrants.

• Problem 4 – in March 2005, Board Vice Chairman, Thomas Coughlin was forced to
resign because he had stolen as much as 5,00,000 from Walmart in the form of Bogus
expenses, reimbursements and the use of gift cards.
• Solution – To maintain its trust among stakeholders

• Why Walmart tended to improve performance while other retail outlets have been
suffering financially
• It is important to make sure its sustainability for a long period.
 Environmental Ethics
• Environmental ethics are a key feature of environmental studies that
establishes the relationship between humans and the earth.
With environmental ethics, you can ensure that you are doing your part to
keep the environment safe and protected.
• For centuries, it was easy to believe that nature existed for human beings to
exploit. The more trees we could cut down and convert into magnificent
buildings, the better our quality of life. The more coal we could mine for
fuel, the more energy we had available to power factories and produce
more life-enhancing goods. And best of all, no matter how much we used,
there was always plenty more available.
• But in recent decades, it’s become clear that this is no longer true. As our
economies have grown, our impact on the environment has grown to the
point where we are depleting the available resources, causing the extinction
of thousands of animal species, and altering the climate of our planet.
•  organizations’ competitiveness in any industry and environmental
protection are two interconnected concepts and we believe that there can
be no excellence in business without excellence in environmental
protection or vice versa.
• Environmental ethics is vast –including not only all people everywhere, but also
animals and the whole nature. Environmental ethics is global - Ecological crisis is
a global issue and environmental pollution does not respect national boundaries
• Environmental ethics is revolutionary –it criticizes the materialism,
hedonism and consumerism that accompanies modern capitalism and
instead, it calls for a ‘green lifestyle’ that is in harmony with nature.
 Sustainable development
• environmental management systems encourage companies to accept responsibility for
protecting the environment, ensuring continuous improvement of the way in which they manage
environmental requirements. When implementing an environmental management system, each
organization must adopt environmental strategies correlated with its environmental performance
by integrating all management functions.. In the specialized literature we can distinguish four
major concepts:
• Sustainability - the society should not use more natural resources than those that the natural
environment can regenerate.
• Qualitative growth (sustainable) - any organization should aim at sustainable growth according
to the inhabitants; this growth can be achieved by a decreasing or constant use of natural
resources and a decreasing or constant environmental expense.
• Sustainable development - meeting the development needs of the present generation without
compromising the ability of future generations to meet their own needs.
• Sustainable society - a well-structured society that behaves so that it can exist for an indefinite
number of generations.
• Environmental ethics is a discipline in applied ethics which deals with the moral
• analysis of how companies, shareholders, employees, buyers act on the
• environment.
• Many organizations face problems incorporating some ecological principles such as sustainable
development and environmental protection in their management practices.
• One of the main reasons for the difficulties in implementing environmental strategies, is the
difficulty to find a balance between economic and social factors. Aiming at effective participation
in global environmental protection, environmental ethics specialists began to be actively involved,
since the beginning of 1990, in implementing environmental ethics principles in establishing the
organizations’ policies. G. Winter (1995: 36-56) focuses on three main reasons for the introduction
of good environmental practices:
• accepting responsibility for the conservation of natural resources;
• awareness of development opportunities through the establishment of measures to protect the
environment and reduce costs, thereby increasing income;
• avoiding or reducing the risks, such as ignoring environmental problems or facing economic
sanctions.
 Examples
• Therefore, we wanted to continue with identifying several instances following are some
instances where environmental ethics was both a central and important point in
addressing some economic initiatives of organizations.
• A first example is that of Shell Company, that in 1995 wanted to drill in Brent Spar
marine platform in the North Sea, and even if they had all the legal approvals of British
government they became victim of Greenpeace campaigners and boycott consumers. As
a result, the legal decision to install offshore was finally, not implemented, because the
company did not take into account the demanding ethical expectations of the society.
• Another example is that of Mc Donald's Company, which around 1970 was heavily
criticized for its environmental policies. Since then, McDonald's has started a
comprehensive program to reduce the quantities of packing they introduce on the market.
Thus, if the average weight of the container for a menu was of 46 grams at the beginning
of the 80's, today's average weight packaging is of 25 grams, resulting in a 46%
reduction in the amount of packaging used
Managing Environmental Affairs in the Firm
• Managers must formulate strategies that preserve and conserve natural
resources and control pollution
• Environmental strategies could include
• Developing or acquiring green businesses
• Divesting or altering environment-damaging businesses
• Striving to become a low-cost producer through waste minimization and
energy conservation
• Pursuing a differentiation strategy through green product features
Reasons Why Firms Should “Be Green
• Consumer demand
• Public opinion
• Environmental advocacy groups
• Federal and state environmental regulations
• Lenders
• Consumers, suppliers, distributors, and investors
• Liability suits and fines
ISO 14000/14001 Certification
• International Organization for Standardization (ISO)
• A network of standards institutes of 147 countries
• Largest developer of sustainability standards in the world
• Compliance is voluntary
ISO 14000/14001 Certification
• ISO 14000 - a series of voluntary standards in the environmental field
• ISO 14001 – a set of standards included within ISO 14000
• Adopted by thousands of firms worldwide to certify that they
are conducting business in an environmentally friendly
manner
• Results in an environmental management system (EMS)
Electric car networks
• Government funding for manufacturing
• Recharging stations being installed in many cities
• Extensive research and development within the auto industry
• Companies are replacing gasoline powered vehicles with hybrid
electric-natural gas vehicles
 What obligations does a corporation
have toward the environment?
• Environmental ethics aims to question the basic assumption that nature is
there for our benefit. If nature has intrinsic value, how should that change the
way your company uses energy or packages its products or treats animals? It
can actually have
• In a business sense, environmental ethics is concerned with
a company's responsibility to protect the environment in which it operates. ...
Corporate response to governmental regulation is a primary area of concern
in environmental business ethics
• The natural environment is another important factor of the macro-
environment. This includes the natural resources that a company uses as
inputs that affects their marketing activities. The concern in this area is the
increased pollution, shortages of raw materials and increased governmental
intervention.