What is Business

Ethics?
BUSINESS ETHICS:
• Business ethics is a set of guidelines about how a business should conduct itself.

• In general, for any business to be successful, it must operate legally, ethically, and
humanely.

• So, business ethics refers to the implementation of appropriate business practices and
policies in the workplace.

• It deals with controversial topics such as corporate governance, insider trading, bribery,
discrimination, social responsibility, and fiduciary responsibilities. This way, through
business ethics, there is a basic level of trust between consumers and the company.

• Nonetheless, business ethics is not there only to differentiate between wrong and right; it
also deals with reconciling what legal actions should be taken and maintaining a
competitive advantage over other businesses.
 Why Are
Business
Ethics
Important?
Why Are Business Ethics Important?​
• While doing business is essential to the company, carrying out work correctly is
critical. It affects the business’s reputation since investors are less likely to buy
stock or invest in a company that operates unethically. Therefore, the ethical
operation is directly linked to short-term and long-term profitability.

• A business that treats its customers or clients ethically can build trust and create
longstanding relationships. These customers are likely to return and may
recommend the business to people within their sphere of influence. Also, a
business known for its effective ethical principles can gain respect and elevate the
quality of its brand.
Principles
of Business
Ethics
Principles of Business Ethics:
1. HONESTY:

All personnel must be committed to telling the truth in all forms of communication
and in all actions. This includes never purposely telling partial truths, selectively omitting
information, making misrepresentations or overstatements. Honesty also means reliably
sharing both good and bad news with equal candor.

2. FAIRNESS:

All dealings and relationships must be founded on a conscious commitment to

fairness, treating others as you would like to be treated. Fairness requires treating all
individuals equally and courteously, never exercising power arbitrarily and never
exploiting weaknesses or mistakes for personal or corporate benefit.
5. COMPASSION:

Fostering a business environment of empathy and compassion requires a commitment

to being kind and caring toward all personnel, business partners and customers. Business
goals must be benevolent, ensured by spending enough time to understand the needs and
sensitivities of others, including the local community.

6. RESPECT:

Respect is demonstrated by a full commitment to the human rights, dignity, autonomy,

interests and privacy of all personnel. It means recognizing that everyone deserves equal
respect and support for sharing ideas and opinions, without fear of any penalty or form of
discrimination.
3. LEADERSHIP:

Demonstrated by a conscious effort to set a positive example of ethical behavior,

leadership is a commitment to excellence through ethical decision-making. Businesses and
business executives maintain their leads by constantly improving operational efficiency,
worker satisfaction and customer approval.

4. INTEGRITY:

Organizations and personnel demonstrate integrity through a consistency between

actions and words that inspires trust and credibility. Integrity also means keeping promises,
honoring commitments, meeting deadlines and refusing to participate in unscrupulous
activities or business dealings.
7. RESPONSIBILITY:

Employees exhibit responsibility by taking full ownership of their jobs, striving to be

conscious of the emotional, financial and business consequences of their actions. Taking
their responsibilities seriously also demonstrates employee maturity and ability to do a
job without needing strict supervision.

8. LOYALTY:

Loyalty is proven by never disclosing information learned in confidence and by

remaining faithful to coworkers, clients, business partners and suppliers. Loyal employees
avoid conflicts of interest, help build and protect the good reputation of their company
and help boost the morale of their coworkers.
9. LAW-ABIDING:

Organizations must fully comply with all applicable laws and codes from local, state
and federal agencies. Law-abiding businesses and personnel also adhere to industry and
trade regulations, marketplace standards and any additional mandatory organizational
policies, practices and procedures.

10. ACCOUNTABILITY:

Accountability requires a total commitment to the ethical quality of all decisions,

actions and relationships. High expectations for ethical behavior drive business
practices when an organization and its personnel are held accountable to fellow
employees, consumers, the local community and the wider public in general.
11. TRANSPARENCY:

Committing to transparency requires making business information and policies available

to appropriate groups, such as financial investors, personnel and consumers. It includes, for
example, sharing criteria for price hikes, wages, hiring, granting promotions, addressing
workplace infringements and firing employees.

12. ENVIRONMENTAL CONSCIOUSNESS:

Organizations and personnel demonstrate a commitment to the environment by helping

mitigate the effects of global climate change. Beneficial actions include reducing the
negative environmental impact of doing business by improving energy efficiency to help
lower carbon emissions, reducing water usage and reducing waste.
Business Ethics
more important
than the
business itself !
1. The Tata group, as an example. Some years ago, the Tata group suffered a setback,
when one five star property in Mumbai was caught in the terrorist attack. The
Government stepped in and the militants were shot dead. However, the damage to the
property ran into several thousands of crores.

Ratan Tata, the then Chairman, did something that is totally out of the world. He in
fact taught the world some lessons in business ethics. Every single person who was
affected, including those like the pav bhaji vendor outside the hotel, was offered
compensation running into several lakhs of rupees. The education of children of those
affected, free medical facilities for those survivors and dependents at Tata hospitals
for the rest of their lives, total education of the 46 children who were affected by the
bomb blast but survived, to be taken up by the Tata group, in total, and formation of a
Trust for the rehabilitation of the families of the victims. Tata himself visited the
families of each of the 80 employees affected by the bomb blast, and offered
compensation running into several lakhs of rupees.
2. In Chennai, a TVS group company called Sundram Finance would serve all its senior
citizen customers in ten minutes flat. No questions asked. Free financial advice is given
on tax matters. It has over two thousand crores in fixed deposits, mostly collected from
senior citizens. The deposit interest is not high, slightly more than what is offered in
banks. Still, the money comes in. The interest is credited one day in advance, if the 1st
of the month is a holiday. Not a single amount of interest has ever been unpaid to any
customer, at any point in time. The organization has a huge network of borrowers, who
also repay dues on time, as they know the value of TVS, which actually stands for
Trust, Values and Service.
The different TVS group companies have one thing in common in all their factories. Each
employee carries home a small gift, in the form of some eatable, like a small biscuit
packet, a packet of banana chips, or potato chips and so on. This is illustrative of the
philosophy of the TVS group: care and share. This is also reflected in the fact that there are
third generation employees happily working in the same TVS group. The quality of the
products of the TVS group is world-class.

The Murugappa group of companies in Chennai is another outstanding example of business

ethics. They never bribe a single official. Everything is done in a very transparent manner.
The owners are all people well known for their business ethics. In TVS and the Murugappa
group, even very small amounts are paid only through cheques or through bank transfers.
 Conclusion:
• Only those organizations that follow business ethics in every walk of life, like the Tata
group, the TVS group, or the Murugappa group, will continue to survive and grow as
highly ethical organizations for generations to come. And be admired for such high class
values forever.

• Companies construct business ethics to encourage moral behavior among their workforce
and win over stakeholders, customers and investors.

• Business ethics concerns employees, customers, society, the environment, shareholders.

Therefore, every business should develop ethical models and practices that guide
employees in their actions and ensure they prioritize the interests and welfare of those the
company serves.

• Doing so not only increases revenues and profits, it creates a positive work environment
and builds trust with consumers and business partners.
Thank You