3(a)-Basics of Corporate Governance & Business Ethics.

Universalism & Utilitarianism.

Universalism.
The Theory of Universalism is based on Duties or Obligations of an Individual in the Society. The Duties and Obligations of an Individual is termed as Deontology. The approach of Universalism states that the Moral Worth of an action of an Individual should be judged by the Intentions of the person performing the action, and not by the Outcomes or Consequences of the action. In other words it is also very closely related to the Non-Consequestionalist Theory of Ethics. Even if the Outcome is not as desired, but the Intention of the person was good, then the action is termed to be a good action. The underlying Philosophy of this Concept is that good intentions should always result in good outcome, ultimately, if not immediately. Deontology is sometimes also referred to as Ethics based on the Act and whether or not the Act is Right. Personal Duties and Obligations of an Individual are Universal. No One can escape from discharging these Duties and Obligations. Hence this Deontological Theory is termed as Universalism. It focuses on Individuals not as Means but as Ends in themselves, Worthy of Dignity and Respect. Thus, only when a Code of Behavior can be Universally applied, should it 2 be considered Ethically Correct.

Universalism (Contd).
Immanuel Kant (1724-1804) proposed the Categorical Imperative, which helps to evaluate an Individuals Moral Conduct. According to it, one should act only in ways that one would wish all others to act, faced with the same set of circumstances, and also to treat others with Dignity and Respect. That basically follows the Tenant that we should not do anything which we would not like to be done to us in similar circumstances. Do unto others as thou would have others do unto thou, said Jesus Christ, almost Two Thousand Years ago. What is morally Right for oneself must be Morally Right for others as well. Everyones Value is Equal. Hence, no ones Rights should be subordinated to those of others. While praiseworthy in Theory, the Universalism approach finds itself in difficulty during practical application. It depends to a large extent, for its interpretation, upon the situation that the individual finds himself in. Not all people may agree on the same Moral Standards. Similarly, it will be difficult for the Firm to think of its Employees as Ends in themselves, rather than the Means in the pursuit of Corporate Excellence. Again, though some people may prescribe to the Time Rate System of payment, others may believe that Piece Rate System where everybody is paid by results, would be Equitable. Then it would be difficult to reconcile these two benefits, as everybodys belief is of Equal Importance according to the System of Universalism.
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Utilitarianism.
This approach to Ethics comes from Teleology, which is concerned not with an act itself, but with the Consequences of the act. Thus the emphasis is on the Outcome of Individual actions and not on the Intent of the Individual. That is why this is sometimes referred to as Consequentialism or Ends-Based Ethics. A Special version of Teleology is Utilitarianism, which aims at creating the greatest degree of Benefits for the largest number of people while incurring least amount of harm possible. Thus Utilitarianism is concerned with Maximizing Welfare for the Society. According to Utilitarianism, an action is good if it results in benefits for Society, and it is bad if it leads to damages or harms the society. The Utilitarianism theory was originated by British thinker Jeremy Bentham (1748-1832). It found support among most of the Philosophers in its time, who held that Moral Worth of an Individuals Conduct can be determined by the outcome or Consequences of that Behavior. In situations where the outcomes can be measured in Financial Terms, Utilitarianism has great merit. However, the Utilitarianism System has certain limitations also. As a determinant of Moral action, this System fails to provide a balance between the benefits of the Majority against the Sacrifices of a minority.
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Utilitarianism (Contd).
Dostoevsky I his book titled, Brother Karamazov asked what would be the Moral action of the Society, if the Happiness of the whole Human Race forever, should lie in the Sacrifice of only one person, a completely innocent child, who should be tortured to death. Such an action would obviously be Morally Wrong, despite its great benefits to a Huge Majority. Moreover, Utilitarianism prescribes the Greatest Good for the Greatest Number. In most cases, it is very difficult to reconcile Greatest Good with Greatest Number of People. There has to be a certain Trade-Off somewhere. And the degree to which this Trade-Off will be possible, is not provided by Utilitarianism. By using a Utilitarianism/Consequentialism approach, a Manager will face some difficulties as under: It is very difficult to Foresee all the Consequences of a Business Decision. Accurate Forecasts of outcomes are required in situations, where little data is available. Many Decisions have Consequences that are not easily measured, and often lack common measurement units. Maximizing Net Utility may require actions that cause harm to 5 some people (may be minority).

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