Risk management ethics and values in business josé ignacio gonzález
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Risk management ethics and values in business josé ignacio gonzález

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Risk management ethics and values in business josé ignacio gonzález Risk management ethics and values in business josé ignacio gonzález Presentation Transcript

  • Ethics AND ValuesETHICS andVALUES IN BUSINESSin BusinessEuropeanManagement AssistantsJosé Ignacio González National Training Day 16 June 2012
  • To start off with a simple question..... EMRON PARMALAT LEMAN BROTHERS GESCARTERAAll companies have ethical values and codes of conduct. But Do they apply them correctly when they do business? june 2012 2
  • The concept of business ethicsBusiness ethics are the set of moral principles or guidelines governingor influencing conduct in organisations doing business.As the standards which organisations use when interacting withindividuals and in business relationships, the ethics of a particularorganisation can be diverse. june 2012 4
  • What is business ethics?Many organisations have already gained a bad reputation just by starting up in business.For some people, business organisations are only interested in making money. Makingmoney is not wrong in itself. What really matters is how individuals and organisationsconduct themselves when doing business.Good business ethics should be part of every business. There are many factors to be takeninto account. When an organisation does business with another individual ororganisation whose conduct is not ethical, is the first organisation also considered to beacting unethically because of its business relationship with such individual ororganisation? Some people would say yes. The first business has a responsibility and it isnow a link in a chain of unethical businesses.Many global businesses, including most of the major brands used by the public today, donot seem to appreciate the need for good business ethics. Many major brands have beenfined millions for breaching business laws on ethics.Money will always be the deciding factor. june 2012 5
  • What is business ethics?If an organisation does not adhere to business ethics and breaks the law, it is usuallyfined. Many organisations have broken anti-trust, ethical and environmental laws andhave been fined millions. The problem is that the money that these organisations make isoften much higher than the fines which are imposed on them. Huge profits makeorganisations blind to business ethics.An organisation may be a multi-million seller, but does it use good business ethics and dopeople care? There are popular soft drinks and fast food restaurants that have been finedtime and time again for unethical behaviour. Business ethics should eliminateexploitation at all levels, whether it is employing young children to make sneakers orpaying low salaries to coffee-serving staff. Business ethics can be applied to everythingfrom the cutting-down of trees to sell paper to the importing of coffee from certaincountries.In the end, it may be up to the public to make sure that an organisation conducts itsbusiness ethically. If the organisation’s profits are high, it may not wish to pay muchattention to ethical conducts. There are many organisations which pride themselves intheir correct business ethics, but in today’s competitive world, they are few and farbetween. june 2012 6
  • What is business ethics?Let’s get down to basics.....................
  • Ethics• To talk about ethics, we have to talk about philosophy as ethics, also known as moral philosophy, is a branch of philosophy that deals with moral principles.• The most widely-accepted understanding of the word “ethos” comes from Aristotle who defined it in the following terms: temperament, character, habits, manner. june 2012 8
  • The nature of ethics• Ethics is a philosophical discipline.• Ethics deals with the study of morals.• Ethics is the rules or standards by which we should live.• Ethics is reflexive in that it studies actions not as they are, but how they should be.• Ethics is practical in the sense that it is concerned with human actions. june 2012 9
  • How is ethics defined?• Ethics is defined as: “A set of principles which guide us in our conception of life, people, judgements, actions and morals”• When we talk about ethics in business, ultimately we are talking about responsibility. june 2012 10
  • Responsibility and its different meanings• Liability to pay the cost of something, e.g. Drivers of motor vehicles are responsible for damages caused by their vehicles.• Commitment, obligation, duty to do something and assume the consequences for our actions. e.g. My responsibility as president will be to lead our country to prosperity.• Cause of something, e.g. Cigarette smoking is responsible for a high percentage of deaths from lung cancer.• Being able to be blamed for something, e.g. He is mentally ill and he cannot be held responsible for his actions. june 2012 11
  • Legal responsibility• Legal responsibility arises when a person fails to carry out a duty of conduct which, unlike moral principles, is established by a body other than the person in question (mainly the State through laws) and is coercive. june 2012 12
  • Corporate ethicsDoes it exist?Is it always correct?
  • Corporate ethics• Ethics are the fundamental pillar of corporate governance and its defining factor.• Ethics are what determine the general public’s perception of companies.• For this reason, companies should have a code of ethics, which they should provide to shareholders, staff, clients, suppliers and the authorities of their sector. june 2012 14
  • Ethics and companies. Ethics and directors• In general, all ethics aim to establish ideal standards of conduct.• Deontological ethics are concerned with the duties which are imposed on people according to the various areas or fields of their lives. june 2012 15
  • Ethics and competition• Fair competition with fines for unfair competition.• Fair competition using legal weapons, i.e. quality and a low price due to efficiency.• Advertising based on truths, not on lies or half-truths, and without denigrating competitors. june 2012 16
  • Virtues of the businessman• Businessmen should be hardworking, imaginative, upright.• Their duties should be based on the truth, firstly the duty to be truthful and transparent in their dealings and to ensure the quality of the products and services which they offer.• Secondly, the duty to be prudent and refrain from using information which they obtain to the detriment of their competitors.• Thirdly, the duty to be bold and assume risks which ultimately are what justify their gains.• Their actions to obtain their gains should be moderate and restrained and should not be taken at all cost. june 2012 17
  • Suppliers, clients and workers:Climate for values• The climate should be one where values are governed by regulations which safeguard the equilibrium and which do not impose more stringent rules for certain parties than others. june 2012 18
  • Creating value in companies• The basis of “value” in companies lies in the way directors run their businesses.• Being a “competitive director” is not enough. Directors should become leaders who know, above all, that they are people and that they are surrounded by people. june 2012 19
  • Three values created by companies 1 • financial 2 • psychological 3 • ethical june 2012 20
  • Professional ethics• Professional ethics regulate the activities of a profession. Professional ethics is a discipline of applied ethics as it refers to a specific part of reality. june 2012 21
  • Relationship of business ethics and corporateactions• In one of Domenec Melé’s studies, he refers to the effect which ethical actions and morals may have in business relationships.• According to him, these actions may be of the following types:  Work motivation.  Practical wisdom (prudence).  Corporate culture.  Reputation or good image.  Gaining trust. june 2012 22
  • Work motivation• Obviously, work motivation largely depends on the worker’s level of satisfaction and the employment climate as well as the human values and qualities of his work colleagues and superiors. june 2012 23
  • Practical wisdom• When faced with situations and events that arise, decision-making requires prudence as well as maturity, initiative and a sense of responsibility.• In addition to these qualities, people who provide services need to have managerial skills. june 2012 24
  • Corporate culture• Corporate culture is knowledge, experience and practices or ways of doing business which are typical in an organisation and are based on the values and convictions of its members. june 2012 25
  • Strong culture versus weak culture• Strong cultures in organisations where key values are highly regarded and widely shared by their members have a bigger impact on workers than weak cultures. june 2012 26
  • • The greater the number of members of an organisation who accept its core values and the greater their commitment to such values the stronger its culture is. june 2012 27
  • How is culture transmitted?
  • How do workers learn about corporate culture?• Culture is transmitted to workers in a number of ways, the most frequent of which are:  Stories  Rituals  Material symbols  Language Let me give you a visual example. june 2012 29
  • Stories• Stories of the organisation are usually about key events or people such as the organisation’s founders, rule-breaking, rags-to-riches stories, staff reductions and relocations, reactions to past mistakes, and solutions to problems. june 2012 31
  • Rituals• Rituals are repetitive sequences of activities which express and reinforce an organisation’s key values and its most important challenges. They help an organisation decide who is essential for the organisation and who is not. june 2012 32
  • Material symbols• Examples of material symbols are the physical layout of an organisation’s business premises, the clothes worn by workers, the company vehicles provided to executives, whether the organisation has its owns aeroplanes. etc. june 2012 33
  • Language• Many organisations and their divisions and departments use language as a means of identifying their members. Merely by using specific language, members show that they accept the organisation’s culture which helps to preserve it. june 2012 34
  • Reputation or good ethical image to attract clients• A good reputation of loyalty and decency is one of the main assets of organisations which all workers should promote with the utmost care. june 2012 35
  • Gaining trust• A certain amount of trust is always required for large economic operations.• Carrying out operations requires:  A certain length of time for negotiations.  The favourable testimonial of a known third person.  More than just superficial relations.  Ethical actions and professional competition at all times. june 2012 36
  • The PwC Experience
  • PwC’s code of conductPwC is one of the biggest international service providers. As professional advisers we helpour clients solve complex business problems and enhance their ability to create value,manage risk and improve performance. As a result we play a significant role in theoperating of capital markets globally. We take pride in the fact that our services add valueto our clients by helping them to improve transparency, trust and consistency in theirbusiness processes. In order to succeed, we must grow and develop, both as individualsand as a business. PwC’s core values of excellence, teamwork and leadership help us toachieve this growth.While, at PwC, we conduct our business within the framework of applicable professionalstandards, laws, regulations and internal policies, we also acknowledge that thesestandards, laws, regulations and policies do not govern all types of conduct.As a result, PwC has established a code of conduct for all its firms and people. This code isbased on our values and enables us to takes them one step further by demonstrating ourvalues in our actions. The PwC code of conduct may be expanded by PwC firms in linewith the specific requirements of their territories. june 2012 38
  • THANK YOU! june 2012