Factors influencing business ethics

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Factors influencing business ethics

  1. 1. Factors influencing business ethics:Leadership, strategy and performance, individual characteristics, corporate culture andenvironmentLeader is a person who leads the people towards achieving a common goal. Leader canbe good or bad, great or small they arise out of the needs and opportunities of a particulartime and place. Not all leaders are considered to be perfect in their decision makingbecause each and every decision they make will depend upon the character of personwhich differ from person to person. Character of a person includes their inborn talents,learned and acquired traits which were imposed upon them by life and experience.Leaders are models and mentors to their followers therefore they follow the path way setby their leaders. In a large organisation the top level managers or CEO are considered tobe the executive and supervisory leader. The CEO should have strong commitmenttowards ethics and ethical conduct and should give a constant leadership in renewing thevalues of an organisation. They play a key role in creating, maintaining and changing theethical culture. It is necessary for the leader to set good examples, and follows ethics.One such good leader is JRD Tata who set a good example for his successor and they stillfollow it. Where there are good leaders there will be good ethical practices in business.Corporate governance: is the set of systems and processes that a company follows toensure that it is in the best interest of the stake holders. Stakeholders are the shareholders,employees, customers, creditors and the community.Sustainability has three components according to john elkingtons triple bottom lineconcept they are economic, social and environmental. According to elkington thebusiness does not have one single goal of attaining profit but to extend the goal set byadding environmental and social values. Thus sustainability has become the new goal setby the organisation.Environmental perspective: natural resources.Economic perspective: about the future generation.Social perspective: over exploiting of employees and not providing equality in genderemployment, caste creed and religion based employment employing child labour.Organisational culture: is the set of shared values, beliefs, goals, norms etc that prevailswithin an organisation. The organisational culture emphasis on ethics but as it grows itmay change, as in the case of tyco where its organisational culture supports unethicalpractices. If the company makes huge profits in unethical way then individual who joinsthe organisation would also have to practice unethical things to survive in the company.As in the case of enron where many executives and managers knew that the company wasfollowing some illegal and unethical practices, but the executives and the board ofdirectors did not know how to make the ethical decisions and corporate ethical culture.Thus they fall back and managers have to pay in the form of fines and imprisonment.
  2. 2. Business ethics is the application of ethical principle in the organization or business. Anorganization should produce or make its own ethical cultures, but this ethical cultureformulated should be drawn from the concept of what is ethical to all and not what isright for the organization itself. The employees of the organization, also has to follow thesame ethical principles. The organisation being ethical will provide certain socialresponsibilities such as they do not harm the stake holders, the general public and thesociety as well. "business that treat their employees with dignity and integrity reaprewards in the form of high moral and productivity" (Frederic, Post and Davis).There are three major types of ethical issues that arise in a business they are, face to faceethics, corporate policy ethics and functional area ethics. Face to face ethical issueshappen between the employees of an organization in their day to day organizational life.the employee face these ethical conflicts when their personal standards differs from whattheir job demands. Corporate policy ethical issues happen in the basic operations of acompany. The top level management including the board of directors and CEOs areresponsible for ethical practices of the organization. Functional area ethics issues arise atall functional levels of the organization. For example in the accounting department, ifunfair pressure is put on employees to deliver an audit report which has been altered ornot showing current accounts of the organization would be un ethical, as it does notfollow the standards and policies set by the organization.Causes for unethical issues:There are many reasons for an organization to follow unethical practices they arepersonal gain and selfish interest, competitive pressures on profits, business goals andpersonal goals, cross cultural contradictions. When an employee gives more importanceto his greed or concern for his personal gain rather than any other concerns, irrespectiveof the harm it can bring to the organization is termed as unethical practices that arise dueto personal gain and selfish interest. When a company has tough competitors in a limitedor static market; it may engage some unethical practices just to be in business or toprotect their profits. If the organization uses some unethical means to achieve its goal thatis unaccepted by its stakeholders will give rise to ethical issues under business goal andpersonal goal. Here the organisaiton has set a goal that would conflict with the personalgoal of its stake holders. Under such conditions the individuals involved have twochoices either to follow the ethical ways of the organization or "blowing the whistle" onorganization.Environmental perspective relates to the exploitation of natural resources in business. Thecompany should make sure that the natural resources are not exploited; it should sustainthe resources so that the future generation can also enjoy them as we did. One suchexample is the restriction of fishing in the North Sea, to sustain the availability ofdiminishing cod fish to the consumers.Economic perspective of sustainability relates to the economic growth and fall in thesociety. The short term adjustments made by the companies such as bribes and cartelswill only be for a short period of time, it will never achieve a long time sustainability the
  3. 3. organizations attitude towards the environment in which it is embedded. If theorganization does not pay taxes are said to behave unethically similar in the case oforganization that does not give donations to public institutions such as schools, hospitals,police and other justice systems.Social perspectives of sustainability refers to the social future of an organization which itis able to give.Business ethics if practiced properly in an organization would provide scope to itsstakeholders (which includes employees, customers, shareholders, bank and other lendinginstitutions, government), personal policy level, social level and internal policy level.Article Source: http://EzineArticles.com/?expert=Anjaneya_ReddyDid you find this article helpful? 1 021Ads by GoogleServiced Apartments Delhiwww.servicedapartmentsindelhi.netModern, spacious & safe residencies N° 1 in South Delhi and GurgaonNGO India 2012www.india-ngo.orgLeading NGO & CSR Event Register here for freeTop MBA Colleges in Indiawww.Shiksha.com/Top-MBA_CollegesFind Top MBA Colleges in India. Get Info on Admission,Courses,Fees,DateGreen Business Investorswww.econokit.frFrench innovative fuel saver - We are looking for investors!God and businesswww.LifesGreatestQuestion.comHear from a successful businessman How God can change your lifeGet Involved0 comments Suggest a topicArticle ToolsPrint this article E-mail to a friend EzinePublisher Report this article Cite this articleStay InformedSubscribe to New Article Alerts:Business: EthicsAnjaneya ReddyEmail Address:Ethics Article FeedAds By Google Business Ethics Business Leadership Business Schools Business StudyFind More Articles
  4. 4. Recent Articles • Business Ethics Battlefield • Cover Your Environmental Responsibilities With ISO 14001 • Clicks Or Clicks? • Paralegal Ethics - Whats Your Duty? • Eco Business • The Power of Responsibility! • Business Integrity - Nothing Else Matters! • Ethics "Training" For Organizational Change • The Sinking Costa Concordia and the Parallel to Business Ethics and Compliance Programs • Improving Respect in the WorkplaceSubmitted On December 07, 2010. Viewed 1,457 time. Word count: 2,593. Ads By Google Business Ethics Business Leadership Business Schools Business StudyAds by GoogleEzineArticles.com© 2012 EzineArticles.comAll Rights Reserved Worldwide • About Us • FAQ • Contact Us • Member Benefits • Privacy Policy • Shop • Site Map • Blog
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