Ethical Standards in Business Organizations


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Presentation given on "Ethical Standards in Business Organizations" to Sir. Abuzar Wajidy by Syed Ahmed Owais in course "Strategic Management" at Hamdard University City Campus, (HIMS).
Management, 8 th edition, John R.Schermer Horn.
Strategic Management Concepts & Cases, 12 th edition, Fred R David.

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Ethical Standards in Business Organizations

  1. 1. Ethical Standards in Business Organizations: By: Syed Ahmed Owais To: Sir. Abuzar Wajidy Course: Strategic Management 2007 - 2010 1Dr.Syed Ahmed Owais
  2. 2. Ethical Standards in Business Organizations: Topics: 1. Ethical Behavior. 2. Values. 3. Alternate views of ethics. 4. Cultural Issues in Ethical behavior. 5. Ethical Dilemmas at Work Place. 6. Rationalization for Unethical Behavior. 7. Factors influencing Ethical Behavior. 8. Maintaining high ethical standards. 9. Corporate Social Responsibility. 10. Perspective on Corporate Social Responsibility. 11. Evaluation of Corporate Social Performance/ 2007 - 2010 Dr.Syed Ahmed Owais 2
  3. 3. 1. Ethical Behavior:  Ethics: Ethics sets standards of good or bad, or right or wrong, in one’s conduct.  Ethical Behavior: Ethical behavior is “right” or “good” in the context of a governing Moral code. 2007 - 2010 3Dr.Syed Ahmed Owais
  4. 4. 2. Values:  Values: Values are broad beliefs about what is appropriate behavior. (i) Terminal Values: Terminal Values are preferences about desired end states. e.g. Self-respect, family security, freedom, inner harmony and happiness. (ii) Instrumental Values: Instrumental Values are preferences regarding the means to desired ends. e.g, Honesty, ambition, courage, imagination, and self-discipline. 2007 - 2010 4Dr.Syed Ahmed Owais
  5. 5. 3. Alternate Views of Ethics:  Moral-rights View.  Individualism View.  Utilitarian View.  Justice View. 2007 - 2010 5Dr.Syed Ahmed Owais
  6. 6. 3. Alternate Views of Ethics:  Moral-rights View: In the moral rights view ethical behavior respects and protects fundamental rights.  Individualism View: In the individualism View ethical behavior advances long-term self-interests. 2007 - 2010 6Dr.Syed Ahmed Owais
  7. 7. 3. Alternate Views of Ethics:  Utilitarian View: In the Utilitarian view ethical behavior delivers the greatest good to the most people.  Justice View: In the justice view ethical behavior treats people impartially and fairly.  A. Procedural Justice.  B. Distributive Justice.  C. Interactional justice. 2007 - 2010 7Dr.Syed Ahmed Owais
  8. 8. 3. Alternate Views of Ethics:  Justice View: a.Procedural Justice: Procedural justice is concerned that policies and rules are fairly applied. b.Distributive Justice: Distributive justice is concerned that people are treated the same regardless of personal characteristics. C. Interactional justice: Interactive justice is the degree to which others are treated with dignity and respect. 2007 - 2010 8Dr.Syed Ahmed Owais
  9. 9. 4. Cultural Issues in Ethical behavior:  Cultural Relativism.  Universalism.  Ethical Imperialism. 2007 - 2010 9Dr.Syed Ahmed Owais
  10. 10. 4. Cultural Issues in Ethical behavior:  Cultural Relativism: Cultural Relativism suggests there is no one right way to behave; ethical behavior is determined by its cultural context.  Universalism: Universalism suggests ethical standards apply absolutely across all cultures.  Ethical Imperialism: Ethical imperialism is an attempt to impose one’s ethical standards on other cultures. 2007 - 2010 10Dr.Syed Ahmed Owais
  11. 11. 5.Ethical Dilemmas at Work Place:  Ethical Dilemma: An ethical dilemma is a situation that although offering potential benefit or gain is also unethical.  (i) Discriminations.  (ii) Sexual Harassment.  (iii)Conflicts of Interest.  (iv)Customer Confidence.  (v)Organizational Resources. 2007 - 2010 11Dr.Syed Ahmed Owais
  12. 12. 5.Ethical Dilemmas at Work Place:  Discriminations: Denying promotion or appointment to a job candidate’s race, religion, gender, age or other non-job- relevant criterion.  Sexual Harassment: Making a coworker feel uncomfortable because of inappropriate comments or actions regarding sexuality; or a manager requesting sexual favors in return for favorable job treatment.  (iii)Conflicts of Interest: Taking a bribe or kickback or extraordinary gift in return for making a decision favorable to the gift giver. 2007 - 2010 12Dr.Syed Ahmed Owais
  13. 13. 5.Ethical Dilemmas at Work Place:  (iv)Customer Confidence: Giving to another party privileged information regarding the activities of a customer.  (v)Organizational Resources: Using official stationary or a company e-mail account to communicate personal or make personal opinions or make request from community organizations. 2007 - 2010 13Dr.Syed Ahmed Owais
  14. 14. 6.Rationalization for Unethical Behavior:  Convincing yourself that that the: -Behavior is not really illegal. -Behavior is in everybody’s interest. -That nobody will ever find out what you’ve done. -Organization will “protect” you. 2007 - 2010 14Dr.Syed Ahmed Owais
  15. 15. 7.Factors influencing Ethical Behavior:  Personal.  Organizational.  Enviroment. 2007 - 2010 15Dr.Syed Ahmed Owais
  16. 16. 7.Factors influencing Ethical Behavior: (i)Personal: -Personal Needs. -Personal Standards. -Family Influence. -Religious Values. 2007 - 2010 16Dr.Syed Ahmed Owais
  17. 17. 8.Factors influencing Ethical Behavior: ii) Organization: Boss can have a major impact on their subordinate’s behavior. (iii) Environment: Organizations operate in competitive environments influenced by government laws and regulations and social norms and values. 2007 - 2010 17Dr.Syed Ahmed Owais
  18. 18. 8.Maintaining high ethical standards:  Ethical Training.  Ethical Role Model.  Ethical Code of Conduct.  Whistle Blower. 2007 - 2010 18Dr.Syed Ahmed Owais
  19. 19. 8.Maintaining high ethical standards: i) Ethical Training: Ethical training seeks to help people understand the ethical aspects of decision making and to incorporate high ethical standards into their daily behaviour. (ii) Ethical Role Model: All managers are in a position to influence the ethical behavior of the people who work for and with them. 2007 - 2010 19Dr.Syed Ahmed Owais
  20. 20. 8.Maintaining high ethical standards: (iii) Ethical Code of Conduct: A code of ethics is a formal statement of values and ethical standards. (iv) Whistle Blower: A whistleblower exposes the misdeeds of others in organization. 2007 - 2010 20Dr.Syed Ahmed Owais
  21. 21. 9.Corporate Social Responsibility:  Corporate Social Responsibility: Corporate Social Responsibility is the obligation of an organization to serve its own interests its own interests and those of society. 2007 - 2010 21Dr.Syed Ahmed Owais
  22. 22. 9.Corporate Social Responsibility:  Organizational Stake Holders: 1.Employees: Employees and contractors who work for the organization. 2.Customers: Consumers and clients that purchase the organization’s goods and/or use its services. 2007 - 2010 22Dr.Syed Ahmed Owais
  23. 23. 9.Corporate Social Responsibility: 3.Suppliers: Providers of the organization’s human, information, material, and financial resources. 4.Owners: Stockholders, investors, and creditors with claims on assets and profits of the organization. 5.Competitors: Other organizations producing the same or similar goods and services. 2007 - 2010 23Dr.Syed Ahmed Owais
  24. 24. 9.Corporate Social Responsibility: 6.Regulators: The local, state and national government agncies that enforce laws and regulations. 7.Invest Group: Community groups, activists, and others representing interests of citizens and society. 2007 - 2010 24Dr.Syed Ahmed Owais
  25. 25. 10.Perspective on Corporate Social Responsibility:  Arguments in Favor of CSR: 1. Add long run profits for business. 2. Improve the public image of business. 3. Help them avoid government regulations. 2007 - 2010 25Dr.Syed Ahmed Owais
  26. 26. 10.Perspective on Corporate Social Responsibility:  Arguments against CSR: 1. Increase cost. 2. Reduce profit. 3. Gives too much social power. 4. Do so without business accountability. 2007 - 2010 26Dr.Syed Ahmed Owais
  27. 27. 11.Evaluation of Corporate Social Performance:  Social Responsibility Audit: A social responsibility audit assesses an organization’s accomplishments in areas of social responsibility. 2007 - 2010 27Dr.Syed Ahmed Owais
  28. 28. 11.Evaluation of Corporate Social Performance:  Criteria for Evaluating Social Performance: 1. Economic Responsibility: Is it profitable? 2. Legal Responsibility: Does it obey law? 3. Ethical Responsibility: Is it doing the “right” things? 4. Discretional Responsibility: Does it contribute to the broader community? 2007 - 2010 28Dr.Syed Ahmed Owais
  29. 29. Social Responsibility Strategies:  Obstructionist Strategy.  Defensive Strategy.  Accommodative Strategy.  Proactive Strategy. 2007 - 2010 29Dr.Syed Ahmed Owais
  30. 30. Social Responsibility Strategies: (i) Obstructionist Strategy: An obstructionist strategy avoids social responsibility and reflects mainly economic priorities. (ii ) Defensive Strategy: A defensive strategy seeks protection by doing the minimum legally required. 2007 - 2010 30Dr.Syed Ahmed Owais
  31. 31. Social Responsibility Strategies: (iii ) Accommodative Strategy: An accommodative strategy accepts social responsibility and tries o satisfy economic, legal, and ethical criteria. (iv) Proactive Strategy: A proactive strategy meets all the criteria of social responsibility, including discretionary performance. 2007 - 2010 31Dr.Syed Ahmed Owais
  32. 32. 13.Government’s Role:  How Government influence organizations: 1. Occupational Safety and Health: The Occupational Safety and Health Act of 1970. 2. Fair Labor Practices: Equal Opportunity Act of 1972. 3. Consumer Protection: The Consumer Protection Act of 1972. 4. Enviromental Protection: Air Pollution Control Act of 1962. 2007 - 2010 32Dr.Syed Ahmed Owais
  33. 33. 14.Organization’s influence on Governments:  How Organizations influence Governments: 1. Personal Contacts & Networks: 2. Public Relation Campaigns: 3. Lobbying: Lobbying expresses opinions and preferences to government officials. 4. Political Action Committees: Political action committees collect money for donation to political campaigns. 2007 - 2010 33Dr.Syed Ahmed Owais
  34. 34. 15.Corporate Governance:  Corporate Governance: Corporate Governance is the oversight of op management by a board of directors. 2007 - 2010 34Dr.Syed Ahmed Owais
  35. 35. Ethical Standards in Business Organizations:  Reference: “Strategic Management Concepts and cases “ 12 th edition, Fred R David. 2007 - 2010 35Dr.Syed Ahmed Owais