Some years ago, sociologist Raymond Baumhart asked business people, "What does ethics mean to you?" Among their replies were the following: 1."Ethics has to do with what my feelings tell me is right or wrong." 2."Ethics has to do with my religious beliefs." 3."Being ethical is doing what the law requires." 4."Ethics consists of the standards of behavior our society accepts." 5."I don't know what the word means." These replies might be typical of our own. The meaning of "ethics" is hard to pin down, and the views many people have about ethics are shaky. MEANING OF ETHICS : T he word “ethics” is derived from the Greek word “ethos”, which refers to character.
1. Like Baumhart's first respondent, many people tend to equate ethics with their feelings. But being ethical is clearly not a matter of following one's feelings. A person following his or her feelings may recoil from doing what is right. In fact, feelings frequently deviate from what is ethical. 2. Nor should one identify ethics with religion. Most religions, of course, advocate high ethical standards. Yet if ethics were confined to religion, then ethics would apply only to religious people. But ethics applies as much to the behavior of the atheist as to that of the saint. Religion can set high ethical standards and can provide intense motivations for ethical behavior. Ethics, however, cannot be confined to religion nor is it the same as religion.
Finally, being ethical is not the same as doing "whatever society accepts." In any society, most people accept standards that are, in fact, ethical. But standards of behavior in society can deviate from what is ethical. An entire society can become ethically corrupt. Nazi Germany is a good example of a morally corrupt society.
Ethics refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from stealing, murder, assault, slander, and fraud. Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons. What, then, is ethics? <ul><li>The nature of ethics : </li></ul><ul><li>Ethics the inner guiding ,moral, principle, values and beliefs that people use to analyze or interpret a situation and then decide what is the “right "or “wrong "appropriate way to behave. </li></ul>
<ul><li>Ethics in business are nothing but the do’s and don’ts by the business users in the business. In other words it could be referred as set of principles a business man ought to follow. ”There should be business ethics” means that the business should be conducted according to certain self recognized moral standards. Few unethical elements in the present day business are cheating, stealing, lying, bribing, corrupting etc. </li></ul><ul><li>According to the rogene “business ethics refer to right or wrong behaviour in business decisions.” </li></ul>
DEFINITION: The study and examination of moral and social responsibility in relation to business practice and decision making in business is known as “Business Ethics”. The term “business” is commonly referred to the commercial activities achieved at making profit. But gradually there is a substantial change in the way in which people viewed the business. OBJECTIVES The main objective of this study is to identify the vital few concerns of business which influence the ethical status of a business and to identify the necessary measures.
<ul><li>In the past primary objective of a business was profit maximization but the present perspectives on business objectives is not m </li></ul><ul><li>It is profit maximization in long run besides fulfilling the ethics in the business. A business is regarded as social institution forming integral part of social systems .The business is viewed as subsystem to the social system. aximization. </li></ul><ul><li>This is because any type of social system is influenced by </li></ul><ul><li>1. The way the business functions </li></ul><ul><li>2. The organization of the business </li></ul><ul><li>3. Innovations </li></ul><ul><li>4. Transmission and diffusion of information. </li></ul><ul><li>5. New ideas etc. </li></ul><ul><li>They have either direct or indirect effect on the society </li></ul>
ELEMENTS OF BUSINESS ETHICS <ul><li>Values </li></ul><ul><li>Rights </li></ul><ul><li>Duties </li></ul>
Ethics and law : law is concerned with the minimum regulation necessary for public order while ethics examines both the individual and the social good in all dimensions. Ethics and morality In brief ethics is the code of conduct developed by proper testing to guide the human behaviour, whereas morality is concerned with generally accepted conducts and conventions of the society.
“ Good ethics promotes good business” Arguments in favour : Robert day has said that good ethics not only promotes professionalism in management, but purity the inner mind of every businessman.
Some important arguments <ul><li>satisfaction of sub-conscious mind </li></ul><ul><li>Goodwill of business and businessman </li></ul><ul><li>It increases mutual trust and confidence </li></ul><ul><li>Protects each other </li></ul><ul><li>Helps in professionalization of management </li></ul><ul><li>Greater zeal and productivity </li></ul>
Characteristics or Assumptions of business ethics <ul><li>A Discipline </li></ul><ul><li>Dynamic philosophy </li></ul><ul><li>Theology is the base of business ethics </li></ul><ul><li>Study of goals and means </li></ul><ul><li>Ethics is different from social morality </li></ul><ul><li>Different from social responsibility </li></ul><ul><li>Relating to human aspect </li></ul><ul><li>Importance to personal dignity </li></ul>
9. A universal philosophy 10.Harmony between different roles 11.Good intention 12.Business ethics is not affected by social approval or disapproval
Principles of business ethics <ul><li>Principle of sacredness of ends and means </li></ul><ul><li>Principle of not to do evil </li></ul><ul><li>Principle of proportional judgment </li></ul><ul><li>Attention to best alternative </li></ul><ul><li>Principle of non-cooperation in evil </li></ul><ul><li>Principle of cooperation with others </li></ul><ul><li>Principle of publicity </li></ul><ul><li>Principle of equivalent price </li></ul><ul><li>Principle of consciousness on business </li></ul>
<ul><li>10. Principle of universal value </li></ul><ul><li>11.Principle of human autonomy </li></ul><ul><li>12. Principle of satisfaction </li></ul><ul><li>13.Principle of non-violence </li></ul>
Importance of ethics in business <ul><li>Ethics corresponds to basic human needs </li></ul><ul><li>Values create credibility with the public </li></ul><ul><li>Value give management credibility with employees </li></ul><ul><li>Value help better decision making </li></ul><ul><li>ethics and profit ethics and profit go together </li></ul><ul><li>Law cannot protect society, ethics can </li></ul>
Ethics and related concepts Ethics and morality : the terms ‘ethics’ and ‘morality’ are not synonymous terms. Ethics is the principle that guide the human behaviour. Morals are related with the traditional believes,norms,moral judgments, ideas and existing social formalities by which the man regulates and guides his social behaviour. Ethics do not accept these things.
Arguments against the view of “good ethics promotes good business <ul><li>No reward for ethical conduct </li></ul><ul><li>No resistance from officers </li></ul><ul><li>demand of the day </li></ul><ul><li>Difficult to decide in a situation in dilemma </li></ul>
Scope of business ethics <ul><li>Issues relating to objective of business </li></ul><ul><li>Issues relating to owners of business </li></ul><ul><li>Issues relating to employees </li></ul><ul><li>Issues relating to customers </li></ul><ul><li>Issues relating to creditors </li></ul><ul><li>Issues relating to competitive institutions </li></ul><ul><li>Issues relating to government </li></ul><ul><li>Issues relating to local community </li></ul><ul><li>Issues relating to national interest </li></ul>
SOCIAL RESPONSIBILITIES OF BUSINESS <ul><li>A firm expresses its responsibility to the society by reacting in either or both of the following two ways. </li></ul><ul><li>1. The manner in which it carries out its own business activities </li></ul><ul><li>2. The welfare activities it takes upon itself as an additional function </li></ul>RESPONSIBILITY TO SHARE HOLDERS 1. To make the shareholders feel secured by protecting their investments 2. To be transparent 3. To allow them to participate in decision making 4. To ensure them good dividends
RESPONSIBILITY TO EMPLOYEES <ul><li>1. To offer employees fair wages </li></ul><ul><li>2. To establish better working conditions </li></ul><ul><li>3. To provide them fair work standards and norms. </li></ul><ul><li>4. To provide labor welfare activities </li></ul><ul><li>5. To educate the employees by adopting proper training methods. </li></ul><ul><li>6. To recognize and appreciate the work of the employees and reward them or to promote them. </li></ul><ul><li>7. To install grievance handling cell. </li></ul><ul><li>8. To enable them to involve in decision making. </li></ul>
RESPONSIBILITY TO CONSUMERS <ul><li>To improve the efficiency of the business by </li></ul><ul><li>a) Increasing productivity. </li></ul><ul><li>b) Improving quality. </li></ul><ul><li>c) Suroothening distribution system. </li></ul><ul><li> 1. To offer the products at reasonable prices. </li></ul><ul><li> 2. To provide pre-purchase and post purchase service to the consumers. </li></ul><ul><li> 3. To facilitate research and development to meet the customer requirements. </li></ul><ul><li> 4. To maximize imperfections in distribution systems </li></ul><ul><li> 5. To provide sufficient and unnecessary information about the product. </li></ul>
RESPONSIBILITY TO COMMUNITY <ul><li>1. To be pollution free and maintain ecological balance. </li></ul><ul><li>2. To invest more in research and development so as to improve the standard of living of the society. </li></ul><ul><li>3.To develop alternative recourses thereby preventing current resources being used from exhaustion. </li></ul><ul><li>4. To improve the efficiency of business operations. </li></ul><ul><li>5. To include in social welfare activities </li></ul><ul><li>6. To contribute to national effort to build up a better society </li></ul><ul><li>If a firm fulfills all the above mentioned responsibilities then it is said to be following the business ethics. But in practice such an ideal business doesn’texist. </li></ul>
FEW ENVIRONMENTAL CONCERNS <ul><li>One important factor a business man must not neglect is his responsibility to environment. The abundant natural resources are getting exhausted after 19th century due to rapid industrialization </li></ul><ul><li>EXAMPLES </li></ul><ul><li>1. LAND: The worst effected are as their cattle starve and they travel even increasing distance for grazing due to industrialization and urbanization </li></ul><ul><li>2. WATER: Through people are keen in this issue by constructing dams and reservoirs the bi products and industry waste couldn’t find a better discharge channel than this. Hence sure measure must be take in this context to keep the water free from pollution. </li></ul>
<ul><li>3.DEFORESTATION : The results of deforestation for industrialization and urbanization are vulnerable. It is resulting in destruction of wild life, increase in price of wood, air production etc. </li></ul><ul><li>4.HABITAT: The people who are living in forests and remote areas love their shelter and livelihood in the vent of industrialization. </li></ul><ul><li>5.HEALTH: The business users must be conscious about the health of the society and behave responsibility for their health. </li></ul>
IMPORTANT ETHICAL PRICIPLES THAT A BUSINESS SHOULD FOLLOW <ul><li>Do not deceive or cheat the customers by selling substandard or defective products by under measurement or any other means. </li></ul><ul><li>[ </li></ul><ul><li>EXAMPLE: </li></ul><ul><li>Textile merchants in general clear the defective stock under the guise of discounts. </li></ul><ul><li>2. Do not destroy or distort competition. </li></ul><ul><li>3. Treasure sincerity and accuracy in advertising, labeling and packaging. </li></ul><ul><li>4. Do not furnish the image of competitors by unfair practices. </li></ul><ul><li>6. Make accurate business records so that transperancy to the share holders can be achieved. </li></ul>
<ul><li>7. Pay taxes and discharge other obligation promptly. </li></ul><ul><li>8. Do not form castle agreements, even informal, to control production, prices etc to the common detriment. </li></ul><ul><li>9. Ensure payment of fair wages and fair treatment to the internal customers as well as external customers and share holders. </li></ul>
Unethical practices relating to products - Examples 1.Selling goods abroad which are banned at home 2.Omitting to provide information on side effects 3.Unsafe products 4.Built in obsolescence 5.Wasteful and unnecessary packaging 6.Deception on size and content 7.Inaccurate and incomplete testing of products 8.Treatment of animals in product testing
CASES OBSERVED <ul><li>In some cases the managers come across the situation where they have to neglect sure ethics in order to fulfill source. In those cases the managers must be keen about the level of distortion caused to the society by neglecting such ethics. </li></ul><ul><li>EXAMPLE: </li></ul><ul><li>Kidney transplantation in India has become most popular because of easy availability at low cost. The doctors run into confusion when they come across the situation where a patient’s life can be saved by disturbing the health of others. </li></ul>
HOW TO IMPLEMENT BUSINESS ETHICS 1.Trade associations can be formed by the business users which should bloster the efforts of running any business with ethics Trade association can promote business ethics in business user by – Educating the members of the association and by consistent persuasion. – Formulation a code of conduct for their members which should contain code of ethics. – Praising and rewarding those firms and business users who keep up the ethics in business & by publishing.
2. A managers must be a professional who possesses systematic knowledge and skill to perform certain responsible functions with authority and who is bound by certain ethics in the use of his knowledge and skill. 3. A professional has to have autonomy
<ul><li>Manjunath Shamugham(27) was an IIM Lucknow alumni and an employee of the Indian Oil Corporation. He was killed in Lakhimpur Khiri on 19th November 2005. He was on a drive preventing the adulteration of petrol in Uttar Pradesh. The murder of Manjunath Shamugham or Machaan as he was popularly known in his friend circles provokes a serious introspection on our society where the anyone who tries to meddle with the system and become a threat for the “dadas” of the society who can afford to bend the law as and when they require is eliminated. </li></ul>Business Ethics: The case of Manjunath Shanmugham
<ul><li>Pre independence India had land lords and kings who exploited common people for their benefits. Post independence the country became democratic and the the landlords and influential lot slowly transformed themselves as businessmen who do not work on the classical theory but exploit their influence in the government and the loopholes in the system to generate huge profits. A nexus exists between politicians and these goons, and anyone who tries to raise his voice is either bought at the right price by them or murdered. Oil is the lifeline of our economy and hence the people who distribute oil exert incredible control in their geographical domain. We have two powerful groups in the country. One has created economic power through knowledge, skill and enterprise and the other commands the political system and subverts the enforcement agency to prolong their control over the shrinking domain. </li></ul>
<ul><li>Clearly the power today is shifting from the latter to the former and the latter cant take it. We the educated youth of the country represent the new order and posing a serious threat to the old order. Lets face this that we are the future of this country and we will fight to replace the old order. Incidents like Machaan should not dampen our spirits and neither should we compromise our ethics and values. </li></ul>