Business ethics and value centered management

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  • 1. Jayashree Sadri and Sorab SadriBUSINESS ETHICSANDVALUE CENTERED MANAGEMENTProfessor Jayashree SadriandDr Sorab Sadri
  • 2. Jayashree Sadri and Sorab SadriTHE BACKDROP Research Findings: InternationalA study conducted by the Sloan School of Management(USA) confirmed the fact that only those companies willremain as effective players in the global market which haveplaced a great importance and which practice Value BasedManagementSuch a powerful statement needs to be examined in detailto understand what it implies for Indian Industry andbusiness.
  • 3. Jayashree Sadri and Sorab SadriVALUES AND ETHICS DEFINED VALUES:They are a set of beliefs held by a person or a group ofpersons or an organization and which the organization orgroup stands for, is known by, and form the basis of itssubsequent actions. ETHICSEthics are a pattern of moral behavior of a person, a groupof persons or an organization which are in consonancewith some assumed, explicit, stated or unstated beliefs.
  • 4. Jayashree Sadri and Sorab SadriETYMOLOGICAL ROOTS Ethics comes from the Greek wordethos. Morality comes from the Latin word mores. Both signify “from a culture”. Hence culture specificity is germane to theunderstanding of what is ethical and what isnot.
  • 5. Jayashree Sadri and Sorab SadriStock Market Crash 1987THE THREE PRIMARY REASONS OF THE STOCK MARKETCRASH WERE IDENTIFIED AS: Ham handed economic policies on the technical side. Poor communication between the banks (lenders) and theindustries (borrowers) both of whom were speculatingwithout adequate reserves. Low level of business ethics in the financial sector whichcreated disharmony and lack of trust between the variousmarkets: Sydney, London, New York, Frankfurt, Hong Kongetc.
  • 6. Jayashree Sadri and Sorab SadriTHEREFOREA SERIOUS STUDY OF ETHICS IS CRUCIALFOR UNDERSTANDING BUSINESS ANDINDUSTRY
  • 7. Jayashree Sadri and Sorab SadriIMPLICATIONS OF ETHICS FOR BUSINESSBusiness Ethics promotes and encourages thefollowing at all levels. DEPENDABILITY TRUST RELATIONSHIPS QUALITY ASSURANCE CONSISTENCY MARKETABILITY
  • 8. Jayashree Sadri and Sorab SadriIMPLICATION LEVELS OF THE FIVE TRAITS At the level of the PERSON At the level of the PROCESS At the level of the PRODUCTBusiness Ethics must thus be seen asoperating at all three levels.
  • 9. Jayashree Sadri and Sorab SadriHOW DOES THE BUSINESS OR INDUSTRYBENEFIT FROM THIS?It enables the company to gain acompetitive edge in the market place byconverting the customer into a client andalso by creating a brand image thatreflects excellence and promotessustainability.
  • 10. Jayashree Sadri and Sorab SadriBUSINESS ETHICS DEFINEDEthics is a branch of moral philosophy whichprescribes a code of conduct, which, in turn,acts as a guide to actionWhen this code or behavioral norm relates tohow industries must function and howbusinesses must be run it is called BusinessEthics.
  • 11. Jayashree Sadri and Sorab SadriMANAGERIAL ETHICS DEFINEDManagement is that part of an organization which is chargedwith the responsibility of meeting the goals of the organization.Management is a dedicated team of persons who areconcerned with decision making and decision executing.In the process of decision making and decision executing themanager often encounters a dilemma which has an ethicalconnotation.The study and science of how the managers act or should act inthe face of an ethical dilemma is known as Managerial Ethics.
  • 12. Jayashree Sadri and Sorab SadriPHILOSOPHICAL CANVAS OFETHICS All truth is relative and the only absolute truthis the larger immensity (nature, God etc.) thatengulfs us. This immensity is too much for our mind tocomprehend. So we function within the ambit of ourbounded rationality (limited knowledge andcomprehension).
  • 13. Jayashree Sadri and Sorab SadriSPECIFICITY OF ETHICSMan is a microcosm of a larger reality and actsaccording to his own innate logic.Ethics is therefore:person specificcontext specificculture specificEthical Modes of Conduct are Three Folds.
  • 14. Jayashree Sadri and Sorab SadriBEHAVIORAL MODES IN THE FACE OF ANETHICAL DILEMMA Consequential Mode (Teleological) Non Consequential Mode (Deontological) Acceptance Mode (Praxis)
  • 15. Jayashree Sadri and Sorab SadriCONSEQUENTIAL MODE(Teleological )The manager gets into such a mode when he askshimself the question: What is in it for me? Will it benefit to all or most?
  • 16. Jayashree Sadri and Sorab SadriNON CONSEQUENTIAL MODE(Deontological)The manager gets himself into such a mode whenhe acts on the basis of: Some actions are right or wrong irrespective ofthe consequences or the personalities involved When a moral issue is at stake, the minorityopinion is enough to carry the day or make adifference.
  • 17. Jayashree Sadri and Sorab SadriACCEPTANCE MODE(Praxis)The manager gets himself into such a mode whenhis decision making is conditioned by anaffirmative answer to: Can the decision be discussed openly and freelywithin reasonable limits and within reasonableopen circles? Will the decision be in line with what others thinkand will it meet the peer ground?
  • 18. Jayashree Sadri and Sorab SadriRESEARCH FINDINGS & IMPLICATIONS 82% of the top managers studied and interviewed bythe authors in India operated in the Acceptance modewhen confronted with an ethical dilemma. Implication: The top level manager was not always aleader who stood for values and blazed a trail forothers to follow. Rather he was someone who wantedto play safe, hurt nobody in power, ruffle no feathersand thereby continue to enjoy his position ofauthority.
  • 19. Jayashree Sadri and Sorab SadriHistory demonstrates and research supports thefact that : Mangers operating in the ConsequentialMode are usually opportunists andcarpetbaggers. Very often they do wellin life since they take calculatedrisks.
  • 20. Jayashree Sadri and Sorab SadriContd.. Managers operating in the acceptanceMode are usually insecure, seek peerapproval and promote mediocrity. Veryoften they live behind a façade andbecome “yes men”. The more insecure and unscrupulousones play organizational politics and forma the guile and deceit brigade.
  • 21. Jayashree Sadri and Sorab SadriContd… Managers operating in the NonConsequential Mode are the trailblazers,history makers and true leaders. Mostoften they are the ones who make thedifference. They are easily misunderstoodand often targeted both by the mediocrityand those who rise high through bendingrules, sucking up, compromising dignityand playing their political cards well.
  • 22. Jayashree Sadri and Sorab SadriWHY DO SENIOR LEVEL MANAGERS WHO AREFINANCIALLY SECURE, ACT UNETHICALLYFive possible reasons revealed by research conductedbetween 1994 and 1997 in the UK. Unclear or weak individual and internalized values. Solely Bottom line driven concern Belief that anything is right so long as others believe it tobe right. Inherently exploitative nature for meeting personal goalsand ambitions. Feeling of insecurity
  • 23. Jayashree Sadri and Sorab SadriWHY DO SENIOR LEVEL MANAGERS WHO AREFINANCIALLY SECURE, ACT UNETHICALLYSimilar research in USA showedorganizations tend to reward behavior thatviolate ethical norms.However most societies value ethics andimbibe mortality in its citizen
  • 24. Jayashree Sadri and Sorab SadriFINDINGS OF STUDY IN INDIA To our surprise the findings in India matched those inboth UK as well as in USA. There was one moremajor combination of factors.The standing army of unemployedprofessionals, unscrupulous employers andno state social security system usually madepeople unable to take a principled stand.
  • 25. Jayashree Sadri and Sorab SadriREASONS FOR CONFLICTSOCIETAL NORMS Be open and honest Follow the rules at all costs Take the responsibility Be a team leaderORGANISATIONALCOUNTER-NORMS Be secretive and deceitful Get the job done anyhow Pass the buck Take credit and move up
  • 26. Jayashree Sadri and Sorab SadriETHICAL CODES AND ETHICS AUDIT CODE OF ETHICS:It is a set of documents describing what anorganization stands for and the general rules ofconduct expected from all employees irrespectiveof rank
  • 27. Jayashree Sadri and Sorab SadriCode of Ethics… Code of ethics evolves from business ethics. Ithelps in identifying the business aims, directionsand values. An ethics code describes the general valuesystem or ethical rules that are supposed toguide employees in their everyday behavior inthe organization.
  • 28. Jayashree Sadri and Sorab SadriPrecautions in Evolving a Code The codes would have a positive impact if theysatisfy the following criteria:a) They are distributed to every employeeb) They are firmly supported by the top management.c) They refer to specific practices and ethicaldilemmas likely to be encountered by targetemployeesd) They are evenly enforced with rewards forcompliance and strict penalties fornoncompliance.
  • 29. Jayashree Sadri and Sorab SadriEthics Audit An Ethics Audit is a practice of regularassessment of employee behavior so as toidentify incidents of dubious (questionable)behavior. Here two systems can operate:either there is an Ethics Manager to whomanyone can complain about anyone or whereeveryone is his brothers’ keeper and is dutybound to complain, correct, guide anyonewho may be seen as falling out of line withcorporate norms of conduct.
  • 30. Jayashree Sadri and Sorab SadriA FINAL QUESTION TO THE LEARNEDREADERSHIP Is it just good business sense for managementsto be ethical ?OR Is it good for managements to be ethical and alsobe seen to be acting ethically anyway?
  • 31. Jayashree Sadri and Sorab SadriYour answer may reflect whereyou stand ideologically.THANK YOU