BUSINESS ETHICS Definitions: The term ‘ethics’ is generally used to refer to the rules or principles that define right and wrong conduct. In Webster’s Dictionary, ethics is defined as “the discipline dealing with what is good & bad and with moral duty and obligation.”
BUSINESS ETHICS “Business ethics is concerned with truth and justice and has a variety of aspects such as the expectations of society, fair competition, advertising, public relations, social responsibilities, consumer autonomy, and corporate behavior in the home country as well as abroad.” -Clarence D. Walton
BUSINESS ETHICS Theodore and James Weber suggested three ways for applying and integrating ethical concepts with daily actions 1) Establishing a company policy regarding ethical behavior or developing a code of ethics (2) Appointing an ethics committee to resolve ethical issues, and (3) Teaching ethics in management development programs
Types of Managerial Ethics Archie B. Carroll, an eminent researcher in the area of social responsibility, identified three types of management, depending on the extent to which their decisions were ethical or moral: Moral management Amoral management Immoral management
Types of Managerial Ethics Moral management strives to follow ethical principles and doctrines. Moral managers strive to succeed without violating ethical standards. They seek to succeed while remaining within the bounds of fairness and justice. Such managers undertake activities which ensure that even though they engage in legal and ethical behavior, they continue to make a profit.
Amoral management This approach is neither immoral nor moral. It simply ignores ethical considerations. Amoral management is broadly categorized into two types. Intentional and Unintentional.
Immoral management Immoral management not only ignores ethical concerns, it also actively opposes ethical behavior. Organizations with immoral management are characterized by: Total concern for company profits only. Stress on profits and company success at any cost. Lack of empathy – managers are hardly bothered about others’ desire to be treated fairly. Laws are regarded as hurdles to be removed or eliminated. Strong inclination to minimize expenditure. The basic principle governing immoral management is: “Can we make money with this action, decision, or behavior?” Thus, in immoral management, ethical considerations are immaterial.
Implications of six stages The following conclusions can be drawn from the study of the six stages of moral development of managers: Individuals move up these stages in a sequential manner. The moral development of an individual may stop at any stage. Most managers are at Stage 4 of moral development.
Best Practices in Ethics andCompliance Risk Assessment—create priorities; words and actions always consistent Value-based, compliance-supported materials and activities On-going, highly interactive, work group- based education and training Everyone held accountable—rewards and punishment are made transparent
The Ethical Organization1. Clear Set of Values2. Open and Effective Communication of Values3. Leaders Exhibit the Values4. Values embodied in policies and procedures5. Open dialogue about value decisions6. Accountability: everyone held to these values7. Consistency: words and actions in sync
Ethical Guidelines forManagers Obeying the law Tell the truth Uphold human dignity Adhere to the golden rule Allow room for participation Always act when you have responsibility Build a ethical culture by example setting
Ethics committee Ethics committees perform the following functions: Organizing regular meetings to discuss ethical issues. Communicating the code to all members of the organization. Identifying possible violations of the code. Enforcing the code. Rewarding ethical behavior and punishing those who violate the organization’s code of ethics. Reviewing and updating the code of ethics. Reporting the activities of the committee to the board of directors.
Ethics audits Ethics audits involve the systematic assessment of the adherence of employees to the ethical policies of the organization. They aid in better understanding of the policies and also identify the deviations in conduct that require corrective action.
Benefits of Managing Ethicsin the Workplace Attention to business ethics has substantially improved society. Ethics programs help avoid criminal acts “of omission” and can lower fines. Ethics programs cultivate strong teamwork and productivity. Ethics programs promote a strong public image.