Epgp (one year) 2009-10_be_individualassignment_rajendra inani_20nov09


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Epgp (one year) 2009-10_be_individualassignment_rajendra inani_20nov09

  1. 1. Business Ethics Individual Assignment EPGP 2009-10 - Term II- Individual Submission 20-Nov-2009 Instructor: Prof. Lalitha Sreenath Prof. M.R. Sreenath Submitted by: Rajendra Inani Roll #27
  2. 2. Table of Contents 1 What is your understanding of ethics? ..............................................................................................3 2 Was any person known to you personally at any time involved in an ethical dilemma? How did he/she resolve it? What lessons did you learn from it? ........................................................................5 3 Write about a person who, in your opinion, is the most ethical. Give reasons why you consider him/her as the most ethical. .................................................................................................................7 4 In business, profit-making and ethics do not go hand-in-hand. Discuss.............................................9 5 Bibliography......................................................................................................................................12 Business Ethics – Individual Assignment Page |2
  3. 3. 1 What is your understanding of ethics? Ethics is a philosophical term derived from the Greek word “ethos”, meaning character or custom. In a business environment, this definition drives towards an organizational code of conduct consisting of moral integrity and values in service to the public to be practiced by organizational leaders. Ethics is a branch of philosophy, which seeks to address questions about morality, such as following. 1. What moral values people actually abide by? 2. How moral values should be determined? 3. How a moral outcome can be achieved in specific situations? 4. How moral capacity or moral agency develops and what its nature is? Commonly, we come across the words values, morals and ethics and try to use them interchangeably. These all provide behavioral rules, but the differences can be important when persuading others. These words can be defined as following. Values - These are the rules by which we make decisions about right and wrong, should and shouldn't, good and bad. They also tell us which are more or less important, which is useful when we have to trade off meeting one value over another. Morals - These have a greater social element to values and tend to have a very broad acceptance. Morals are far more about good and bad than other values. We thus judge others more strongly on morals than values. A person can be described as immoral, yet there is no word for them not following values. Ethics - One can have professional ethics, but we seldom hear about professional morals. Ethics tend to be codified into a formal system or set of rules which are explicitly adopted by a group of people. Thus, one can have medical ethics. Ethics are thus internally defined and adopted, whilst morals tend to be externally imposed on other people. Difference between Ethics and Morals – Some Examples Ethics and morals are not the same thing. Though, it may look arbitrary to many, but there is a basic difference between ethics and morals. Morals define personal character, while ethics stress a social system in which those morals are applied. One can say, ethics point to standards or codes of behavior expected by the group to which the individual belongs. This could be national ethics, social ethics, company ethics, professional ethics, or even family ethics. Thus, while a person’s moral code is usually unchanging, the ethics he or she practices can be other-dependent. In a certain period of time, Morals form a tradition in a certain society and define how one should behave, giving the concepts of what is “good” and what is “bad”. These Morals rules Business Ethics – Individual Assignment Page |3
  4. 4. would vary differently in different countries or within the same country in different regions. These are a subjective phenomenon as its rules do not follow from any objective necessity and advisability. For example, a moral rule about how to dress, where and how much one can cover the body, what is “appropriate” to do and what is not, what one should be ashamed of, what turns of speech are decent and what are not, etc. Based on the real necessity and advisability, Ethical principles are formed in objectivity. They are based on the understanding of the Path to the Perfection, to God. It believes that it is what God tries to explain people. It is the science about the correct attitude of man toward God in all of his aspects and manifestations, towards other people and to all incarnate and non-incarnate beings and towards one’s own life path. Let’s take a case of Criminal defense Lawyer to better understand difference between ethics and morals. The Lawyer’s ethics demands that the accused client must be defended as vigorously as possible, despite the fact that the lawyer knows him to be a guilty and if let free, it would potentially lead to more crime. Though, his personal moral code finds murder immoral and reprehensible. Finally, the Legal ethics must override personal morals for the greater good of upholding a justice system ensuring that the accused is given a fair trial and guilt must be proved beyond a reasonable doubt. Similarly, the prosecution and court deal with the difference between ethics and morals. The prosecutor never reveals the prejudicial evidence, in case he is aware of past actions of the accused which might resonate with the current charges, thus the prosecutor ensures avoiding prejudicing the jury. But, if the prosecutor finds that her friend have a date with a potentially dangerous or suspect history, he would go ahead and reveal to her on moral grounds. We are all faced with the butting heads of ethics and morals in Society. Abortion is found to be personally immoral by many people but considered legal and therefore medically ethical. Extremists, fundamentalists and even mainstream theists all have different ideas about moralities which impact our everyday’s life, even if though indirectly through social pressures or legal discrimination. Morals and ethics also clash at the workplace where company ethics play against personal morality. One has to choose demanding, stressing and consuming work ethics over family obligations, since later is viewed as moral obligations towards spouse and children. This is despite the facts that corporate greed itself blurs its own ethical lines. On the other hand a common reason for dismissal like employee theft is due to poor personal morals. Business Ethics – Individual Assignment Page |4
  5. 5. 2 Was any person known to you personally at any time involved in an ethical dilemma? How did he/she resolve it? What lessons did you learn from it? In my last job with L&T McNeil, a subsidiary of Larsen & Toubro Limited (L&T) during the year 1992, an employee Mr. Balasubramanayam (Bala) had severe heart attack and admitted to hospital. He was diagnosed with blocks in his heart arteries and advised to undergo Bypass surgery. His condition was very serious and doctors advised him to undergo this surgery at the earliest. During that period, personal health insurance was not very common and this person was not having any personal health insurance. He was belonging to Supervisor cadre of organization and was entitled only up to Rs 10000 per annum of medical reimbursement. This employee had responsibility of a homemaker wife, 2 school going little kids and his old mother. He had been with organization with more than 20 years and his humble earnings were not enough to bear load of expensive surgery and post operative care costing more than Rs. 2 Lakhs. It was not possible for his wife to arrange this huge sum at such short notice. Also, even after undergoing such surgery, there was no means with the family to repay the money, if a loan is taken. This employee’s wife (Mrs. Bala) along with her two kids landed in the company’s office for help with tears in her eye. She was begging for life of her husband and father of her kids. She was arranged to meet Head of HR Mr. Srinivasan. Mr. Srinivasan was aware about the health of Mr. Bala, who was away from office for a week and was also aware of the financial condition of his family. The company was having more than 3000 employees and it was not within the powers of Head of HR to arrange any immediate help either from company’s fund or immediately arranging any employee contribution. Not seeing any feasible solution within his reach, Mr. Srinivasan approached Mr. K V Mathew, the CEO of L&T McNeil, whose office was located within the same factory campus. Mr. Srinivasan informed the emergency need of Mrs. Bala to Mr. Mathew. The two, the CEO and Head of HR, discussed and evaluated this employees employment record and come to conclusion that he has been a diligent long time employee of organization and should be helped by any suitable means. They come to agreement that • There was a limitation on the funds to be released on any compassionate ground given the large number of employees in the organization, and such move could create a precedence which may be difficult to comply at later date. • An employee, who has spent a major part of his career for the company, cannot be left alone in such bad situation, and his family would be orphaned in case he is not helped in time. Business Ethics – Individual Assignment Page |5
  6. 6. • Any untoward outcome of this situation with Mr. Bala, would demoralize employees of the company, who have seen Mrs. Bala in company campus with her kids in helpless situation. • Many of the employees of company could imagine such situation with their families in case they undergo any emergency in future and hardship to be faced by them, this has put a big responsibility before the CEO before taking any decision on Mrs. Bala’s request. Mr. Mathew quickly reviewed the HR policies of organization with Mr. Srinivasan and available options for Mr. Bala’s treatment. In the rules book of company there was very little could be done given the employee cadre of Mr. Bala. Seeing the cost of treatment, it was difficult to arrange fund in personal capacity with other employees’ contribution. They also noticed that while an employee is in Supervisory cadre, his medical treatment is his own risk, if not covered under medical insurance by employee himself, where as employees in Executive and upper cadres are covered for medical treatment on company’s cost. Thus, to handle this situation there idea came to promote Mr. Bala to Executive cadre with immediate effect, so that his cost of medical treatment can be billed to company and his family can be helped. This solution raised a number of ethical questions. 1. Could Mr. Bala be given out of turn promotion, whereas as per his seniority and other merits, it may take two more years for him to get this promotion? 2. Impact on employee morale, in case Mr. Bala is given this promotion. 3. Would this be a fair practice to pass an employee’s expenses to company by this means? After a quick thought, Mr. Mathew decided to go ahead and promoted Mr. Bala to Executive cadre. Mr. Mathew met Mrs. Bala and his family and assured them that company would be taking care of full medical expenses of Mr. Bala’s treatment and whole company is with them in this hour of crises. He instructed Mr. Srinivasan to depute one employee from HR department to attend Mr. Bala in hospital and ensure that all necessary support for his best treatment is arranged immediately. This situation’s handling of the CEO had created a lot of positivity among employees and assured them that in hours of any genuine need, the company would be taking care of them. It gave them belief that company would not be constrained by rules book, but it would extend support using any alternative path. Even the employees, who were affected with out of turn promotion of Mr. Bala never complaint about it, instead they appreciated the CEO’s effort in handling the situation in unique way. Mr. Bala was back to work after 3 months with renewed commitment to the company and he became an ambassador of company’s employee friendliness behaviour. Business Ethics – Individual Assignment Page |6
  7. 7. 3 Write about a person who, in your opinion, is the most ethical. Give reasons why you consider him/her as the most ethical. I consider my mother to be most ethical person whom I met in my life. This is due to values she enforced on me since my childhood despite her undergoing a lot of hardship in her life. My mother lost her own mother at age of five. She had a hard upbringing in a lower middle class conservative family with her brothers with no other female in her house. She had to take care of all homely work at very tender age due to being only female in home. She got married at age of seventeen due to customs of the society at her time with a small school teacher. She was unfortunate to lose her husband at age of 36. She was left with four small kids and a meager sum of pension provided by government due to my father’s untimely death. My father was a simple person, did not leave any bank balance or any big property. My mother was educated only a matriculate level and was not in a position to take up a job to support her family. Living in a small town further limited her option for livelihood and kids education. Some of her options to survive were • Discontinue studies of at least two elder kids and put them on any meager jobs to survive the family, though they were minor. This posed a big question front of her, if she should ruin kids’ childhood for family survival. • Sale the ancestral house in village to get some funds to survive, which would bring in lot of social wrath and extinction. This created a big dilemma between social prestige vis-à-vis justices with childhood of kids, especially she herself had a tough childhood. • Get her daughter, who was only fifteen to get married to someone less suitable person from any rich family, who can support her family in return. This was well supported by local village customs, but in her own wisdom it was most unethical with her personal life experiences. My mother decided to sale off the ancestral house and left the village and moved to a nearby city. She ensured that all four of her kids going to school and there is no discontinuity in their studies. While, there was scarcity of resource to fund study and expenses, she motivated elder kids to take up part-time jobs and tuitions to fund the study. She taught us lesions of hard work with dignity. She never accepted any donation from any relatives in cash or kind. She also ensured that we do not get lured by taking up any unlawful jobs or short cuts in study. She motivated all kids to maintain high values in life and achieve success by sheer hard work. She used to be very strict mother and used to punish us children badly for any misdeed, which was unethical or unlawful. She ensured that her love and care do not develop any bad habits in the kids and if needed she suppressed its display itself. Today, when all four kids are well settled their career and family, my mother still remains a source of strength and inspiration to all kids and grand kids. She still maintains very high ethical values and her principles of self dependence. Even, she does not take any money from kids, but maintains her simple life with meager pension received from government. Business Ethics – Individual Assignment Page |7
  8. 8. She used to tell me a story in childhood about a small boy, who used to steal toys from his friends and neighborhood. As the boy grew up, he started stealing and robbing other people and his mother never corrected him, instead encouraged him to bring more valuable things back home. One day, this boy turned out to be a big thief and ultimately caught by police and put into jail. This boy requested police to arrange a meeting with his mother. When he met his mother in the jail, he told her that he wants to tell her some secret by whispering in her ear. On the pretext of telling her something in her ear, he bites off her mother’s ear with anger. He told her that in his childhood, she did not correct him when he used to steal small toys of his friends in school. If she would have corrected him at that step, today he would have not landed in jail. She continues to tell this story to her grandchildren with the same enthusiasm. Business Ethics – Individual Assignment Page |8
  9. 9. 4 In business, profit-making and ethics do not go hand-in-hand. Discuss. In summary, this is totally a misconception that profit-making and ethics do not go hand-in-hand. In fact, they are complimentary instead of being adversaries. One may show high profit with short term vision using unethical means, this may turn up with an immediate gain, but the losses are passed to the society or environment. Since, the social cost is not accounted in the books of the profit maker; it gives an illusion of profit. On the other hand, business did with ethical means shows a slow but study profit, which on long run results in overall more profit then the previous case. In the later case, the ethical practice reaps more benefit and trust of stake holders, which would not be the earlier case. Also, legal liabilities arising out due to unethical practice can wipe off earlier profits at any time during the life of business. Ethical behavior involves a Golden Rule, a Guiding Philosophy. It's doing things the Right Way, when no one else is watching. The thing is, people are always watching the decision makers, particularly when they make bad decisions. In the real world of business, companies are faced with issues not only of profit maximization, but also of ethical responsibilities towards social and environmental causes. While making business decisions a firm needs to take into account the moral and ethical repercussions of the firms’ activities. The tradeoff between profit and social responsibility and ethical principles is inevitable. In the recent years, social and environmental responsibilities have emerged as a great sense of corporate wisdom. While making business decisions, in early days managers used to usually look at maximization of profit, but now forced to look into its social and environmental implications as well. Particularly, an unpopular opinion with regards to sex, creed, race, religion, politics, sexual preference, job discrimination, difference in sporting team favorites, abortion, gay marriage, military support, etc. may cost terribly to a manager, if he gives priority to profit over these issues. The recent corporate scandals have fostered in many people’s minds the notion that the pursuit of profit by its very nature leads to poor behaviour. In a system of free exchange, profit is an indication that someone has created value for others. At the root of many of these scandals is a business model that isn't working and they have failed to discover how to create real value, where companies fall into ethical lapses. It's an inability to legitimately turn a profit that leads some corporate actors to behave poorly. Once companies have discovered how to deliver sustainably superior value to customers, they don't need to engage in creative accounting, or political efforts to restrict competition. Their successful pursuit of profit is one of the key things that distinguish them from unethical companies. Business Ethics – Individual Assignment Page |9
  10. 10. Principled Entrepreneurship - Effective entrepreneurial action produces profit, making unethical behavior a waste of time. A culture infused with strong principles, meanwhile, makes unethical behavior a non-starter. One of the advantages of building a company based on principled entrepreneurship, then, is that it will be filled with people who, most importantly, will not tolerate any violation of law or integrity, but also who would never need to do such a thing, because they are focused on creating genuine value for customers. Book : Profit with Honor - Daniel Yankelovich one of the world's most respected social science survey researchers and as a member of numerous corporate boards - to bear on the issue of values and ethics, published his views in the book titled “Profit with Honor”. This book talks about the New Stage of Market Capitalism, as its subtitle suggests. This book answers questions like "Is Corporate Ethics an Oxymoron, and If Not, What the Heck Can We Do About It? ". It suggests that even if you're not in business, this question matters. It finds us today facing a "third wave of mistrust of business and other institutions," following two earlier waves around the time of the Great Depression and again in the late 1960s. This book argues that the current mistrust, while fed by scandals at Enron, Tyco, WorldCom, and elsewhere, springs from a convergence of three deeper trends: • The deregulation of the 1980s and 1990s that "transformed the gatekeepers - the accounting firms, the investment bankers, the business law firms, the regulatory agencies - into enablers." • The excesses of CEO pay, which tied it to "the vagaries of the stock market" and "sorely tempted" CEOs to "take questionable shortcuts, or even cheat." • The importing into business of bad cultural norms that include winning at all costs and gaming the system. This book suggests that "one need to give people a positive basis for trust and respect and an ethical vision to live by, not merely severe punishment for misdeeds." It concludes that fighting such trends with laws and compliance structures isn't enough. "If one wants positive results." Stewardship Ethics - Unlike many laments about corporate malfeasance that are awash with diagnoses but scant on prescriptions, this book steers directly toward a concept of “stewardship ethics”. It advocates it as "a new stage of enlightened self-interest" that brings social norms together with business imperatives, focuses on community, and "emphasizes the conscious effort required to reconcile profitability with social good." This book locates its concept between two popular business ethics. • A laissez-faire approach that assumes "all reasonably honest ways of making profit somehow serve the public good" with no additional ethical imperatives required. Business Ethics – Individual Assignment P a g e | 10
  11. 11. • A corporate social responsibility approach. Arising from the nonprofit sector, this theory finds profit making suspect, and seeks to burden business with the correction of social ills unrelated to its core objectives. Will it matter? Will hard- driving executives buy into stewardship ethics? Here the book draws few strong arguments. • Executive pay – The book divides compensation into two pieces: "the wealth needed to provide a CEO with financial security and a high-status lifestyle, and the wealth desired mainly for scorekeeping purposes ('my bonus is bigger than yours')." The author suggests that baby boomers - who make up the bulk of today's CEOs - desire more than money. He finds them "hungry for recognition and for the conviction that they are leaving a valued legacy for the future." If that hunger can replace the "scorekeeping" part of executive compensation - and author thinks it can - then stewardship ethics may well be attractive to the CEO. • Culture's broad social norms - "The good news is that the larger culture is ready for less self-centered, more-communal-minded values," as suggested by the book. What's most needed today is a new vision for corporate ethics, this book makes perfect sense. Business Ethics – Individual Assignment P a g e | 11
  12. 12. 5 Bibliography 1. http://en.wikipedia.org/wiki/Ethics 2. http://changingminds.org/explanations/values/values_morals_ethics.htm 3. http://www.allabouttruth.org/Moral-Ethics.htm 4. http://www.wisegeek.com/what-is-the-difference-between-ethics-and-morals.htm 5. http://www.religiousbook.net/Books/Online_books/Jt/Jesus_Teaching_20.html 6. http://www.academon.com/Essay-The-Ethics-of-Profit-Maximization/45819 7. PROFIT WITH HONOR: The New Stage of Market Capitalism By Daniel Yankelovich 8. Moral Courage By Rushworth M. Kidder Business Ethics – Individual Assignment P a g e | 12