ETHICS

1. Ch-2
Management of Ethics

2. Management of Ethics
Managing ethics mainly concern with the ethical quality
of the decisions and actions taken by managers of an
organization. Its main objective is to ensure that the
managers especially executive managers behave
ethically and take decisions that are ethically correct.

3. HOSMER STUDY
The model was developed on the basis of research conducted on HR problem
relates to employee drug testing issue of a company that faces the problem of
low productivity and low quality. It is suspected that it is due to drug and alcohol
abuse. The testing for chemical depending is an invasion of personal privacy and
the test does not always give accurate result. The management has information that
less than 20 percent of the workforce uses drugs and alcohol. However, if the test is
carried out, the other 80 percent will also have to go through the indignity of tests.
The managerial dilemma is whether to go for drug test or not.

4. ETHICS ANALYSIS (HOSMER MODEL)
Managing ethics mainly concern with the ethical quality
of the decisions and actions taken by managers of an
organization. Its main objective is to ensure that the
managers especially executive managers behave
ethically and take decisions that are ethically correct.

5. ETHICS ANALYSIS (HOSMER MODEL)

6. ETHICS ANALYSIS (HOSMER MODEL)
STEP 1: IDENTIFY THE MORAL PROBLEM
A quick way of identifying the moral issue is asking who has been harmed and whether they
have been harmed in a significant way.

7. ETHICS ANALYSIS (Cont……
STEP 2: ADDITIONAL FACTS
Business students and business people tend to do quite well in finding many additional facts
and identifying questions that they want to have answers before they make a conclusion.

8. ETHICS ANALYSIS (Cont……
STEP 3: AVAILABLE ALTERNATIVES
Sometimes, we may think of an ethical issue as an either-or choice.

9. ETHICS ANALYSIS (Cont……
STEP 4: IDENTIFY PERSONAL IMPACTS
Assume that you are in the position of being the decision-maker or a person who’s making a
recommendation to the decision-maker. In that position, what are the consequences to you as
a person and what are the consequences to your career resulting from the decision you
make? Recognize that from a career standpoint, it can cut both ways. So, recognize that in
many situations, the personal impacts could go in a couple of different directions.

10. ETHICS ANALYSIS (Cont……
STEP 5: APPLYTHREE MORAL FRAMEWORKS
Professor Hosmer’s Step Five applies ten ethical principles drawn from thousands of years of
philosophy. The modification is to reduce these to three leading, contemporary business ethics
frameworks which capture the historical philosophies and place them into a business
application
SHAREHOLDER THEORY:
STAKEHOLDER THEORY:
VIRTUE THEORY

11. ETHICS ANALYSIS (Cont……
STEP 6 : CONCLUSION
calls for a conclusion. This could be to choose the Justice approach in the Stakeholder
Theory. It could be to choose maximizing profitability in the short term. It could be a mix of a
variety of the frameworks. For example, one would design a solution based on respecting
rights and protecting the vulnerable because in the long term, such attention is going to create
the greatest good for the greatest number, which will also equate with long-term shareholder
value.

12. ETHICS DILEMMA
A dilemma is a tough choice. When one is in a difficult situation and each option
looks equally bad or equally good, you're in a dilemma. Ethical dilemma occurs
when the decision-maker has to chose among actions that looks equally good or
equally bad on the grounds of ethical analysis.
Thus ethical dilemma occurs when ethical analysis fails.
A dilemma is described as a grim problem apparently incapable of a satisfactory
solution or a situation involving choice between equally unsatisfactory alternatives
(Davis, Aroskar, Liaschencko, and Drought, 1997). It is concept appraised by
Sletteboe (1997) who recognized three circumstances that can give rise to a
dilemma.

13. TYPES OF ETHICS DILEMMA IN ORGANISATION
1. FACE-TO-FACE ETHICAL DILEMMAS
This arises mainly because of human element at work. People make social interaction
and relation at work. These informal relations create certain type of expectations.
However, organization has specific expectation from each employee. When
expectations of organization and of social relations oppose each other, we say there is
face-to-face dilemma.

14. TYPES OF ETHICS DILEM(Cont…..
2. CORPORATE POLICY DILEMMAS
Managers have to make certain policy decisions based on the corporate policy or
corporate directive that might seem to be unethical or that might increase the scope of
being misused. However, manger has to make policy decision. At the time when
manager feels that the policy made by him is unethical or which might result in an
unethical practice in future than such is known as corporate-policy ethical dilemmas.

15. TYPES OF ETHICS DILEM(Cont…..
3. FUNCTIONAL AREA ETHICAL DILEMMA
Manager perform wide rage of functions in the organization. These functions
sometimes have unethical choice associated with them, or the choice is equally bad at
that time what manager feels is called functional area dilemmas.

16. PRINCIPLES OF ETHICS
1. HUMAN DIGNITY
Those thing or decision or actions that violates human dignity are unethical in an
organization. The manger of the organization has to choices in accordance with human
dignity.
Eg. 1. Harassment at work is unethical as it is against human dignity.
2. Verbally abusing employees of competitor’s firm.

17. PRINCIPLES OF ETHICS(Cont…..
2. HUMAN RIGHTS
In practice it is expected that organisation or the members of organisation perform
action such that no human right should be denied or violated.
Eg. 1. Adulteration in food. Completely against human right and has be treated as
unethical activity.
2. Putting hazardous affluent in river.

18. PRINCIPLES OF ETHICS(Cont…..
3. JUSTICE
Manager will make sure that there is no injustice done to employee, customer or
stakeholder. In case of ethical dilemmas manager has to see to it that there is greater
justice to greater number of people.
Eg. In Fisher industry 50% of the catch is wasted and not used for consumption as
food. One of the reason is lack of technology. So is it ethical , no.

19. PRINCIPLES OF ETHICS(Cont…..
4. BENEFICENCE
It is concerns human welfare, reducing the harms and optimizing the benefits of
greater number of people. Whatever action a manger makes whether it is benefiting
organisation, employee and society at large.
Eg. The working condition is very harsh and the appropriate care is not taken of
employee and more over not compensated for such harsh condition then it is unethical.

20. PRINCIPLES OF ETHICS(Cont…..
5. CULTURAL DIVERSITY
Customers or employees or stakeholder come different cultural background having
different moral standards. And being organisation on has accept to the point that it is
not affecting organization's process; it induce pluralism, and there should be certain
amount tolerance for these differences.

21. PRINCIPLES OF ETHICS(Cont…..
6. SOLIDARITY, EQUITY AND CO-OPERATION
Organisation believes that employee has to display feeling of solidarity (unit)
accompanied with co-operation there has to be equity. If organisation is treating
employees with equity there will be no co-operation.
7. RESPONSIBILITY TOWARDS ENVIRONMENT

22. ETHICS FOR MANAGERS
1. ETHICS FOR MANAGERS AT ALL LEVELS AND FUNCTIONS
Honesty:
Integrity:
Loyalty:
Fairness:
Respect:

23. ETHICS FOR MANAGERS(Cont……
2. ETHICS FOR LEADER
3. ETHICS FOR MARKETING
4. ETHICS FOR HR MANAGER
5. ETHICS FOR FINANCIAL MANAGER
6. ETHICS FOR PRODUCTION MANAGER
MANAGER

24. ROLES AND FUNCTIONS OF ETHICAL MANAGERS
1. Always Honor Commitments
2. Never Break A Confidence
3. Treat Others As Valued
4. Learn Constantly And Never Stop Improving
5. Always Think “Win-win”
6. Honor Both The Letter And The Spirit Of Applicable Laws
MANAGER

25. ROLES AND FUNCTIONS OF ETHICAL(Cont ……..
According to Gerald Cavanagh and his colleagues role of ethical
manger is to make ethical decision. And to make ethical decision there
is a stipulated decision-making framework. This framework includes
following aspects that help manger to take ethical decisions
DUTIES ( DEONTOLOGICAL APPROACH)
RIGHTS
UTILITARIANISM (TELEOLOGICAL APPROACH)
JUSTICE
ETHICS OF CARE

26. ORGANISATIONAL SIZE
An organization's structure is important to the study of business ethics. In a Centralized
organization, decision- making authority is concentrated in the hands of top- level
managers, and little authority is delegated to lower levels. Responsibility, both internal
and external, rests with top management. This structure is especially suited for
organizations that make high-risk decisions and whose lower- level managers are not
highly skilled in decision making. It is also suitable for organizations in which
production processes are routine and efficiency is of primary importance.
These organizations are usually extremely bureaucratic (managing through elaborate
rules, policies and stipulated procedures) , and the division of labour(high
specialization) is typically very well defined. Each worker knows his or her job and what
is specifically expected, and each has a clear understanding of how to carry out
assigned tasks. Centralized organizations stress formal rules, policies, and
procedures, backed up with elaborate control systems. Their codes of ethics may
specify the techniques to be used for decision making.

27. ORGANISATIONAL SIZE (Cont…..
For managing ethics there are several measures that an organisation can take raging
from legality to compassionate behavior. All the bellow mentioned aspects are
important for both centralized and decentralized organisation. However, certain
aspects are more important for centralized organisation rather than decentralized
organisation, vice versa, and they are as under:

28. PROFITABILITY AND ETHICS
While profit is something that can be measured in monetary terms (quantitative) while,
ethics is measured subjectively or by the actions taken. But the relationship of these
terms is something which has raised a controversy in the minds of people.

29. PROFITABILITY AND ETHICS (Cont…….
PROFIT OVER ETHICS:
Profit is one of the missions for any business. Profits are needed to pay back investors
as well as give salaries to employees. That should not lead to unethical practices.
Profits can be earned along with practicing ethically. There have been many scenarios
where unethical practices have caused the organization to go into serious
controversies. Some of the examples are given below:
Maggi instant noodles ban in the year 2015: Occurred due to excessive quantities of
Mono Sodium Glutamate aka MSG, despite writing “No MSG” on the packet.

30. PROFITABILITY AND ETHICS (Cont…….
ETHICS OVER PROFITS:
An investor will look at the financial performance of a company, whereas the customer
will look at the reputation of the company before purchasing. Sometimes, customers
also look at the social cause of the company. It is necessary to maintain a reputation in
the market to grow.
Having ethical practices in our business can offer you good employees, customers who
come to you because of the ethical practices as well as good productivity in the long
run. Ethical practices can create a holistic environment to work. Many organizations
like Tata, Starbucks, Wipro, Walmart, are known for their ethical practices all over the
world.

31. BALANCED APPROACH
Consider this balance between profits and ethics to be "ethical profitability." Well-
balanced companies not only consistently reward owners, investors and employees
with profitable performance, they also genuinely focus on these five key areas of
ethics:
 LEADERSHIP BY EXAMPLE
 COMPANY-WIDE ETHICAL AWARENESS
 STRONG MANAGEMENT OF REVENUE GENERATION AND REPORTING
 HIGH LEVEL OF INTERNAL TRUST
 FORMAL AND ACTIVE COMPLIANCE PROGRAM

32. COST OF ETHICS IN CORPORATE
Operating in an ethical way may incur additional costs to a business when compared
with other organisation and companies who may not do business in the same way.
Additional cost an ethical company has bear in comparison to unethical company.
Direct Cost:
Higher raw material cost:
ethical organisation would not prefer adulterated raw material.
Will give preference to renewable material.
Organic material.
Like purchase from ethical vendor.
Human resource Cost:
Labour cost per unit will be higher.
Labour welfare cost will be higher.
Labour safety and security cost will be higher.
Effluent treatment cost
Marketing Cost
Rejected product cost
Better quality cost
R&D Cost

33. COST OF ETHICS IN CORPOR (Cont…….
Indirect cost:
Tax evasion
CSR activity
Audit rigorous audit and will higher ethical auditors.
Legalities compliance cost
Ethical marketing
Ethical R&D
Transparency Cost eg. in Australia the origin of the product has to mentioned on
the packet

34. ETHICS EVALUATION
Ethical — Evaluation should not reflect personal or sectoral interests. Evaluators must
have professional integrity, respect the rights of institutions and individuals to provide
information in confidence, and be sensitive to the beliefs and customs of local social
and cultural environments. When considering an ethical issues it is advised that you
follow a stepwise approach in your decision-making process
1) Recognize there is an issue Identify the problem
2) who is involved Consider the relevant facts, laws and principles
3) Analyze and determine possible courses of action
4) Implement the solution
5) Evaluate and follow up

35. BUSINESS AND ECOLOGICAL
There are many environmental issues in India.
Air pollution, water pollution, garbage domestically prohibited goods and pollution of
the natural environment are all challenges for India.Nature is also causing some drastic
effects on India. The situation was worse between 1947 through 1995. According to
data collection and environment assessment studies of World Bank experts, between
1995 through 2010, India has made some of the fastest progress in addressing its
environmental issues and improving its environmental quality in the world. Still, India
has a long way to go to reach environmental quality similar to those enjoyed in
developed economies. Pollution remains a major challenge and opportunity for India.
The environmental issues can be classified into
 Air pollution
Water pollution
Land Pollution and
Noise pollution