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Ethics
- 1. v Importance of ethics ∑ Regulating human behavior ∑ Benefit in long term ∑ Corresponds to basic human needs ∑ Better decision making ∑ Inhabits knowledge ∑ Promotes moral and social values v Ethics and related terms ∑ Ethics and morality ∑ Ethics and religion ∑ Ethics and law ∑ Ethics and values v Relationship views on ethics and business ∑ Unitarian view of ethics ∑ Separatist view of ethics ∑ Integration view of ethics Business ethics v Nature of business ethics ∑ Ethical values ∑ Relative terms ∑ Interest of society ∑ Business-society relationship ∑ Provides frameworks v Scope of business ethics ∑ Societal level ∑ Stakeholder’s level ∑ Internal policy level ∑ Personal policy level
- 2. v Role of business ethics in different areas ∑ Role of business ethics in finance ∑ Role of business ethics in sales and marketing ∑ Role of business ethics in hrm ∑ Role of business ethics in production ∑ Role of business ethics in technology v Principles of business ethics ∑ be trustful ∑ keep an open mind ∑ meet obligation ∑ have clear documents ∑ become community involved ∑ maintain accounting control ∑ be respectful v 3Cs of business ethics ∑ Compliance ∑ Contribution ∑ Consequences of business activity v Level of business ethics ∑ Individual level ∑ Organizational level ∑ Associative level ∑ Societal level ∑ International level v Types of business ethics ∑ General business ethics ∑ Professional business ethics
- 3. ∑ International business ethics and ethics of economic systems v Tools for business ethics ∑ Vision/mission statements ∑ Values ∑ Rights ∑ Duties ∑ Moral rules ∑ Human relationship ∑ Common morality ∑ Business policies and procedures ∑ Code of conduct ∑ Code of ethics v Factor influencing business ethics ∑ Value forming institutions ∑ Organizational goal ∑ Work and career ∑ Superiors ∑ Peers and colleagues ∑ Professional codes v Arguments for business ethics ∑ Improve society ∑ Helps to maintain a moral course in turbulent times ∑ Cultivates strong, teamwork and productivity ∑ Supports employee growth and meaning ∑ Helps to ensure that policies are legal ∑ Helps to avoid criminal acts ‘’of omission’’ ∑ Helps to manage values ∑ Managing ethical values ∑ Formal attention to ethics
- 4. ∑ Law cannot protect society, ethics can Morality and ethics v Kohlberg’s stages of moral development ∑ Pre-conventional level 1. punishment and obedience orientation 2. instrumental relativist orientation ∑ Conventional level 3 .interpersonal concordance or good boy – nice girls orientation 4. Law and order orientation ∑ Post – conventional, autonomous or principles level 5. social – contract legalistic orientation 6. universal ethical – principle orientation Values v Characteristics of values ∑ Part of culture ∑ Learned responses ∑ Inculcated ∑ Social phenomenon ∑ Gratifying responses ∑ Adaptive process v Objectives of values ∑ Human spirit ∑ Change human nature ∑ Scope for improvement ∑ Form base of relationship ∑ Self management ∑ Business growth ∑ Provide direction ∑ Provide feedback
- 5. ∑ Improved relationships ∑ Building culture ∑ Socialization decision making v Classification of values ∑ Human values ∑ Social values ∑ Business values ∑ Community values ∑ Family values ∑ Professional values ∑ Secular values ∑ Spiritual values Secular versus spiritual values in management v Features of secularism ∑ Productivity ∑ Profit ∑ Goodwill ∑ Reputation ∑ Responsibility ∑ Strategy and achievement v Features of spiritualism ∑ Self fulfillments ∑ Egolessness ∑ Complete freedom ∑ Universal ∑ Unconditional love v Role of values in business ∑ Image building ∑ Trust and support
- 6. ∑ Successfulness in long run ∑ Attracting investors ∑ Economic efficiency ∑ Corporate culture ∑ Guide to action ∑ Objectives standards ∑ Social responsibility v Values for managers in india ∑ Core values ∑ Personal traits ∑ Goals of a typical manager in india ∑ Important personal qualities of a manager ∑ Privates values of managers Module 2 Managerial ethics v Types of managerial ethics ∑ immoral management ∑ amoral management ∑ moral management v types of managerial ethical dilemmas ∑ bribery ÿ reasons ÿ bribery is universally shameful ÿ bribery is a sell out the rich ÿ bribery is a betrayal of trust ÿ bribery violates a divine paradigm ∑ deception ∑ unfair discrimination
- 7. ÿ types ÿ gender based discrimination ÿ discrimination on the bases of colour of skins ÿ discrimination on bases of nationality ÿ employee’s discrimination unethical ∑ black money ∑ coercion ∑ theft ∑ honesty ∑ insider training ∑ tax evasion ∑ pollution ∑ corruption v sources of managerial ethical dilemmas ∑ pressure to balance work and family ∑ poor communication ∑ poor leadership ∑ heavy work load ∑ lack of management support ∑ pressure to meet sales or profit goals ∑ personal financial worries ∑ company politics ∑ insufficient resources ∑ lack of fairness and equality ∑ low literacy rate v ethical dilemmas in multinational companies (MNCs) ∑ political activity ∑ sales marketing and advertisement ∑ environmental issues ∑ Technology
- 8. ∑ Economic activities v Guidelines for managing ethical problems ∑ Utility approach ∑ Human rights approach ∑ Justice approach Managerial ethics and individual decisions v Process of ethical decision making ∑ Recognising an issues as an ethical one ∑ Making the ethical judgment ∑ Resolving to do ethical thing ∑ Actually acting ethically v Motivators of individual ethical behavior ∑ Restraints upon personal liberty ∑ Determinants of individual ∑ Unselfish concern driven by empathy ∑ Self concern driven by social pressure ∑ Personality Corporate ethical leadership v Leadership style influencing ethical decisions ∑ Autocratic leaderships ∑ Bureaucratic leaderships ∑ Charismatic leaderships ∑ Democratic leaderships ∑ Participative leaderships ∑ People oriented leaderships ∑ Relation oriented leadership ∑ Servant leadership ∑ Task oriented leadership ∑ Transactional leadership
- 9. ∑ Transformational leadership v Habits of strong ethical leaders ∑ Ethical leaders have strong personal character ∑ Ethical leader have a passion to do right ∑ Ethical leader are proactive ∑ Ethical leader consider stakeholders interests ∑ Ethical leaders are role models for the organization’s values Corporate social responsibility(CSR) v SCOPE OF CSR ∑ Net income contribution ∑ Human resource contribution ∑ Public contribution ∑ Environmental contribution ∑ Product or service contribution v Essentials of CSR ∑ constituency relation ∑ compensating social costs ∑ social contract theory ∑ moral obligation v REASONS OF GROWNING CONCERN FOR CSR ∑ Consumerism ∑ Trade unionism ∑ Public opinion ∑ Professionalisation ∑ Trusteeship v CSR WITH RESPECT TO DIFFERENT STAKEHOLDERS
- 10. ∑ Responsibility towards shareholder or owners ÿ Reasonable dividend ÿ Soundness ÿ Information protection of assets ∑ Responsibility towards workers/employees ÿ Fair wages ÿ Good working condition ÿ Service benefits ÿ Cooperation ÿ Recognition of worker’s rights ÿ Opportunity for growth ∑ Responsibility towards customers ÿ Need satisfaction ÿ Regular flow of goods ÿ Courteous service ÿ Right information ÿ Fair trade practice ∑ Responsibility towards suppliers ∑ Responsibility towards creditors ∑ Responsibility towards government ∑ Responsibility towards society/community v Tools for CSR ∑ Accountability ∑ Codes of conduct ∑ Fair trade ∑ Social accountability ∑ Socially responsible investing ∑ Global reporting v Arguments for CSR ∑ Changed public expectations of business ∑ Better environment for business
- 11. ∑ Public image ∑ Avoidance of government regulation ∑ Balance of responsibility with power ∑ Business has the resources ∑ Let business try ∑ Moral responsibility ∑ Duty of gratitude ∑ Prevention is better than cure v Issues related to CSR ∑ Economic issues ∑ Competitive issues ∑ Legal and regulatory issues ∑ Philanthropic issues Social reporting v Four Cs OF social reporting ∑ Clear ∑ Comprehensive ∑ Consistent ∑ Comparable v Dimensions of corporate social reporting ∑ Social ∑ Environmental ∑ Economic v Types of corporate social reporting ∑ Inventory reporting approach ∑ Social indicators approach ∑ Goal accounting and reporting approach ∑ Balance sheet approach v Issues with corporate social reportimg
- 12. ∑ Completeness ∑ Materiality ∑ Regularity ∑ Quality assurance ∑ Public confidence ∑ Accessibility ∑ Information quality ∑ Openness ETHICS OF WHISTLE BLOWING v Procedures of whistle blowing ∑ Reporting ∑ Investigation ∑ Safeguards ∑ Disciplinary action v Guidelines for whistle blower ∑ Magnitude of consequences ∑ Probability of effect ∑ Temporal immediacy ∑ Proximity ∑ Concentration of effort v Guidelines for organization ∑ Process should be transparent ∑ Protect the confidentiality of the whistle blower ∑ Companies should not fear crank calls ∑ Make known the procedures MODULE 3
- 13. CORPORATE GOVERNANCE v Characteristics of corporate governance ∑ Represent the framework under which business decision are taken ∑ Depends on the rules and practices ∑ Key part of the contract ∑ Assurance to well functioning of markets v Need of corporate governance ∑ Impact of globalization ∑ Economic changes ∑ Change in the structure of shareholding ∑ Financial reporting and transparency ∑ Shareholder net worth and net wealth v Principles of corporate governance ∑ Fairness ∑ Transparency and disclosure ∑ Responsibility ∑ Trusteeship ∑ Empowerment and accountability ∑ Control ∑ Ethical corporate citizenship v Corporate governance ; mechanism and control v Internal corporate governance controls ∑ Monitoring by the board of directors ∑ Remuneration ∑ Audit committees v External corporate governance control ∑ Debt covenants ∑ Government regulation
- 14. ∑ Competition ∑ External auditor ∑ Managerial external labour market v Importance of corporate governance for industry ∑ Creation and enhancement of corporation’s competitive advantages ∑ Providing protection to shareholder’s interest ∑ Enhancing the valuation of an enterprise ∑ Ensuring compliance of laws and regulations v Issues of corporate governance ∑ Distinguishing the role of board and management ∑ Composition of the board and related issues ∑ Separation of the roles of the ceo and chairperson ∑ Should the board have committees ∑ Directors and executives remuneration ∑ Disclosure and audit GLOBAL PRACTICE OF CORPORATE GOVERNANCE v OECD(ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT) v Elements of OECD principles ∑ Right of shareholders ∑ Equitable treatment of shareholders ∑ Role of stakeholder in corporate governance ∑ Disclosure and transparency ∑ Responsibility of the board
- 15. v Sarbanes-oxley act of 2002 ∑ Public company accounting oversight board ∑ Auditor independence ∑ Corporate responsibility ∑ Enhanced financial disclosures ∑ Studies and reports ∑ Corporate and criminal fraud accountability ∑ Corporate tax returns Kumar mangalam birla committee(2001) v Mandatory recommendation ∑ Applicability ∑ Board of directors ∑ Audit committee ∑ Remuneration committee of the board ∑ Board procedures ∑ Management ∑ Shareholder ∑ Report on corporate governance v Non-mandatory recommendations ∑ Chairman of the board ∑ Remuneration committee ∑ Shareholder rights ∑ Postal ballot Ganguly committee(2002) Narayana murthy committee(2003) v Major recommendation
- 16. ∑ audit committees ∑ audit reports ∑ audit qualification ∑ related party transactions ∑ risk management ∑ proceeds from initial offerings ∑ codes of conducts ∑ nominee directors ∑ independent director ∑ subsidiary companies ∑ real time disclosure ∑ analyst reports module 4 v corporate governance models ∑ anglo American model ∑ german model ∑ Japanese model ∑ Indian model of governance v Role of board of directors ∑ To establish an organizational vision and mission ∑ Giving strategic direction and advice ∑ Overseeing strategy implementation and performance ∑ Developing and evaluating the CEO ∑ Risk mitigation ∑ Procuring resources v Responsibility /duties of directors ∑ statutory duties of directors ÿ to file return of allotments ÿ not to issue irredeemable preferences shares ÿ to disclose interest
- 17. ÿ to disclose receipt from transferee of property ÿ to disclose receipt of compensation from transferee of shares ∑ general duties of directors ÿ duty of good faith ÿ duty of care ÿ duty to attend board meetings ÿ duty not to delegate SHAREHOLDERS v RIGHTS OF SHREHOLDERS ∑ Statutory rights ∑ Documentary rights ∑ Legal rights ∑ Proprietary rights ∑ Remedial rights v Role of auditors ∑ Audit performance or pm systems ∑ Assess performance information ∑ Define or measure performance ∑ Encourage or assist management ∑ Assist elected officials or citizens v Duties of auditors ∑ To report on special matters ∑ To make a report ∑ To certify the statements Of prospectus ∑ To certify the statutory report ∑ Duties on investigation of the company ∑ Aware of duties ∑ To sign the report
- 18. v Responsibility of auditors ∑ Analyse documents ∑ Verify effectiveness ∑ Reports findings v Key variables of ICRA’s corporate governance rating ∑ Ownership ∑ Shareholder structure ∑ Governance structure ∑ Management process ∑ Board structure and process ∑ Stakeholder relationship ∑ Transparency and disclosures ∑ Financial discipline ∑ Ethical practices