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Business EthicsBusiness Ethics

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What is ethics?What is ethics?

Doing the right thing.Doing the right thing. Doing it the right way.Doing it the right way. Doing it for the right reason.Doing it for the right reason.

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Business EthicsBusiness Ethics

Planning & LeadershipPlanning & Leadership Aim at doing the right thingAim at doing the right thing

OrganizingOrganizing Do it the right wayDo it the right way

ControlControl Do it for the right reasonDo it for the right reason

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Evolution of Business Evolution of Business EthicsEthics

BusinessBusiness Historically not known to be ethicalHistorically not known to be ethical Profit before any thing elseProfit before any thing else

EthicsEthics Religious influenceReligious influence Social influenceSocial influence

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Why Business is being Why Business is being ethical now?ethical now?

Stricter laws and regulationsStricter laws and regulations Watch dogsWatch dogs Realization that ethics is profitableRealization that ethics is profitable

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How to enforce EthicsHow to enforce Ethics

LawLaw Industrial and professional codesIndustrial and professional codes Internal codesInternal codes Wanting to be ethicalWanting to be ethical

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LawLaw

Words of law and spirit of lawWords of law and spirit of law Laws cannot create honestyLaws cannot create honesty Laws cannot cover every thing.Laws cannot cover every thing.

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Professional CodesProfessional Codes

Lesser force than law.Lesser force than law. Professional associations e.g. ICAP Professional associations e.g. ICAP

force their members to follow ethics, force their members to follow ethics, or face expulsion.or face expulsion.

Professionals work for companies Professionals work for companies and force companies to follow ethics.and force companies to follow ethics.

Industrial associations also exhort Industrial associations also exhort their members to be ethical.their members to be ethical.

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Internal CodeInternal Code The most compelling reason for a The most compelling reason for a

company to be ethical is its own board.company to be ethical is its own board. A company can become ethical only if its A company can become ethical only if its

board is willing to face the consequences board is willing to face the consequences and pay the price of honesty.and pay the price of honesty.

Setting up a formal policy on ethics is Setting up a formal policy on ethics is essential.essential.

Ethics should be part of every thing that Ethics should be part of every thing that a company does. Doing certain things in a company does. Doing certain things in name of ethics is not enough.name of ethics is not enough.

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Advantages of BEAdvantages of BE

Improvement in imageImprovement in image Higher productivityHigher productivity Access to more and cheaper capitalAccess to more and cheaper capital Helps society; society helps companyHelps society; society helps company Every one is a winnerEvery one is a winner

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Impact on EmployeesImpact on Employees

If the company is honest, employees tend If the company is honest, employees tend to be honest as well. This means better to be honest as well. This means better work environment, better productivity, work environment, better productivity, higher efficiency.higher efficiency.

Honest companies have lesser frauds and Honest companies have lesser frauds and thefts.thefts.

Ethical companies attract better quality Ethical companies attract better quality of staff.of staff.

Ethical companies are able to retain good Ethical companies are able to retain good staff.staff.

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Characteristics ofCharacteristics ofan ethical organizationan ethical organization

Formal code of ethicsFormal code of ethics Regular interaction with stakeholdersRegular interaction with stakeholders Obsessively fair to allObsessively fair to all Managers feel responsible Managers feel responsible

individually; do not hide behind individually; do not hide behind collective responsibility charadecollective responsibility charade

Employees see a purpose in their workEmployees see a purpose in their work Non-bureaucratic proceduresNon-bureaucratic procedures

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Roots of individual Roots of individual unethical behaviorunethical behavior

Pressure of work and family lifePressure of work and family life Poor communication between Poor communication between

company and employeescompany and employees Poor leadership of the companyPoor leadership of the company Heavy work load; long working Heavy work load; long working

hourshours Undue pressure / targetsUndue pressure / targets Politics, favoritismPolitics, favoritism Personal traits & circumstancesPersonal traits & circumstances

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Handling these causesHandling these causes

All these causes can be handled by a All these causes can be handled by a good management team by:good management team by: Fairness and equal treatment of all Fairness and equal treatment of all

employeesemployees Reasonable load of workReasonable load of work Reasonable targetsReasonable targets Good HR practicesGood HR practices

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Aspects of corporate Aspects of corporate unethical behaviorunethical behavior

BriberyBribery CoercionCoercion Conflict of interest: company & Conflict of interest: company &

othersothers Tax evasionTax evasion Insider tradingInsider trading Lack of regard for the societyLack of regard for the society

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How to enforce ethics How to enforce ethics in a company?in a company?

Decide to be ethicalDecide to be ethical Ethical decision making as norm for Ethical decision making as norm for

all operations.all operations. Draw up a formal Ethics Policy and Draw up a formal Ethics Policy and

let it be part of normal operational let it be part of normal operational manuals.manuals.

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Ethics PolicyEthics Policy

Avoidance of conflict of interest at Avoidance of conflict of interest at all levelsall levels

Honesty and integrityHonesty and integrity Fairness in dealing with every oneFairness in dealing with every one Acting in good faithActing in good faith Compliance with lawCompliance with law Encouraging ethical reporting: Encouraging ethical reporting:

whistleblowingwhistleblowing

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Pakistani ScenePakistani Scene

Companies are not willing to be Companies are not willing to be ethicalethical

Those that are willing cannot afford Those that are willing cannot afford to be ethical.to be ethical.

Those that can afford, are not Those that can afford, are not allowed by the situation.allowed by the situation.

One has to bribe even to get one’s One has to bribe even to get one’s rightsrights

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Rectifying the situationRectifying the situation

Principal causes:Principal causes: Company policiesCompany policies Unethical industrial climateUnethical industrial climate Rampant corruption in governmentRampant corruption in government

Solution:Solution: Bigger companies should start; others will Bigger companies should start; others will

followfollow Gradually the business climate will changeGradually the business climate will change Once business is honest; government will Once business is honest; government will

have to get honest.have to get honest.

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Thank youThank you