ETHICS

ETHICS ETHICS IS DERIVED FROM GREEK WORD ETHIKOS MEANING CUSTOM OR CHARACTER.ETHICS IS A CODE OF BEHAVIOUR CONSIDORED CORRECT.ETHICS INVOLVES THE EVALUATION AND APPLICATION OF CERTAIN MORAL VALUES THAT A SOCIETY OR CULTURE HAS COME TO ACCEPT AS ITS NORMS.ETHICS IS A BRANCH OF PHILOSOPHY, IS CONSIDERED A NORMATIVE SCIENCE BECAUSE IT IS CONCERNED WITH THE NORMS OF HUMAN CONDUCT.BUSINESS ETHICSBUSINESS-ETHICS IS A SUM TOTAL OF PRINCIPLES AND CODE OF CONDUCT BUSINESSMEN ARE EXPECTED TO FOLLOW IN DEALING WITH THEIR STACKEHOLDERS. SUCH AS STOCKHOLDERS, EMPLOYEES, CUSTOMERS, CREDITORS, LAW ENFORCING AGENCIES ETC.

SINCE BUSINESS-ETHICS IS AN OFFSHUTE OF APPLIED ETHICS, THE STUDY OF BUSINESS-ETHICS ESSENTIALLY DEALS WITH UNDERSTANDING WHAT IS RIGHT AND MORALLY GOOD IN BUSINESS

BUSINESS-ETHICS IS THAT SET OF PRINCIPLES & REASONS WHICH SHOULD GOVERN THE CONDUCT OF BUSINESS AT INDIVIDUAL AND COLLECTIVE LEVELS.PRINCIPLES OF PERSONAL ETHICSPERSONAL-VALUES ARE THE CONCEPTION OF WHAT AN INDIVIDUAL OR A GROUP REGARDS AS DESIRABLE.

PERSONAL-ETHICS REFER TO THE APPLICATION OF THESE VALUES IN ANY THING ONE DOES. PERSONAL-ETHICS MIGHT ALSO BE CALLED AS MORALITY.

CON CERN RESPECT FOR THE AUTONOMY OF OTHERS.HONESTY AND THE WILLINGNESS TO COMPLY WITH THE LAW.FAIRNESS AND ABILITY NOT TO TAKE UNDUE ADVANTAGE OF OTHERS.BENEVOLENCE AND PREVENTING HARM TO ANY CREATUREWHY PEOPLE BEHAVE ETHICALLY?MOST PEOPLE WANT TO MAINTAIN CLEAR CONSCIENCE AND WOULD LIKE TO ACT ETHICALLY UNDER NORMAL CIRCUMSTANCES.PEOPLE WANT TO AVOID PHYSICAL AND MENTAL INJURIES TO OTHERS.PEOPLE ARE OBLIGED TO OBEY LAWS OF THE LAND.SOCIAL AND MATERIAL WELL BEING DEPENDS ON ONES ETHICAL BEHAVIOUR IN THE SOCIETY.PRINCIPLES OF PROFESSIONAL ETHICSA PROFESSION INVOLVES A SPECIFIC BRANCH OF ADVANCED LEARNING OR A BRANCH OF SCIENCE PROFESSION OF DOCTOR, ENGINEER, BUISNESS MANAGER ETC.A PROFESSIONAL IS ONE WHO IS ENGAGED IN ACTIVITIES OF A SPECIFIC PROFESSION AS ONES PAID OCCUPATIONBASIC PRINCIPLE

IMIMPARTIALITY: OBJECTIVITY DILIGLNCE / DUTY OPENNESS: FULL DISCLONURE FIDELITY TO PROFESSIONAL RESPONSIBILITY CONFIDENTIALITY : TRUST A VOIDING POTANTIAL OR APPARENT CONFLICT OF INTERESTWHAT IS NOT BUSINESS ETHICSRELIGIONLAWCULTURAL TRAITSFEELINGSSCIENCECOLLECTION OF VALUESIMPORTANCE AND NEED FOR BUSINESS ETHICSETHICAL BEHAVIOUR IS NECESSARY TO GAIN TRUST.

TRUST LEADS TO PREDICTABILITY AND EFFIECLCY OF BUSINESS

BUSINESS OF BUSINESS IS ETHICAL BUSINESS

BUSINESS-ETHICS ENABLES US TO ASSESS THE BENEFITS & PROBLEMS ASSOCIATED WITH DIFFERENT WAYS OF MANAGING ETHICS IN THE ORGANIZATION.

BUSINESS-ETHICS SEEKS TO IMPROVE WELFARE OF THE SOCIETY.CODE OF CONDUCT AND ETHICS FOR MANAGERSIN THE EXERCISE OF THEIR DUTIES AND RESPONSIBILITIES MANAGERS MUST OBSERVE FOLLOWING ETHICAL VALUES.INTEGRITY : MORALLY UPRIGHTIMPARTIALITY : FAIR AND UNPREJUDICED RESPONSIVENESS TO PUBLIC INTERESTACCOUNTABILITY : RESPONSIBLE FOR THEIR ACTION AND ACCOUNTABLE TO ALL STAKEHOLDERS STOCKHOLDERS, CREDITORS, SUPPLIERS, EMPLOYEES, CONSUMERS, GOVERNMENT AND SOCIETTY AT LARGE.HONESTY : SINCERE, TRUTHFUL AND TRUST WORTHYTRANSPARENCY : FRANK, OPEN

DISTINCTION BETWEEN VALUES AND ETHICSVALUES ARE PERSONAL IN NATURE WHILE ETHICS IS A GENERALIZED VALUE SYSTEM. (e.g. (A) VALUES A BELIEF IN CUSTOMER SATISFACTION, BEING A GOOD PAY-MASTER ETC. (B) ETHICS AVOIDING DISCRIMINATION IN RECRUITMENT, ADOPTING FAIR BUSINESS PRACTICES)

BUSINESS ETHICS CAN PROVIDE THE GENERAL GUIDELINE WITHIN WHICH MANAGEMENT CAN OPERATE, WHILE VALUES HAVE ALTERNATIVES TO CHOOSE FROM (e.g. PHILANTHROPY AS BUSINESS POLICY IS OPTIONAL VALUES)

MANAGERS MAY HAVE TO RECONCILE DIVERGENT VALUES (e.g. STANDARDIZATION V/S PRODUCT VARIETY)

MODIFICATION OF VALUES IS FREQUENTLY REQUIRED FOR BUSINESS STRATEGY IMPLEMENTATION (THOUGH IT IS DIFFICULT) WHY SHOULD BUSINESS ACT ETHICALLYTO PROTECT ITS OWN INTERESTTO PROTECT THE INTEREST OF BUSINESS COMMUNITY AS A WHOLE SO THAT PEOPLE HAVE CONFIDENCE IN IT.TO KEEP ITS COMMITMENT TO SOCIETY TO ACT ETHICALLYTO MEET STAKEHOLDERS EXPECTATIONSTO PREVENT HARM TO GENERAL PUBLICTO BUILD TRUST WITH KEY STAKEHOLDER GROUPSTO PROTECT THEMSELVES FROM ABUSE OF UNETHICAL EMPLOYEES AND COMPETITORSTO PROTECT THEIR OWN REPUTATIONTO PROTECT THEIR EMPLOYEES BY PROVIDING THEM AN ENVIRONMENT FACILITATING OBESRVING THEIR OWN VALUESETHICAL DECISION MAKINGIS THE DECISION YOU ARE TAKING LEGAL? IF NOT, IT IS NOT ETHICAL.

IS THE DECISION YOU ARE TAKING FAIR? WIN-WIN- EQUITABLE RISK AND REWARDS.

IS THERE READINESS FOR ACCEPTANCE OF NEGATIVE CONSEQUENCES OF SEEMINGLY UNETHICAL BEHAVIOR. IF ONES CONSCIENCE IS CLEAR THERE IS NOTHING TO BE ASHAMED OF.CHANGING BUSINESS ENVIRONMENT & ETHICAL CHALLENGESFAST CHANGING, EXTERNAL ENVIRONMENT CALLS FOR POSITIVE CHANGE IN RESPONSE OF THE ORGANIZATION NEW ETHICAL ISSUES.

PROCESS OF DECENTRALIZATION LEADS TO NUMBER OF ETHICAL ISSUES.

CONFLICT BETWEEN ORGANIZATION & INDIVIDUAL GOALS CAUSES SEVERAL UNETHICAL PRACTICES.

HUGE INFORMATION FROM ALL SOURCES INCREASES POTENTIAL OF ILLEGAL USE OF PROPERIETORY INFORMATION.CHANGING BUSINESS ENVIRONMENT & ETHICAL CHALLENGES (CONTD.)McCOY SAYS DEALING WITH VALUES REQUIRES CONTINUAL MONITORING OF THE SURROUNDING ENVIRONMENT, WEIGHING ALTERNATIVE CAUSES OF ACTION, BALANCING AND (WHEN POSSIBLE) INTEGRATING CONFLICTING, RESPONSIBILITIES, SETTING PRIORITIES AMONG COMPETING GOALS, AND ESTABLISHING CRITERIA FOR DEFINING AND EVALUATING PERFORMANCE.CORPORATE GOVERNENCERIGVEDA SAYS A BUSINESS MAN SHOULD BENEFIT FROM BUSINESS LIKE A HONEY BEE WHICH SUCKLES HONEY FROM THE FLOWER WITHOUT AFFECTING ITS CHARM AND BEAUTY. ORGANIZATIONS FOLLOWING ETHICAL PRACTICES IN ALL THEIR ACTIVITIES IN ALL PROBABILITY FOLLOWS BEST CORPORATE GEVERNENCE PRACTICES AS WELL.CORPORATE GOVERNENCE (CONTD.)SOME PEOPLE DEFINE AS: CORPORATE GOVERNENCE ARE THE GUIDING PRINIPLES THAT ON ONE HAND TRIES TO SYNTHESIZE THE SEMINGLY CONFLICTING GOALS AMONG THE INDIVIDUALS, THE CORPORATION AND THE COMMUNITY AND ON THE OTHER HAND BETWEEN THE IMMEDIATE BENEFITS TO THE CORPORATION SUCH AS PROFITS AND THE SECULAR AND LASTING SUBSTANTIVE SOCIAL GAINS.SOME OTHER DEFINE AS : SET OF RULES THAT GOVERN THE ADMINISTRATION AND MANAGEMENT OF THE COMPANY.CORPORATE GOVERNENCE (CONTD.)IN ALL FACTS OF CORPORATE GOVERNANCE THE UNDERLYING GOAL POSTS ARE:TRANSPARENCYINTEGRITYFULL DISCLOSER OF FINANCIAL AND NONFINANCIAL INFORMATIONPROTECTION OF STAKEHOLDERS INTERESTCORPORATE GOVERNENCE (ETHICAL) PRACTICESACT WITH HONESTY AND INTEGRITY AVOIDING ACTUAL AND APPARENT CONFLICT OF INTEREST IN PERSONAL AND PROFESSIONAL RELATIONSHIPPROVIDE ACCURATE COMPLETE, TIMELY, RELEVANT INFORMATION, IN REPORTS AND DOCUMENTSCOMPLY WITH LAW OF THE LANDACT IN GOODFAITH WITHOUT MISREPRESENTING FACTSPROTACT THE CONFIDENTIALITY OF INFORMATIONENSURE THAT CONFIDENTIAL INFORMATION IS NOT USED TO PROMOTE THE PERSONAL BENEFITSSHARE KNOWLEDGE AND MAINTAIN SKILLS IMPORTANT AND RELEVANT TO STAKEHOLDER NEEDSACHIEVE RESPONSIBLE USE OF AND CONTROL OVER ALL ASSEST AND RESOURCES EMPLOYED OR ENTRUSTEDHOW ETHICS CAN MAKE CORPORATE GOVERNENCE MORE MEANINGFULCOREPORATE GOVERNENCE IS MEANT TO RUN COMPANIES ETHICALLY IN A MANNER SUCH THAT ALL STAKEHOLDERS i.e. CREDITORS, DISTRIBUTORS, CUSTOMERS, EMPLOYEES, SOCIETY AT LARGE, GOVT. ETC. ARE DEALT WITH IN A FAIR MANNER.

GOOD C.G. SHOULD LOOK AT ALL THE STAKEHOLDERS AND NOT JUST SHAREHOLDERS ALONE.

C.G. NOT TO BE IMPOSED IT SHOULD COME FROM WITHIN

THERE ARE PROVISIONS OF COMPANIES ACT WHICH ARE TO BE ADHERED TO IN LETTER AS WELL AS SPIRITS

CORRECT DECISIONS IN THE AREAS WHERE LAW IS SILENT OR REGULATORY FRAMEWORK IS WEAK.

SEBI HAS JURISDICTION ONLY UPTO LIMTED/LISTED COMPANIES.CHARACTERSTIC OF AN ETHICAL ORGANIZATIONEASY INTERACTION WITH DIVERSE INTERNAL AND EXTERNAL STAKEHOLDER GROUPS. AND MEETING THE NEEDS OF STAKEHOLDERS.

OBSESSED WITH FAIRNESS, THEIR GROUND RULES EMPHASIZE THAT THE OTHER PERSONS INTERESTS COUNT AS MUCH AS THEIR OWN.

INDIVIDUAL TAKE PERSONAL RESPONSIBILITY FOR ACTIONS OF THE ORGANIZATION.

THEY SEE THEIR ACTIVITIES IN TERMS OF PURPOSE, THE PURPOSE WHICH TIES THE ORGANIZATION WITH THE ENVIRONMENT, CORPORATE SOCIAL RESPONSIBILITY.

CORPORATE EXCELLENCE THROUGH ORGANIZATION CULTURE.

MANAGER PERFORMING WELL IN A PRESCRIBED MANNER CORPORATE GOVERNENCE.

CORPORATE SOCIAL RESPONSIBILITYTHE CLASSICAL ECONOMIC MODEL:

PUBLIC INTEREST WAS SERVED BEST BY INDIVIDUALS PERSUING THEIR OWN SELF-INTEREST.

THE SOCIAL ECONOMIC MODEL:* BUSINESS AS A SUB SYSTEM OF HIGHLY INTERDEPENDENT SOCIETY

* COMPANIES HAVE STAKEHOLDERS OTHER THAN STOCKHOLDERS

* STAKEHOLDER AUDIT ALLOWS TO SYSTEMATICALLY IDENTIFY ALL PARTIES THAT COULD POSSIBILY IMPACTED BY COMPANYS PERFORMANCE

* BUSINESS HAS AN OBLIGATION TO RESPOND TO THE NEEDS OF ALL STAKEHOLDERS WHILE PURSUING ITS PROFITDEFINITION OF CORPORATE SOCIAL RESPONSIBILITY IT IS CONTINUING COMMITMENT BY BUSINESS TO BEHAVE ETHICALLY AND CONTRIBUTE TO ECONOMIC DEVELOPMENT, WHILE IMPROVING THE QUALITY OF LIFE OF THE WORK-FORCE AND THEIR FAMILIES AS WELL AS OF THE LOCAL COMMUNITY AND SOCIETY AT LARGE.

COMPANIES TO ANSWER1. QUALITY OF THEIR MANAGEMENT ( PEOPLE & PROCESSES)2. NATURE AND QUALITY OF THEIR IMPACT ON STAKEHOLDERS INCLUDING SOCIETY AT LARGETODAYS CORPORATE SOCIAL RESPONSIBILITYTO BE VOLUNTARILY RESPONSIBLE TO ETHICAL & SOCIAL CONSIDERATIONSIT IS NOT A LEGAL BINDING UNLIKE CORPORATE ACCOUNTABILITYWHICH MAKES COMPANY TO ADHERE TO LEGAL AND SOCIAL NORMS.IT IS SET OF OBLIGATIONS TO PURSUE THOSE POLICIES AND ACTIONS DESIRABLE INTERMS OF OBJECTIVES AND VALUES OF SOCIETY FOR ITS BETTERMENT.IT IS OVERALL RELATIONSHIP WITH ALL ITS STAKEHOLDERS ,THESE INCLUDE CUSTOMERS, EMPLOYEES, COMMUNTIES, OWNERS / INVESTORS, GOVERNMENT, SUPPLIERS AND COMPETITORSIT CAN BE EXPLAINED BY FOLLOWING EQUATION:TOTAL CORPORATE SOCIAL RESPONSIBILITY = ECONOMIC + LEGAL / ETHICAL + PHILAN THROPIC RESPONSIBILITIESTODAYS CORPORATE SOCIAL RESPONSIBILITY (CONTD.)SOCIALLY RESPONSIBLE FIRM SHOULD STRIVE TO:* MAKE A PROFIT* OBEY THE LAW* BE ETHICAL* BE A GOOD CORPORATE CITIZEN

SOCIAL RESPONSBILITY OF BUSINESS IS SOCIETY BASED AND TEMPORAL(I) SOME SOCETIES HAVE STRONG FORMAL INSTITUTIONS (GOVT., BUSINESS, ORGANIZED RELIGION ETC.) WHILE OTHERS HAVE STRONG INFORMAL INSTITUTIONS ( FAMILY, CLAN, CUSTOMER ETC.)(II)SOCIETY DEMANDS DIFFERENT ROLES FROM INSTITUTIONS

TO PROTECT, TO ENHANCE AND TO WORK FOR BETTERMENT OF SOCIETY.Corporate citizenship implies a firms commitment and business focus to fulfill its social responsibilities as defined by its stakeholders.23ADVANTAGES OF C.S.R.IMPROVED FINANCIAL PERFORMANCEENHANCED BRAND IMAGE AND REPUTATIONINCREASED SALES AND CUSTOMER LOYALTYBETTER ATTRACTION & RETENTION OF EMPLOYEESREDUCED REGULATORY OVERSIGHTSINNOVATION AND LEARNINGRISK MANAGEMENTEASIER ACCESS TO CAPITALREDUCED OPERATING COSTSC.S.R. AS A BUSINESS STRATEGY FOR SUSTAINABLE DEVELOPMENTC.S.R. AS A STRATEGY REFERS TO ENHANCING STAKE HOLDER VALUE AND DELIVERY OF MEASURABLE RESULTS TO SOCEITY AT LARGE.

IN CONTEXT OF DEVELOPING SOCIETY C.S.R. IS CAPACITY BUILDING FOR SUSTAINABLE LIVELIHOODS.

EXTERNALLY IT PROMOTES IMAGE AND GOODWILL, SPECIAL RESPECT AMONGST PEERS, CUSTOMERS, GOVT. AGENCIES, INVESTORS AND MEDIA, ALL PROMOTING LONGTERM SHAREHOLDER VALUE AND SUSTAINABLE DEVELOPMENT.

INTERNALLY IT PROMPTES LOYALTY, TRUST IN ORGANIZATIONAL ETHICS, DIVERSION FROM MUNDANE THINGS OF DAILY WORK TO MEANING TO EMPLOYEES LIFE. IT REDUCES ATTRITION RATEIf u cant measure you cannot manage.25SOCIALLY RESPONSIBLE INVESTINGS.R.I. AS A STRTEGY IS IMPORTANT BECAUSE(a) S.R.I. COMPANIES OFFER LONG TERM VALUE.(b) SOCIAL IMPACT ON TOP OF FINANCIAL PERFORMANCE PROVIDES ADDITIONAL SAFETY AGAINST RISK.

S.R.I. PROVIDES A COMPETITIVE ADVANTAGE AS IT IS ACCEPTABLE TO THE WIDER ENVIRONMENT IN WHICH COMPANIES COMPETE.

PRACTITIONORS OF S.R.I. STRESS THE FACT THAT IT IS THE COST-EFFECTIVE WAY TO GAIN COMPETITIVE ADVANTAGE. COMPANIES, IN THEIR EFFORTS TO ENGAGE IN STRATEIC CSR AIM TO MATCH BUSINESS OBJECTIVES WITH THE NEEDS OF THE COMMUNITY E.G. COCA-COLA PLANT HARVESTING RAIN WATER FOR VILLAGERS, IT COMPANY EDUCATING SCHOOL CHILDREN IN COMPUTERS ETC.