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An Overview
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What is Ethics?Ethics: is a branch of philosophy.
is a normative science because it is concerned with
the norms of human conduct
as a science, it must follow the same rigours of logicalreasoning as other sciences.
as a science, involves systemising, defending andrecommending concepts of right and wrong behaviour.
.
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Principles of Personal Ethics
Personal ethics refer to the application of values ineverything one does.
Principles of personal ethics include:
1. Concern for the well being of others;
2. Respect for the autonomy of others;
3. Trustworthiness and honesty;
4. Willing compliance to law;
5. Basic justice: being fair;6. Refusing to take unfair advantage;
7. Benevolence: doing good; and
8. Preventing harm to any creature.
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Principles of Professional Ethics
The basic principles people are expected to follow in theirprofessional career are the following:
Impartiality: Objectivity; Trustworthiness and honesty;
Openness: Full Disclosure;
Confidentiality: Trust;
Due Diligence: Duty of care;
Fidelity to professional responsibilities; and
Avoiding potential or apparent conflict of interest
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What is Business Ethics?
Business ethics is the application of general ethical ideasto business behavior.
It is based on the principle of integrity and fairness and concentrateson the benefits to the stakeholders, both internal and external.Stakeholder includes those individuals and groups without which theorganisation does not have an existence. It includes shareholders,creditors, employees, customers, dealers, vendors, government and
the society.
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What is not Business Ethics?
1. Ethics is different from religion
2. Ethics is not synonymous with law
3. Ethical standards are different from cultural traits
4. Ethics is different from feelings
5. Ethics is not a science in the strictest sense of the term
6. Ethics is not just a collection of values
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Code of Conduct and Ethics for Managers
Managers must observe the following ethical values whileperforming their duties:
Impartiality
Responsiveness to public interest
Accountability
Honesty Transparency
Integrity
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Evolution of Business Ethics over the yearsThe 1970s saw papers from the academic circle. Businessmenbecame more concerned with their public image and addressedethics more directly.
1974: the first conference held at the University of Kansas.1975: business ethics became institutionalised at manylevels through writings and conferences.1979: three anthologies on business ethics appeared:
(i) Ethical Theory and Business by Tom Beauchamp and NormanBowie;(ii) Ethical Issues in Business: A Philosophical Approach by Thomas
Donaldson and Patricia Werhane; and(iii) Moral Issues in Business by Vincent Berry
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Evolution of Business Ethics over the years(contd.)
1980s: the subject was taught in several universities in the US
and Europe. There were also, by this time, many journals of
business ethics, apart from Centres and Societies established topromote ethical practices.
1982: Richard De George brought out Business Ethics, and
Manuel G. Velasquez published his Business Ethics: Concepts
and Cases.
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Evolution of Business Ethics over the years(contd.)
1990: business ethics as a management discipline was well-established.
Parallel to these academic pursuits, the late 1980s and early
1990s saw increased concern for consumer rights, quality, safety,
price, customer service and environment in Britain.
Simultaneously with these developments, religion also lent itspowerful voice.
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Importance and Need for Business Ethics A business organisation competes in the global market on its own
internal strength, in particular, on the strength of its humanresource, and on the goodwill of its stakeholders.
The value-based management and ethics that an organisation usesin its governance enables it to establish productive relationship withits internal customers, and lasting business relationship with itsexternal customers.
Real type situations (Tata Steel and Infosys) show that use ofethical practices in business creates high returns for companies.
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Values and Ethics in BusinessA value is a view of life and judgement of what is desirable. It isvery much part of a persons personality and a groups morale.
Business ethics relates to issues of what is right and what is
wrong while doing business. What values are to individuals, ethics
are to business.
Business ethics operates as a system of values, relating businessgoals and techniques to specific human ends.
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Distinction between Values and Ethics
Values Ethics
Personal in nature (eg. a
belief in providingcustomer satisfaction andbeing a good paymaster)
Generalised value
system (eg. avoidingdiscrimination inrecruitment and adoptingfair business practices).
Offer alternatives tochoose from.
Provides generalguidelines within whichthe management canoperate.
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Why should Businesses act Ethically?The reasons for an organisation to be ethical include:
To protect its own interest,
To protect the interests of the business community as a whole sothat the public will have trust in it.
To keep its commitment to society to act ethically,
To meet stakeholder expectations.
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Why should Businesses act Ethically? (contd.)The reasons for an organisation to be ethical include:
To prevent harm to the general public,
To build trust with key stakeholder groups,
To protect themselves from abuse from unethical employees andcompetitors,
To protect their own reputations,
To protect their own employees, and
To create an environment in which workers can act in waysconsistent with their values.
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Ethical Decision MakingNorman Vincent Peale and Kenneth Blanchards suggestions to
conduct ethical business.
Is your decision fair?
Is it a win-win situation for all?
Is your decision legal? If it is not legal, it is not ethical.
The Eleventh CommandmentThou shall not be ashamed whenfound, meaning when hauled up for unethical behaviour, if ones
conscience is clear, then there is nothing to be ashamed of.
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How Corporations Observe Ethics in theirOrganisations?
Publish in-house codes of ethics to be strictly followed by all theirassociates
Employ people with a reputation for high standards of ethicalbehaviour at the top levels
Incorporate consideration of ethics into performance reviews.
Give rewards for ethical behaviour.
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How Corporations Observe Ethics in theirOrganisations? (contd.)
SEBI, CII and such other organisations representing corporationsissue codes of best practices and enjoin their members to observe
them. IIMs and highly rated B-schools give extensive and intensive
instruction in business ethics, corporate social responsibility andcorporate governance as part of their curriculum.
Conduct an Ethics Audit
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Corporate Governance Ethics
Corporate governance is a set of rules that governs theadministration and management of companies.
Its goalposts are transparency, integrity, full disclosure of financialand non-financial information, and protection of stakeholdersinterests.
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Benefits from Managing Ethics in WorkplaceThe many benefits that arise from managing ethics in the workplaceare:
Attention to Business Ethics improves Society
Ethical practice contributes towards high productivity and strongteam work
Changing situations require ethical education
Ethical practices create strong public image
Strong ethical practices act as an insurance
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Characteristics of an Ethical OrganisationMark Pastin provides the following characteristics of ethicalorganizations:
At ease while interacting with diverse internal and external
stakeholder groups.
Obsessed with fairness.
Individual responsibility, with individuals assuming personalresponsibility for actions of the organisation.
See their activities in terms of purpose.
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Recognising Ethical OrganisationsThere are certain characteristics by which we will be able to identifyan ethical organization:
On the basis of Corporate Excellence
In relation to the Stakeholders
In relation to Corporate Governance