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Business Ethics Fundamentals

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Introduction
Business Ethics The value of what should be done and what should not be done from the business point of view Publics interest in business ethics increased during the last four decades Publics interest in business ethics spurred by the media
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Introduction
Inventory of Ethical Issues in Business Employee-Employer Relations Employer-Employee Relations Company-Customer Relations Company-Shareholder Relations Company-Community/Public Interest

Business Ethics: What Does It Really Mean?


Business Ethics:Today vs. Earlier Period
Societys Expectations of Business Ethics
Ethical Problem Actual Business Ethics

Ethical Problem

1950s

Time

Early 2000s
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Business Ethics: What Does It Really Mean?

Definitions
Ethics involves a discipline that examines good or bad practices within the context of a moral duty Moral conduct is behavior that is right or wrong Business ethics include practices and behaviors that are good or bad
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Business Ethics: What Does It Really Mean?

Two Key Branches of Ethics


Descriptive ethics involves describing, characterizing and studying morality What is Normative ethics involves supplying and justifying moral systems What should be

Ethical issues for business


Product safety standards Advertising contents Working environment Unauthorized payments Employees privacy Environmental issues

origin of Ethics
Ethics is a Greek word, it means Character or manners.
Ethics is subjective while morality is objective. Ethics is about sense of belongingness to society of business. Formed with a limited vision for economic generation but should resolve conflict with society by servicing the community.

Meaning of Ethics

Character of a man

Decided by

Conduct of a person

Leads to

Series of Actions

Taken together Considered As

Good or Bad, Right or wrong, Moral or Immoral

By which we can Judge again Moral Standards

Known as Moral Judgement

Requires

Objective of Ethics
Studies human behavior and makes evaluative assessment about them as moral or immoral Establishes moral standards and norms of behavior Makes judgment upon human behavior based on these standards and norms Prescribes moral behavior and makes recommendations about how to or how not to behave Expresses an opinion or attitude about human conduct in 10 general

Business Ethics
When business people speak about business ethics they usually mean one of three things: 1. 2. 3. Avoid breaking the criminal law in ones work related activity Avoid action that may result in civil law suits against the company Avoid actions that are bad for the company image

Businesses are especially concerned with these three things since they involve loss of money and company reputation.
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3D of Ethics.
UNITARIAN VIEW OF ETHICS Business is a part of moral structure and moral ethics. SEPARATISTS VIEWS OF ETHICS Morality and ethics has no role in business. Society and law deals with ethics and morality. INTEGRATED VIEW OF ETHICS Ethical behavior and business should be integrated in a new era called Business Ethics.
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Views on relationship between Business & Ethics


Unitarian View: Business & morality cannot be separated and it must play by the rules of ethics of the community.
Moral Structure

Business

Moral Ethics

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Separatist view of Ethics


Proposed by Adam Smith and Milton Friedman: Business is a distinct entity and does not include ethics and morality
Ethics

Business

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Integration view of ethics


Proposed by Talcott Parsons
Government Law

Business

Morality & Ethics

Market Systems

Business Ethics

Society
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Ethical Consciousness
Stage 6 corporate citizenship
Ethical standards Vary between cultures And countries. More evident From /amongst Entrepreneurs/ Corporations.

Stage 5 Stake holder concept

Stage 4 Profit Maximization in the long term Stage 3 Profit Maximization In the short term. Stage 2 Anything for Profit

Long term profitability and Attractiveness of Orgn Is key to competitive strategy Both attractiveness & competitive Position can be shaped i.e. challenging and exciting
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Stage 1 Jungle Law

Stake holder concept

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Ethics and morality


Ethics is about field or domain of enquiry while morality is the object of enquiry. Ethics or behavior accepted with in a group is recorded as credos espoused value of group/Orgn. When espoused value become practiced values, then the group is said to be Ethical Organization. Ethical theories can be classified into three subject areas: Meta ethics Normative ethics Applied ethics.
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Details of 3 Ethical theories


Meta Ethics Deals with entire scale of ethical issues:moral values of humans It is the branch of ethics that focuses on how we understand, know about, and what we mean when we talk about what is right and what is wrong. Addresses questions such as "What is goodness?" and "How can we tell what is good from what is bad?.
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Details of 3 Ethical theories


Applied Ethics:Applied ethics is, in the words of Brenda Almond, cofounder of the Society for Applied Philosophy, "the philosophical examination, from a moral standpoint, of particular issues in private and public life that are matters of moral judgment". It is thus a term used to describe attempts to use philosophical methods to identify the morally correct course of action in various fields of human life E.g. BIOETHICS, BUSINESS ETHICS , ENVIRONMENTAL ETHICS
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Applied Ethics contd..


There are six domains to help improve organizations and social issues at the national and global level: Decision ethics, or ethical theories and ethical decision processes Professional ethics, or ethics to improve professionalism Clinical ethics, or ethics to improve our basic health needs Business ethics, or individual based morals to improve ethics in an organization Organizational ethics, or ethics among organizations Social ethics, or ethics among nations and as one global 21 unit

Details of 3 Ethical theories


Normative theories
That which guides and controls human conduct. Sets out certain standards that determine what is right and what is wrong. Golden principle behind this WE SHOULD TREAT OTHERS THE SAME WAY THAT WE WANT OTHERS TO TREAT US There are Three leading theories of Normative ethics1. STOCK HOLDERS THEORY 2. STAKE HOLDERS THEORY 3. SOCIAL CONTRACT THEORY
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Sources of Ethical Norms


Fellow Workers Fellow Workers

Regions of Country

Family

Profession

The Individual
Conscience Friends Employer

The Law

Religious Beliefs

Society at Large

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3 Models of Management Ethics


1. Immoral ManagementA style devoid of ethical principles and active opposition to what is ethical. 2. Moral ManagementConforms to high standards of ethical behavior. 3. Amoral Management
Intentional - does not consider ethical factors Unintentional - casual or careless about ethical considerations in business
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3 Models of Management Ethics

Three Types Of Management Ethics

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Three Approaches to Management Ethics

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Making Moral Management Actionable

Important Factors
Senior management Ethics training Self-analysis

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Developing Moral Judgment

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Developing Moral Judgment

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Developing Moral Judgment

External Sources of a Managers Values


Religious values Philosophical values Cultural values Legal values Professional values
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Developing Moral Judgment Internal Sources of a Managers Values


Respect for the authority structure Loyalty Conformity (TRADITIONAL VALUES) Performance Results

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Elements of Moral Judgment


Moral imagination Moral identification and ordering Moral evaluation Tolerance of moral disagreement and ambiguity Integration of managerial and moral competence A sense of moral obligation
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Common Unethical Acts...


Lying and withholding needed information Abusive or intimidating behavior Misreporting time worked Discrimination and sexual harassment Stealing Breaking environmental and safety laws

Falsifying records
Drug or alcohol abuse

Giving or accepting bribes

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Why Misconduct Is Not Reported...

Belief that nothing will be done Fear of retaliation


Fear of being viewed as a troublemaker

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Why ethical behavior is important???


Business is a subsystem of society
Reduction in cost of friction with social environment

Important for organizations leaders because they influence the ethical climate for the rest.
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Why Ethical problems occur?


Personal gain Individual values widely differ with organizational goals Managers values and attitudes

Competitive pressures
Cross-Cultural contradictions
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Encouraging Ethical Conduct


Ethics Training
Key features of effective ethics training programs
Top management support. Open discussion. A clear focus on ethical issues. Integration of ethics into the organization. A mechanism for anonymously reporting ethical violations. Reward ethical conduct.
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Encouraging Ethical Conduct (contd Whistle-Blowing


The reporting of perceived unethical matters. Reducing the fear of retaliation against whistleblowers
Anonymous hotlines and web sites Personal, confidential guidance

Ethical Advocate
An ethics specialist who plays a role of critical questioner in top-managements decision-making. Serves as the Board of directors social conscience. Helps prevent groupthink and blind conformity
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Encouraging Ethical Conduct (contd)


Code of Ethics Published statement of moral expectations for employee conduct Requirements for an effective ethics code Must describe specific practices as unethical (e.g., kickbacks, payoffs, gifts, falsification of records, and misleading product claims). Must be firmly supported and fairly enforced by top management.

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Role of the Business Officer


Employee/Staff rely on you to explain the rule/policy Be able to say no and explain why Ethical leadership Be the example, not the exception Ethics are what you would you do, if you were sure no one would see you. Be consistent
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THANK YOU

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