Ethical Dilemma #: What do you do when you observe a colleague lying, cheating or

stealing, and in order to report them you have to risk negative repercussions for
yourself?
This sort of ethical dilemma is extremely tricky. The trickiness is increased if there’s a risk
of negative consequences for the reporting employee. Often, in such cases, decisions must
be made quickly, and they must be the correct decision the first time around.
Consider this Scenario: Rita the Pilfering Head Manager
Rita is the head manager of a bustling, on-campus fast food facility that serves several
thousand students each day. She has only five years left until retirement and is one the
corporation’s major revenue generators. Rita runs a tight, efficient ship and turns a hefty
profit for the company. She has one day-shift supervisor and one night-shift supervisor, who
are student managers. One evening, the night-shift student manager, Jennifer, walks into the
back room during closing and spies Rita stuffing a handful of $20 bills into her pocket.
Jennifer quickly backs out before Rita notices her. That night, like every night, the receipts
balance for the day’s sales, so there’s no proof. What should Jennifer do? If she tells, she
risks being fired by Rita as retribution, and there’s no proof anyway. If she doesn’t tell,
she’s colluding with Rita.
Workplace Ethics Training Activity : Generate Ethical Dilemmas

In this activity you allow your employees the opportunity to address situations they may
have experienced or observed that they haven’t been free to resolve. Ask them to share true
situations (not made up) of ethical, moral or legal conflicts they may have found themselves
in or may have observed. This activity will reveal ethical dilemmas in your organization,
many of which you will have no clue are occurring. 
1. One of the newest salespeople in your division is a real goof-off, never showing up for
work on time, distracting other people with his antics and so on. You complain about him to
your boss, who tells you the kid is the son of the company president. Your boss instructs
you not only to leave the new guy alone but also to make his sales numbers look good by
throwing him some no-brainer accounts. What do you do?
ETHICS
 Ethics is a branch of social science. It deals with moral principles and social values. It
helps us to classifying, what is good and what is bad? It tells us to do good things and
avoid doing bad things.
 So, ethics separate, good and bad, right and wrong, fair and unfair, moral and immoral
and proper and improper human action. In short, ethics means a code of conduct. It is
like the 10 commandments of holy Bible. It tells a person how to behave with another
person.
What does Business Ethics mean?

Business ethics means to conduct business with a human touch in order to give welfare to the society.
 The businessmen must give a regular supply of good quality goods and services at reasonable
prices to their consumers.
 They must avoid indulging in unfair trade practices like adulteration, promoting misleading
advertisements, cheating in weights and measures, black marketing, etc.
 They must give fair wages and provide good working conditions to their workers. They must not
exploit the workers.
 They must encourage competition in the market.
 They must protect the interest of small businessmen.
 They must avoid unfair competition.
 They must avoid monopolies. They must pay all their taxes regularly to the government.
 “Business ethics is the study of business situations, activities, and decisions where
issues of right and wrong are addressed.”
 “The ethics of business is the ethics of responsibility. The business man must
promise that he will not harm knowingly.”
Common Misconduct in Organizations
 Misrepresenting hours worked
 Employees lying to supervisors
 Management lying to employees, customers,
vendors or the public
 Misuse of organizational assets
 Lying on reports/falsifying records
 Sexual harassment
 Stealing/theft
 Accepting or giving bribes or kickbacks
 Withholding needed information from
employees, customers, vendors or public
Formation of Personal
Ethics
Persons ethics are formulated through the operation of five key forces in the individual’s
environment.
Family influences
Peer influences
Experiences
Value and Morals
Situational factors
Ethics and Moral
 Moral is similar to ethics and many
people use the two words
interchangeably and derived from the
Latin “mores”, means custom or
habit.
 And morals are based on religious beliefs
and social influence and group norms.
Ethics & Moral

Ethics and morals both relate to “right” and “wrong” conduct. However, ethics refer to the series
of rules provided to an individual by an external source. E.g. their profession. On the other hand,
morals refer to an individual’s own principles regarding right and wrong.
 Ethics
What is it? The rules of conduct recognized
in respect to a particular class of
human actions or a particular
group, culture, etc. it defines
how thing are according to the
rules.
Source Social system/ external
Why we do it? Because society says it is the
right thing to do.
What if we don’t We will face peer/ societal
do
it? disapproval, or even be fired
from our job.
Flexibility Ethics are dependent on others
for definition. They tend to be
consistent within a certain
context, but can vary
Morals
Principles or habits with
respect to right or wrong
conduct. It defines how
things should work according
to an individual’ ideas and
principles.
Individual / internal
Because we believe in
something being right or
wrong.
Doing something against
one’s morals and principles
can have different effects on
different people, they may
feel uncomfortable, remorse,
depressed etc.
Usually consistent, although
can change if an
individual’s beliefs change.
Common Causes of Unethical Behavior

 Pressure
 Fear
 Greed
 Convenience
Causes of Unethical Behavior (cont’d)

 Following boss’s directives

 Meeting overly aggressive business/financial objectives
 Helping the organization survive
 Meeting schedule pressures
 Be a team player (group think)
 Rationalizing that others do it
 Resisting competitive threats
 Advancing own career
NATURE OF BUSINESS ETHICS
The characteristics or features of business ethics are:-
 Code of conduct : Business ethics is a code of conduct. It tells what to do and what not to do for
the welfare of the society. All businessmen must follow this code of conduct.
 Based on moral and social values : Business ethics is based on moral and social values. It
contains moral and social principles (rules) for doing business. This includes self-control,
consumer protection and welfare, service to society, fair treatment to social groups, not to exploit
others, etc.
 Gives protection to social groups : Business ethics give protection to different social groups such
as consumers, employees, small businessmen, government, shareholders, creditors, etc.
 Provides basic framework : Business ethics provide a basic framework for doing business. It
gives the social cultural, economic, legal and other limits of business. Business must be conducted
within these limits.
 Voluntary : Business ethics must be voluntary. The businessmen must accept business
ethics on their own. Business ethics must be like self-discipline. It must not be enforced
by law.
 Requires education and guidance : Businessmen must be given proper education and
guidance before introducing business ethics. The businessmen must be motivated to use
business ethics. They must be informed about the advantages of using business ethics.
Trade Associations and Chambers of Commerce must also play an active role in this
matter.
 Relative Term : Business ethics is a relative term. That is, it changes from one business
to another. It also changes from one country to another. What is considered as good in
one country may be taboo in another country.
 New concept : Business ethics is a newer concept. It is strictly followed only in
developed countries. It is not followed properly in poor and developing countries.
 IMPORTANCE OF BUSINESS ETHICS
 Long-term growth: sustainability comes from an ethical long-term vision which takes into
account all stakeholders. Smaller but sustainable profits long-term must be better than higher but
riskier short-lived profits.
 Cost and risk reduction: companies which recognise the importance of business ethics will need
to spend less protecting themselves from internal and external behavioural risks, especially when
supported by sound governance systems and independent research
 Limited resources: the planet has finite resources but a growing population; without ethics, those
resources are repleted for purely individual gain at huge cost both to current and future
generations.
ETHICS IN BUSINESS
 SCOPE OF BUSINESS ETHICS
Ethical problems and phenomena arise across all the functional areas of companies and at all levels within the
company.
 1.Ethics in Compliance
Compliance is about obeying and adhering to rules and authority. The motivation for being compliant could be to
do the right thing out of the fear of being caught rather than a desire to be abiding by the law. An ethical climate in
an organization ensures that compliance with law is fueled by a desire to abide by the laws. Organizations that
value high ethics comply with the laws not only in letter but go beyond what is stipulated or expected of them.
 2.Ethics in Finance
The ethical issues in finance that companies and employees are confronted with include:
a) In accounting – misleading financial analysis. satyam
b) Insider trading, securities fraud leading to manipulation of the financial markets.
c) Executive compensation.
d) Bribery, kickbacks, over billing of expenses, facilitation payments.
e) Fake reimbursements
 3.Ethics in Human Resources
Human resource management (HRM) plays a decisive role in introducing and implementing ethics.
Ethics should be a pivotal issue for HR specialists. The ethics of human resource management (HRM)
covers those ethical issues arising around the employer-employee relationship, such as the rights and
duties owed between employer and employee.
The issues of ethics faced by HRM include:
 Discrimination issues i.e. discrimination on the bases of age, gender, race, religion, disabilities,
weight etc.
 Sexual harassment.
 Issues affecting the privacy of the employee: workplace surveillance, drug testing.
 Issues affecting the privacy of the employer: whistle-blowing.
 Issues relating to the fairness of the employment contract and the balance of power between employer
and employee.
 Occupational safety and health.
 Companies tend to shift economic risks onto the shoulders of their employees. The boom of
performance-related pay systems and flexible employment contracts are indicators of these newly
established forms of shifting risk.
Ethics in marketing
Marketing ethics is the area of applied ethics which deals with the moral principles behind the
operation and regulation of marketing. The ethical issues confronted in this area include:
 Pricing: price fixing, price discrimination, price skimming.
 Anti-competitive practices like manipulation of supply, exclusive dealing arrangements,
tying arrangements etc.
 Misleading advertisements
 Content of advertisements.
 Black markets, grey markets.
Ethics in production
 This area of business ethics deals with the duties of a company to ensure that products and
production processes do not cause harm. Some of the more acute dilemmas in this area arise out
of the fact that there is usually a degree of danger in any product or production process and it is
difficult to define a degree of permissibility, or the degree of permissibility may depend on the
changing state of preventative technologies or changing social perceptions of acceptable risk.
 Defective, addictive and inherently dangerous products and
 Ethical relations between the company and the environment include pollution, environmental
ethics, and carbon emissions trading.
 Ethical problems arising out of new technologies for eg. Nuclear technology
 Product testing ethics.
APPROACHES TO ETHICS
 Meta-Ethics: this examines the nature of moral judgment. Philosophers look at the meaning and
origins of ethical principles. Rather than addressing such questions as “What should I do?”, this
branch addresses questions such as “How can we tell what is good from what is bad?” or “What
is goodness?” The aim is to seek to understand the nature of ethical properties and evaluations.
 – Normative Ethics: this is the study of ethical actions; it looks at the content of moral
judgments and the criteria for what is right & wrong. This branch examines the standards for the
wrongness or rightness of actions. Philosophers disagree about what precisely gives a rule,
disposition or action its ethical force. 
 – Descriptive Ethics: looks at what motivates pro-social behavior, how people reason about
ethical issues, what we believe to have overriding importance, and how societies regulate
behavior, such as punishing individuals for certain actions. Philosophers say empathy helps
motivate pro-social behavior in humans – such as donating to charity. Our beliefs about what has
overriding importance is largely based on the culture we live and were brought up in.
 – Applied Ethics: deals with controversial topics like capital punishment, animal rights, abortion
and war. It is the attempts to use philosophical methods to determine what the morally correct
courses of action are in a number of fields of everyday life.
Ethical Decision Making Framework
 Recognize an Ethical Issue
1. Could this decision or situation be damaging to someone or to some group? Does this decision
involve a choice between a good and bad alternative, or perhaps between two "goods" or between
two "bads"?
2. Is this issue about more than what is legal or what is most efficient? If so, how?
 Get the Facts
3. What are the relevant facts of the case? What facts are not known? Can I learn more about the
situation? Do I know enough to make a decision?
4. What individuals and groups have an important stake in the outcome? Are some concerns more
important? Why?
5. What are the options for acting? Have all the relevant persons and groups been consulted? Have I
identified creative options?
 Evaluate Alternative Actions
6. Evaluate the options by asking the following questions:
a) Which option will produce the most good and do the least harm? (The Utilitarian Approach)
b) Which option best respects the rights of all who have a stake? (The Rights Approach)
c) Which option treats people equally or proportionately? (The Justice Approach)
d) Which option best serves the community as a whole, not just some members? (The Common
Good Approach)
e) Which option leads me to act as the sort of person I want to be? (The Virtue Approach)
 Make a Decision and Test It
7. Considering all these approaches, which option best addresses the situation?
 Act and Reflect on the Outcome
8. How can my decision be implemented with the greatest care and attention to the concerns
of all stakeholders?
9. How did my decision turn out and what have I learned from this specific situation?
Effects of Ethical/Unethical Behavior 25

Ethical Behavior Unethical Behavior

Increases Efficiency and Reduces Efficiency and

Effectiveness of Effectiveness of
Production and Trade Production and trade

Increases Company Reduces company

Performance Performance

Increases National Reduces National

Standard of Living, Well- Standard of Living, Well-
being, and Prosperity. being, and Prosperity.
 Utilitarian Rule
An ethical decision should produce 26
the greatest good for the greatest
number of people

Moral Rights Rule

Rules for Justice Rule
An ethical decision should
maintain and protect the
Ethical An ethical decision should
distribute benefits and harm
fundamental rights and
privileges of peoples.
Decision among people in a fair,
equitable, and impartial
Making. manner

Practical rule
An ethical decision should be one that
a manager has no hesitation about
communicating to people outside the
company because the typical person in
a society would think the decision is
acceptable.
 Ethical Decision Making Approaches 27

1) Utilitarian Approach – Moral behavior produces the greatest good for the
greatest number
What benefits and what harms will each course of action produce, and which
alternative will lead to the best overall consequences?

2) Rights Approach – The rights approach follows the belief that individuals have the ability
to make their decisions freely. It believes that if the act does not respect everyone’s moral rights,
it is wrong to act. 
 Ethical Decision-Making Approaches 28

3) Virtue approach– Each of us holds internal values and morals that we strive to maintain and
hold onto
Which course of action develops moral virtues? 

4) Justice approach – Moral Decisions must be based on standards of equity, fairness, I

impartiality
Which course of action treats everyone the same, except where there is a morally
justifiable reason not to, and does not show favoritism or discrimination?
 Three Types of Justices 29

◦ Three types of Justice Approaches:

I. Distributive Justice – In case of substantive differences, people
should be treated differently in proportion to the differences among
them
II. Procedural Justice – Rules should be clearly stated & consistently
and impartially enforced
III. Compensatory Justice –Individuals should be compensated for the
cost of their injuries by the party responsible.
ETHICAL PRINCIPLES IN BUSINESS
 Honesty: an ethical director, manager or executive must be honest and truthful in all his or her
dealings. They should never purposefully mislead or deceive other people by overstatements,
partial truths, misrepresentations, selective omissions, etc.
 Integrity: ethical executives demonstrate the courage of their convictions and demonstrates
personal integrity by doing what they believe to be the right thing, regardless of pressures to do
otherwise. They are honorable, principled and upright, and will defend their beliefs. Principle is
never sacrificed for expediency; they are never unscrupulous or hypocritical.
 Trustworthy & a Promise-Keeper: they are worthy of trust. Ethical executives are forthcoming
and candid in explaining things with the relevant information and correcting misstatements. They
try as hard as they can to keep to the letter and spirit of their commitments and promises.
 Loyalty: they are loyal to individuals and institutions by support and devotion to duty and
friendship in adversity. They do not exploit a situation by disclosing information they learned in
confidence. They are extremely careful not to be affected by conflicts of interest. They are
extremely loyal to their companies and work colleagues.
 Fairness: they are just and fair in all their dealings. They never exercise power
arbitrarily. They do not use indecent means to gain an advantage or exploit other
people’s mistakes for their own benefit. They are committed to justice and the equal
treatment of people. They are willing to admit they are wrong.
 Compassion and Empathy: ethical executives are compassionate, empathetic,
benevolent, kind and caring. They strive to achieve their business goals and targets in a
manner that causes the least harm and the greatest positive good.
 Respect: they demonstrate total respect for the human rights, dignity, autonomy,
interests and privacy of everybody who is affected by their decisions. They are polite
and treat everybody with equal respect and dignity regardless of nationality, national
origin, race or sex.
 Law Abiding: they respect and abide by the laws, regulations and rules of the
marketplace
 Committed to Excellence: they aim to perform their duties to the best of their abilities.
They make sure they are prepared and well-informed, and constantly try to improve in
all areas of responsibility.
 Leadership: they aim to be positive ethical role models. They are aware of the
responsibilities and opportunities of their position of leadership – they aim to create an
environment in which ethical decision-making and principled reasoning are highly
prized.
 Reputation & Morale: they aim to build and maintain the company’s good reputation
as well as the morale of its workforce. They avoid becoming involved in conduct that
may undermine respect and will take all actions necessary to prevent the inappropriate
conduct of others.
  Accountability: they accept personal accountability for the ethical quality of their
decisions.
ETHICAL PRINCIPLES IN
1. Be Transparent 

MARKETING
Whenever you are marketing a product or service to customers, ensure that you are fully transparent about it, including key
information about its safety and effective use.

2. Protect Consumer Data And Privacy

Consumers are becoming increasingly concerned about entrusting their personal data with companies. For this reason, it’s important
to emphasise the company’s commitment to consumer privacy.

3. Commit To Sustainability And Human Rights 

Ethical consumerism is becoming a bigger priority for many customers. People want to feel assured that what they are purchasing is
sustainable and ethically produced. Be honest about your ingredients, product components, and your supply chain.

4. Meaningfully To Consumer Concerns

If customers have safety concerns about a product or service, then this should be seen as a company’s top priority. Always seek to
protect consumer rights and immediately investigate any complaint.

5. Maximise Benefits And Minimise Risks

Every ethical marketing strategy should try to benefit as many people as possible while creating as little harm or cost as possible.
Making an overall and lasting positive impact should always be the aim.
The Five Don’ts Of Ethical Marketing

1.Don’t Exaggerate
 When you exaggerate the benefits of a product or service, you are making a false claim. You are promising a customer a
level of quality that cannot be delivered.
2. Don’t Make False Comparisons
 This is an unscrupulous tactic that involves making false, inaccurate, or misleading statements about a competitor’s
products.
3. Don’t Make Unverified Claims
 This involves promising to deliver results (e.g. improved skin) without providing any scientific evidence to back this up.
4. Don’t Stereotype
 This involves the promotion of stereotypes (e.g. portraying women as sex objects) in order to sell a product. The harm
here is that this sort of marketing helps to maintain a sexist culture.
5. Don’t Exploit Emotions
 Getting an emotional reaction from consumers is one of the most effective ways to generate interest. However, if you
evoke negative emotions such as rage, fear, sadness in a tasteless way, this could be seen as exploitative. Customers
want their emotions to be sympathised with, not manipulated.
Ethical Principles in Human Resources
Human resource management deals with manpower planning and development related
activities in an organization. Arguably it is that branch of management where ethics really
matter, since it concerns human issues specially those of
 compensation,
 development,
 industrial relations
 health and safety issues.
Ethics and Technology
 Businesses today are technology and innovation driven. There is huge competition in the sphere and therefore like other industry or
business function ethics is essential here also. Specially because ethics by itself is only a tool to create and doesn’t know ethics or
morals!
 Every day we have innovative products and services that announce their arrival in the market place and others that go obsolete. It is
this technology and innovation that leads to ethical issues, considering the competition to stay ahead by innovating is immense.
Issues like data mining, invasion to privacy, data theft and workplace monitoring are common and critical.
 In technology we speak of ethics in two contexts; one is whether the pace of technological innovation is benefiting the
humankind or not, the other is either severely empowering people while choking others for the same. Technology, for
example, has drastically replaced people at work.
 In the first case we are compelled to think about the pace at which technology is progressing. There are manifold implications here,
be it things like computer security or viruses, Trojans, spam’s that invade the privacy of people or the fact the technology is
promoting consumerism.
 Nowadays data storage is primarily on computer systems. With the advent of internet technology the world has got interconnected
and data can be accessed remotely by those who are otherwise unauthorized to do the same. This is one of the pitfalls of innovation.
The other one i.e. the pace of technological change also raises the question of ethics.
 New products make their way and leave the existing ones obsolete. In fact technological change and innovation is at the heart of
consumerism, which is bad for economy and environment in general. The recent economic downturn makes up for a very good
example.
 Increasingly technological products are adding up to environmental degradation. Computer screens, keyboards, the ink used in the
printers are some of the ways in which technology is polluting the environment. All these produce toxins that cannot be
decomposed easily.
 The other major issue in technology that brings in ethics is interface between
technology and the computers. Many scientists are of the opinion that the world will
come to an end with a war between the humankind and the technology. Technology they
say will advance to an extent beyond the control of those who have made it!
 No doubt technology has replaced people at work and made certain others redundant.
On the flip side many people have been raised to power while others have been severely
handicapped. The latter is especially true for third world countries. New manufacturing
processes that are outsourced either replace manpower there or either exploits the latter
in the name of employment by engaging them cheaper price
Ethics and Production

 Ethics in production is a subset of business ethic that is meant to ensure that the
production function or activities are not damaging to the consumer or the society. Like
other ethics there is a certain code of conduct or standards to be followed, however
ensuring that the ethics are complied with is often difficult.All the production functions are
governed by production ethics but there are certain that are severely harmful or deleterious
which need to be monitored continuously. The following are worth mentioning:
1. There are ethical problems arising out of use of new technologies that are deleterious to
health, safety and environment. Technological advancements like genetically modified
food, radiations from mobile phones, medical equipment etc are less problems are more of
dilemmas.
2. Defective services and products or products those are innately deleterious like alcohol,
tobacco, fast motor vehicles, warfare, chemical manufacturing etc.
3. Animal testing and their rights or use of economically or socially deprived people for
testing or experimentation is another area of production ethics.
4. Ethics of transactions between the organization and the environment that lead to pollution,
global warming, increase in water toxicity and diminishing natural resources.
What is Environmental Ethics?

-the moral relationship of human beings to and

the value and moral status of the environment
and its nonhuman content.
-Study of the ethical basis of environment or
discussion of the ethical basis of
environmental protection.
Environmental Ethics Principles

 We should have profound respect for nature.

 We must maintain a harmonious relation with
other species.
 Everyone should take responsibility for this
impact on nature.
 Environmental Ethics Principles

 Local & indigenous environmental knowledge

should be respected.

 We must plan for the long term.

What is Ethics in finance
 Ethics in finance is mean that bifurcate what is right and wrong in
context of financial matter.
 The assumption of modern financial-economic theory runs counter
to the ideas of honesty, devotion, dependability and loyalty.
 Peoples who involved in finance activity have to serve both their
company and their customers at utmost good faith.
Financial sector in India
REGULATION:
RBI, SEBI
MARKETS:
Commodities, equities, debts, foreign exchange
Players:
Brokers, firms, banks, financial institutions
Ethical issue in finance
Ethics in finance in define in three board theme:
 In financial markets
 In financial service industry( including banking
& insurance company)
 In financial people in organization
 ISSUES IN FINANCIAL SERVICES

 Deception
 Concealment
 Churning
 Twisting
 Flipping
In financial
markets
Frauds in relation to financial insider trading
market

 Legal authority define  insider trading refers

fraud as a crime that generally to buying and
use of they dishonest or
“involve selling a security, in breach
deceitful conduct in of fiduciary duty or other
to order
some relationships of trust and
obtain unjust over confidence, while in
advantage someone possession of material , non
else.”
e.g. credit card public information about the
security fraud, security.
related related frauds etc.
identify fraud,
Stakeholder interest v/s Stockholder interest

 shareholder own a share of company so its known as owner of

company.
 stakeholder have an interest in company but do not own it ( such as
customer, government etc.)
so both party have different objective so they come into conflicts .
such as shareholder wants short term profit where as stakeholder desire
tend to cost money and reduce the profits.