Business Ethics

Evolution of Thoughts
First Phase License Quota Permit Raj(Independence- late 1960s) Second Phase- Socialistic frenzy (1970- mid 1980s) Third Phase- Economic Reforms, 1991

Reasons for Evolution of BE

Globalization and Decentralization of business Growth of Media- Co. are being held
increasingly accountable for their ethical conduct

International Agreements and Actions- to

fight against corruption and bribery around the world

Global Initiatives
Global Sullivan Principles- Includes
Corporations, Higher Education and Civic Involvement

SA8000- created in 1997, by SAI and CEP is a

standard based on commitment to establishing a cross country standard for workplace. Focuses on Labor Rights. United Nations Global Compact- Kofi Annan (July 31,1999) at Davos, CSR, 9 principles- Human Rights,Labour standards & Environment.

Caux Principles
The Caux Round Table consisted of group Of International Executives. Shared a belief that business organizations can be powerful force for +ve change Two basic ethical ideals: KYOSEI and HUMAN DIGNITY

Kyosie and Human Dignity

KYOSEI- means living and working together for the human good
Human Dignity can be defined as value of each person as an end
Shared values, including commitment to shared prosperity are important to global as well as communities of smaller scale

Foundation for actions by Business Leaders

Principle 1: The Responsibilities of Business: beyond Shareholders towards Stakeholders
Principle 2: The Economic and Social Impact of Businesses: towards innovation, justice and world community

cont
Principle 3: Business Behavior: beyond the letter of the Law towards a spirit of Trust Principle 4: Respect for Rules Principle 5: Support for Multilateral Trade Principle 6: Respect for Environment Principle 7: Avoidance of Illicit Operations

ETHICS AND DECISION MAKING

Ethical Dilemmas

Significant value conflicts among differing interests Real alternatives that are equally justifiable
Significant consequences on "stakeholders in the situation

Approaches to Ethical Decision Making

Utilitarian Criteria- Jeremy Benthham,1800.
Rights Criteria- Right to speech Whistle Blowers Justice Criteria in decisions for wages, retrenchments Ethics of Care- should exercise care

preaches maximum good for maximum no. of people as a result of an action.

Resolving Ethical dilemma

Recognize that there is a moral issue and define the problem accordingly
Determine the actor who will be affected by the decision. Also determine your role.

Analyze the facts how events happened. This will reduce dilemmas to common patterns which are ultimately manageable
Test for Right versus Right paradigms such as Truth versus Loyalty, self versus community, short term versus long term, justice versus mercy.

Resolving Ethical dilemma

Apply all three approaches to solving the dilemmas-(i) utilitarianism i.e. do whatever produces greatest good for the greatest number; (ii) rule based thinking i.e. follow rules only; (iii) care based i.e. do what you would like to be done to you. Investigate to find a third way out. Make decisions and take action. Revisit and reflect on the decision.

Characteristics

of

an

ethical

decision

Right morally correct Equitable - Just and equal Good Highest good for all concerned Proper Appropriate and acceptable

Fair Honesty
Just - Action

Guiding factors for managers in ethical decision making

A persons personal code of ethics

The companys formal policies, values and culture The ethical climate in the industry Government regulations. Morality transcends conformity to law Behaviour of management in the company Deep belief to abide by the laws Ethical conduct/Standards tend to rise due to greater public exposure/image

Ethical Dilemmas at Workplace (Donaldson)

Recognizing conflicts of interest and avoiding them Deciding if the business gift is just a gift or a bribe Attaining fairness in employee performance appraisals

Initiating employee

disciplinary

action

against

an

Executing an order to take action against staff

Ethical Dilemmas at Workplace (Donaldson)

Managing a problem employee Handling reports of wrong doing on the job

Safeguarding confidential information

Recognizing and balancing the legitimate interest of customers, employees, suppliers, owners and the society in which they live

Sources of Ethical Dilemmas

Face-to-Face Ethics
Corporate Policy Ethics Functional Area Ethics

Difficulties making

in

Ethical

decision

Face dilemmas in deciding a course of action Confront a distinction between facts and values

Knowledge about the consequences of an action is limited

Antagonist interests frequently use incompatible ethical arguments to justify their intentions Some ethical standards vary with the passage of time

Difficulties in Ethical decision making

Competitive pressures
Individual values in organizational goals conflict with

Cross cultural contradictions

Suggestions for Ethical decision making

Top management can improve behavior Code of Ethics Interaction colleagues with peers and other

Control System

Stakeholder Analysis for Ethical Decision Making

Identification Facts Alternatives Stakeholders Impact Guidance Constraints Comfort Assessment

NASHS TWELVE POINT PRESCRIPTION Resolving Ethical Dilemma

Have you defined the problem accurately? How would you define the problem if you stood on the other side of the fence? How did this situation occur in the first place? To whom and to what do you give your loyalty as a person and as a member of the corporation? What is your intention in making the decision? How does this intention compare with the probable results?

NASHS TWELVE POINT PRESCRIPTION Resolving Ethical Dilemma

Whom could your decision or action injure? Can you discuss the problem with the affected parties before you make your decision? Are you confident that your problem will be valid over a long period of time, as it seems now? Could you discuss without qualm your decision or action with other? What is the symbolic potential of your action, if understood? If misunderstood? Under what conditions would you allow exceptions to your stand?

FRAMEWORK FOR ETHICAL THINKING

Do what is best for the greatest number of people [consequencebased thinking] Follow the applicable universal principle, e.g. do not lie [duty-based thinking] Do what a good [virtuous] person would do [virtue based thinking].

Four Factors : Ethical Decisions

The end- outcome sought The means methods employed The motive Foreseeable consequences

Kohlbergs Moral Development Theory

Punishment and Obedience orientation

Level 1 Pre-conventional Stages

Instrument and Relativity Orientation

Interpersonal Concordance Orientation

Level 2 Conventional Stages

Law and Order Orientation

Social Contract Orientation

Level 3 Post Conventional Stages

Universal Ethical Principles Orientation

Usefulness of Kohlbergs theory

Helps us understand how our moral capabilities develop Reveals how we can become increasingly sophisticated and critical in our understanding of moral standards we hold People generally progress through the stages in the same sequence and not everyone progresses through all the stages Implies that moral reasoning of people at later stages of moral development are better than their reasoning at earlier steps

Carol Gilligan Moral Development Theory

Pre-conventional level: Right conduct is viewed in a selfish manner solely as what is good for oneself Conventional level: Importance is on not hurting others and willing to sacrifice ones own interest and help others. This is a characteristic feature of women Post-Conventional level: At this level, balances is found between caring about others and pursuing owns interest

Kohlberg vs. Gilligan

Kohlberg Gilligan

A. Basic Aspects Based on study on men

Men give importance to moral rule

Based on study on men and women

Women always wants to keep up personal relationships with all the persons involved in the situation Context oriented and ethics of care Shying away from decision making Human Oriented Emotional Dependence

Ethics of rules and rights Taking a commanding role Rigid Factual Independence

B. Characteristic Features

Code of ethics
Most common way of ethics in the organization institutionalizing

Statements of the norms and beliefs which form the ethical rules of the organization as defined by the middle and top level management

Indicates This is what we expect you to behave

Thank You