ETHICS AND BUSINESS

1. WHAT DO ETHICS MEAN TO YOU? (a) The meaning of ethics is hard to pin down, and the views many people have about ethics is shaky. (b) Many people tend to equate ethics with their feelings. But being ethical is clearly not a matter of following ones feelings. In fact, feelings frequently deviate from what is ethical. (c) Nor should one identify ethics with religion. Yet if ethics were confined to religion, then ethics would apply only to religious people. But ethics applies as much to the behavior of the atheist as to that of the saint. Ethics however cannot be confined to religion nor is it the same as religion. (d) Being ethical is also not the same as following the law. Laws, like ethics, can deviate from what is ethical. (e) Being ethical is also not the same as doing whatever society accepts. Standards of behavior in society can deviate from what is ethical. An entire society can become ethically corrupt (e.g. Nazi Germany). If being ethical were doing whatever society accepts, one would have to find an agreement on issues which does not, in fact, exist. 2. ETHICS: (a) Ethics comes from the Greek word Ethos moral character or custom. (b) The word ethics refers to principles of behavior that distinguish between good & bad; right & wrong. It is a persons own attitude & beliefs concerning good behavior. Ethics reside within individuals & as such are defined separately by each individual in his own way. (c) It means character, norms, morals, ideas prevailing in a group. (d) Ethics are principles of personal & professional conduct. (e) Ethics refers to code of moral principles & values that govern the behavior of a person or group with respect to what is right or wrong. (f) Ethics is the discipline that examines one's moral standards or the moral standards of a society. It asks how these standards apply to our lives and whether these standards are reasonable or unreasonablethat is, whether they are supported by good reasons or poor ones.

(g) Ethics is the study of moral standardsthe process of examining the moral standards of a person or society (h) The ultimate aim of ethics is to develop a body of moral standards that we feel are reasonable to holdstandards that we have thought about carefully and have decided are justified standards for us to accept and apply to the choices that fill our lives

3. ETHICS IS BASICALLY TWO THINGS: First, ethics refers to well based standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics refers to those standards that impose reasonable obligations to refrain from rape, stealing, murder, assault, slander, and fraud. Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well founded reasons. Secondly, ethics refers to the study and development of ones ethical standards. As, feelings, laws, and social norms can deviate from what is ethical. So it is necessary to constantly examine ones standards to ensure that they are reasonable and well-founded. Ethics also means, then, the continuous effort of studying our own moral beliefs and our moral conduct, and striving to ensure that we, and the institutions we help to shape, live up to standards that are reasonable and solidly based. 4. DIFFERENCES BETWEEN VALUES, MORALS AND ETHICS: VALUES are the rules by which we make decisions about right and wrong, should and shouldnt, good and bad. They also tell us which are more or less important, which is useful when we have to trade off meeting one value or

another. Values are beliefs of a person or social group in which they have an emotional investment. MORALS have a greater social element to values and tend to have a very good acceptance. Morals are far more about good and bad than other values. We thus judge others more strongly on morals than values. A person can be described as immoral, yet there is no word for them not following values. Morals are motivation based on ideas of right and wrong. ETHICS: you can have professional ethics, but you seldom hear about professional morals. Ethics tend to be codified into a formal system or set of rules which are explicitly adopted by a group of people. Ethics are thus internally defined and adopted, whilst morals tend to be externally imposed on other people. 5. MORALITY (a) Morality: The standards that an individual or a group hasabout what is right and and wrong or good and evil. (b) Moral Standards: The norms about the kinds of actions believed to be morally right and wrong as well as the values placed on the kinds of objects believed to be morally good and morally bad. (c) Nonmoral standards: The standards by which we judge what is good or bad and right or wrong in a nonmoral way. (d) We do not always do what we believe is morally right nor do we always pursue what we believe is morally good.

Where do these standards come from? 1. Family 2. Friends 3. Various societal influences (church, school, magazines, TV, music, and associations) 4. Experience, Learning, Intellectual development may lead the maturing person to revise these standards 5. Through the maturing process the person may develop standards that are more intellectually adequate and so more suited for dealing with the moral dilemmas of adult life.

6. MORALITY AND ETHICS (a) Ethics and Morality have something to do with the concepts of good and bad. (b) The meanings of the terms ethics and morality can be differentiated based on their origins in ancient Greek and Latin, respectively (c) Greeks philosophers, Romans builders (d) Greeks often have meanings that are primarily philosophical study, while the Latin derived words imply doing the thing. (e) Ethics comes from the Greek word Ethos moral character or custom. Morality comes from the Latin word Moralis custom or manner. (f) Both words deal with the customs or the manner in which people do things. (g) Their modern meanings relate to the way people act either good or bad (h) Morality, strictly speaking, is used to refer to what we would call moral conduct or standards. (i) Morality is looking at how good or bad our conduct is, and our standards about conduct. Ethics is used to refer to the formal study of those standards or conduct. (j) One refers to the study of conduct as moral philosophy, but that is less common than just saying ethics. Hence in most colleges, there is an ethics class, rather than one named morality.

7. TYPES OF STUDY OF ETHICS: The study of ethics or moral philosophy can be divided into three broad areas: Descriptive Study Normative Study Analytical Study (or Metaethics)

Descriptive Study Descriptive ethics is simply describing how people behave. Descriptive ethics lets us see if we walk the walk. A descriptive study is one that does not try to reach any conclusions about what things are truly good or bad or right or wrong. Instead, a descriptive study attempts to describe or explain the world without reaching any conclusions about whether the world is as it should be. Normative Study Normative ethics tries to establish norms or typical appropriate behaviors people should perform. One should be honest, in the language of ethics, this is called veracity. Fairness or Justice is another norm A normative study is an investigation that attempts to reach normative conclusionsthat is, conclusions about what things are good or bad or about what actions are right or wrong. In short, a normative study aims to discover what should be. Analytical Study (or Metaethics) Metaethics often looks at how people determine for themselves what norms to follow. There are many sources or determinants of peoples personal ethical beliefs: Parents Teachers Religion (e.g. The Ten Commandments) Peers Culture Media Moral Self Reflection

8. ROLE OF GUILT AND FEAR IN ETHICS

Some maintain their conduct within accepted ethical norms because of the fear of getting caught. These people often do whatever they think that they can get away with. if they know they are not being watched and are unlikely to get caught, they will violate almost any ethical norm. Guilt, on the other hand, is the motivator of honest people. Their decision to comply with ethical norms is NOT based on whether they will get caught, but because they will know that they did something they think is wrong. Sociopaths do not feel guilt because they do not believe their actions are wrong.

9. BUSINESS ETHICS Application of moral principles to business problems. According to Carter Macnamara, Business ethics is generally coming to know what is right or wrong at the work place & doing what is right. This is in regard to products, services & in relationships with stakeholders. It is sensitizing the managers at the work place about how they should act so that they hold some kind of moral compass, which always tells you the direction in terms of where to go. Business ethics is a specialized study of right and wrong applied to business policies, institutions, and behaviors. Business Ethics is a specialized study of moral right and wrong that concentrates on moral standards as they apply to business institutions, organizations, and behavior. It is a study of moral standards and how these apply to the social systems and organizations through which modern societies produce and distribute goods and services and to the behaviors of the people who work within these organizations. 10.IMPORTANCE OF ETHICS IN BUSINESS: Ethical considerations in business are important to managers as individuals personal life & business life cannot be neatly separated with respect to moral judgments. Importance of ethics can be explained in the following explanations, namely For the individual, job is the centre of life & its values must be in harmony with the rest of life, if he is to be a whole & healthy personality.

 This is an industrial society & its values tend to become those of the entire culture. If an organization does not behave in accordance with the social systems expectations, it might not merely lose its market share of face another piece of legislated control but might lose its very right to exist. 11.OBJECTIVES OF BUSINESS ETHICS Two folds objective of business ethics: (a) It evaluates the human practices by calling upon moral standards. (b) To give prescriptive advice on how to act morally in specific situations.

12.BENEFITS OF BEING ETHICAL IN BUSINESS According to Carter Macnamara the benefits of managing ethics in an organization are: It improves the society. It helps to maintain moral standards in turbulent times i.e. when you are in a dilemma, often called as Ethical Dilemma. Ethical Dilemma is a situation that arises when all alternative choices or behaviors have been deemed undesirable because of Potentially negative consequences making it difficult to distinguish right from wrong. It also cultivates strong team work in the organization It aligns employee behavior with the ethical values It helps to support employee growth It also serves as an insurance policy (person is insured against going the wrong way.) It helps to avoid criminal omissions & commissions It helps to improve the public image of the organization Unethical companies have a tough time in hiring and retaining talent Employees want to work in an ethical and socially responsible organization.

3 Cs OF BUSINESS ETHICS

It is related with Compliance It is related with Contribution It is related with Consequences 13.MYTHS ABOUT BUSINESS ETHICS Myth: Business Ethics is more a matter of religion than management. Truth: Business Ethics is more a matter of management Myth: Employees are ethical so we dont need to pay attention to Business Ethics. Truth: Most managers face complex ethical dilemma at workplace. Myth: Ethics is a personal or individual matter and not a public matter. Truth: Ethics is a publicly debatable matter, a public affair and not an individual or a personal affair. Myth: Business and Ethics do not mix. Truth: Business and Ethics go hand in hand. Myth: Ethics in business is relative. (Ethical Relativism) Truth: There are absolute things that exist in ethics. Myth: Good Business means good Ethics Truth: It is not necessary that a business doing good is ethical as well. Myth: Information and Computing are amoral Truth: Information should not be misleading and accuracy has to be maintained in the technology being used. 14.THREE ISSUES IN BUSINESS ETHICS Though business ethics cover a variety of topics, there are three basic types of issues: Systemic Issues

Questions raised about the economic, political, legal, or other social systems within which businesses operate. These include questions about the morality of capitalism or of the laws, regulations, industrial structures, and social practices within which businesses operate. Corporate Issues Questions raised about a particular company. These include questions about the morality of the activities, policies, practices, or organizational structure of an individual company taken as a whole. Individual Issues Questions about a particular individual within an organization and their behaviors and decisions. These include questions about the morality of the decisions, actions, or character of an individual. Some theorists maintain that moral notions apply only to individuals, not to corporations themselves Others counter that corporations do act like individuals, having objectives and actions, which can be moral or immoral just as an individual's action might be. Perhaps neither extreme view is correct. Corporate actions do depend on human individuals who should be held accountable for their actions. However, they also have policies and culture that direct individuals, and should therefore be held accountable for the effects of these corporate artifacts. Nonetheless, it makes perfectly good sense to say that a corporate organization has moral duties and that it is morally responsible for its acts. 15.ETHICAL RELATIVISM When faced with the fact that different cultures have different moral standards, the managers of some multinationals have adopted the theory of Ethical Relativism. Ethical relativism is the theory that, because different societies have different ethical beliefs, there is no rational way of determining whether an action is morally right or wrong other than by asking whether the people of this or that society believe it to be right or wrong . In fact, the multiplicity of moral codes demonstrates that there is no one "right" answer to ethical questions. The best a

company can do is follow the old adage, "When in Rome, do as the Romans do." In other words, there are no absolute moral standards.

16.MORAL DEVELOPMENTS As people mature, they change their values in very deep and profound ways. Just as people's physical, emotional, and cognitive abilities develop as they age,so also their ability to deal with oral issues develops as they move through their lives. Lawrence Kohlberg has identified six stages in the process of moral development (in three levels) Level One: Pre Conventional Stages Punishment and Obedience Orientation - At this stage, the physical consequences of an act wholly determine the goodness or badness of that act. The child's reasons for doing the right thing are to avoid punishment or defer to the superior physical power of authorities. There is little awareness that others have needs similar to ones own. Instrument and Relativity Orientation- At this stage, right actions become those that can serve as instruments for satisfying the childs own needs or the needs of those for whom the child cares. Level Two: Conventional Stages Interpersonal Concordance Orientation - Good behavior at this early conventional stage is living to the expectations of those for whom one feels loyalty, affection, and trust, such as family and friends. Right action is conformity to what is generally expected in one's role as a good son, daughter, brother, friend, and so on. Law and Order Orientation - Right and wrong at this more mature conventional stage now come to be determined by loyalty to one's own larger nation or surrounding society. Laws are to be upheld except where they conflict with other fixed social duties.

Level Three: Post - Conventional Stages Social Contract Orientation - At this first post-conventional stage, the person becomes aware that people hold a variety of conflicting personal views and opinions and emphasizes fair ways of reaching consensus by agreement, contract, and due process. Universal Ethical Principles Orientation - At this final stage, right action comes to be defined in terms of moral principles chosen because of their logical comprehensiveness, universality, and consistency. Criticisms of Kohlbergs Theory: Kohlberg's own research found that many people remain stuck at an early stage of moral development. His structure implies that later stages are better than the earlier ones. Kohlberg has been criticized for this implication, and for not offering any argument to back it up. Carol Gilligan, a feminist psychologist, has also criticized Kohlberg's theory on the grounds that it describes male and not female patterns of moral development. Gilligan claims that there is a "female" approach to moral issues that Kohlberg ignores.

17.MORAL REASONING Moral reasoning refers to the reasoning process by which human behaviors, institutions, or policies are judged to be in accordance with or in violation of moral standards. Moral reasoning always involves two essential components: an understanding of what reasonable moral standards require, prohibit, value, or condemn; and evidence or information that shows that a particular person, policy, institution, or behavior has the kinds of features that these moral standards require, prohibit, value, or condemn. To evaluate the adequacy of moral reasoning, ethicists employ three main criteria:

Moral reasoning must be logical. Factual evidence must be accurate, relevant, and complete. Moral standards must be consistent. 18.MORAL RESPONSIBILITY AND BLAME Moral responsibility can refer to two different but related things: First, a person has moral responsibility for a situation if that person has an obligation to ensure that something happens. Second, a person has moral responsibility for a situation when it would be correct to morally praise or blame that person for the situation. People who have moral responsibility for an action are usually called moral agents. Agents are creatures that are capable of reflecting on their situation, forming intentions about how they will act, and then carrying out that action. Moral responsibility is directed not only at judgments concerning right or wrong. Sometimes, they are directed at determining whether a person or organization is morally responsible for having done something wrong. People are not always responsible for their wrongful or injurious acts: moral responsibility is incurred only when a person knowingly and freely acts in an immoral way or fails to act in a moral way. Ignorance and inability to do otherwise are two conditions, called excusing condition, that completely eliminate a person's moral responsibility for causing wrongful injury. Ignorance and inability do not always excuse a person, however. When one deliberately keeps oneself ignorant to escape responsibility, that ignorance does not excuse the wrongful injury. A person is morally responsible for an injury or a wrong if: The person caused or helped cause it, or failed to prevent it when he could and should have; The person did so knowing what he or she was doing; The person did so of his own free will. Ignorance may concern the relevant facts or the relevant moral standards. Generally, ignorance of the facts eliminates moral responsibility. This is

because moral responsibility requires freedom, which is impossible in the case of ignorance of the relevant facts. Inability eliminates responsibility because a person cannot have a moral obligation to do something over which he or she has no control. A person is NOT morally responsible for an injury or a wrong if The person did not cause and could not prevent the injury or wrong; The person did not know he was inflicting the injury or the wrong; The person did not inflict the injury or the wrong of his own free will 19.ARGUMENTS FOR AND AGAINST BUSINESS ETHICS Business Ethics is a process of rationally evaluating our moralcstandards and applying them to business situations. However, many people have raised objections to the very idea of applying moral standards to business activities. People object to the entire notion that ethical standards should be brought into business organizations. They make three general objections: First, they argue that the pursuit of profit in perfectly competitive free markets will, by itself, ensure that the members of a society are served in the most socially beneficial ways. Second, they claim that employees, as "loyal agents," are obligated to serve their employers single-mindedly, in whatever ways will advance the employer's self-interest. Third, they say that obeying the law is sufficient for businesses and that business ethics is, essentially, nothing more than obeying the law. Arguments for bringing ethics into business: One argument points out that since ethics should govern all human activity, there is no reason to exempt business activity from ethical scrutiny. Business is a cooperative activity whose very existence requires ethical behavior. Another more developed argument points out that no activity, business included, could be carried out in an ethical vacuum.

Another argument claims that ethical companies are more profitable than other companies