PART 4 LESSON 9 ETHICAL CONSIDERATIONS

LESSON 9 ETHICAL CONSIDERATIONS

Ethics
In recent years governments has insisted on the importance of doing business ethically, and in turn organizations have insisted their employees to behave ethically. Having said that one has to define what is ethics. Determining ethical and unethical behavior is not that simple because individuals each have their own concept of ethical behavior. Ethics also differs between cultures still; ethics can be defined in general terms. Ethics are moral principles that prescribe acceptable behavior over unacceptable behavior. Ethics are set of value judgments that define the right and wrong conduct for individuals who live in a society.

Forces that determine ethical behavior

Many forces in the domestic organizational and societal environment determine the ethical behavior in an individual. Firstly, the society at large makes an great impact on the ethical conduct of an individual. The particular societies cultural features like norms more etc in fuse a general sense of ethics in the individual. The things permitted and those that are non permitted in a society, regulates the conduct of the individual. Secondly the laws and regulations imposed by governmental authorities also play an important role in determining ethical behavior. The law allows some behavior and actions while it bans some other behavior and action. Thus, by law and rules, the ethical behavior of individual is conditioned. Individuals also behave according to what pleases others. Especially, if the individual interacts with influential people who demand unethical behavior from the individual, the individual may be compelled in a way to behave unethically. An individual may also have to alter his or her behavior according to the organizational culture and climate. Also, individual conduct themselves in accordance with the rewards and punishments they received for their varied behaviors during their childhood.

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PART 4 LESSON 9 ETHICAL CONSIDERATIONS The way the top management deals with the public, environment, government, etc will also have an impact on the way the employee behaves within the organization.

Factors that lead to unethical behavior

Personal value judgments, self interest and pressure are some of the main factors that lead to unethical behavior among individuals. The problem of personal value judgments , is that individuals might be having principles that are contrary to that of other. What the individual things as acceptable behavior might not be actually so. The next major reason for unethical conduct is that of self interest. People who look only for their own gain at the cost others, tend to behave mostly unethically. Thus selfishness leads to unethical behavior. Some times people act against their own moral values when other like seniors, stockholders, family members, peers excert pressure on them to behave unethically. Also, some individual behave unethically to gain from any short term performance. Unethical behavior may bring some benefits in short run, but in the longer run unethical business practices results in losses.

Creating ethical conduct in organizations

The major responsibility for creating ethical behavior among the employees is with the organization. To promote ethical behavior the organization has to encourage and discourage certain others through both formal and informal ways. The employees must be encouraged to follow the golden rule, i.e. not doing others, what they will not want to happen for them. The organization must encourage whistle blowing i.e. employees must feel free to report to the top management about misconduct or unethical behavior in their departments. Such employee must be given due protection and their reports must be kept confidential. Fair dealing has to be followed as a matter of rule. Discrimination and inequality must be completely avoided by the top management, so that the employees will also be force to act is such ways.

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PART 4 LESSON 9 ETHICAL CONSIDERATIONS The organization must encourage long term benefit rather than looking for short term benefits. The organization must be looking for steady growth which will make the employees to act honest and help them to monitor themselves. The organization must establish a code of conduct. The code of conduct is a set of rules regarding ethical behavior in the organization. The code of conduct must be communicated and clearly explained to the employees. Also, the organization must induce transparency in all its dealings. The department and employees must also be forced to be transparent in all their dealings. This measure directly eradicate unethical behavior Finally the organization must incorporate ethics at the training itself. This will show the importance of ethics to the organization to the new recruits.

Conflict of interest
A manager or a worker naturally performs two different set of roles. One the individual performs his / her domestic roles at home and the other performs his / her official duties at work. While performing these two dissimilar roles the individual may at times, compelled to perform any one of these roles at the cost of other. Such conflict in performing the roles at the cost of official and domestic duties is called conflict of interest.

The IMA ethical code of conduct

To impact ethical conduct an any finance professional the IMA has drafted an ethical code of conduct. The IMAs code of conduct statement contains overall ethical principles which include honesty, fairness, objectivity and responsibility. Then after the principles section, it contains details about various standards namely competence, confidentiality, integrity and credibility. And at last the IMAs code of conduct suggests practical measures for professionals to encounter ethics related problems.

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