B.kumar Ethics

Business ethics
Business ethics/ Dr. B.Kumar
9/18/15
Business ethics
Nature, purpose and scope of ethics
Importance of ethics and moral standards
Relevance of values
Secular vs. spiritual values in management
A business that makes

nothing but money is a
poor business.
Henry Ford
Business ethics/ Dr. B.
Kumar
9/18/15
The concept comes from the Greek word

ethos that means both an individuals
character and a communitys culture.
Business ethics involves adhering to legal,

regulatory, professional and company
standards, keeping promises and
commitments and abiding by general
principles like fairness, truth, honesty and
respect.
9/18/15
The institute of global ethics defines ethics

as
obedience to the
unenforceable.
9/18/15
The maxims such as business is business

or principles like caveat emptor (let the
buyer beware) fall for short of public
expectation.
Businesses are under pressure to define

their standards and codes of practice.
9/18/15
Ethics are moral guidelines which govern

good behaviour
So behaving ethically is doing what is
morally right
Behaving ethically in business is widely
regarded as good business practice.
9/18/15
An important distinction to remember is

that behaving ethically is not quite the
same thing as behaving lawfully:
Ethics are about what is right and what is

wrong
Law is about what is lawful
and what is unlawful
9/18/15
Ethics constitutes desirable conduct in a

particular set of social circumstances.
Business ethics are that functions which

leads to choosing right decision at right
time which leads for the welfare of not only
business owners but also society,
consumers, stakeholders and its employees.
9/18/15
There are three approaches to studying

business ethics Descriptive- describing practices, moral codes
and beliefs
Prescriptive- an attempt to formulate and
defend basic moral norms
Conceptual study- analyzing central ethical
terms such as right, good, an attempt to
distinguish what is moral and what is immoral.
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10
Proponents of moral relativism believes that

the bulk of moral rules are culture-specific.
In other words things are right or wrong in a
particular context.
9/18/15
11
Nature of business ethics
Business ethics has a five part structure:

1.
2.
3.
4.
5.
The specification of moral judgment

Moral judgment and the moral standard
Justification of moral judgment
Logical reasoning and moral judgment
Moral judgment and moral responsibility
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12
Requirements for moral judgments
Moral judgment should be

Logical- our goals should be able to support our
moral judgments with reason and evidence.
Based on facts- must collect as much relevant
information as possible for making them.
Based on acceptable moral principles-
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13
The ethics movement has grown most

strongly in the USA because the risk of
being penalized by the courts for unethical
behavior is greatest there.
9/18/15
14
Initial approaches were heavily based on

compliance, the creation of rules and
systems that people and companies had to
follow. But rules are hard to draft and can
quickly become out of date.
This has led to the evolution of the belief that

although some level of compliance will always
be necessary, it is more important to instill
ethical values into the corporate body
and the employees that inhabit it.
9/18/15
15
To do this successfully businesses must

have a vision about why they exist and
which ought to be shared by every one
connected with the company.
They must also have shared beliefs about

acceptable standards of behavior.
9/18/15
16
Unethical behavior can cost a company its

reputation and hard cash and reduce its
stock price.
Whereas, ethical companies are most likely

to build trust among their shareholders,
employees, customers and wider
community and thus surely is good for
business.
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17
Ethical relativism
What is right in one place may be wrong in

another because the only criterion for
distinguishing right from wrong is the moral
system of the society in which the act
occurs.
For e.g., abortion is condemned as immoral

in catholic Ireland but is
practiced as a morally
neutral
form of birth
control in Japan.
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18
Many immoral moralities have been adopted,

tolerated or even encouraged by the moral
system of one society or another.
Albert Carr argues that business has its own

norms and rules that differ from those of the
rest of society.
There are number of things that we normally

think of as wrong are really permissible in
business context.
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19
Conscious misstatement and concealment

of pertinent facts in negotiation.
Lying about ones age on a resume.
Deceptive packaging
Overcharging of electricity uses.
Hence business has its own moral standards
and business actions should be evaluated
only by those standards.
9/18/15
20
Herd morality and conventional

morality
In the earliest period of human history, men

lived in herds and were totally dependent
for their survival on the group of herd, and
hence what was good for the herd was good
for its members. Also known as instinctive
morality.
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21
When men graduated from nomadic stage

to the agricultural stage, his struggle for
existence became less harsh, he found
some leisure to think and social life begin to
take shape.
But here too, the iron grip of social rules

and regulations held complete sway over
the individual.
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When we claim to be highly civilized, the

majority of us follow the rules of conduct
regarded as good and avoid those regarded
as bad.
This certainly ensures smooth functioning of

the society and simplifies problems of the
individual.
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The question is why do we call a particular

conduct good and another bad.
Is good a fact like tables and chairs? If so a

conduct called good by one should be
regarded as good by others.
9/18/15
24
Ethics is essentially a social phenomenon.

That which is approved by the group or
society is ethical and conduct frowned upon
by the group is bad or immoral.
Does this not prove that morality means

following rules prescribed by the elders or
majority of society?
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25
For e.g., At the beginning of the battle of

Kurukshetra, Arjuna asked Sri krishna to
take him before the army of Kauravas. He
was overwhelmed by the idea of killing his
kith and kin and was on the point of fleeing
the battlefield.
He could not determine what is his duty and

what is good for him.
9/18/15
26
Ethics as a normative
science
A normative science seeks to determine

norms, ideals, standards or values.
There are three ideals of human life viz.,

Truth, Beauty and Goodness. They
correspond to three aspects of our
experience thinking, feeling and willing.
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27
Ethics is concerned not with human conduct

as it is but as it ought to be. It passes
judgments of value upon human actions
with reference to the moral ideal.
Moral judgments are not descriptive but

prescriptive, they state what we ought to
do, not what we actually do.
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28
Postulates of ethics
All types of behaviour or conduct of men do

not come under the purview of ethics.
E.g., an office employee going to a bank to

deposit a large office sum. On the way he is
shot at by certain miscreants, is slightly
wounded and the money is snatched from
him by those miscreants.
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29
1.
Freedom of will of the agent or doer is

fundamental postulate of morality. Such
events that do not follow from the free will
of the doer, do not form the subject matter
of moral judgments.
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30
Exceptions are:
Instinctive action- A man fleeing from a

dangerous animal is behaving under the
influence of the instinct of self
preservation.
Reflex action when we withdraw our

hand when it touches a very hot object.
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31
Ideo motor action- A spectator watching a

footballer about to kick ball into the net,
himself kicks the man standing in front of
him.
Accidents breaking ones leg as a result

of slipping on a banana skin.
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2.
Reason only persons with a properly

developed rational faculty, i.e., with the
power of distinguishing good from bad are
to be held responsible for their voluntary
actions.
For e.g., A boy of eight sets fire to a hut
and causes considerable loss of property.
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33
3.
Personality the unity and continuity of the

mental life of a person.
The consequences of actions come after the
deeds are done. Sometimes, there is
considerable time gap between an action and
its result.
For e.g., a man commits a crime and during
the course of his trial, is found to be insane,
he is not punished for his crime.
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Apart from voluntary actions, habitual

actions also come under the scope of
moral judgment.
For e.g., a smoker tries hard to give up

smoking, but he does not succeed. This is
more of a psychological problem, how can
he be held morally responsible?
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35
A voluntary action is not a simple event. It

has three stages
The mental stage
The bodily stage
The external stage of consequences
For e.g., quenching thirst by water.
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Motive or intention?
The motive is the fuel for the intent. The

motive is the reason why someone is going
to do something, the intent is what they
desire the outcome of that something to be.
Motive is the fountain from which the

actions spring, whereas intent is the goal to
which they are directed.
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In short intention = motive + means

adopted
To actually do good to my friend, I need to

adopt proper means then only the result will
be satisfactory.
E.g., A surgeon performs an operation with

utmost care to cure a patient; but in spite of
that the patient dies.
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The means adopted for realizing the motive

must be good.
For e.g., motive of passing exam is good,

but adopting unfair means to do that is not
good.
Hence the morality of an action depends

not merely on the motive but also on the
means adopted.
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The term intention is used in a wide sense

which includes:
Immediate and remote intention

Direct and indirect intention
Conscious and unconscious intention
Formal and material intention
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40
Examples:
Two person trying to save a man from

drowning, one is policeman.
Helping a beggar.
A politician adopting various measures to

strengthen his hold on power.
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Importance of ethics
and moral standards
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42
Importance of ethics in
business
Ethical behavior is essential for long term

success in business, both from micro and
macro perspective.
9/18/15
43
1.
2.
3.
The market system leads to a more efficient

way of allocating resources and the
conditions required are:
The right to own and control private
property.
Freedom of choice in buying and selling
goods and services.
The availability of perfect information
regarding these goods and services.
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Macro perspective unethical

behavior
Bribery reduces freedom of choice by

changing the conditions under which the
decision is made. Greater appeal is created
by enhancing the personal gain associated
with the choice by addition of unearned
income.
Coercive acts threats that prevent a

seller from dealing with certain customers.
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Deceptive information creates false

impressions and leads buyers to select
goods and services that provide less
satisfaction.
Delivering products and services below the
promised quality also distorts the system.
Theft losses due to theft may be made up

via larger profit margins that increase
prices.
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46
Unfair discrimination results in the

purchase of services from less capable
people or sale to less capable people.
9/18/15
47
Macro perspective ethics and

trust
Ethics is closely associated with trust. In

order to develop trust, behavior must be
ethical.
Trust in a business setting reduces costs,

makes life more pleasant and improves
efficiency.
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Two norms are to be honored in all

situations:
1. Commitments are to be honored in almost
all situations.
2.
One ought to produce a good product and

stand by it.
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Trust involves three fundamental elements

Predictability
Dependability
Faith
Need for trust arises when one faces some

type of risk. Thus trust, is a risk reducing
mechanism.
9/18/15
50
1.
Trust in supplier relations purchases

move from a series of discrete transactions to
an on going buyer seller relationship which is
called an exchange relationship, which is
based on trust between both parties that each
will honor his commitments.
2.
It also provides several benefits to the buyer.

The buyer gets a dependable source of
supply, during the period of shortages also.
9/18/15
51
2.
Trust in customer relations a

salesman earn customers trust by being
dependable, honest, competent and
customer oriented.
Customers who trust suppliers are more

likely to stay with them.
9/18/15
52
Trust in employee relations a climate

of trust provides:
3.
Improved communication
Greater predictability
Dependability and confidence among
employees
Reduction in employee turnover
Openness and willingness to listen and accept
criticism
Reduction of friction among employees
9/18/15
53
The following factors promote trust:
Open communications
Giving workers a greater share in decision
making.
Sharing of critical information
Trust based sharing of perceptions and feelings
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54
Moral standards
Moral standards are the yardsticks of

business ethics. They provide the basis for
deciding whether an act is right or wrong.
Moral standards consist of specific moral

norms and general moral principles.
9/18/15
55
Business ethics is the process of evaluating

decisions, either pre or post, with respect to
the moral standards of societys culture.
Moral norms prohibit certain types of

behaviour such as lying, stealing and killing.
Moral principles provide more general

guidelines for behaviour and are applicable
to decision situations.
9/18/15
56
Integrative social contracts theory is

used for evaluating the ethical dimension of
decisions.
It is a normative theory of business ethics

and it allows for moral diversity among
various cultures while maintaining certain
universal norms.
9/18/15
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Essential elements of social

contract theory
S.No.
Hypernorms
Universal
Personal freedom
Physical security
Political participation
Informed consent
Ownership of property
Right to subsistence
Equal dignity to all humans
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S.No Macro social contract Globally based

.
1
Moral free space
Free consent with right

to exist
Compatible with
Hypernorms
Priority levels
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59
S.No Micro social contract

Individual norms
.
1
Do not lie in
negotiations
Honor all contracts
Give job preference to

natives
Give contract
preference to local
suppliers
Provide a safe
workplace
Community
based
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Relevance of values
9/18/15
62
Value
The word value is derived from a French

word, Valoir which means the worth, merit,
usefulness or importance of a thing.
Values are prescriptive belief which depicts

what is good and what is bad.
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9/18/15
64
Allport described a value as a belief upon

which one acts by preference. When we
place importance on something that we
cherish we are valuing that trait, ideal, or
characteristic.
Values describe what managers try to

achieve through work and how to behave.
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Values may be based on rules and are

referred to as deontological or rule based
belief;
or values may be based on the perceived

outcomes and are referred to as
teleological beliefs.
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Features of values
Values are the core of personality and are a

powerful force affecting behaviour.
Values contain a judgmental element in that

they carry an individuals ideas as to what is
right or wrong.
Values are not fixed, they change over time.
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Values have both content and intensity

attributes. The content attribute indicates
that a mode of conduct of existence is
important. The intensity attributes specifies
how important it is.
Many values are relatively stable and

enduring.
9/18/15
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Value formulation
Genetic source
Environmental source
Influence of superiors
Media
Values describe what managers try to

achieve through work and how to behave.
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Importance of values in
business
Values should be in alignment with the

business goals, and mission and vision
statements, otherwise there is bound to be
organizational conflict.
Values will also help you in finding your

purpose in life.
Values lay the foundation for the understanding

of perception, attitudes and motivation of
people.
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Values help you get and stay motivated.
Values relate to our purpose in life and are

used as guiding principles, to make your life
easier.
Values provide you with a strong

foundation; a method for living your life to
its fullest.
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Corporate culture: an effective value

system creates a strong corporate culture
which is necessary for high performance.
Guide to action: serves as social guides to

decision making and actions to be taken in
business.
9/18/15
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Objective standards: serves as norms

against which the conduct of businessmen
and their performance can be judged.
Social responsibility: help to persuade

businessmen to discharge their social
responsibilities.
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Value based management
Judgment and guided actions which are

based on individuals beliefs or convections.
Every organisation has its own beliefs and
convictions.
A managers values determine the

managerial functions he performs.
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A managers value system plays a

significant role in the performance appraisal
of his subordinates.
The job of planning, organizing and

controlling the behaviour of employees
should be compatible with managerial
values.
9/18/15
75
Importance of value based

management
Value orientations of managers underlie
managerial behavior. The importance are as
follows:
Managerial effectiveness based on value based

management can solve problems harassing the
economy in country.
Selfless action purifies our mind. Purer mind

concentrate and mediate to approach divinity
or perfection.
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Proper use of valuable human and material

resources offered by the earth.
Promotes work culture, self discipline and

consciousness among the employees.
Helps in bringing human harmony and

happiness in the organization.
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It cares for its people. People are protected

from unwanted stress and strains, unrest
and loneliness.
Helps in reducing conflicts and disputes.

This enhances reputation and goodwill of
the organization.
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Types of values
These are personal convictions about lifelong goals (terminal values) and modes of
conduct (instrumental values).
9/18/15
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INSTRUMENTAL VALUES
Instrumental Valuesarecore
values,permanent in nature, comprise
personal characteristics and character
traits.
9/18/15
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INSTRUMENTAL VALUES
Cheerfulness
Ambition
Love
Cleanliness
Self-Control
Capability
Courage
Politeness
Honesty
Imagination
Independence
Intellect
Broad-Mindedness
Logic
Obedience
Helpfulness
Responsibility
Forgiveness
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TERMINAL VALUES
In our personal lives, Terminal Values are

those things that we can work towards or
we think are most important and we feel are
most desirable terminal values are
desirable states of existence.
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TERMINAL VALUES
True Friendship
Mature Love
Self-Respect
Happiness
Inner Harmony
Equality
Freedom
Pleasure
An Exciting Life
Social Recognition
Wisdom
Salvation
Family Security
National Security
A Sense of
Accomplishment
A World of Beauty
A Comfortable Life
9/18/15
83
Secular versus Spiritual values

in management
9/18/15
84
Secularism
Secularism is the doctrine that morality

should be based solely with regard to the
well-being of mankind in the present life to
the exclusion of all considerations drawn
from belief in God.
Secularism means non-religious. The

secular values are based on facts and
science.
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Secularism means being materialism and

task oriented for managers.
Secularism is a professional value which

completely ignores the difference of caste,
color, religion, culture etc.
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86
Main features:
Primary emphasis on the material and

cultural improvement of human being.
Concern for this world and its improvement.
Maximize the profit without discriminating

work force.
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Responsibility towards society: One should

take maximum efforts for the well being of
society.
Professionalism: decision should not be on

the basis of religion, caste, colour etc.
Secular values lay emphasis on brother

hood of man and unity of the world.
9/18/15
88
Secularism and management
Under this the management acted as

handmade of profit and motto was more
and more money at any cost. Hence we got
external growth at the cost of internal
growth.
Some consequences of management by

secularism are as follows:
9/18/15
89
Workers are demoralized
Labor management conflict is rampant.
Human welfare is neglected
Wealth is accumulated
Main objective of management is to earn

money at any cost.
9/18/15
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Spiritualism
Spiritual means religious one or the people

who believe in religion.
They behave that work and religion are two

side of a coin.
Human values are based on spiritualism.

They act as base for thoughts, actions, skills
and behaviour and will mould character.
9/18/15
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Main features:
Divine qualities: such as respect for elders,
belief in giving than taking, satisfaction etc.
Work is worship: one should work with

more confidence, loyalty, dedication,
responsibility and motivation.
Self disciplined: helps in proper usage of our

time, energy and other resources.
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Belief in religion: spiritual people believe in

religion.
9/18/15
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Spiritualism and management
The quality of work life in an organization is

greatly influenced by the spiritual and
ethical values prevalent in the organization.
There is no clash between secularism and

spiritualism.
Spiritualism shows the goal and secularism

supplies the tools.
9/18/15
94
SECULAR Vs SPIRITUAL VALUES IN

MANGEMENT
Secular
It refers to the worldly
thoughts and
philosophies as
reproduced by
management Gurus.
Find its way from
maslows need
hierarchy and
culminate till most
modern thoughts on
management.
Spiritual
It refers to the insights
thrown on
management by
Vedas and Upanishad
or by spiritual Gurus.
Find its base from
Vedas and Upanishads
with special reference
to Gita.
9/18/15
95
Secular
Treat management
values as a science.
Treat management
values as an
evolutionary concept.
Views on values are

not generally ethical
by nature.
Spiritual
Treat management
values as a philosophy.
Believe sources like

Bhagvad Gita, as a
ready reckoner of
value based
management.
Ethical or moral in its

true sense.
9/18/15
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Secular
Contribution of Indian
thoughts is
comparatively poor.
As propounded by
management experts
lack any ideals.
Spiritual
Contribution of Indian
thoughts has
magnificent theories.
Have divinity as the
ideal to be portrayed.
9/18/15
97
Examples
Worship of Tulsi
Spiritualism: we do worship tulsi by giving

water or by lighting a lamp in the plant of
tulsi.
Secularism: believes that lighting a lamp

in tulsi kills insects, and tulsi also has
medicinal value as it cures cough and cold.
9/18/15
98
Giving Argh to Sun
Spiritualism: it is a spiritual value.
Secularism: believes that when we give

argh to Sun, our eye sights will also become
good.
9/18/15
99
Touching feet of elders
Spiritualism: we get blessing by touching

feet of elders.
Secularism: believes that blood circulation

is maintained by it.
9/18/15
10
0
Secular practices with human dignity,

human morality and human value will alone
bring bright future for India.
The country should have common law which

is applicable to all cities.
There should be no privileges based on

religion or faith.
9/18/15
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1
9/18/15
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2

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Business ethics

Business ethics/ Dr. B.Kumar

A business that makes

The concept comes from the Greek word

Business ethics involves adhering to legal,

The institute of global ethics defines ethics

Business ethics/ Dr. B.Kumar

The maxims such as business is business

Businesses are under pressure to define

Business ethics/ Dr. B.Kumar

Ethics are moral guidelines which govern

Business ethics/ Dr. B.Kumar

An important distinction to remember is

Ethics are about what is right and what is

Business ethics/ Dr. B.Kumar

Ethics constitutes desirable conduct in a

Business ethics are that functions which

Business ethics/ Dr. B.Kumar

There are three approaches to studying

Proponents of moral relativism believes that

Business ethics/ Dr. B.Kumar

Nature of business ethics

Business ethics has a five part structure:

The specification of moral judgment

Business ethics/ Dr. B.Kumar

Requirements for moral judgments

Moral judgment should be

Business ethics/ Dr. B.Kumar

The ethics movement has grown most

Business ethics/ Dr. B.Kumar

Initial approaches were heavily based on

This has led to the evolution of the belief that

To do this successfully businesses must

They must also have shared beliefs about

Business ethics/ Dr. B.Kumar

Unethical behavior can cost a company its

Whereas, ethical companies are most likely

Business ethics/ Dr. B.Kumar

What is right in one place may be wrong in

For e.g., abortion is condemned as immoral

Many immoral moralities have been adopted,

Albert Carr argues that business has its own

There are number of things that we normally

Conscious misstatement and concealment

Business ethics/ Dr. B.Kumar

Herd morality and conventional

In the earliest period of human history, men

Business ethics/ Dr. B.Kumar

When men graduated from nomadic stage

But here too, the iron grip of social rules

Business ethics/ Dr. B.Kumar

When we claim to be highly civilized, the

This certainly ensures smooth functioning of

Business ethics/ Dr. B.Kumar

The question is why do we call a particular

Is good a fact like tables and chairs? If so a

Business ethics/ Dr. B.Kumar

Ethics is essentially a social phenomenon.

Does this not prove that morality means

Business ethics/ Dr. B.Kumar

For e.g., At the beginning of the battle of

He could not determine what is his duty and

Business ethics/ Dr. B.Kumar

A normative science seeks to determine