Business Ethics

Dr. Eti Khatri

Asst. Professor
 Ethics
The study of god and evil, right and wrong and
just and unjust.
The study of moral obligation involving the
distinction between right and wrong.
 Business Ethics
The study of good and evil, Right and wrong,
& just and unjust actions in business.

Right and wrong in the workplace- Value

Management
 Evolution of Business Ethics
Term-Business Ethics-1970,United States
Originally in academic and research domain
Media-Public-Correlate with business
scandals=Business Ethics
 Warren Buffets rule of thumb for
ethical conduct
I want employees to ask themselves (when
they are in doubt about whether a particular
conduct is ethical or not) whether they are
willing to have any contemplated act appear
the next day on the front page of their local
paper to be read by their spouses, children
and friends with the reporting done by an
informed and critical reporter. [Berkshire
Hathaways code of ethics]
 Relation of Business and Ethics
Competition
Leadership
Bad Business Practices
 General Business Ethics
Ethics of human resource management
Ethics of sales and marketing
Ethics of production
Ethics of intellectual property, knowledge and
skills
 Need/Importance of Business Ethics
Corresponds to Basic Human Needs
Credibility in the Public
Credibility with the Employees
Better Decision Making
Profitability
Protection of Society
Major Sources of Ethical values in
Business
Philosophy

Sources
Religion of Ethical Law
Values

Culture
 Benefits of Managing Ethics at work
place
Improves society.
Maintains a moral course.
Cultivates employee teamwork, productivity,
morale and development.
Acts as an insurance policy.
 Establishes values for quality management,
strategic planning and diversity management.
Promotes strong public image.
It is the RIGHT thing to do!
Approaches of Business Ethics
 Ethical Theories
1.Consequentialist
2.Non consequentialist
 Consequentialist theories
If the consequences are good, the action is
right; if they are bad, the action is wrong.

There are two theories under this category :

Egoism
Utilitarianism
 Egoism
The view that equates morality with self-
interest is referred to as egoism.
An egoist contends that an act is morally right
if and only if it best promotes his interests.
 kinds of egoism
a) Personal
b) Impersonal
Personal egoists claim they should pursue
their own best interests, but they do not say
what others should do.
Impersonal egoists claim that everyone
should let self-interest guide his or her
conduct.
 UTILITARIANISM
Utilitarianism tells us to bring about the most
happiness for everyone affected by our
actions.
 Six Points about Utilitarianism
1. when deciding which action will produce the
greatest happiness, we must consider
unhappiness or pain as well as happiness.
2. Second, actions affect people to different
degrees.
3. utilitarian's evaluate actions according to
their consequences and because actions
produce different results in different
circumstances.
4. Utilitarian's wish to maximize happiness not
simply immediately but in the long run as well.

5. Utilitarians acknowledge that we often do

not know with certainty what the future
consequences of our actions will be.
Accordingly, we must act so that the expected or
likely happiness is as great as possible.

6. My pleasure as pain should be equally treated

as others
 Non-consequentialist Theory
Outcome of the actions doesnt really matter,
what matters is essentially the intention.
 Ethical Decision Making
Select And Hire Ethical
Employees

Establish A Code Of Ethics

Train Employees To Make

Ethical Decisions

Create An Ethical Climate

 HOSMER Model
Principle of Long-term self-interest

Principle of Personal Virtue

Principle of Religious injunction

Principle of Government Requirements

Principle of Utilitarian benefit

Principle of Individual rights

Principle of Distributive Justice
 Unethical Issues in Work Place
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
Common Causes of Unethical Behavior
Pressure
Fear
Greed
Convenience
Following bosss directives
Meeting overly aggressive business/financial
objectives
 Helping the organization survive
Be a team player (group think)
Rationalizing that others do it
Resisting competitive threats
Advancing own career
 Ethical Dilemmas
Making decisions under stress or dealing with
complex issues that have no clear indication of
what is right or wrong.
 Essential Steps for Ethical Problem-
Solving
1. DETERMINE whether there is an ethical issue
or/and dilemma
2. IDENTIFY the key values and principles
involved
3. RANK the values or ethical principles which -
in your professional judgement - are most
relevant to the issue or dilemma
4. DEVELOP an action plan that is consistent
with the ethical priorities that have been
determine
5. IMPLEMENT your plan, utilizing the most
appropriate practice skills and competencies
6. REFLECT on the outcome of this ethical
decision making process
 Professional Ethics For Functional
Manages
Functional Managers are those who are
responsible for carrying at a particular function
in an organization like functional manager can
be Marketing Manager, HR Manager, Financial
Manager, Public relation officer etc.
 Professional Ethics For Marketing
Manager
Marketing Ethics means a standard by which a
marketing action may be judged as Right or
wrong.
A right marketing action is expected to contribute
to the overall societal gain both in the short and
the long rule.
One ethical practice would be that which in a
marketing exchange alters the entitlements of
either the buyers of the seller in such a way that
it is at the expenses of others.
 For instance, raising the price by a percent
and offering that as a discount to attract.
Therefore Marketing ethics should guide a
marketers action in such a way that a
marketing action Shall not do any harm
knowingly.
Shall not knowingly promote conflict of
interest. Is honest and fair.
Adheres to all applicable laws and
regulations. Does not deceive.
 Human Resource Management
HRM functions include recruitment, selection,
training & development, performance etc.
The ethics of HRM revolve around those
ethical issues arising of the employer-
employee relationship, such as the rights and
duties between them.
 The unethical behavior of HR manager may
also be seen in the case recruitment and
promotion and also in the case of
performance appraisal.
HR professionals confronts several ethics
dilemmas in their day to day work.
For this the org. should evolve code of ethics
for managers, executives and employees and
enforce them.
 Financial Managers
Financial Managers shall adhere to and
advocate to the best of their knowledge and
ability the following principles and
responsibilities governing their professional
and ethical conduct.
Act with honesty and integrity, including the
ethical handling of actual or apparent
conflicts of interest between personal and
professional relationships.
 When disclosing information to constituents,
provide them with information that is
accurate, complete, objective, relevant, timely
and understandable.
Reports and documents shall contain full, fair,
accurate, timely and understandable
information.
 Profitability & Ethics
Leadership
Company-wide ethical awareness
Strong management of revenue generation
and reporting
High level of internal trust
Formal and active compliance program
 Organizational Size & Ethics
Formal Policy
Small Size = close contact of employees
Size doesnt matter in fraud prevention
 Competitiveness & Ethics
If Ethics are there, then the competitiveness is
Hollow
Ethical behavior can survive in highly
competitive markets