Business Ethics

Fundamentals

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 Introduction
Business Ethics
• The value of what should be done and what
should not be done from the business point of
view
• Ethics is a code of behaviour considered correct.
• Branch of philosophy and is considered
normative science as its concerned with norms
of Human conduct.

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 origin of Ethics
• Ethics is derived from Greek word “Ethikos”-
means Character or manners or custom.

• Ethics is subjective while morality is objective.

• Ethics is about sense of belongingness to

society of business. Formed with a limited
vision for economic generation but should
resolve conflict with society by servicing the
community.
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 Business Ethics: What Does It
Really Mean?
Definitions
• Ethics involves a discipline that examines
good or bad practices within the context of a
moral duty
• Moral conduct is behavior that is right or
wrong
• Business ethics include practices and
behaviors that are good or bad

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 Meaning of Ethics

Taken Good or
Decided by Leads to Bad,
together
Right or
Character Conduct Series of
wrong,
of a man of a person Actions
Moral or
Considered Immoral
As
By
which Known as
we Moral
can
Moral Judgement
Judge Requires
Standards
again
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Business Ethics: What Does It Really
Mean?
Business Ethics:Today vs. Earlier
Period
Society’s
Expectations
Expected and Actual Levels

of Business
of Business Ethics

Ethics

Ethical
Problem

Actual
Ethical Problem Business
Ethics

1950s Time Early 2000s

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Why should businesses act
ethically?
• To protect its own interests.
• To keep its commitment to society to act ethically.
• To meet stakeholders’ expectations.
• To prevent harm to the general public.
• To build trust with key stakeholder groups.
• To protect themselves from abuse of unethical employees
and competitors.
• To protect their own reputations.
• To protect their own employees.
• To create environment in which workers can act in ways
consistent with their values.
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 Business Ethics: What Does It
Really Mean?
Two Key Branches of Ethics
• Descriptive ethics involves describing,
characterizing and studying morality
• “What is”
• Normative ethics involves supplying and
justifying moral systems
• “What should be”

Morality as the standards that an individual or a

group has about what is right and wrong, or good
and evil. 8
 Ethical issues for
business
• Product safety standards
• Advertising contents
• Working environment
• Unauthorized payments
• Employee’s privacy
• Environmental issues
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 Objective of Ethics
• Studies human behavior and makes evaluative assessment
about them as moral or immoral

• Establishes moral standards and norms of behavior

• Makes judgment upon human behavior based on these

standards and norms

• Prescribes moral behavior and makes recommendations

about how to or how not to behave

• Expresses an opinion or attitude about human conduct in

general
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 Business Ethics
When business people speak about “business ethics” they usually mean
one of three things:

1. Avoid breaking the criminal law in one’s work related activity

2. Avoid action that may result in civil law suits against the
company

3. Avoid actions that are bad for the company image

Businesses are especially concerned with these three things since they
involve loss of money and company reputation.

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 Common Unethical Acts...
• Lying and withholding needed information

• Abusive or intimidating behavior

• Misreporting time worked

• Discrimination and sexual harassment

• Stealing

• Breaking environmental and safety laws

• Falsifying records

• Drug or alcohol abuse

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• Giving or accepting bribes
Why Misconduct Is Not
Reported...
• Belief that nothing will be done

• Fear of retaliation

• Fear of being viewed as a troublemaker

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Why ethical behavior is important???

• Business is a subsystem of society

• Reduction in cost of friction with social

environment

• Important for organizations leaders because

they influence the ethical climate for the
rest.
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 Why Ethical problems occur?

• Personal gain

• Individual values widely differ with organizational

goals

• Managers values and attitudes

• Competitive pressures

• Cross-Cultural contradictions 15
 Ethics
1. Business ethics is more a matter of religion than management.

2. Our employees are ethical so we don’t need attention to business

ethics.

3. Business ethics is a discipline best led by philosophers, academics and

theologians.

4. Business ethics is superfluous — it only asserts the obvious: “do

good!”

5. Business ethics is a matter of the good guys preaching to the bad guys.

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 Ethics
6. Business ethics in the new policeperson on the block.

7. Ethics can’t be managed.

8. Business ethics and social responsibility are the same thing.

9. Our organization is not in trouble with the law, so we’re

ethical.

10. Managing ethics in the workplace has little practical

relevance.

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Benefits From Managing Ethics in
Workplace

• Improved Society.
• Contribution towards High
Productivity & strong team-work.
• Changing situations require Ethical
Education.
• Helps in creating Strong Public Image.
• Act as an Insurance.
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Encouraging Ethical Conduct

• Ethics Training
• Key features of effective ethics training
programs
• Top management support.
• Open discussion.
• A clear focus on ethical issues.
• Integration of ethics into the organization.
• A mechanism for anonymously reporting ethical
violations.
• Reward ethical conduct.

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 Encouraging Ethical Conduct (cont’d
• Whistle-Blowing
• The reporting of perceived unethical matters.
• Reducing the fear of retaliation against
whistleblowers
• Anonymous hotlines and web sites
• Personal, confidential guidance
• Ethical Advocate
• An ethics specialist who plays a role of critical
questioner in top-management’s decision-making.
• Serves as the Board of directors’ social conscience.
• Helps prevent groupthink and blind conformity
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Encouraging Ethical Conduct
(cont’d)
• Code of Ethics
• Published statement of moral expectations for
employee conduct
• Requirements for an effective ethics code
• Must describe specific practices as unethical
(e.g., kickbacks, payoffs, gifts, falsification of
records, and misleading product claims).
• Must be firmly supported and fairly enforced
by
top management.
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 Role of the Business Officer

• Employee/Staff rely on you to explain the

rule/policy
• Be able to say no and explain why
• Ethical leadership
• Be the example, not the exception
• “Ethics are what you would you do, if you were
sure no one would see you.”
• Be consistent

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THANK YOU

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