Business Ethics

Business Ethics

 Business Ethics is about:

 Decision-Making
 By People in Business
 According to Moral Principles or Values
Decision-Making
 Ethical decision-making involves the ability to
separate right from wrong along with the
commitment to do what is right
 Some factors affecting decision-making :
 Issue Intensity

 (i.e. how important does the decision-maker

perceive the issue to be?
 Can be influenced by company/management
emphasis)
 Decision-Maker’s Personal Moral Philosophy (Moral
philosophy involves systematizing, defending, and
recommending concepts of right and wrong behavior)
 Organizational Culture
 Decision-Making
8 Steps to Sound, Ethical Decision-Making
 1. Gather as many relevant & material facts as
circumstances permit.
 2. Identify the relevant ethical issues (consider alt.
viewpoints)
 3. Identify, weigh & prioritize all the affected parties (i.e.
stakeholders) (see Johnson & Johnson Credo, Taking
Sides, p.25)
 4. Identify your existing commitments/obligations.
 5. Identify various courses of action (dare to think creatively)
 6. Identify the possible/probable consequences of same
(both short & long-term)
 7. Consider the practicality of same.
 8. Consider the dictates and impacts upon your character &
integrity.
By People in Business

Decision-Maker (Managers)
The moral foundation of the decision-maker matters. If
he thinks that by giving punishments he can take his
work out but punishment and fear is only effective in
the short-run. Organizations that have a clear vision,
and support individual integrity are attractive places
of employment.
Moral Principles or Values
 Values: guiding ideas, representing deeply held generalized
behaviors, which are considered by the holder, to be of great
significance.

 Morals: a system or set of beliefs or principles, based on values,

which constitute an individual or group’s perception of human
duty, and therefore which act as an influence or control over their
behavior. Morals are typically concerned with behaviors that
have potentially serious consequences or profound impacts. The
word “morals” is derived from the Latin mores (character, custom
or habit)

 Ethics: the study and assessment of morals. The word "ethics"

is derived from the Greek word, ethos (character or custom).
Ethics means working in such manner which is morally right.
Objectives of Ethics
 Study of human behaviour and makes evaluative assessment
about that as moral or immoral (A diagnostic goal).

 Establishes moral standards and norms of behaviour.

 Makes judgment upon human behavior based on these

standards and norms.

 Prescribes moral behaviour and makes recommendations about

how to or how not to behave.

 Expresses an opinion or attitude about human contact in

general.
Nature of Ethics
 Concepts of ethics deals with human beings only. Human beings
can distinguish right or wrong, good or evil.
 The Study of ethics is a set of systematic knowledge about moral
behaviour and conduct. Study of ethics is a science – a social
science.
 Science of ethics (Normative Science) : it judges the value of the
facts in terms of ideal situation.
 Deals with human conduct which is voluntary, not forced or
coerced by persons or circumstances.
Code of Ethics in Business
 Responsibilities of Business :
a) not to do harm knowingly,
b) to adhere all applicable laws and regulations,
c) the accurate representation of their education, training and experience,
d) active support, practice and promotion of this code of ethics.

 Honesty and Fairness :

a) being honest in serving consumers, clients, employees, suppliers,
distributors and the public.
b) no knowingly participating in conflict of interest without prior notice to all
parties involved.

 Rights and Duties of parties :

a) products and service offered are safe and fit for their intended use,
b) communications about offered product and services are not deceptive,
c) all parties intend to discharge their obligations, financial and otherwise,
in good faith,
Characteristics of Business
Ethics
 Ethical decisions differ with individual perspective of different
persons. Each person views the ethical question in terms of his
or her own frame of reference. And this frame of reference is the
person’s own unique value system.
 Ethical decisions are not limited only to themselves, but affects a
wide range of other situations as well. Similarly, unethical
decisions do not end in themselves, but have widespread
ramifications.
 Most ethical decisions involve a tradeoff between cost incurred
and benefits received. Cost and benefits, profits and social
responsibilities are different ends of a single spectrum. All
cannot be maximized simultaneously.
Characteristics of Business
Ethics
 The consequences of most ethical or unethical decisions are not
clear. The only certainty is that somewhere, sometime,
somehow, something positive will result from an ethical decision
and something negative from unethical one.
 Every person is individually responsible for the ethical or
unethical decision and action that he or she takes. Taking an
ethical decision cannot be an impersonal activity as it involves
the person’s individual unique value system along with his moral
standards.
 Ethical decisions are voluntary human actions. A person cannot
escape his personal liability for his crimes citing force of
circumstances or pressure.
Ethics will be different at
different levels
 At the basic level, it is about discipline, i.e.. to
maintain punctuality, coming to work on time,
behaving properly with superiors, colleagues
and subordinates and not wasting time during
working hours.

 At the top level, it is about commitment and

Protecting the interests of the organization.
 Sources of Ethics
• Genetic Inheritance : the qualities of goodness is a product of
genetic traits strengthened over time by the evolutionary process.

• Religion : religious morality is clearly a primary focus in shaping

our societal ethics.

• Philosophical Systems : the quality of pleasure to be derived

from an act was the essential measure of its goodness.

• Cultural Experience : individual values are shaped in large

measure by the norms of the society.

• The legal system : laws represent a rough approximation of

society’s ethical standards.
Factors Influencing Ethics

Individual Organizational Environmental

o Values oTop Level Mgmt. oCompetition

o Work Philosophy
oEconomic
Background
oThe Firm’s Reward Conditions
o Family Status System
oSocial/Cultural
o Personality oJob Dimensions Institutions
Ethical Issues in Business

Many of the ethical issues and dilemmas in

business are rooted in the fact that political
systems, law, economic development, and
culture vary significantly from nation to nation

The most common ethical issues involve in

businesses are:
 Employment practices
 Human rights
 Environmental regulations
Ethics @ Workplace

 Ethics in the workplace in its simplest terms

means doing the right things that guide your
behavior at work.
 On-the-Job Ethical Dilemmas

Telling the truth and 
Situation in which a business 
adhering to deeply felt 
decision may be influenced 
ethical principles in 
for personal gain.
business decisions.

Employee’s disclosure  Businesspeople expect 
of illegal, immoral, or  employees to be loyal 
unethical practices in  and truthful, but ethical 
the organization. conflicts may arise.
Golden Rules of Ethics @ Workp
 Body Language
 Avoid Creating Disturbance
 Trust & Respect for Others Work
 Don’t Interfere In Others Work
 Respect the Privacy of your Co-workers
 Avoid Ethnic & Gender Biasness
 Improve Your Self Presentation
 Avoid Lobbying
 No/Least Personal Work During Work Hours
 Maintain the balance between
transparency/openness and confidentiality
Benefits of Ethics
The list of potential benefits:

 Fostering a more satisfying and productive working environment

 Building and sustaining Organisation reputation
 Maintaining the trust of staff to ensure continued self-regulation
 Providing ethical guidance for employees prior to making
difficult decisions
 Aligning the work efforts of employees with the Organisation’s
broader mission and vision
 Increased employee loyalty, higher commitment and morale as
well as lower staff turnover
 Attraction of ‘high-quality’ staff
 Reputation benefits (customers and suppliers)
 More open and innovative culture
 Decreased cost of borrowing and insurance
 Generation of good-will in the communities in which the
business operates
HOW ORGANIZATIONS SHAPE ETHICAL CONDUCT
 Ethical Awareness
Code of Conduct Formal statement that defines how the organization expects and 
requires employees to resolve ethical questions.

 Ethical Reasoning
Codes of conduct cannot detail a solution for every ethical situation, so corporations 
provide training in ethical reasoning.

 Ethical Action
Helping employees recognize and reason through ethical problems and turning them 
into ethical actions.

 Ethical Leadership
Executives must demonstrate ethical behavior in their actions.