Ethics

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ETHICS COMPARED

ETHICS MORALS VALUES

Theories about rules.

Ordering, questioning, awareness, investigation of what we believe

Are we justified in believing it? Is it consistent? Should we remain open to other beliefs?

Moral Rules that we follow

Double Connotations-

Positive: goodness, guidance, humanitarian attitude

Negative: Bigotry repression, double standards,

Likes and dislikes,

things that we consider worth and things that we don't consider worth

Moral preferences

ETHICS DEFINED

• Inquiry into the nature and grounds of morality where the term morality is taken to mean moral judgments, standards and rules of conduct

- Paul Taylor

• The study of the general nature of morals and of specific moral choices; moral philosophy; and the rules or standards governing the conduct of the members of the profession.

-The American Heritage Dictionary of the English Language

Factors Affecting Ethical/ Unethical Decision-Making

INDIVIDUAL FACTORS1.PERSONAL MORAL PHILOSOPHY

2.STAGE OF MORAL DEVELOPMENT

ORGANISATIONAL FACTORS1.ORGANISATIONAL CULTURE

2.CO WORKERS AND SUPERIORS3.OPPURTUNITY

ETHICAL /UNETHICALDECISION

ISSUE INTENSITYMAGNITUDE OF CONSEQUENCESSOCIAL CONSENSUS, PROBABILITY EFFECT, PROXIMITY,CONCENTRATION EFFECT

PERSONAL MORAL PHILOSOPHY

Philosophy Meaning

1.Teleology

#Egotism

#Utilitarianism

Stipulates that acts are morally right or acceptable if they produce some desired result, such as realization of self interest or utility

Defines right or acceptable actions as those that maximize a particular person's self interest as defined by the individual

Defines right or acceptable actions as those that maximize total utility or the greatest good for the greatest number of people

Deontology Focuses on preservation of individual rights and on the intentions associated with a particular behaviour

Relativist Evaluated ethicalness subjectively on the basis of individual and group experiences

I act or don't act in a certain way because:• I fear being caught by the authoritiesStage 1 Punishment and obedience

• It serves my needs.Stage 2 Individual instrumental purpose

• It leads to well being of others along with my obedience to rules

Stage 3 Mutual interpersonal expectations

• It is my duty towards the societyStage 4 Social system and consicence maintainence

I act or don't act in a certain way because:• I have to uphold basic rights, values and legal contracts of the

society.

Stage 5 prior rights, social contracts

• I follow universal ethical

principles that everyone should follow

Stage 6 universal ethical principles

KOHLBERG`S MODEL OF COGNITIVE

MORAL DEVELOPEMENT

Stake holders and Conflict of Interest

banks

Shareholders

investors

government

communities

Environment

Trade associations

media

customers

employees

Company

•Conflict of Interest exists when an individual must choose whether to advance his/her own interests, the organization’s, or others’

What is Organizational Culture:

The behavioral patterns, concepts, values, beliefs, customs, rules, ceremonies and ways of solving problems, accepted, shared and circulated throughout the organization.

Framework of Organizational Typologies (by N.K.Sethia and

M.A.Von Glinow)

Caring integrative

apathetic exacting

high

low

low high

CONCERN

FOR

PEOPLE

CONCERN FOR PERFORMANCE

-Communicating the Codes:Free AccessTraining programmesMeetingsInternal communiation-Establishing Robust processes for handling

ethical issues:Living statements of ethics

Importance of Leadership

Guiding Motivating

Enforcing Directin

Leadership Styles according to Daniel Goleman:

1.Coercive leader

2.Authoritative leader

3.Affiliative leader

4.Democratic leader

5.Pacesetting leader

6.Coaching leader

• The Power of the Leader:

1.Reward

2.Coercive

3.Legitimate

4.Expert

5.Referent

Creating organizational Symbols

• However, it is these ethical exceptions that are increasingly becoming the rule. N.R. Narayana Murthy, the chairman of Infosys Technologies, the company with the largest market capitalization today, does not lounge in a Lexus or breeze through in a BMW to work. His office in Bangalore does not have an airconditioner. Murthy may have the vision and the drive to make it happen, but he does not know driving. So, on Saturdays, when his driver takes his weekly off, his wife drives him to the bus stop from where the venerable chairman boards the Infosys bus to work.

The Role of Ethics in Performance:

Employee Commitment

Ethical ClimateInvestor Loyalty

And TrustProfits

CustomerSatisfaction and Trust

• What are GREEN Issues?

• Who is Responsible for GREEN Issues?

• What are the implications of GREEN Issues?

Shades of Green Suggested by Edward Freeman

Light Green /Legal Green:

• It involves complying with the law.

• It relies on the public processes to drive its strategy.

• Is it profitable???

• It creates possibilities for competitive advantage.

• Market Green:• Rather than focusing on public policy this approach

focuses on customers.• It attempts to create and sustain competitive

advantage by paying attention to environmental preferences of customers.

• E.g. Macdonald`s decision to ban Styrofoam.

Selling it Green

• BP Plc.

• Chevron Corp.

• General Electronics

• Ford Motor Company

• Dow Chemical Company

• Wal-Mart

Green Washing

• Disinformation disseminated by an organization so as to present an environmentally responsible public image

The Role of Stakeholders

• Supplying Tangible and Intangible Resources

• Two-way power structure

• Dictate the standards of what is acceptable or unacceptable corporate behaviour or practices

• Primary and Secondary Stakeholders

• Stakeholder Green:• This approach seeks to create and sustain

competitive advantage by responding to the environmental preferences of stakeholders.

• 2001 Sony Lost $ 85million when illegal Cadmium was found in the cables bought from suppliers…

• Dark Green:

• To create and sustain value in a way that sustains and cares for the earth.

• It upholds the idea of living with earth and treating it with respect.

SUSTAINABLE DEVELOPMENT??

• According to Gro Bruntland the Prime Minister of Norway who has authored the U.N. report

• “to meet the needs of the present withot compromising the ability of future generations to meet their own needs”

Kyoto Protocol

• An agreement made under United Nations Framework Convention on Climate Change (UNFCC).

• List fo Green House Gases that lead to Greenhouse Effect.

• Commitment to bring down GHG by 2012• Fixed Targets for Emission Reductions- at

least 5%-purchase- estimate of reduction of at least 1.9 billions

Kyoto Protocol

Emission Reductions

Tweaking Existing Technology

Clean Development Mechanism

(CDM)

Clean Development Mechanism

• CER Certified Emission Reductions

• Carbon Exchange

CDP Carbon Disclosure Project

284 Institutional Investors- 2400 companies asked to fill up the 8 page questionnaire-

Reliance NTPCICICI RanbaxyInfosysBombay Stock Exchange

• TERI (The Energy and Resource Institute )

Global Compact that require signatories to "support a precautionary approach to environmental challenges" (Principle 7); "undertake initiatives to promote greater environmental responsibility" (Principle 8) promote the "diffusion of environmentally friendly technologies" (Principle 9).

Special Action Groups

• Conceding to the demands of citizens groups and Greenpeace, Unilever has agreed to the permanent closure of its polluting mercury thermometer factory in Kodaikanal, and to undertake a clean-up of 5.3 tons of mercury wastes dumped by the company at a local scrapeyard. Amidst denials by the company of environmental double-standards or any illegal toxic waste dumping, Greenpeace, Unilever ex-workers and Kodaikanal community groups exposed and cordoned off one of Unilever's illegal dumpsite in a crowded part of the Southern Indian tourist town.

The Centre for Science & Environment (CSE) has adjudged ITC's Paperboard Unit at Bhadrachalam, Andhra Pradesh, as India's most environment-friendly paper mill. CSE's Green Rating Project evaluated 30 paper mills accounting for over 60% of production of paper in India  27 Sep 2004 : The Centre for Science & Environment (CSE) has adjudged ITC's Paperboard Unit at Bhadrachalam, Andhra Pradesh, as India's most environment-friendly paper mill. CSE's Green Rating Project evaluated 30 paper mills accounting for over 60% of production of paper in India. It has now awarded the highest rating to the Bhadrachalam Unit for 'leadership in upgrading technology to eliminate elemental chlorine use and for its initiative in promoting farm forestry'. ITC's Paperboard Unit in Bhadrachalam is the only paperboard manufacturing facility in the country to produce Elemental Chlorine-Free (ECF) pulp..

The 'Top Green Rating' recognised ITC's Paperboard Unit for implementing a sustainable fibre strategy, water conservation efforts, eco-consciousness, minimum or no utilisation of chlorine and other chemicals and the forestry programme that ITC has pioneered in partnership with local communities.

Organisations and Companies• In particular, it is ITC’s EHS policy:• To contribute to sustainable development through the establishment and

implementation of environment standards that are scientifically tested and meet the requirement of relevant laws, regulations & codes of practice.•To take account of environment, occupational health and safety in planning and decision making.•To provide appropriate training and disseminate information to enable all employees to accept individual  responsibility for environment, health and safety, implement best practice and work in partnership to create a culture of continuous improvement.•To instil a sense of duty in every employee towards personal safety as well as that of others who may be affected by the employee’s actions.•To provide and maintain facilities, equipment, operations and working conditions which are safe for employees, visitors and contractors at the Company’s premises.•To ensure safe handling, storage, use and disposal of all substances and materials that are classified as hazardous to health and environment.•To reduce waste, conserve energy and promote recycling of materials wherever possible.•To institute and implement a system of regular EHS audit in order to assure compliance with laid down policy, benchmarked standards and requirements of laws, regulations and applicable codes of practice.•To proactively share information with business partners towards inculcating world-class EHS standards across the value chain of which ITC is a part.All employees of ITC are expected to adhere to, and comply with the EHS Policy and Corporate Standards on EHS

Procter & Gamble Releases 10th Annual Sustainability Report

20/11/2008

• Titled ‘Designed to innovate…sustainably’, the report highlights the company’s long-term commitment to responsible growth and progress toward meeting its sustainability goals. These goals include measurable objectives for developing ‘sustainable innovation products’, improving the environmental profile of P&G operations, and improving lives through the company’s ‘Live, Learn and Thrive’ corporate social responsibility programmes.  

Developments highlighted by the document include:

  During the last year, P&G operations reduced water consumption by seven per cent, energy usage by six per cent, carbon dioxide emissions by eight per cent and waste disposal by 21 per cent (per unit of production).  Including last year’s results, P&G has reduced water consumption by 51 per cent, energy usage by 46 per cent, carbon dioxide emissions by 52 per cent and waste disposal by 50 per cent since 2002 (per unit of production).  

  P&G achieved $2.05 billion in cumulative sales of products with a ‘reduced environmental footprint’ (>10% reduction versus previous or alternative products).  

  P&G delivered 430 million litres of clean drinking water through the Children’s Safe Drinking Water programme – water which prevented an estimated 18 million days of disease.

P&G, which has approximately 138,000 employees working in more than 80 countries, has made the report available online at www.pg.com/sustainability.  

Consumer's choice

• Creating Awareness

• British Rail and “Recyclable” Paper

• AEG and save Newts issue

Joint Force

Gaining Credits and Credibility- HSBC and its Green Audits- Carbon Neutral

Aditya Birla Management Corporation LTd and ETP

Tata Group’s TCCI(Tata Council of Community Initiatives) and Tata Business Excellence Model

Shell India and Balanced Score Cards

Sanyo`s Rechargable Battery-Eneloop

P&G and Refill packages

Privacy??

• Spyshop.com claims to service one third of the Fortune 500 companies.

• Office Systems reports that more than 30 million workers were subject to workplace monitoring in 1999 in comparison to 8 million in 1991

• Omnitrack

• Spyzone

Computer based monitoring

• Websense

• Net Access Manager

• Web Track

• Internet Watch dog

• Beeper buster

• Truth telling device

Monitoring devices allow managers-

• to track the web use

• To observe the downloaded files

• To filter sites

• To restrict certain sites

• To know how much time employees spend on various sites

• Video monitoring

• Monitoring personal investments

Conflict of Rights

Integrative Social Contracts Theory(ISCT)

Tom Donaldson and Tom Dufee

• Privacy is a fundamental human aright recognized in all major international treaties and agreements on human rights. Nearly every country in the world recognizes privacy as a fundamental human right in their constitution, either implicitly or explicitly.

• Privacy and Human Rights : An international survey.

Ethicist Gary Marksmore ‘no’= more unethical

• Does the collection of the data involve physical or psychological harm?

• Does the technique cross a personal boundary without permission?

• Could the collection produce invalid results?• Are you being more intrusive than necessary?• Is the data subject prohibited from appealing or changing the

information recorded?• Are there negative effects on those beyond the data subject?• Is the link between the information collected and the goal sought

unclear?• Is the data being used in such a manner as to cause a

disadvantage to the subject?

The implementation of an Ethical resolution-

“ Assuming for the purposes of this argument that privacy is a hyper norm, but one that may be limited by the employer`s congruent right to managerial autonomy, how should the matter be resolved a fairness based decision based on two values: integrity and accountability”

• Of 67% of the mid to large sized companies that monitor, 84% notify their employees of this activity.

Intimating about digital fishing

• The notice may range from one line in the employee manual like

Columbia/ HCA Health Corp. issues a warning policy in its electronic communication policy

• “It is sometimes necessary for authorized personnel to access and monitor their contents and in some situations, the company may be required to publicly disclose e-mail messages, even those marked private’

Adopting ‘Zero Tolerance’ policy

• Like Ameritech whose business code states that computers and other equipments are to be used only to provide service to the customers and for other business purposes.

Privacy as a benefit

• Bell South was a hardliner on the issue of monitoring until they started offering they decided to loosen up to benefit the employees. Though a dialogue box would pop up when they hit send button to send the e mail notifying them against misuse of email and internet.

• Al Gore:• ‘ New technology must not reopen the oldest

threats to our basic rights: liberty and privacy. But government should not simply block or regulate all that electronic progress. If we are to move at full speed ahead into the information age, government must do more to protect your rights-in a way that empowers you more, not less. We need an electronic bill of rights for this electronic age.”

Global Business

• Advances in Communication

• Technological advancements

• Easy transportation

• Transactions across national boundaries

DifferencesCultures

Values

Laws

Ethical Standards

Ethical Complexities

Whose Values do we follow??

When in Rome, do as Romans do.

You must adapt to the cultural practices of the country you are in…

or

We should evolve a set of global or

universal ethical standards.

Matrix for Global Relativists

Ethical Ethical

Ethical unethical

Home Country Perceptions

Foreign

Country

Perceptions

Ethical Unethical

Ethical

Unethical

• Intellectual Property Rights

Patent

Copyright

Counterfeit products

www. Fake-busters.com

Ethics & Performance Correlations...

• intrafirm trust

• commitment to quality

• customer satisfaction

• employee commitment

• profitability

Benefits of Intrafirm Trust...

• efficiency in decisions and actions of employees

• many human resource problems decrease (turnover, conflict, absenteeism, and apathy)

• effectiveness results from communication improvements throughout the organization

Ethics & Commitment to Quality...

• the # 1 breach of ethics was the compromise in quality, with respect to customers (EOA, 1998)

• majority of employees (80%) admit to doing the ‘bare minimum’ with respect to quality (Kelly, 1987)

• ethical climate has been linked to improvements in the commitment to quality=customer satisfaction (Loe, 1996)

Customer Satisfaction & Ethics...

• 70% of customers will switch to brands or stores based on ethics & societal issues (Cone/Roper, 1997)

• 88% of consumers are more likely to buy from a socially responsible firm (Walker Research, 1998)

• the cost of ethics is an investment in customer loyalty

Committed Employees & Ethics...

• creates employee loyalty

• encourages personal sacrifices

• focuses on organizational success

• honors organizational policies & contractual obligations

• reduces turnover

• satisfies customers

Ethics & The Bottom Line...

• sales growth, profits, and ROI are correlated with corporate citizenship (Maignan, 1997)

• an investment in the 10 most admired Fortune firms would result in 3 times the return of the S&P 500

• business ethics = profits!

Corporate Ethics = Profits...

• top management support• core values/organizational culture• code of conduct• ethics training/program• reporting and monitoring• continuous improvement

• …profitability...

Ethics Filters

• P = PoliciesIs it consistent with my organization's policies, procedures and guidelines?

• L= LegalIs it acceptable under the applicable laws and regulations?

• U = UniversalDoes it conform to the universal principles/values my organization has adopted?

• S= Self • Does it satisfy my personal definition of right,

good and fair?