ETHICS & CSR

Ethics: What Does It Really Mean???

Derived from Greek word ‘Ethicos’ meaning Character or Manners

Science of character of a person expressed as right or wrong conduct or action.

Set of moral principles prescribing code, explains what is good and right, or bad and wrong.

Meaning of Ethics

Character of a man

Conductof a person

Series ofActions

Good or Bad,

Right orwrong,

Moral orImmoral

Moral Standards

Decided by Leads toTakentogether

Considered As

Known asMoral

Judgement

Requires

By which we can Judge again

Ethics can be termed as the science of character of a person

expressed as right or wrong conduct or action

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

Business Ethics: What Does It Really Mean???

comprises principles and standards that guide behavior in the world of business

According to John Donaldson “Business Ethics can be described as the systematic study of moral (ethical) matters pertaining to business, industry or related activities, institutions, or practices and beliefs. It is the systematic handling of values in business and industry.”

Unitarian View: Business & morality cannot be separated and it must play by the rules of ethics of the community.

Views on relationship between Business & Ethics

Moral Structure

Business

Moral Ethics

Separatist view of Ethics

Proposed by Adam Smith and Milton Friedman: Business is a distinct entity and does not include ethics and morality

Business Ethics

Integration view of ethics

Proposed by Talcott Parsons

Law

Society

Government

Market Systems

BusinessMorality

& Ethics

BusinessEthics

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.

Laws and moral standards overlap to a certain extent

Law represents a minimum set of standards for producing a desired human behaviour

Ethics often represents a standard that exceeds the legal minimum

Ethics Law

Frequent Overlap

Relationship between law and moral standards

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

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

Why ethical behavior is important???

Business is a subsystem of society

Empowers all stakeholders concerned

Reduction in cost of friction with social environment

Important for organizations leaders because they influence the ethical climate for the rest.

Why Ethical problems occur?

Personal gain

Individual values widely differ with organizational goals

Managers values and attitudes

Competitive pressures

Cross-Cultural contradictions

Sources of Ethical Norms

Fellow Workers

Family

Friends

The Law

Regions of Country

Profession

Employer

Society at LargeReligious Beliefs

The Individual

Conscience

Culture

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.

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

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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