Introduction To Ethics unit 1

Introduction To Ethics & the Conceptual Background: 

Introduction To Ethics & the Conceptual Background

Ethics: 

Ethics Derived from the Greek word “ Ethos ” Also known as Moral Philosophy. It refers to the moral principles of right & wrong. The goodness & badness of one’s actions. Business Ethics is the study of good & evil, right & wrong actions of businessmen. It is an extension of values of personal life to business.

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It does not differ from everyday routine. Business Ethics is also termed as Corporate Ethics. Business Ethics are those principles & philosophies that are concerned with moral judgment & good conduct as they are applicable to business solution.

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It refers to a code which businessmen are expected to follow while dealing with others. The coverage of business ethics is very wide as it deals with norms relating to customers, shareholder, employees, dealers, government & competitors.

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If a business man recalls a product back due to its defective nature, then that is an example of ethical behavior. E.g. Nokia Battery.

Approaches to Business Ethics: 

Approaches to Business Ethics 4 basic approaches: Empirical Approach- ethics is derived thru experiences of businessmen who determine what is right & wrong. Intuitive Approach- states that business ethics is not necessarily derived from experiences or logic but businessmen automatically process an understanding of what is good or bad.

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Rational Approach- it states that businessmen need not require any past experience for the determination of ethics. Revelation Approach- it states that religious moral principles help life to its greatest potential.

Sources Of Business Ethics: 

Sources Of Business Ethics Influenced by 3 major blocks: Religion Culture Law

Religion: 

Religion Tolerance for other Faiths imparts to Us a Truer Understanding of our Own! Each religion preaches a similar set of principles. Principle of Reciprocity is found in all religions.

Culture: 

Culture Set of Values, Rules that a society needs to follow. Equality of Gender.

Law: 

Law Rules of Conduct, approved by legislatures that guide human behavior in the society. Society is expected to abide by the law, and even business has to follow these guidelines. Law breaking is common in the area of business. E.g. Taxes are evaded. Workers die due to industrial accidents.

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Princess Diana’s car crashed in the tunnel in Paris. But the photographers continued to click the pictures of the scene. They all faced charges .

Scope of Business Ethics: 

Scope of Business Ethics Criminal Behavior & Legal Framework. Human Values & personal behavior. Corporate & Business Ethics.

Duty: 

Duty Is derived from the word "due," which means owing. It is a term that conveys a sense of moral commitment to someone or something. Breach of Trust- Unethical. Duty comes out of a position that a person holds.

Rights: 

Rights Everyone has the right to privacy, to information, to safety, to equity. Any act that violates these rights is termed as unethical. E.g. Driving. Internet.

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Attempts to coax a customer to come to a department in order to collect a prize that he/ she has won……

Why is Ethics Important?: 

Why is Ethics Important? Ethics corresponds to Basic Human needs. Values Create Credibility with the Public. Values give Management Credibility with Employees. Values help better Decision Making. Ethics & Profit go Hand in Hand.

Ethical Dilemmas: 

Ethical Dilemmas Stem from Three Sources: Face – To- Face Ethics Corporate Policy Ethics Functional- Area Ethics

Face- To- Face Ethics: 

Face- To- Face Ethics Human Element is involved. Such dilemmas arise often.

Corporate Policy Ethics: 

Corporate Policy Ethics Companies are often faced with ethical dilemmas that affect their operations across all departments and divisions. The Ethical Burden of deciding Corporate Policy matters normally rests upon the company’s Top Management.

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The Top Management and the directors are responsible for making the corporate policies and the onus of implementing them. Your R&D Dept has modernized one of the products. But it is “not really improved and new.” What would you do?

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Bribes Anti- dandruff shampoo

Functional Area Ethics: 

Functional Area Ethics Relates to the different functional departments of a company. Accounting is a critical function of any business. Accounting statements reveal to the managers and the owners about the financial soundness of a company.

Ethics vs. Altruism: 

Ethics vs. Altruism Ethical egoism states that we ought to do what is best for us, that it is not only our right, but our duty to look after our own interests first. Ethical altruism is the opposite, and states that we should look after the interests of others ahead of ours. If the society had to choose one of these two extremes, with which do you think we'd be better off?

Corporate Code of Conduct: 

Corporate Code of Conduct

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Unlike laws, Corporate codes of Conduct do not have any authorized definition. The concept "corporate code of conduct" refers to companies' policy statements that define ethical standards for their conduct.

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Corporate codes of conduct are completely voluntary . They can take a number of formats and address any issue - workplace issues and workers' rights being just one possible category.

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Also, their implementation depends totally on the company concerned. Potential authors of a code are the Founder, Board of Directors, CEO, Top Management, Legal departments, Consultants. The process can involve employee representatives and/or randomly or otherwise selected employees .

Tata’s Code of Conduct: 

Tata’s Code of Conduct For the Company : To supply goods & services of the highest quality standards to ensure the total satisfaction. To be fully transparent in accounting & financial reporting standards. To comply with all the regulations regarding the preservation of the environment.

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To Cooperate & share human management resources with other Tata companies so long as this does not adversely affect its business interest & shareholder value.

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For the Employees: Conduct themselves professionally with professionalism, honesty, integrity as well as high moral & ethical standards & to be fair & transparent. Not derive any benefit from any information about the company or Group which constitutes inside information.

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Report to the Management any actual or possible violation of the Code or an event that the employee becomes aware of that could affect the business or reputation of the employees’ company.

Corporate Culture: 

Corporate Culture

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It is a blend of ideas, customs, traditional practices, company values & shared meanings that help define normal behavior for everyone who works in a company. Corporate culture is the total sum of the values, and meanings that make a company unique.

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Corporate culture is often called "the character of an organization", since it embodies the vision of the company’s founders. The values of a corporate culture influence the ethical standards within a corporation, as well as managerial behavior.

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Senior Management may try to determine a corporate culture . They may wish to impose corporate values and standards of behavior that specifically reflect the objectives of the organization. In addition, there will also be an extant internal culture within the workforce. Work-groups within the organization have their own behavioral quirks and interactions which, to an extent, affect the whole system.

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How is Organizational Culture Diff from Corporate Culture? Organizational culture is the workplace environment formulated from the interaction of the employees in the workplace.

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Organizational culture is defined by all of the life experiences, strengths, weaknesses, education, upbringing, and so forth of the employees. While executive leaders play a large role in defining organizational culture by their actions and leadership, all employees contribute to the organizational culture.

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Hewlett- Packard is well known for a culture that stresses values & ethics. Called the “HP Way” by employees, the most important values of the culture are: Confidence in & respect for people. Open Communication. Sharing of Benefits & Responsibilities. Concern for Individual Employees. Honesty & Integrity.

Why is Understanding the Employer’s Corporate Culture Imp?: 

Why is Understanding the Employer’s Corporate Culture Imp? Because the organization's culture will affect you in many, many ways. How do you uncover the corporate culture of a potential employer ?

Ethical Climate: 

Ethical Climate In some Companies, one can feel the blowing of ethical winds. People pick up subtle hints & clues that tell them what behavior is approved & what is forbidden. This unarticulated understanding among employees is called Ethical Climate. It is that part of the corporate culture that sets the ethical tone in a company.

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Three Different types of ethical yardsticks are: Egoism (Self- Centeredness) Benevolence (Concern for Others) Principle (respect for one’s own integrity, for group norms & for society’s laws)

Entrepreneur: 

Entrepreneur

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The word is derived from the French word "entre" (to enter) and "prendre" (to take), and in a general sense applies to any person starting a new project or trying a new opportunity. An entrepreneur is an individual who accepts financial risks and undertakes new financial ventures.

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An entrepreneur has the greatest chance of success by focusing on a market niche either too small or too new to have been noticed by established businesses.

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Dena Bank will help Government of India’s initiative to encourage women entrepreneurs for self-employment ventures in any kind of non-farm activity.

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Published on 07/22/2008 , New Delhi: Dena Bank on Monday signed a Memorandum of Understanding (MoU) with the Ministry of Micro, Small and Medium Enterprises (MSME) in India for operating a programme to encourage & assist women entrepreneurs.

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This scheme was launched by the Government of India to provide resources and financial assistance to women entrepreneur not only in villages, but also in the urban areas.

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The scheme provides for grants up to 30 per cent of the total project cost released to financial institutions who become partners in implementation of the scheme.

Characteristics: 

Characteristics Spontaneous. Ability and Willingness to make decisions. Generally risk- taking ability. An entrepreneur may be driven by a need to create something new or build something tangible. Highly Independent.

Manager: 

Manager A manager is someone who directs a team. While an entrepreneur is someone who organizes, manages, and assumes the risks of a business or enterprise. An entrepreneur can be a manager but a manager can not be an entrepreneur.

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David Ebersman Chief Financial Officer Christopher Cox VP of Product Founder & Chief Executive Officer Mark Zuckerberg

Profit Maximization: 

Profit Maximization

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A process that companies undergo to determine the best output and price levels in order to maximize its return. The company will usually adjust influential factors such as production costs, sale prices, and output levels as a way of reaching its profit goal.

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Profit maximization is a good thing for a company, but can be a bad thing for consumers if the company starts to use cheaper products or decides to raise prices.

Profit Maximization- An Ethical Decision: 

Profit Maximization- An Ethical Decision In the contemporary world of commerce, the very term "business ethics" creates a kneejerk reaction in executive suites signaling negative, defensive responses. WHY?

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Partly because "business ethics" has become associated with abuse and mismanagement. Also because "business ethics" is a relatively new term, a misunderstood concept, which frightens managers.

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There also exists a tendency by detractors of the present economic system to universalize exceptions and to think that all men and women in business are seeking greed and power for its own sake.

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Consider the virtually impossible task of a Defense Department contractor trying to keep informed and updated on rapidly changing government specifications and regulations. The minute a failure is detected, a red flag is thrown into the air and charges of unethical cheating and over-charging the public become headlines in our newspapers.

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Once the charge is made the damage is done. Human and financial resources are immediately directed coward clearing the charges through a bewildering maze of litigation. Cleared of deliberate or intentional wrong-doing, it is often said that the contractor is lucky to read a fifth-page, small-print announcement. E.g. The Bofors Case.

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There exists an implicit mythology on the part of the media (and on the part of the public) which assumed that business is inherently unethical. The business enterprise is besieged by popular misconceptions as well as by legal, religious and academic theorists.

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They all are anxious to prove that the business is only existing to maximize its profits and to do so at any cost to the consumer, the community and the environment. Business is defensive in matters concerning ethics.

Two Ways: 

Two Ways First, there is a need for business to clarify its function within society as a whole. Second, there is a need for business to situate ethics within the heart and center of its very self-identification, i.e., within private enterprise and profit maximization.

IPL-3 Controversy : 

IPL-3 Controversy

Ethics & Law: 

Ethics & Law Laws are a society’s attempt to formalize what is right & what is wrong. These are the written rules. Ethical Concepts are more complex than written rules. Ethics deal with human dilemmas that frequently go beyond the formal language of law.

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But Legal Rules help promote ethical behaviors in organizations. Some of the Acts which seek to ensure fair business practices in our country are: The Consumer Protection Act, 1986 The Environment Protection Act, 1986 The Companies Act , 1956…….

Ethics Committee: 

Ethics Committee Many companies have ethics committees to advise on ethical issues. Such a committee can be a high level one comprising the Board of Directors, chaired by the CEO. It is open to discussions with employees, helps the company to establish some rules and policies on paper, and oversees the enforcement of the codes of ethics .

Ethics Hot Lines: 

Ethics Hot Lines Can place a call on the company’s “Ethics Hot Line”. A member of the Ethics Committee receives the confidential call & then quickly investigates the situation. Elaborate steps are provided in order to protect the identity of the caller.

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This is done in order to encourage more employees to come up and take a stand against the wrong- doings. Whistle – Blowing.

Types of Ethics: 

Types of Ethics Metaethics Normative Ethics Applied Ethics Descriptive Ethics

Metaethics: 

Metaethics Is the branch of ethics that seeks to understand the nature of ethical properties & ethical statements, attitudes & judgments. The study of what ethical terms and theories actually refer to. It studies the meaning of moral language and the metaphysics of moral facts. Metaphysics-whether the moral values exist? What does Right even mean?

Normative Ethics: 

Normative Ethics The study of moral problems which seeks to discover how one ought to act, not how one does in fact act or how one thinks one should act. Prescriptive Ethics. When an act is right or wrong--e.g., is it wrong to litter on campus when we pay someone to pick up the litter.

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3 types of Normative Ethics: Teleological Theory Deontological Theory Virtue Ethics

Teleological Ethical Theory: 

Teleological Ethical Theory Derived from two Greek Words, “telos” meaning end or goal and “logos” meaning logic or reason. Also known as the Theory of CONSEQUENTIALISM. The Rightness & the Wrongness depends upon the Consequences of the Act. 3 types of Teleological Ethical Theories: Egoism Utilitarianism Altruism

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Egoism - An action is morally right if the consequences of that action are more favorable than unfavorable only to the individual performing the action. Utilitarianism - An action is morally right if the consequences of that action are more favorable than unfavorable to everyone. Propounded by Jeremy Bentham. Altruism - An action is morally right if the consequences of that action are more favorable than unfavorable to everyone except the individual.

Deontological Ethical Theory : 

Deontological Ethical Theory Derived from the Greek word “deno” meaning duty or obligation. THE ACT States that the rightness & the wrongness of an action depends upon the action & not the consequence. E.g. Soldier killing people outside the border. Euthanasia

Virtue Ethics: 

Virtue Ethics Advocated by Greek Philosopher Aristotle. Virtue may be defined as any disposition or tendency of a character that an individual desires in himself or others. E.g. Self-discipline, sincerity, loyalty, truthfulness, etc.

Applied Ethics: 

Applied Ethics Is described as the "the philosophical examination, from a moral standpoint, of particular issues in private and public life that are matters of moral judgment". It is thus a term used to describe attempts to use philosophical methods to identify the morally correct course of action in various fields of human life.

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E.g. Environmental ethics is concerned with questions such as the duties of humans towards landscapes or species. Business ethics concerns questions such as the limits on managers in the pursuit of profit, or the duty of 'whistleblowers' to the general public as opposed to their employers.

List of Subfields of Applied Ethics: 

List of Subfields of Applied Ethics Environmental Ethics Animal Rights Business Ethics Legal Ethics Human Rights

Descriptive Ethics: 

Descriptive Ethics A study of human behavior as a consequence of beliefs about what is right or wrong, or good or bad, insofar as that behavior is useful or effective. In general, morals correspond to what actually is done in a society. Morals is best studied as psychology, sociology.

Questions to be Asked: 

Questions to be Asked Descriptive Ethics : What do people think is right? Normative (Prescriptive) Ethics : How should people act? Applied Ethics : How do we take moral knowledge and put it into practice? Metaethics - What does Right even Mean?