Business ethics refers to the moral principles or rules of behaviour which should govern moral conduct of businessmen. They suggest the ways and means of running a business which are morally justified and are influenced by expectations of society, employees or government.
Business ethics refers to the moral standards which business persons are expected to follow. It simply means ethics as applied to business affairs. It represents what is ethically permissible in business. Business ethics is a set of norms and values that guides managers and employees in business enterprises.
“Business ethics is a study of moral standards and how these apply to the system and organisation which provide goods and services to society. Business ethics is specialised study of moral right or wrong. It concentrates on moral standards as they apply to business policy, institutions and behaviour.” — Manuel G. Velasquez.
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1. Introduction to Business Ethics 2. Definitions and Meaning of Business Ethics 3. Concept 4. Sources 5. Need 6. Elements 7. Types 8. Factors 9. Principles 10. Importance 11. Causes 12. Ethical Decision Making 13. Relevance of Ethics in Business 14. Limitations.
Business Ethics: Definitions and Meaning, Concept, Factors, Principles, Sources, Need, Elements and Importance
Contents:
- Introduction to Business Ethics
- Definitions and Meaning of Business Ethics
- Concept of Business Ethics
- Sources of Business Ethics
- Need of Business Ethics
- Elements of Business Ethics
- Types of Business Ethics
- Factors of Business Ethics
- Principles of Business Ethics
- Importance of Business Ethics
- Causes of Business Ethics
- Ethical Decision Making of Business Ethics
- Relevance of Ethics in Business of Business Ethics
- Limitations of Business Ethics
Business Ethics – Introduction
The word ‘ethics’ is derived from the Greek word ‘ethos’ which means character, norms or morals of the community. Ethics should be based on broad guidelines of what should be done (i.e. what is right) and what should be avoided (i.e. what is wrong).
Ethical standards are often enacted into laws. However, ethical behaviour is above the behaviour required by law. Ethics are not mandatory like law. They are based on broad guidelines of what should be done and what should be avoided. As ethics are not compulsory to be followed, they are not punishable under law (except some unethical aspects like adulteration, black marketing, etc.)
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Business ethics refers to the moral principles or rules of behaviour which should govern moral conduct of businessmen. They suggest the ways and means of running a business which are morally justified and are influenced by expectations of society, employees or government.
In simple terms, business ethics are moral principles that define right and wrong behaviour in the world of business. A businessperson behaves ethically when her or his actions are upright and serve the interest of society.
Examples of Business Ethics:
(i) Selling genuine goods at reasonable prices.
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(ii) Paying taxes with honesty.
(iii) Giving fair treatment to workers.
(iv) Using fair weights for measurement of commodities.
In the modern competitive world, it has been widely recognised that ethics are essential for every business and for the progress of any society. Ethical business behaviour improves public image, earns people’s confidence and trust and leads to greater success.
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Recently, there has been an increasing awareness, and more importantly increasing interest in the field of Business Ethics. This is indeed a very welcome trend! In fact, perhaps, there has not been any time in the history of business development when the concepts and an understanding of the nature of business ethics has been so urgently needed, so urgently felt, never before had the need for ethical practices in business so widely felt.
After the epoch making effects of the Industrial Revolution on business and the subsequent framing of labour legislations for protecting employees and the laying down of their rights and duties in legal terms, there has been one area which has caused concern repetitively to both business academicians and business practitioners alike, and that has been the ethical way of conducting business.
Previously, it was thought that business ethics is a contradiction of terms. The popular concept was that if it is business, then it cannot be ethical, and if it is ethical at all, it does not represent business. Fortunately, there were people in the world, even at that time, significant people, who disagreed with this philosophy-the notable amongst them being our very own J.R.D. Tata- and it is mainly due to the efforts of these significant people that Business Ethics has reached the proper place in business that is due to it.
Business Ethics – Meaning and Definitions: Suggested by Manuel G. Velasquez, Carroll Buchholtz, Goerge A. Steiner and Frederick and Lawrence
“The term business ethics refers to the system of moral principles and rules of conduct applied to business.”
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Business being a social organ shall not be conducted in a way detrimental to the interests of society and the business sector itself.
There is no unanimity of opinion on what constitutes business ethics. There are no separate ethics of business but every individual and organ in society should abide by certain moral order.
Commonly Advocated Business Ethics:
Premium non nocere (not knowingly do harm), this ethic implies that a professional should carefully evaluate his decision and ensure that his actions will not produce negative effects. This code rules out all antisocial business practices.
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Premium non nocere encompasses most business ethics.
The important ethical principles that a business should follow are as follows:
(i) Do not resort to hoarding, black marketing or profiteering.
(ii) Do not deceive or cheat customers by selling substandard or defective products, by under measurement or by any other means.
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(iii) Do not destroy or distort competition.
(iv) Do not tarnish the image of competitors by unfair practices.
(v) Make accurate business records available to all authorised persons.
(vi) Ensure sincerity and accuracy in advertising, labelling and packaging.
(vii) Restrain from secret kick-backs or pay offs to customers, suppliers, administrators, politicians etc.
(viii) Pay taxes and discharge other obligations promptly.
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(ix) Do not form carte agreements, even informal to control production, price etc. to the common detriment.
(x) Ensure payment of fair wages to and fair treatment of employees.
Trade associations can play an important role to promote business ethics. These associations can promote business ethics in three important ways.
They are:
i. Education and Persuasion:
The trade associations can educate and persuade the members in the importance of and the need for having business ethics. The members should understand that if every businessman follows business ethics, all of them will be benefitted and there would be an improvement in the general image of the business community in the eyes of the public.
ii. Code of Ethics:
Trade associations should formulate a code of conduct, which also contains a code of ethics, for their members. The code of conduct will guide and regulate the conduct of business by the members.
iii. Moral Sanctions:
“Sanctions refer to the ways in which moral conduct is rewarded or misconduct is punished.” Such incentives and punishments should be expected to promote business ethics. Incentives can be in the form of public recognition and reward for high moral standards. Punishment way is in the form of debarring a member for a serious violation of the code of conduct.
Business ethics refers to the moral standards which business persons are expected to follow. It simply means ethics as applied to business affairs. It represents what is ethically permissible in business. Business ethics is a set of norms and values that guides managers and employees in business enterprises.
“Business ethics is a study of moral standards and how these apply to the system and organisation which provide goods and services to society. Business ethics is specialised study of moral right or wrong. It concentrates on moral standards as they apply to business policy, institutions and behaviour.“ — Manuel G. Velasquez
“Business ethics are concerned with good or bad, right to wrong behaviour and practices that take place within a business. The concept of right or wrong includes questions of justice, fairness and equity.” — Carroll Buchholtz
“Business essentially is a means of society to used scares resources to produce in an efficient manner those goods and services which society wants and is willing to pay.” — Goerge A. Steiner
“Business ethics is the application of general ethical ideas to business.” — Post, Frederick and Lawrence
“Business ethics is the branch of ethics that examines ethical rules and principles within a commercial context; the various moral or ethical problems that can arise in a business setting; and special duties or obligations that apply to persons who are engaged in commerce.”
Business Ethics – Concept
Concept of business ethics generally applied to the business having separate entity from its owners. However, these separate entities are not involved in the decision making process. Managers at different levels are required to take decision within the business entity. Top level managers take decisions that affect the organisations policies and that determine how lower level managers confront decisions that involve applying organizational policies to their day to day circumstances.
Since managers are taking decisions it is their sense of right and wrong that ultimately determines the extent of corporate ethical environment. Business ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole.
The study of ethics in management addresses individual decisions in the context of certain rules of conduct or moral standards. Ethical behaviour then refers to individual conduct that is considered “right” or “good” in the context of a governing moral code. It confirms not only to the law, but also to a broader set of moral principles expected by all or by a segment of society. In contrast, unethical behaviour covers any individual conduct that is “wrong” or “bad” within this moral code. It may or may not be illegal, but it falls short of the broader set of moral principles expected by society.
Human beings are the active segment of the business. The companies cannot and shall not be immune to ethics. The goal of business is to provide goods and services to customers and earn profits. The business organisation has to ensure the supply of goods and services at reasonable price and of a reasonable quality.
A society consists of people who have common ends and whose activities are organized by a system of institutions designed to achieve these ends. Family, community, society, schools, religion, temples, government etc., are the basic institutions which are the base for formulation of values and moral standards.
These institutions help in designing the sub-systems:
(a) Production of the goods and services to the members of society want and need, and
(b) Distribution of these goods and services to the various members of society.
Thus, economic institutions determine who will carry out the work of production, how that work will be organized, what resources that work will consume, and how its products and benefits will be distributed among society’s members. Business organisations are the economic institutions through which people in modern societies carry on the tasks of producing and distributing the goods and services.
They provide the fundamental structures within which the members of society combine their scarce resources – land, labour, capital and technology – into usable goods, and they provide the channels through which these goods are distributed in the form of consumer products, employee salaries, investors’ return, and government taxes.
Thus, the business ethics is a study of moral standards and how these apply to the systems and organizations through which modern societies produce and distribute goods and services, and to the people who work within these organizations. It includes not only the analysis of moral norms and moral values, but also attempts to apply the conclusions of this analysis to that assortment of institutions, technologies, transactions, activities, and pursuits that we call business enterprises.
Business Ethics – 4 Major Sources: Values and Goals, Values Forming Institution, Work and Career and Professional’s Codes
Major sources of ethical behaviour of business are as follows:
Source # 1. Values and Goals:
There is an important relationship between goals and values of an organisation. The goals of the organisation are influenced by leadership, knowledge and skills, amity, influence and power and survival. All these factors change the goals of the organisation and consequently business expects values based behaviour from their individual managers.
Source # 2. Values Forming Institution:
The life and development of society produce values. There are so many organizations like family, school, state and religion which are the basic sources of values for individuals. The basic purpose of values formation by these institutions is that they prescribe what is good or bad for an individual. And at a later stage inculcation of these values enable the managers to work for values in their own business.
Source # 3. Work and Career:
Work consists of the tasks or responsibilities associated with the job or position in an organisation. In organisation, the work is organized and directed for the achievement of desired end. An individual’s experience over a period of time constitutes his career work and career creates special values that give unity, cohesion and meaning to persons and groups.
Source # 4. Professional’s Codes:
In recent days, more and more appointments of professionals are being by the business houses. These professionals are required to go by the values and code of conduct prescribed by the relevant professional institutes and associations. Professional’s codes are the sources of ethical norms for managers in business organizations.
These codes are consistent with customs, beliefs, social values, public laws and generally desirable behaviour. The Institute of Chartered Accountants of India, Institution of Engineers, Institute of Company Secretaries of India and All India Management Association etc. have prescribed a set of code of conduct for their members.
Business Ethics – Needs
The ethical behaviour of corporate leaders/managers is being put to debate and discussion everywhere. Issues such as corporate scandals, corruption at high places, managerial misconduct, inflating profits, deceiving customers, withholding crucial facts, misusing company property, copyright violations etc., have tarnished the image of business as well as business managers in recent times. There is, therefore, a big question mark over the public face of big corporations. Unethical companies have collapsed under their own weight.
Precisely for this reason, ethical issues cannot be dismissed as trivial issues and demand attention due to the following reasons:
i. If ethics are missing, business and society as a whole cannot flourish.
ii. Likewise, when job values are in conflict with individual expectations, productivity suffers. The job-holder remains unhappy and discontented.
iii. If the organisation fails to project a healthy image of itself in society – its quality, service and customer satisfaction – its very existence may be in danger. A positive public image, on the other hand, can attract customers who might view such an image as desirable.
iv. When the image takes a dent, the company may lose market share fairly quickly because customers will not like to buy the products of such companies.
v. Again, where companies are said to be behaving unethically, the public is more likely to seek increased governmental intervention and regulation. In short, ethical concerns are of vital importance to individuals, organisations and the society in general and cannot be discounted or slighted away as unimportant and unnecessary.
Business Ethics – 5 Main Elements
Ethical business behaviour is beneficial for both the business enterprise and society. Business can promote ethics in its day-to-day working.
The essential elements of business ethics are as under:
Element # 1. Top Management Commitment:
Top management plays a crucial role in guiding the entire organisation towards ethical behaviour. Top level executives (CEO, Directors, etc.) must be strongly committed towards ethical conduct. They should guide and encourage employees to follow ethical behaviour.
Element # 2. Publication of a Code:
Ethical enterprises often defines the principles of conduct to be followed by entire organisation. They are in the form of written documents and are termed as ‘Code’. The ‘code’ generally covers areas like honesty, adherence to laws, product safety, healthy working environment, fair business practices, etc.
Element # 3. Establishment of Compliance Mechanisms:
The business enterprise should establish suitable mechanisms to ensure that actual actions of organisational members comply with firm’s ethical standards. For example, enterprise must ensure that values and ethics are followed in recruitment, selection and training. Similarly, there should be efficient communication system so that employees can freely report incidents of unethical behaviour.
Element # 4. Involving Employees at All Levels:
Employees must be involved in the process of developing ethical programmes as ethical policies have to be implemented by them only. For example, small groups of employees can be formed to discuss the important ethics policies of firms and to examine their attitude towards such policies.
Element # 5. Measuring Results:
Although, it is very difficult to accurately measure the results of ethics programmes, the firms should periodically verify and audit the extent to which the ethical practices have been followed. Top management should also discuss the result with employees in order to decide the further course of action.
Business Ethics – Top 2 Types: Normative and Business
All individuals, irrespective of their vocation, are concerned with ethics. Ethics refer to the principles of right and wrong, and moral duty and obligation that are accepted by an individual or a social group. Personal ethics relate to the rules and values that individuals follow to live and lead their life. Accounting ethics relate to code of accepted accounting practices and rules that are to be adhered to in case of company accounts.
Since ethics emanate from philosophy and not science, there is no singular correct answer to the question ‘is this ethical?’. As such there are different views of ethics that can be applied to evaluate whether a particular decision or behaviour is ethically acceptable or not.
Managers while performing their roles in pursuit of achievement of corporate goals have to compete for getting information and resources, and influence employees and other stakeholders. What matters the most is the criteria and principles governing morality and acceptable conduct of business.
Type # 1. Normative Ethics:
There are three types of moral theories pertaining to normative ethics—utilitarian theory, theory based on rights, and theory of justice. Utilitarian theory suggests that plans and actions of managers should give rise to greatest benefit and good to the largest number of people. Theory of rights emphasize that all people have rights while working in an organized group, or governmental body by law or tradition or nature.
As per the Constitution of India, people have fundamental rights to equality, right to particular freedom, cultural and educational rights, right to freedom of religion, right against exploitation, and right to constitutional remedies. The theory of justice emphasizes that decision-makers’ approach to problem-solving should be based on and guided by fairness, equity, and objectivity.
The utilitarian view focuses on the welfare of the greatest number of people. It implies the greatest good for the greatest number as a criterion for weighing and evaluating decisions. Therefore, the decision that benefits the greatest number of people would be the decision of choice. This decision can be viewed as ethical as per utilitarian view, even if few people are adversely or negatively affected by it.
The rights view focuses on the premise that individuals have basic rights that must be protected, irrespective of associated cost to the society or to the organization. The protection of individual’s rights is the main concern as per the rights view.
The justice view is grounded in the idea that rules of organizational or societal existence must be imposed equitably to all. The focus is making a decision that is objective, without prejudice to emotions, and fair to everyone involved.
Type # 2. Business Ethics:
Business ethics relate to true and honest practices that are adhered to in the conduct of business in various areas of operation, such as advertising, competition, public relations, social responsibilities, consumer liberty and independence, and behavioural attributes of a corporate entity in its operations in home country and abroad.
Unethical practices leading to temporary business gains are becoming more and more prominent in the present context. Business houses attempt to gain competitive advantage to improve their profits by taking recourse to unethical acts, such as insider trading, bribery, unethical accounting practices by providing incorrect information to customers and investors, and using wrong means to influence people in power.
Managers by being dishonest to customers and colleagues try to take advantage of the situation. Enron, WorldCom, and Tyco International are some of the recent cases from the corporate world where the management manipulated company data for personal gains, thus leading to the collapse of these companies. As a result, investors who had put in their hard-earned money lost all they had invested.
These incidents have created a greater debate in favour of business ethics. The need for profits through values and long-term sustained growth requiring adherence to ethical business practices is being realized more and more by managers. ‘There are two big driving forces behind the growth of the ethics industry – Sarbanes-Oxley Act 2002 and the USA sentencing guidelines.
The debate has shifted from whether to be ethical to how to be ethical. Five years ago, the debate was theoretical. Now, corporate governance is an important part of the analysis on Wall Street’, says Michael Connor, publisher of the magazine Business Ethics. An example of Coca-Cola, the way it reacted and responded to the challenges posed by public movement, is given here.
Business Ethics – 10 Important Factors
Business ethics reflects its responsibility, authority and dignity. So, the business organisation wants to conduct its business without affecting the interest of society and the business itself by assuming responsibility, exercising authority and maintaining dignity. But there are some factors affecting the observation or adoption of business ethics.
They are briefly explained below:
1. Unhealthy competition – Businessmen adopt unfair trade practices to have an edges over other competitors. This will ruin business in the long-run. Unhealthy competition is not preferred by gentleman-businessman.
2. Abnormal profit motive -The very purpose of starting a business unit is to earn profit. Only a lesser amount of profit is earned during the initial period of business. But, the businessman wants to earn more profits by economising establishment expenses.
3. Political interference – Political parties approach the businessman to get donation. Now, the businessman is not ready to deny it as it would affect the smooth running of business. The donation given to a political party is considered unnecessary expenses from the business point of view. This will affect profit and the smooth running of business.
4. Political uncertainty – The policy of government affects the business ethics to some extent. If a number of governments are in power for short periods, there is every chance for changes in the policies of the government. A Stable Government alone does not affect business ethics.
5. Unjust legislation – An act is passed only after thorough discussion. But, the person who participates in the discussion does not know the practical difficulties and practices and no business experience. So, a legally right practice may not be ethically right.
6. Corruption – A business is regulated by the government through its officials. Straightforward and able officials are working in the government departments. However, the approach or behaviour of some government officials are not appreciated by the businessmen.
7. Lack of ethical attitude – A businessman wants to stand out distinctly from other fellow businessmen. At the same time, he does not prefer to practice business ethics inspite of his sound knowledge of them.
8. Lack of education – Here, education refers to the knowledge of ethical values. Businessman wants to follow business ethics strictly but he does not know what is the business ethics relating to his business.
9. Non-Co-operation of workers – Workers or employees do not care about the business ethics. They want, just, to do their work as quickly as possible for remuneration. The impact of non-adoption of business ethics affects the business and not the workers or employees.
10. Red-tapism – The existence of red-tapism also affects the business ethics. Business unit should get prior permission of the government for all its proceedings at every stages of development. Red-tapism is found to be at its maximum in the issue of licenses and in the taxation policy.
Business Ethics – 9 Main Principles: Fair Advertising, Competence, Self-Regard and Welfare, Informed Consent, Freedom to Withdraw and a Few Others
Many professional bodies have developed their own ethical codes. Managers should be familiar with the relevant ethical codes of their vocation and country.
Most ethical codes cover nine main points:
1. Fair advertising
2. Competence
3. Self regard
4. Informed consent
5. Freedom to withdraw
6. Confidentiality
7. Respect for social codes and multicultural sensitivities
8. Professional relationships between colleagues
9. Principles of fees and financial arrangements
Principle # 1. Fair Advertising:
There is nothing wrong with advertising and promoting goods and services. Indeed advertising increases market size, which eventually leads to economies of scale and less expensive products. However, advertising needs to be fair, accurate and socially responsible.
In general:
(a) Qualifications, training and affiliations should be represented accurately.
(b) Information should not be withheld in order to promote misunderstandings.
(c) Employees of the press, radio television or other media should not be paid in return publicity. Paid advertisements should be clearly identified as such.
The principle of fair advertising extends to the statements of others – especially those who are paid to promote the service or product. If they make a deceptive or full statement on behalf of an organisation the organisation must make reasonable efforts to issue corrections.
Principle # 2. Competence:
The principle of competence means that managers should operate to high technical and professional standards. Difficult decisions are often necessary and cannot be shirked. The managers who make them should be competent and qualified. They should not get involved in situations where they could not cope should things go wrong. This means being able to cope with the worst case. A key to observing this principle is to recognise one’s own limits and operate within them.
In a changing world, this principle also imposes the need to extend competence. It is relatively easy to extend personal competence by training and development. The main difficulty is obtaining experience in a way that does not harm others.
Principle # 3. Self-Regard and Welfare:
Human dignity should be upheld. People should not be harmed except in very exceptional circumstances. This includes psychological harm. Actions involving humiliation, embarrassment and harm to people should be avoided. If such tactics seem absolutely necessary a second opinion should be obtained.
This may be provided by an impartial senior colleague or by an “ethics committee”. In this context, degradation or embarrassment must be seen through the eyes of lay people, not through the eyes of managers or professionals who may have become blase or burnt out after years of work in the field.
Principle # 4. Informed Consent:
People have the right to know what they are letting themselves in for before they make any significant comment.
They should have reasonable information on:
(a) The processes to be used
(b) The uses to which the information will be put
(c) The “ownership” of information
(d) The identity the people and organisations involved
Principle # 5. Freedom to Withdraw:
People are expected to keep agreements that have been willingly agreed. However, there may be a problem over the definition of the term “willing”. For example, is a parent taking out a second mortgage in order to buy medical treatment for their child a willing vendor? However, rather different rules apply to professional services and participation in experiments. People are free to withdraw from a professional relationship after giving due notice and paying appropriate fees. People are free to withdraw at will from experiments.
Principle # 6. Confidentiality:
In the vast majority of circumstances, information obtained on a confidential basis should not be divulged to others without explicit, preferably written, consent.
There are, however, some situations where the principle of confidentiality should be breached. They include situations where people are likely to be a danger to themselves or others. They also arise when people are involved in illegal activities. Even in these cases a second impartial opinion should be sought. Information should only be disclosed to authorities when there is clear legal authorization. In almost all circumstances the law must be obeyed – even if you have formed your subjective opinion that the law of the land is silly!
Principle # 7. Respect for Social Codes:
People should show sensible regard to the social codes and moral expectations of the community in which they work. For example, an atheist doing maintenance work in a monastery should not engage in blasphemous behaviour that causes gratuitous offence. If one cannot be tolerant and courteous to the people in an organisation it is better not to accept work in that organisation in the first place.
Principle # 8. Relationships with Others:
A final set of ethics covers relationships with others. Many aspects of relationships with others are covered elsewhere. However, it is worth pointing out that managers and professional workers should avoid body contact with employees or clients other than customary greetings such as shaking hands or giving “a pat on the back”. Any form of activity with clients which could be construed as sexual or likely to reduce objectivity must be avoided.
Ethics relating to professional colleagues usually concern boundaries and roles. A general principle is to agree, in advance, an orderly, explicit arrangement concerning roles, rights and obligations. Harassment of other people, especially junior colleagues, should be avoided. A professional worker should avoid interfering with or inhibiting the work of another professional. While the ideas, theories and data of another person can, and should be, scrutinised, personal “ad hominem” attacks should be avoided.
Principle # 9. Fees and Financial Arrangements:
There is a cardinal ethical principle concerning fees- fee structure and terms of payment should be made clear during, or immediately after, an initial meeting or consultation. Sometimes broaching the matter of fees can be “delicate” and it is often appropriate to send a short letter confirming acceptance of an assignment together with a sheet setting out the fee rate, the estimated length of the assignment and the terms of the payment.
A client should be notified immediately if it is apparent that costs are likely to exceed the initial estimate. Fees for missed appointments and cancelled meetings often need clarification. As a general rule, some level of fee is appropriate for second and subsequent cancellations.
Up to a limit, “pro bono publico” work should be encouraged. “Gift work” serves two main purposes. It provides a way of returning to society the gifts and benefits that have been received. This is in addition to paying taxes and levies. A clear policy of giving, say, 5 per cent of one’s time as “gift work” avoids ambiguities and helps defend against unreasonable demands.
Sinclair and Pettifor (1991) give a useful guide to the work that can be undertaken on a pro bono publico basis. Other ethical aspects of financial ethics include prompt payment of bills and, whenever possible, the avoidance of arrangements involving barter. Where barter is absolutely necessary, the items bartered should be translated into monetary terms and recorded.
Business Ethics – Importance
The importance of ethics in management are briefly stated here:
1. Almost all the required ethical norms and values may determine the rationality in role and behaviour of employees,
2. By way of ethical and morale standards the feeling of enthusiasm, devotion and loyalty may be developed,
3. By way of ethical norms, the managers may be able to create positive thoughts and approaches as well as to fulfill their commitments in proper way,
4. By means of ethical norms, we may be able to fulfill our responsibilities and accountabilities in due course,
5. The ethical norms and behaviour stimulate some appropriateness to formulate team spirit and team work among employees,
6. By means of ethics, the quality awareness and consciousness among employees may be developed,
7. By means of ethics, there will be an emerging trend to fulfill the social responsibilities which may be increased for the well-being of society,
8. By means of ethics, the applications of human values and aspects may be developed within overall managerial performances.
Business Ethics – 13 Major Causes: Professional Attitudes, Developing Learning Organisation, Informal Groups, Better Work Environment and a Few Others
Within the field of management, whereas the human aspects are very much decisional and important part, the ethical norms and values are needful for better work environment. Here, some of the valuable causes are being responsible to follow the ethical norms and values in an organisation.
The causes are briefly stated here:
Cause # 1. Professional Attitudes:
Management is required to become a profession and as such, there is a need to introduce ethical code of conducts, learning attitudes, service motives, consultation services, efficient work performance and to fulfill the social responsibilities. All these things are duly based on the social and ethical values in managerial scenario.
Cause # 2. Developing Learning Organisation:
The learning and teaching attitudes are never ending at the employees’ platform. Every organisation is basically a learning organisation and the management may be able to make learning attitudes by some sort of social concepts and values etc.
In order to create and develop the motivational aspects and inner feelings, there is a need to make some desirable behaviour to be based on informal relationship with different persons. As such, the informal relationship may be based on some value oriented aspects like devotion, enthusiasm and work spirit etc.
Cause # 4. Better Work Environment:
The ethical norms and better values are most beneficial to develop healthy work environment. The values like devotion, loyalty, trust and belongingness may develop the feeling of better opportunities as well as work environment.
In every field of management the discipline is a very important part in organisation. By different ways and means concerning of ethical values, the discipline may be observed with proper way.
Cause # 6. Encouraging the Cooperative Tendencies:
In any organisation, the ethical norms establish the spirit of cooperation. With the initiative role of ethics and values within any organisation, all the policies, decisions and rules becomes very clear, easy and acceptable and thereby the cooperative attitudes and tendencies may be developed.
Cause # 7. Better Work Performance:
Besides the emerging role of ethics and value based work culture, there are certain approaches and standards which may be developed to recognise the work, allotment of work and evaluation of work as well as better work performance by the employees. So, in order to make most congenial work performance, the ethical norms are much needful.
Ethical values are concerned with humanity and human aspects. All the relevant norms of ethics are determined by the human behaviour and its aspects. The management is required to introduce and determine the concepts and viewpoints concerning the humanitarian grounds.
In order to achieve goals and target in an appropriate manner there is a need to formulate fair and practical visions. Ethical norms develop the visualisation of a better state of goal achievements. It is based on vision forming in nature to be applied.
Cause # 10. Equitable Behaviour:
The ethical norms and attributes contributes to the standards and behavioural aspects to make fair and equitable conducts in an organisation. The ethics are based on some congenial views to make fair and equitable behaviour between individual and group of persons.
The ethical norms and attitudes are being able to shape and organise the novel ideas towards creativity among people to make a better working and social environment. So, for creativity, it is needful to learn the lessons of Ethics.
The ethical norms develop some feelings of fearlessness in attitudes and behaviour among employees. These norms may develop the fearlessness environment in organisation, so that the ethical norms are very much needful in it.
It has constantly a path for satisfaction of mind with lot of happiness. Ethics provide a balancing norm towards a state of satisfaction. Every part of behavioural approaches makes a mind set up towards some feeling of satisfaction.
Business Ethics – Ethical Decision Making
In managerial tasks and practices, the decision making is an important part to make most applicable performance. In context of business management, the decision making process is invariably related with the responsiveness of management. It is required to make decisions to be based on fair and justified manner by managers.
Here, proper attention is given to involve the ethical norms and values in decision making process.
In order to formulate ethical decision making, we should consider the ethical norms in it as briefly stated here:
1. On the basis of intuition with inner feeling of decision taker, the appropriate decision may be considered,
2. The decision maker should have an open and full hearted views and opinions,
3. There is a need to make an open and without any barrier communication system,
4. The practicability of trial and error with refined concepts may be observed,
5. We should avoid misconduct and misbehaviour in decision making programmes,
6. Within the overall decision making programme, it is required to determine the responsiveness by means of effective accountabilities,
7. All the aspects should considered human values and relations,
8. Motivational work designs and standards can be given to top employees to discourage the negative issues,
9. Decisions should be based on fair, justified and equitable manners,
10. Within decision process the self-respect, self-discipline, self-actualisation and self-control etc., may be emerged,
11. Within decision process, the role and behaviour should be based and involved with rationality and logical viewpoints,
12. Pre and after decision making process, it is required to make the balancing form between ‘work’ and ‘life’ scenario.
Business Ethics – Relevance of Ethics in Business
Ethics are important in business for the following reasons:
1. Business practices affect our lives considerably. Scandals and disasters like Satyam Computers, Bhopal Gas Tragedy etc. can be disastrous for people within and outside the business organisations. There is, therefore, need for business houses to perform actions that are morally right and do not adversely affect the lives of people at large.
2. There is increasing awareness amongst society that business houses are the creation of society and, therefore, must work for the benefit of society. It should not be the sole responsibility of the Government to look after the desired social programmes (education, hospitals, employment, old age homes etc.). The changing social expectations make it necessary for business houses to follow ethical practices.
3. Liberalization and globalization have united global markets into a single market. Business houses operating in global markets must have common standards of employment which is possible if they have uniform code of ethics.
4. Business houses that do not have ethical profile in favour of public at large, may face the threat of consumer boycotts. This may threaten their survival and, therefore, the growing need for business ethics is relevant.
5. Globalization may be disadvantageous for small and weak economies. These economies can favourably operate in developed countries if they develop a common code of business ethics.
6. Unethical business firms will invite government regulations and interference. To avoid this, firms prefer to regulate their activities and address issues that are morally and ethically justified.
Law cannot regulate business dealings because law cannot always define what is desirable or undesirable. In case there is an ethical controversy, law is itself unclear about what is ethical. There are many actions that are unethical but not illegal at the same time. For example, it is unethical to hire one’s relative for the job when there is another more deserving applicant but it is not illegal. Law may forbid selling weapons to A who is a culprit but not to B who is an honest citizen (for self-defense).
In this case, selling to B is legal even if it is known that B will further sell the weapons to A. Selling to B is, thus, legal but not ethical. The code of ethics helps in solving such problems by uniformly laying down actions that should or should not be followed by business organisations. They determine rightness or wrongness of actions to be followed by all professionals or corporations.
The code of ethics serves the following purposes:
1. It protects the interests of consumers as they know they are not being misled or misguided by false advertisements or price fixing. They have faith in their dealings with business firms.
2. It helps firms in obeying the law and treating people honestly and fairly.
3. It promotes employment ethics: fairness in hiring people, promotions, conforming to health and safety issues by providing safe working conditions etc.
4. It helps companies in making valid contracts with third parties which are subject to compliance.
5. It ensures safety of investors’ dealings with business firms. Investors are not misled by false promises made by companies regarding increase in the value of their investment.
6. It promotes healthy and fair competition amongst firms in the same industry, which is beneficial for the public at large.
The code of ethics, thus, provides guidelines that helps business houses exhibit fair and just behaviour in specific circumstances. All firms behave alike and their behaviour is morally justified. There may be code of ethics that governs business practices (professional code), business decisions and policies (policy guidelines) and values and Link Company with the society (company creed).
Study of business ethics has been important since times immemorial but lately the subject of business ethics is gaining wide popularity. It has become a subject of interest and academic curriculum of most of the business schools today.
Business Ethics – 9 Major Limitations
There are different problems and limitations as arising from the performance and proper implementation of ethical norms and behaviour by way of management.
In brief, these are being stated here:
1. There are narrow and self-centered ideas and viewpoints of the managers and employees so that they can’t develop any perspective thoughts and approaches,
2. Somehow the managers does not pay proper and responsive behaviour with employees. By way of negligent and indifferent behaviour, the ethical behaviour can’t develop,
3. Within the dynamic and competitive environment, the managers are not fully able to observe and implement the code of conducts,
4. It is being difficult to follow the provisions of the ethical code of conducts as there are no certain and sound provisions for penalising on them,
5. There are no provisions as well as lack of training facilities towards learning about ethical norms and behaviour,
6. The management has not paid attention towards fulfilling the social responsibilities towards the society,
7. There is a lack of proper consultation and counseling services for employees for making the refined and positive thoughts and ideologies,
8. There is a lack of confidence, enthusiasm and devotional feelings and aspirations among employees,
9. There are certain personal differences as well as different cross cultural backgrounds. Thereby due to different conceptual viewpoints, the ethical norms can’t get proper platform.
It is stated that within the present scenario, the role of management is important to create and develop the congenial environment based on ethical norms. Some of the causes are responsible to study the ethical values in management. The causes are professional attitudes, developing learning organisation, informal groups, making discipline and human aspects etc.