Business relationships & Ethics
Week 5 Ethical domains
Objectives
Understand the ethical issues in business with emphasis on Indian context Become aware of ethical issues in business domains such as HR, finance, IT/IS
ethical issues in India
Bribery one buys power of influence of another person to satisfy selfish need
Corruption acceptance of money, stealing funds, use of public office
Black money illegal earning of money
Coercion forcing a being to act against self-will
Insider trading misuse of vital organizational information Tax evasion
Conflicts of interest - when an individual/organization is
involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other
Pollution
Some questionable business practices
Software Piracy
Nepotism Gift giving
Firing of older employees
Marketing unhealthy products in domestic markets Environmental issues
Dishonesty in advertising
Marketing unhealthy products Padding expense accounts
Factors affecting ethical issues in Indian corporations
Socio-cultural factors; Fear of losing jobs; Lax government structures and regulations;
Factors affecting ethical issues in Indian corporations
Strong family traditions and laws of inheritance; A tendency to adopt an easy option when confronted with difficult ethical choices; and A belief that business and ethics are irreconcilable.
Ethical Dilemmas of Indian Managers
There is a general perception that it is very difficult for managers working in Indian corporations to be ethical because of
a. All pervading corruption
b. The manner in which governments function licenses, quotas, permits etc.
c. The unholy nexus between politicians, bureaucrats and contractors - The electoral system, the heavy investments politicians make in it to win elections
Ethical Dilemmas of Indian Managers (Contd.)
e. The take-it-easy attitude of people even when they come across corrupt and unethical behaviour; f. The attitude of the population oriental spirit of hospitality, concept of return gifts, help is to be matched by help and the feeling that when one makes some money, one can share it with those who made it possible; g. Lack of education
Why Should Indian Business be Ethical?
There are four reasons why business should be ethical: Ethics responds to the best in us Values create credibility for company with the public Values give management credibility with its employees Values help better decision making
Ethical Issues in Human Resource Management
Definition of HRM
HRM is a management function. Refers to a system of principles, policies, practices, that influence employee behaviour, attitude and motivation
Determining human resource needs (job descriptions); Attracting & retaining potential employees; Choosing employees; Teaching/preparing; Rewarding;
Evaluating performance; and
Creating a positive work environment
HR related ethical issues
Discrimination issues
Suppression of democratization in the workplace
Privacy issues Recruitment and selection
Performance tracking
Privacy issues (computerized employee records, Electronic surveillance)
Safety and health
Role of HRM in creating an ethical organization
The top management should be committed to ethical behaviour act as role models to their employees The organization should evolve codes of ethics for its employees and enforce them. Ethics committees should be formed with top executives as members to advice on ethical issues.
Role of HRM in creating an ethical organization (Contd.)
Company journals to publish articles on ethical issues and pose hypothetical ethical dilemmas and discussions on how to resolve these
An ethics office with ethics officers to oversee the process and help communicate policy to employees.
Organize employee ethics training which can play an integral role in ensuring compliance with the ethics code. A disciplinary system to deal with ethical violations promptly and decisively.
Marketing Ethics
Defining marketing ethics
Marketing ethics means a standard by which a marketing action may be judged right or wrong
It can also be defined as how moral standards are applied to marketing decisions, behaviours, and institutions.
In the context of Indian economy
Corrupt governments Archaic & Lax implementation of existing laws Lackadaisical consumers Very few independent monitors
Areas in marketing ethics
In product development Safe products, disclose risks in use & service Make existing products safer
In pricing In promotions (advertising)
Ethical issues in IT Industry
Ethical perspective of IT-ITES industry Unethical practices are prevalent in the industry in areas relating to: Information security: Lack of information security processes; disclosure of confidential information about customers to unauthorized people; forcing of customers to part with confidential information; hacking; cookies; conspiracy among IT employees/organizations to help clients perform unethical transactions
Ethical perspective of IT-ITES industry (Contd.)
Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.
IP rights: software piracy; illegal use of intellectual properties; reverse engineering of programs to gain access to the business logic and intellectual property of the vendor company.
Ethical perspective of IT-ITES industry (Contd.)
Work culture and environment: leakage of recruitment test question papers; wastage of company time and resources; breach of employment agreements; fraudulent bills; poaching of employees from competitors; unethical means of retaining the employees; unrealistic estimations and plans; breach of privacy of the employee; non-ergonomic working conditions
Environmental ethics
Environmental philosophy which considers extending the traditional boundaries of ethics from solely including humans and associated entities to including the nature and environment we dwell in. Legal rights of nature? Protection of nature: legally and morally
Environmental damage through industrial activity
Two types: [Link] of Natural Resources: extraction of fossil fuels, minerals; removal of forest cover
[Link] of the Natural Resources: deterioration of the quality of environment
Environmental issues in India
Air pollution: 3rd largest CO2 producer, poorest air quality out of 132 countries Solid waste pollution Water pollution Indias golden (or toxic) corridor: Ahmedabad to Mumbai road houses number of factories
Environmental preservation: role of stakeholders
The stakeholders are:
The Public: has the power to influence policy, provide support to various groups, buy or reject products;
The Media: influences public perception, duty to provide positive and negative stories;
Environmental Groups: transition to moderate and conservative groups; Corporations: shift in attitudes for environment protection; The Government: balance between economic development, regulation, and environment protection
Key strategies for industrial pollution mgt.
Waste management - pollution management 1. Systematic waste reduction audit 2. Economic balance: works using benefit: cost ratio to reduce solid waste, air, water pollutants save on clean-up operations 3. Use of Newer, Cleaner Technologies
Managing environmental issues
Reinhardt suggests approaches to managing environmental issues 1. Investing in environment friendly processes or products.
2. Managing environmental regulations.
3. Looking at environmental issues from a risk management perspective.
Innovative business responses to environmental regulations
There are several reasons why those managing business are becoming increasingly conscious of environmental issues: For management morale To cut waste & realize benefits arising from pollution prevention
Green design of environment-friendly processes
products & Production of products, packages and
Eco-labelling: CPCB logo
McDonalds: 79% of the consumer packaging used in our eight largest markets is made from renewable (paper or wood-fiber) materials
Indias environmental policy
The Environment (Protection) Act, 1986 takes into account the following: 1. Water (Prevention and Control of Pollution) Act, 1974 2. Air (Prevention and Control of Pollution) Act, 1981 3. The Factories Amendment Act, 1987 4. The National Environmental Policy 2004
Creating ethical organisations
What is an ethical organisation?
Sound corporate culture & virtues Rigorous Corporate governance structures Policies & programs for Corporate social responsibility
Developing and Executing a Comprehensive Ethics Programme
A sound ethics programme should include the following six components: 1. Formal codes of conduct: Codes of conduct are statements of organizational values that comprises of code of ethics, and a code of conduct. It is a written document, inspirational in content and specifies clearly what is acceptable or unacceptable behaviour in the workplace and beyond, when employees represent their organizations outside.
Developing and Executing a Comprehensive Ethics Programme (Contd.)
2: Ethics Committees: develop an ethical policy for the organization and also investigate ethical infractions by employees.
They prepare or update codes of conduct, resolve ethical dilemmas in companies, evaluate the companys compliance with them.
Developing and Executing a Comprehensive Ethics Programme (Contd.)
3: An Ethics Office with officer(s) to oversee the process and facilitate the communication of the policy to employees. Ethics officers are responsible for:
developing and distributing a code of conduct for ethics, conducting training program for employees, processes to help employees obtain guidance and
Establish means of enquiry for employees
Developing and Executing a Comprehensive Ethics Programme (Contd.)
4. Ethics Communication System: includes the facility for employees to post queries, get advice, or report any wrongdoing.
Objective of the ethics communication system is to:
a) Communicate the companys values and standards of ethical business conduct to employees; b) Provide information to employees on the companys policies and procedures regarding ethical business conduct;
Developing and Executing a Comprehensive Ethics Programme (Contd.)
5. Ethics training programs:
The basic objective of a training programme is to help employees understand the ethical issues that are likely to arise at their workplace and to offer assistance in dealing with such issues.
Developing and Executing a Comprehensive Ethics Programme (Contd.)
6. Disciplinary system:
A systems for prompt, decisive and impartial dealings with violations.
Consistent enforcement and pursuit of disciplinary system are necessary for achieving a sound and fruitful ethics program.
