Module - 4

Ethical Practices
 Ethical Practices
• Ethical issues in employer-employee relations;
• Environmental ethics-
• Ethics of consumer protection- the limits of doctrine of caveat emptor;
• Ethical issues in Finance, marketing, advertising;
• Whistleblowing –Whistleblowing Act-
• Concept of Ethical hacking: Case study of Red Team Hacking
 Ethical issues in employer-employee relations
• Harming Some While Benefitting Others: Screening employees during hiring
• Equal Opportunity: No discrimination
• Compensation and Skills: Different compensation and same skill
 Ethical issues in employer-employee relations
(HR Ethical Issues)

• Some of the major issues an organization deals with is handling ethical challenges in
workforce diversity. The following are some of the major ethical challenges an
organization faces in ethical management −
• Harming Some While Benefitting Others: HR managers do much of the screening
while the hiring process is still on. By its very nature, screening leaves some people
out and permits others to move forward. In short, the ones left out will be affected by
not getting the job, no matter how much they need it.
• Equal Opportunity: The HR managers must regularly monitor the company's hiring
practices to make sure there is no discrimination in the hiring process based on
ethnicity, sexual orientation, race, religion and disability. However, simply abiding
with Equal Employment Opportunity guidelines does not guarantee ethical behavior.
• Compensation and Skills: HR managers can suggest compensation. While these
recommendations may be based on a salary range for each position, ethical dilemmas
arise when it comes to compensating employees differently for the same skills.
 Environmental Ethics
• Adopt More Efficient Processes and Machinery: Ford using sustainable fabric,
Geothermal cooling system, largest green roof; HP cutting back on toxic
substances used in manufacturing its products like cartridges. Nike using
recycled polyester.
• Reduce Paper Waste: Disney’s zero waste policy;
• Use Efficient Light Bulbs:
• Allow Telecommuting and Remote Work:
• Proper Waste Disposal:
 Environmental Ethics
• Before the 1960s, business owners were not known to invest their resources in
protecting the environment but the trend started to change in 1992.
• In 1992, Cormac Cullinan introduced the concept of “earth justice,” which
pointed out how laws can protect the planet from toxic business practices. This
theory explained how businesses that pollute could be effectively regulated and
held liable for their actions.
• Environmental ethics focuses on the ethical relationship between human beings
and the natural environment. This not only applies to the depletion of natural
resources and pollution; the field also includes degradation of ecosystems, loss
of wilderness, animal and plant biodiversity, and climate change. These have all
become significant political issues and have become ingrained into the public
consciousness over the past decades.
• 9 Companies with Great Environmental Initiatives | Smart Cities Dive
 Environmental ethics contd….
• How Businesses can protect the Environment:
• Adopt More Efficient Processes and Machinery: Many processes and machines that businesses will use end
up using a lot more energy or power than they need. Protecting the environment can often be as simple as
replacing or changing these processes and machinery to efficient options that exist today.
• Reduce Paper Waste: Around 26% of the total waste in landfills is paper waste. While many companies
have gone completely paperless, others have not. Some of the best ways to reduce paper waste are to store
files online, use electronic documents and print less often. If the paper needs to be used, then it can be
recycled paper.
• Use Efficient Light Bulbs: Keeping work space well-lit is an important part of ensuring employees can
comfortably see and do their job. Consider using energy-efficient LEDs.
• Allow Telecommuting and Remote Work: While the prevalence of remote work has been growing recently,
there are still some companies who don’t allow it. By simply allowing people to work remotely
permanently, or from time to time, companies can improve their eco-friendliness. The amount of energy
used in your office should drop significantly with less people there. less people driving to work means
lower emission rates.
• Proper Waste Disposal: Using hazardous materials or chemicals is sometimes required at many companies
for a variety of things. Ensuring proper waste disposal is of the utmost importance. As a result, Companies
need to work with a reputable clean-up service who works in an environmentally friendly manner.
 Marketing Ethics
• One of the most effective ways to improve marketing strategy is to consistently abide by certain
ethical principles.
• The following are the marketing ethics:
• Be Transparent: While marketing a product or service to customers, business should ensure
transparency including key information about its safety and effective use.
• Protect Consumer Data and Privacy: Consumers are becoming increasingly concerned about
entrusting their personal data with companies. For this reason, it’s important to emphasize the
company’s commitment to consumer privacy.
• Commit to Sustainability and Human Rights: Ethical consumerism is becoming a bigger
priority for many customers. People want to feel assured that what they are purchasing is
sustainable and ethically produced. Business needs to be honest about ingredients, product
components, and supply chain.
• Respond Meaningfully to Consumer Concerns: If customers have safety concerns about a
product or service, then it should become a company’s top priority. Businesses should always
seek to protect consumer rights and immediately investigate any complaint.
• Businesses should avoid exaggerating, making false comparisons and unverified claims etc.,
• The All New Garnier Fructis Long & Strong 2011 India commercial – YouTube
• "City light", de McCann Mumbai (India) para HappyDent, 2007 – YouTube
• Fair & Lovely FAIRNESS FACEWASH - YouTube
 Ethics in Advertising
• Advertising should avoid:
• Puffery/Fraud: Very often advertisement exaggerates about the product qualities. Now a days
‘puffery’ i.e. “metaphor of idea” is forming the main element in advertising. On the one hand critics
accuse it, while on the other defenders i.e. advertisers and advertising professionals opined it as a
helping agent to differentiate their brands from the competitors. Puffery is considered to be an
‘opinion’ and not a ‘factual information’. Advertisers claim that the consumers are intelligent
enough to distinguish between truth and exaggeration. Moreover they are not blindly going to
believe everything as such presented in an advertisement. Puffery, though legal, but is not harmful
to an extent. But false claim and dishonesty are unethical practices and regular deception, leads to
losing costumers trust & confidence.
• Untruthful Or Deceptive: A number of studies have shown a general mistrust of advertising among
consumers. Deceptiveness is defined as not only as false and misleading statements but also as false
impressions conveyed, whether intentional or not. The following acts are considered unfair or
deceptive practices :
• False promises
• Incomplete Descriptive
• Misleading Comparisons
• False Testimonials
 Ethics in Advertising
• Offensive Ads: Another one of the major complaints against advertisements is
offensive, tasteless, irritating, boring, obnoxious & so on. The type of appeal or
the manner of presentation often irritates consumer. E.g. Fear Appeal in
Deodorants, Mouthwash & Anti-dandruff shampoo ads are criticized to
create anxiety & fear to be rejected in the society.
• Comparative Advertising: Comparative advertising is another unethical
practice of advertising besides fraudulent and deceptive advertising.
• Coca-Cola VS Pepsi - The new battle – YouTube
• TOI vs The Hindu - YouTube
 Ethical issues in Accounting and Finance
• Fraud: A fraud is a dishonest act by an employee that result in personal benefit
to the employee at a cost to the employer example = a bookkeeper in small
company diverted $ 750,000 of bill payments to a personal bank account over a
three year period .
• Misleading financial statement: Before investing money investor want to
known the company’s financial position and performance . They want to see the
balance sheet and income statement. So financial companies sometimes
intentionally prepare false financial statement to improve their chances of
getting invested.
• Insider Trading: A trading of corporation’s stock or other securities by
individual with access to non-public information about the company. In
company, it is an unfair practice and it would destroy the security markets by
destroying investor confidence
 Financial Management Ethics
• The accountants who do financial reporting should be expected to act in the
highest standards of legal and ethical business conduct. Unethical financial
reporting can cause major problems, not only within an organization, but also
for the economy.
• The following are the ethical concerns when it comes to Financial
management, analysis and reporting:
• Act with honesty and integrity.
• Avoid conflicts of interest in professional relationships.
• Provide stakeholders with accurate, objective, understandable information.
• Comply with all rules and regulations governing the corporate.
• Respect the confidentiality of information.
• Act with good faith and independent judgment.
• Maintain an internal controls system to guard against unethical behavior.
• Report anyone violating the code.
 Whistleblowing
• Whistleblowing is the act of drawing public attention, or the attention of an
authority figure, to perceived wrongdoing, misconduct, unethical activity within
public, private or third-sector organizations. Corruption, fraud, bullying, health
and safety violation, cover-ups and discrimination are common activities
highlighted by whistleblowers.
• A whistleblower (also written as whistle-blower or whistle blower) is a person,
often an employee, who reveals information about activity within a private or
public organization that is deemed illegal, immoral, illicit, unsafe or fraudulent.
 Whistleblowing contd…
• Whistleblowers often face reprisals from their employer, who may suffer
reputational damage as a result of the whistle being blown, or from colleagues
who may have been involved in the illicit activities. In some cases reprisals
become so severe that they turn into prosecution. In some cases reprisals come
from legal channels, particularly if the whistle has been blown for illegitimate
reasons.
• Protection of whistleblowers is an important focus for the legal system, as is
incentivizing whistle blowing when there are many reasons stopping employees
from doing so.
• All employers should adopt a whistleblowing policy that encourages employees
to draw attention to wrongdoing or risky behavior. In the case of legal action
being taken against a company as a result of internal wrongdoing, having and
promoting a strong whistleblowing policy may act in part as a legal defense.
 Article to read
• List of Whistleblower in India Who Died Exposing Corruption (knowledgeofind
[Link])
 Whistleblowing contd…
• An ideal whistleblower policy should:
• Establish a simple procedure for disclosure
• Incentivize the whistleblower
• Protect the whistleblower against retaliation
• Address both concerns raised internally and externally
• List a fair method of investigation
• Create a special body to enforce the policy
 The Whistle Blowers Protection Act, 2014
• The Government of India had been considering adopting a whistleblower protection law for
several years.
• As a result, the Whistle Blowers Protection Act, 2014 has come into force. The Act extends
to the whole of India except the State of Jammu and Kashmir.
• The act establishes a mechanism to receive complaints related to disclosure of allegations of
corruption or willful misuse of power or discretion, against any public servant, and to inquire
or cause an inquiry into such disclosure.
• The act also provides adequate safeguards against victimization of the person making such
complaints.
• It allows any person, including a public servant, to make a public interest disclosure before a
Competent Authority. The law has elaborately defined various competent authorities. For
instance, Competent authority to complaint against any union minister is the Prime Minister.
• The law does not allow anonymous complaints to be made and clearly states that no action
will be taken by a competent authority if the complainant does not establish his/her identity.
• The maximum time period for solving a complaint is seven years.
 Types of Whistleblowing
Types Meaning of Whistleblowing
Internal Whistleblowing When the employee of the organization reports the unethical behavior or
practice to the management of the company, for example, improper
conduct, indiscipline in accounts, disloyalty of employees etc
External Whistleblowing When the unethical practices are reported outside the organization to the
general public via media, newspaper, any enforcement agencies.
Alumni Whistleblowing When a former employee of any organization discloses out the
information about wrong doing.
Open Whistleblowing When the Whistle-blower is ready to reveal his/her identity to the public
Personal Whistleblowing When the wrong doings are specific to harm only one particular person
Impersonal Whistleblowing When the intent of the wrong doing is for the entire organization
Government When the officials of government are being informed about any illegal
Whistleblowing or wrong practices in an organization
Corporate Whistleblowing When the discloser is done on the corporation itself
 Ethical Hacking
[Link]
• Ethical hacking is also known as penetration testing or white-hat hacking
— involves the same tools, tricks, and techniques that hackers use, but with one
major difference: Ethical hacking is legal.
• The intent of ethical hacking is to discover vulnerabilities from a hacker’s
viewpoint, so systems can be better secured.
• Its part of an overall information risk management program that allows for
ongoing security improvements.
• Overall goals of Ethical Hacking:
• Hack the systems in a nondestructive fashion.
• Enumerate vulnerabilities and, if necessary, prove to upper management that
vulnerabilities exist.
• Apply results to remove vulnerabilities and better secure the systems
 Ethical Hacking contd….
• Ethical hackers are hired by organizations to look into the vulnerabilities of their
systems and networks and develop solutions to prevent data breaches.
• They check for key vulnerabilities include but are not limited to:
• Injection attacks ([Link]
hacking/)
• Changes in security settings
• Exposure of sensitive data
• Breach in authentication protocols
• Components used in the system or network that may be used as access points
 Ethical Hacker Roles and Responsibilities
• Ethical Hackers must follow certain guidelines in order to perform hacking legally. A
good hacker knows his or her responsibility and adheres to all of the ethical
guidelines. The most important roles of Ethical Hackers:
• An ethical hacker must seek authorization from the organization that owns the
system. Hackers should obtain complete approval before performing any security
assessment on the system or network.
• Determine the scope of their assessment and make known their plan to the
organization.
• Report any security breaches and vulnerabilities found in the system or network.
• Keep their discoveries confidential. As their purpose is to secure the system or
network, ethical hackers should agree to and respect their non-disclosure
agreement.
• Erase all traces of the hack after checking the system for any vulnerability. It
prevents malicious hackers from entering the system through the identified
loopholes.
White Hat Hackers/Ethical Hackers:
End of the Module