BUSINESS ETHICS and
Corporate governance
What is ethics?
Ethics is the branch of philosophy that focuses
on morality and the way in which moral
principles are applied to everyday life.
Ethics has to do with fundamental questions
such as What is fair? What is just? What is
the right thing to do in this situation?
Ethics involves an active process of applying
values, which may range from religious
principles to customs and traditions.
What is business ethics?
Business ethics focuses on what constitutes
right or wrong behavior in the world of business.
Corporate business executives have a
responsibility to their shareholders and
employees to make decisions that will help their
business make a profit. But in doing so,
businesspeople also have a responsibility to the
public and themselves to maintain ethical
principles.
Although ethics provides moral guidelines, individuals
must apply these guidelines in making decisions.
Ethics that applies to business (business ethics) is not a
separate theory of ethics; rather, it is an application of
ethics to business situations.
Although all people have ethical responsibilities, higher
ethical standards are imposed upon professionals who
serve as social models, such as physicians, attorneys,
and businesspeople.
Measures to Improve Ethical
standards in Business
1) Measures at the Business/ Organizational
Level
a) Adoption of code of conduct for dealing with employees,
consumers, shareholders and other social groups
b) To hire the services of expert in business ethics and arrange
for his lectures.
c) To make social audit compulsory to identify the ethical and
unethical conduct of business.
d) To arrange training progammes on ethical standards for
executives and employees.
e) To introduce open and free communication system and
bring total transparency is business working.
f) To penalize those employees who willfully violate rules of
ethical standards
Measures at the Government
Level
a)Government policies, procedure and working should
be simplified.
b) Excessive or unwanted controls over business
working be lifted or reduced.
c) Strict enforcement of laws relating to protection of
interest of shareholders, consumers, employees and
other social groups.
d) There should be political discipline and corrupt
politicians must be punished seriously.
e) The working of Lok- Adalat should be popularized.
f) Quick dispersal of legal cases relating to unethical
business practices.
At the Social Level:-
A)) Social boycott on the products made by
companies involved in unethical business.
b) Trade Associations and chambers of
commerce to prescribe code of conduct to its
members and they must be made to observe it
strictly.
c) Social organisations like Consumers
Guidance Society of Bnagladesh, and Council
for Fair Business Practices should play active
role in spreading the message of ethical values
in business
Roots of Unethical Behavior
Personal Ethics
Decision-Making Processes
Organizational Culture
Leadership
Unrealistic Performance expectations
Primary Psychological Traps
Personality Traps
Defensive Psychological Traps
Greed
Corruption
A code of conduct is framed by Council for Fair
Business Practices (CFBP) for its members.
The following are the highlights of code of
conduct of CFBP:
To charge fair and reasonable prices.
To ensure accuracy in weights and measures.
To ensure that intermediaries do not manipulate the prices.
To fulfill social responsibility towards various sections of the public
such as employees, customers, shareholders, government,
suppliers, competitors, dealings, and the general public.
To pay attention to consumer rights.
To provide product warranty in clear terms
Not to engage in hoarding and profiteering.
Not to adulterate the goods.
Not to trade in sub- standard products, and also smuggled products.
Not to undertake misleading and deceptive advertisements.
Importance:-
Standard of behavior
True North Principles to lead a Business
Short Term Gain and Long Term Pain V /s
Short Term Pain and Long Term Gain
Value Based Leadership creates Ethical
Practices
Moral values of employees
Strong and Independent Board
Role of Regulation in Business Ethics
Role of Information Technology & Business
Ethics
How Ethics Can Make Corporate
Governance More Meaningful?
Corporate governance is meant to run companies ethically in a
manner such that all stakeholders creditors, distributors,
customers, employees, the society at large and governments
are dealt in a fair manner.
Good corporate governance should look at all stakeholders and
not just shareholders along. Otherwise, a chemical company, for
example, can maximize the profit of shareholders, but
completely violate all environment laws and make it impossible
for the people around the area to lead a normal life.
Corporate governance is not something which regulators have
to impose on a management, it should come from within. There
is no point in making statutory provisions for enforcing ethical
conduct.
4.There is a lot of provisions in the companies
act, for example, in dealing with the following
issues: (1) disclosing the interest of directors in
contracts in which they are interested; (2)
abstaining from exercising voting rights in
matters they are interested; (3) statutory
protection to auditors who are supposed to go
into the details of the financial management of
the company and report the same to the
shareholders of the company.
There is a number of grey areas where the law is silent
or where regulatory framework is weak, which are
manipulate by unscrupulous persons
The Serious Fraud Investigation Office (SIFO) in the
Department of Company Affairs (DCA). has been
investigating several "Vanishing Companies". By 2003,
SEBI has identified 229 as "vanishing companies" which
tapped the capital market, collected more than Rs. 800
crores from the public and subsequently became
untraceable. However, thousands of investors have lost
their hard-earned' money and no agency has come to
their rescue so far.
Unfair or Unethical Business
practices in Bangladesh
(I) With Respect to Customer:
Pricing
Advertisement
Product Promotion
Customer Service
Price Fixing
Unethical business practice of
employees
Job Switching
Giving Information which is
Confidential (Insider Information
Industrial Espionage
Occupational Crimes
Principles of business ethics in
Bangladesh are as follows
Avoid exploitation of consumers
Avoid profiteering
Encourage healthy competition
Ensure accuracy
Pay taxes regularly
Get accounts audited
Fair treatment to employees
Keep investors informed Avoid injustice and
discrimination
No bribe and corruption
Discourage secret agreement
Keep service before profit
Practice fair business
Avoid monopoly
Fulfill customers expectations
Respect consumers rights
Accept social responsibilities
Satisfy consumers wants
Service motive
Protect group interests
Optimum utilization of resources
Intentions of business
Follow Woodrow Wilson's rules
Rule of publicity
Rule of equivalent price
Rule of conscience in business
Rule of spirit of service
