WHAT IS BUSINESS ETHICS?

» WHAT IS BUSINESS ETHICS?
» FORMULATION OF ETHICAL VALUES
» BENEFITS OF ETHICS MANAGEMENT
» CORPORATE GOVERNANCE

 

 

WHAT IS BUSINESS ETHICS?

Let’s start with “what is ethics?” Simply put, ethics involves learning what is right or wrong, and then doing the right thing but “the right thing “is not nearly as straightforward as conveyed in a great deal of business ethics literature. Most ethical dilemmas in the workplace are not simply a matter of “Should Bob steal from Jack?” or “Should Jack lie to his boss?”

The concept has come to mean various things to various people, but generally it’s coming to know what is right or wrong in the workplace and doing what’s right-this is in regard to effects of products/services and in relationship with stakeholders. Wallace and pekel explain that attention to business ethics is critical during times of fundamental change-times much like those faced now by business, both nonprofit and for –profit .In times of fundamental change, values that were previously taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should act .Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass. However, attention to business ethics provides numerous other benefits; as well as listed later in this document. Note that many people react that business ethics, with its continuing attention to” doing the right thing”. Only asserts the obvious (“be good,” “don’t lie” etc.), and so these people don’t take business ethics seriously. For many of us, these principles of the obvious can go right out the door during times of stress. Consequently, business ethics can be strong preventative medicine. Anyway, there are many other benefits of managing ethics in the workplace. These benefits are explained later in this document.

RELATIONSHIP BETWEEN BUSINESS AND ETHICS

Functional Area Ethics: Functional areas of business are likely to confront ethical issues. Accounting is a critical function of any business. Accounting statement reveal to the managers and owners about the financial soundness of a company. Managers, investors, regulating agencies, tax collectors and absolute requirements of the accounting function. Professional accounting organizations have evolved generally accepted accounting standards whose purpose is to establish uniform standards for reporting accounting data. When they are followed, these standards ensure a high level of honest and ethical accounting disclosures. Rarely are they followed in practice.

Ethical dilemmas crop up in purchasing departments where strong pressure are felt to obtain the lowest possible prices from suppliers and where suppliers and where suppliers too feel a similar need to bag lucrative contracts ,Bribes, kickbacks and discriminatory pricing are temptations to both the parties.

Marketing is another area of the ethics issue. Pricing, promotions, advertising, product information, relations between agencies and their clients and marketing research are potential areas of ethical dilemmas. Then there is thee area of sophisticated communication technology which is grossly abused or misused to realize one’s ambitions.

ETHICS TRAINING PROGRAMMES

Nearly all Companies which take ethics seriously provide training in ethics for their manager and employees and employees. Such training programs acquaint company personnel with the official company policy on ethical issues, and they show how those policies can be translated into the specifics of every day decision making .Often simulated cases based on actual events in the company are used to illustrate how to apply ethical principles to on the job problems.

FORMULATION OF ETHICAL VALUES

Depending on the size of the organization, certain roles may prove useful in managing ethics in the workplace. These can be full-time roles or part-time functions assumed by someone already in the organization. Small organization certainly will not have the resources to implement each the following roles using different people in the organization. However, the following functions point out responsibilities that should be included somewhere in the organization.

1. The organization’s chief executive must fully support the program:
2. Consider establishing an ethics committee at the board level:
3. Consider establishing an ethics management committee:
4. Consider assigning/developing an ethics officer:
5. Consider establishing an ombudsperson:
6. Note that one person must ultimately be responsible for:
7. Review any values needed to adhere to relevant laws and regulations:
8. Review which values produce the top three or four traits of a highly ethical and successful product or service in your area, e.g. for accountants:
9. Identify values needed to address current issues in your workplace:
10. Identify any values needed, based on findings during strategic planning:
11. Consider any top ethical values that might be prized by stakeholder:
12. Collect from the above steps, the top five to ten ethical values which are high priorities in your Organization:
13. Examples of ethical values might include:
a) Trustworthiness; Honesty, integrity, promise keeping, loyalty.
b) Request; Autonomy, privacy, dignity, courtesy, tolerance, acceptance.
c) Responsibility; Accountability, pursuit of excellence.
d) Caring; Compassion, consideration. Giving, sharing, kindness, loving.
e) Justice and fairness; Procedural fairness, impartiality, consistency, equity, quality, due process.
f) Civic virtue and citizenship; Law abiding, community service ,protection of environment.
14. Compose your code of ethics.
15. Include wording that indicates all employees are expected to conform to the valus stated in the cod of ethics:
16. Obtain review from key members of the organization:
17. Announce and distribute the new code of ethics (unless you are waiting to announce it along with any new codes of conduct and associated policies and procedures):
18. Update the code at least once a year:
19. Note that you cannot include values and preferred behaviors for every possible ethical dilemma that might arise:
20. Examples of a code of ethics:

BENEFITS OF ETHICS MANAGEMENT

Many people are used to reading or hearing of the moral benefits of attention to business ethics. However, there are other types of benefits, as well. The following list describes various types of benefits from managing ethics in the workplace.

1. Attention to business ethics has substantially improved society.

2. Ethics program help maintain moral course in turbulent times.

3. Ethics programs cultivate strong teamwork and productivity.

4. Ethics program support employee growth and meaning.

5. Ethics programs are an insurance policy they help ensure that policies are legal.

6. Ethics programs help avoid criminal acts ’of omission’ and can lower fines.

7. Ethics programs help manage values associated with quality management, Strategic planning and diversity management this benefit needs far more attention.

8. Ethics programs promote a strong public image.

9. Overall benefits of ethics programs.

CORPORATE GOVERNANCE

A corporation is a creation of Law as an association of persons forming part of the society in which it operates. These Corporations are to be both managed and governed. At all stages interest of society is involved. The activities of the Corporation and values of society are mutually influencing each other, Activities of corporation. However, Corporations have a duty to view the interest of nation, laws, and ethical values, in the interest of whole society.

Corporate governance is gaining importance in Business world .One can find a blending of morality, Law and ethics in corporate governance. GATT, WTO and the local situation have opened a new thought in corporate governance.



Review Your Knowledge

• 1. What is an Agreement?
• 2. Define Consideration.
• 3. What is fraud?
• 4. Define Public Company.
• 5. What is the difference between bailment and pledge?
• 6. What are participating prefernce shares?
• 7. Define condition in a contract of sale.
• 8. What is contract? Explain the essential elements of valid contract?
• 9. What do you understand by 'Corporate Veil'? When is it said to be lifted?
• 10. Explain the process of organisational development.
• 11. Discuss the requisites of a valid general meeting?
• 12. Discuss the main features of central excise.
• 13. What is contract?
• 14. What is offer and acceptance?
• 15. What are the conditions of a valid contract?
• 16. Describe Contract and its essentials.