Faculty -B.PADMANABH Business ethics and values Captains of. business volumes and bank balances alone matter.

Social responsibility factors may not motivate Principles and policies of past irrelevant. Leaders --under pressure to grow business fast . Any motives or actions will get justified. Casuality is ethics- desirable vs undesirable what is accept able and not acceptable. Ethics not compromise long term survival important. Today relevance more Nature and need for ethics , ethical issues Ethics -- refers to a system of moral principles- a sense of right and wrong and goodness and badness of actions and their motives and consequences. Business ethics business. refers to the application of ethics to

Business ethics is an extension of values of personnel life to business.

Business ethics not different from accepted norms of good or bad.

Two theories 1) Theory of moral unity ---one ethical business and non business. standard for

2) Theory of Amorality --- business can be amoral . Market mechanisms distills their actions into benefits to shareholders and society at large.

Sources of business ethics Managers influenced by religion , culture and law. 3 repositories exert control. The idea of reciprocity runs through all value systems. Ethical values beneficial to society.
a)

Religion oldest , lakhs of religion.. ethics expression of divine will. orderly social system

b)

Cultural experience --- set of values , rules and standards transmitted among generations and full within acceptable limits. Culture determines values.

3 stages 1) hunting and gathering stage-pugnacity , appetite and green 2).agricultural stage industriuosness important , monogamy , peace and not wars.. new values codifed into ethical systems. 3). Industrial stage large factories , population growth, capitalist created tension with old ethical systems.
c)

Legal system --rules of conduct approved by legislators that guide human behaviuor in society.

Law is reactive Business expected to obey law but often they break. Tax evade, employees die because of occupational diseases , damage environment. Myths about ethics Business ethics oxymoron contradiction in terms. Myth1 ethics is personel and confined to self Individual choice of right or wrong not absolute. Myth 2 business and ethics do not gell. Business cant operate in vacuum Stealing , firing employees recklessly , breaking contracts not accepted. Myth 3 ethics in business is relative .Across countries cant change. Myth 4 good business means good ethics. Myth 5 Information and computing are amoral.
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Empowerement and enlightment Access to information wrongful use.

Why is ethics important ? 1) Ethics corresponds to basic human needs, basic ethical needs compel organizations to be ethical 2) Values create credibility with the public 3) Values give management employees credibility with the

4) Values help better decision making 5) Ethics and profits go together 6) Law cannot protect society, ethics can.

Ethical dilemmas 1) Face to face ethics 2) corporate policy ethics 3). Functional area ethics.

CORPORATE GOVERNANCE Business operate in an ethical and socially responsible way. --who must ensure this ? --what mechanism exists to ensure right behavior Nature of corporate governance Corporate governance is the overall control of activities It is concerned with the formulation of long term objectives and plans and the proper management structure( organizations , systems and people) to achieve them.

Structure board of directors, shareholders, creditors and others.

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management

Relevance of C.G Effective corporate governance is competetivness and success in the long run. crucial for

International agencies like world bank highlights . World bank draft code for corporate governance. In IndiaLack of adequate governance reason for under performance of companies.

3 reasons trigger for concern in corporate governance. 1) Liberalized economy management flout rules norms of behaviuor required. 2) Domestic and foreign investors compliance with global practices. demanding

3) Interest of non promoter shareholder s being undermined.

Factors influencing corporate governance 1) The ownership structure of corporation 2) Its financial structure 3) The structure and functioning of company boards

4) The legal, political and regulatory environment within which company operates.

The ownership structure Determines management and control. Ownership structure individual , institutional investor or few large shareholders. Large shareholders active in Corporate governance Ex Reliance Industries. Ltd. Structure of company boards Influence on Corporate governance reviews management performance.Single or two tiered. Size 9 to 15 . Inside or outside directors.

Financial structure Proportion between debt and equity has implications for quality of governance. Banks influence because of their lending and reduce the costs of financial distress.

Legal policies and regulatory environment determines quality of Corporate governance.

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Mechanisms of corporate governance Mechanisms are institutionalized. New economic policy in 1991 important of corporate governance. Six mechanisms to ensure corporate governance.
1)

Companies act of 1956 --regulate companies. 658 sections , 14 schedules . common good of people , not concentration of w ealth in a few. Act ---legal rights to shareholders --regular amendments happen.

2)

SEBI -- Primary securities law. SEBI Act.

--investor protection --aim --mandated information disclosureprospectus ,annual accounts SEBI --Regulation promoters 20 percent stake . Lock period minimum 3 years. 3). Discipline of capital market ( shareholders participation ) --refuse to subscribe to shares. Sell shares , depress priceturnover attractive. Debt holder monitors actions of management .

Transparent process,external investors reassured.

monitoring

potential

4). Nominees on company board. Nominee directors governance. 5).statutory Audit governance. - active role in ensures corporate

good Corporate

Auditors -- conscience keepers Enhance credibility of financial statements. Auditors hand in glove dressed up. Audit to detect fraud and review internal controls. 6). Codes of conduct - self regulation helps. Cadbury committee in the UK code of best practice Good governance --effectiveness accountability of board of directors. Code is based on checks and balances . Adequate disclosure there. and

Code four sections 1) Role of the board of directors . Balance outside and inside directors 2) Role of non executive directors . Appointed for a specific term formal process Majority of board to be independent. 3) Executive directors --disclosure of pay, remuneration committee decide pay. 4) Financial reporting and controls Audit committee of board to appoint. Non executive directors report of systems and internal financial control.

Annual reports mention to the adherence of code. Confederation of Indian Industry Apr 1997 Draft code of desirable corporate governance

Good governance helps to maximize shareholders value , which will necessarily maximize coprporate value and thereby satisfy the claim of creditors , employees and state.

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Future Corporate governance more relevant and acceptable practice.

Managing stress at work.

Stress in Managing

Stress is an adaptive response, mediated by individual differences and/or psychological processes, that is a consequence of any external (environmental) action, situation, or event that places excessive psychological and/or physical demands on a person. Causes of workplace stress -- fear of being laid off -- more overtime due to staff cutbacks -- pressure to perform to meet rising expectations -- pressure to work at optimum level at all times.

Coping with stress in an uncertain climate 1) Taking responsibility well being for one s physical and emotional

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2) Avoiding attitudes

pitfalls knee jerk reactions

and negative

3) Learning better communication skills . ( Improving relationships with co workers and management )

How to reduce Job stress 1) Get moving helps ) ( aerobic that exercises keeps and other exercises going ( frequent

2) Make food choices small meals )

you

Maintains optimum sugar level in the body. 3) Drinking -- avoid totally or in moderation 4) Get enough sleep 5) Work prioritizing and organizing -- create a balanced schedule -- dont over commit yourself -- try to leave early in the morning -- plan regular breaks --- delegate responsibly -- be willing to compromise

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