Académique Documents
Professionnel Documents
Culture Documents
How lonely are the Humans! . A bundle of contradictions, Ignorance and arrogance, Prejudice and superstitions, Bigotry and fanaticism, Illusions and hallucinations. Tamoso Maa Jyotirgamayo. Let the Lights remove all Darkness, Let Noble Thoughts come from all sides. .
2/12/2013
1.1 Definition of Ethics 1.2 History of Ethics and Business Ethics 1.3 Scope of Business Ethics 1.4 Applicability of Business Ethics
2/12/2013
6. Ethics of Finance
6.1 Ethics of Accounting and Accounts Manager 6.2 Ethics of Financial Advisor 6.3 Ethics of Investment Bankers and Lenders 6.4 Ethics of the Stock Exchange 6.5 Ethics of Investments 6.6 Positive and Negative Areas of Investment 6.7 Government Control in Investment 6.8 Ethics of Investment in Social Sectors-Educational Institutions and Healthcare
2/12/2013 7
2/12/2013
2/12/2013
11
Chapter 1:Introduction
Introduction Shakespeare said the world is a stage (he meant acting we are all actors) but today, the entire world is a stage not for acting but for business and marketing. You find business anytime, anywhere and in anything. And if there is Business (i.e. an economic activity where there are buyers, sellers and transactions for a consideration), there will be a Market. Except perhaps for a few hours at home ,you will always find yourself in some market place or other.
2/12/2013 13
Types of Markets
The Retail Markets Food, Vegetables, fruits, groceries, books, medicines etc. 2. Commodity Markets food grains, Cotton, jute etc. 3. The Raw Materials Markets Inputs for finished products. 4. The Finished Goods Markets 5. The Capital Goods Markets 6. The Labour Markets 7. The Financial Markets- stock market, Banking, Insurance etc. 8. The Service Sector Markets Transportation-air road, railways ,water Communications, Health, Hospitality, Entertainment ,Sports, Marriage Beauty etc.. 9. International Markets- Export-Import etc. 2/12/2013 14 10. Cyber Market
1.
Applicability of Business Ethics The common concept is business ethics concerns the corporate sector. Modern concept is it should cover: Ethics of companies & corporations. Ethics of Public Accountants. Ethics of Doctors and Medical profession. Ethics of Lawyers and Law Firms. Ethics of Public Administrators. Ethics of Engineers Ethics of Educators, Teachers & Educational Institutions. Ethics of traders, retailers and vendors. Ethics of NGOs, Trusts and Institutions.
2/12/2013 15
Business ethics being part of the larger social ethics, always been affected by the ethics of the epoch. At different epochs of the world, people, especially the elites of the world, were blind to ethics and morality which were obviously unethical to the succeeding epoch. History of business, thus, is tainted by and through the history of slavery history of colonialism and later by the history of cold war. The current discourse of business ethics is the ethical discourse of the post-colonialism and post-world wars. The need for business ethics in the current epoch had begun gaining attention since 1970s.Historically, firms started highlighting their ethical stature since the late 1980s and early 1990s, as the world witnessed serious economic and natural disasters because of unethical business practices. The Bhopal disaster, and the fall of Enron are instances of the 2/12/2013 major disasters triggered by bad corporate ethics.
17
It should be noted that the idea of business ethics caught the attention of academics, media and business firms by the end of the overt Cold War. Cold Wars, seen . fought through and through pages of history were fought for American business firms abroad. Ideologically, promotion of firms owned by American nationals were presented as if it were freedom and the local resistance against the excess of American firms were labeled as communist upraising sponsored by the Soviet Block. Further, even legitimate criticism against unethical practice of the firms were presented as if it were infringement into the 'freedom' of the entrepreneurs by activists backed by communist totalitarians. This scuttled the discourse of business ethics both at media and academics. Overt violence by business firms have decreased to a great extent in the democratic and media affluent world of the day, though it has not ceased to exist. The war in Iraq is one of the recent 18 2/12/2013 example of overt violence by the liberal western
The Companies Act The Income Tax Act The SEBI Act The Factories Act The Environment Act The Minimum Wages Act The Provident Fund Act The Hazardous Substances Act The FEMA The Consumer Protection Act etc.etc.
19
2/12/2013
Two Questions which arise: 1.When there is a plethora of Acts ,Rules and Regulations to control business, where is the need to frame a separate Code of Business Ethics? 2.Why should the Corporate world be periodically rocked by scandals in spite of having the Code of Business Ethics? The answer is Ethics begins where the Law ends.
2/12/2013 20
1.2 Indianness of Indian Business-Rediscovery of Indian Schools of thought and Philosophy. Treasure of Indian Philosophy and Ethical Values: The Vedas (4)- Rigveda, Samaveda,Yajur-veda, Atharvaveda (Nalayira Divya PrabhandhamTamil) The Upanishads (123 books; 13 basic) The Puranas (18) The Greatest Epics -The Ramayana & The Mahabharata The Greatest Book of Philosophy-The Gita Indian Schools of Philisophy (6) Buddhism, Jainism, Jataka Tales,Panchatantra and a treasure of unparalled Sanskrit & Pali 2/12/2013 21 Literature, Ayurveda, Economics,Law, Logic etc.
Many Hindu intellectual traditions were classified during the medieval period of Brahmanic-Sanskritic . scholasticism into a standard list of six orthodox (astika) schools (darshanas), the "Six Philosophies" (ad-darana), all of which cite Vedic authority as their source: 1.Nyaya, the school of logic 2.Vaisheshika, the atomist school 3.Samkhya, the enumeration school 4.Yoga, the school of Patanjali (which provisionally asserts the metaphysics of Samkhya) 5.Purva Mimamsa (or simply Mimamsa), the tradition of Vedic exegesis, with emphasis on Vedic ritual, and 6.Vedanta (also called Uttara Mimamsa), the Upanishadic tradition, with emphasis on Vedic philosophy.
2/12/2013 22
Ethical Principles of Indian Society Individuals. Business and Governance 1.Aims of Life: Four Phases of Life- Brahmacharya(Duties as Student life), Grihastha (Duties as a Householder), Banaprastha (Pilgrimage and Meditation), Moksha (Salvation). 2. Duties of Life: Artha, Kama, Moksha, Dharma Every individual including businessman and ruler must conduct himself according to DHARMA i.e. honesty, fairness, equity and with a sense of divine duty and Nishkam Karma. 3. Style of Living: Spiritualistic against Materialistic: Simple Living and High Thinking 4. Reverence for Elders: Matrideva bhaba, Pitrideva bhava, acharyadeva bhaba , Atithideva bhava 5.Attitude towards Self: Inner Happiness, peace of mind, Detachment, Yoga and Meditation. Chidanandam 6.Attitude to the World: Shanti, Sukham, Anandam-let there be peace evrywhere-to humans, to vegetation, to the universe. 2/12/2013 23 Vasundhara Kutumbakam- the whole world is your family.
System of Education in Ancient India- Vedic System and Buddhist System Essentials of Indian Philosophy: The law of Karma, Rebirth and Salvation (idea of liberation)-Brahmacharya, Grihastha, Baanprastha, and Moksha. Eight Schools of Thoughts or Philosophy. Common principlessimple living high thinking-nonattachment to material things. Difference with Buddhist philosophy.
2/12/2013 26
Sustainable Growth-Planting and nurturing of trees and nature. Utilization of local resources Full employment Dana-gifts-and charities to others-profit- sharing (ethics of the wealthy and the business class) Least expenditure on armies and promote development through non-violence (ethics of governance) Following Dharma by the Rulers (ethics of rulers)
28
2/12/2013
Ethics of Jainism
1.Ahimsa (Abstinence from all injury) 2.Satyam (Abstinence from falsehood) 3.Asteyam (Abstinence from stealing) 4.Brahmacharyam (Abstinence from self-indulgence) 5.Aparigraha (Abstinence from all attachments) Bondage of the soul: causes: anger, pride, infatuation and greed. Liberation of the soul: dissociation of the soul from the matter. Believes in the Theory of Karma and Rebirth but not in God.
2/12/2013 29
Dont forget that the poor, the down-trodden, and the untouchables are your brothers & sisters. You will reach God by playing football rather than by reading the Gita. You can not preach religion to people with empty stomach-food and education come first before anything else. Education, education, & education for all- womens freedom, enlightenment and freedom from superstition and blind faith. Service to Humanity .Those who are serving jiva i.e living beings are serving God. Building of a strong nation and character through education, economic and spiritual development.
30
2/12/2013
Ahimsa- Non-violence ( imbibed Buddhism & Jainism & Tolstoy) Dharma- Moral Law (Gita) Truth-Truth is God and God is Truth (Aristotle: know Thyself) Communal Harmony (Indian tradition of tolerance and harmony) Equality of all human beings and Women (Western thoughts) Harijans- up-liftment of the downtrodden (Vivekananda) Khadi & Village development- dev. from grassroots (innovation) Trustee for Industries & Industrial Houses (innovation) Sarvodaya & Community Development ( Marxism)
31
2/12/2013
Philosophy of Rabindranath Tagore Universalism against Nationalism; Humanism; Humanizing Education System in natural environment (Shantiniketan); Agricultural development (Sriniketan); The religion of Man; Peace and Non-violence; Unity of Mankind, Freedom and Fearlessness; Truthfulness; those who do injustice and those who tolerate injustice are equally condemnable. Where the mind is without fear and the head is held high. Tagore epitomized the entire Indian Culture of five 2/12/2013 thousand years. A unique example of Total Quality 33
Cognitivism and Non-cognitivism Consequentialism and Non-consequentialism Deontological Theory of Emanuel Kant -goodwill Utilitarianism- maximum good for the maximum number -Jeremy Bentham Egoism- Enlightened Egoism- Market Ethic (Adam Smith), Protestant Ethic (work ethic-Max Weber), Liberty Ethic (John Lock). Rights Principles- Animal Rights, Human Rights, Democratic Rights, Women Rights, Childrens Rights Theory of Justice-based on principles of rights, fairness and equality. Distributive Justice. Retributive Justice. Compensatory Justice. Ethical Relativism- attitudes of races, religion & societies Secular Ethics- truth, rationality and humanism.
34
2/12/2013
Ethics is all about distinguishing between: *Good & bad or good and evil *Right & wrong *Morality & immorality *Rationality & irrationality *Justice & Injustice *Reason & unreason or prejudice *Fairness & unfairness *Truth and untruth
2/12/2013 35
Human Values For Indian Managers In spite of the fact that ancient India set highest ethical, moral and spiritual standards, there is no evidence of those in Corporate governance. While Japan has largely retained their own cultural values in management Indian managers are governed by western values which are mainly materialistic. Need for moral regeneration and adopt an Indian Style of Management.
38
2/12/2013
Basic Questions in EconomicsWHAT, . HOW and FOR WHOManswers all questions. When there are plethora of Acts, Rules, Guidelines and Regulatory Authorities to regulate Business ,the question arises why should there be a separate set of Business Ethics? The answer is Acts and Rules are not enoughBusiness has to do much more than this and that brings us to the question of Morality and Moral Judgements.
39
2/12/2013
Ethical issues concerning relations between different companies: e.g. hostile take-overs, . industrial espionage. Leadership issues: corporate governance; Corporate Social Entrepreneurship Political contributions made by corporations. Law reform, such as the ethical debate over introducing a crime of corporate manslaughter. The misuse of corporate ethics policies as marketing instruments.
2/12/2013
42
2. Ethics of Accounting and Financial Information Creative accounting, earnings management, . misleading financial analysis. Insider trading, securities fraud, bucket shops, . forex scams: concerns (criminal) manipulation of the financial markets. Executive compensation: concerns excessive payments made to corporate CEO's and top management. Bribery, kickbacks, facilitation payments: while these may be in the (short-term) interests of the company and its shareholders, these practices may be anti-competitive or offend against the values of society. Cases: accounting scandals, Enron, WorldCom, 2/12/2013Satyam 43
. 3. Ethics of Human Resource Management The ethics of human resource management (HRM) . covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee.
Discrimination issues include discrimination on the bases of age (ageism), gender, race, religion, disabilities, weight and attractiveness. See also: affirmative action, sexual harassment. Issues arising from the traditional view of relationships between employers and employees, also known as At-will employment.
Issues surrounding the representation of employees and the democratization of the 2/12/2013 workplace: union busting, strike breaking.
44
. Issues affecting the privacy of the employee: workplace surveillance, . drug testing. See also: privacy. Issues affecting the privacy of the employer: whistle-blowing. Issues relating to the fairness of the employment contract and the balance of power between employer and employee: slavery, indentured servitude, employment law. Occupational safety and health.
All of the above are also related to the hiring and firing of employees. An employee or future employee can not be hired or fired based on race, age, gender, religion, or any other discriminatory 45 2/12/2013
4. Ethics of Sales and Marketing Marketing, which goes beyond the mere provision of information about (and . access to) a product, may seek to manipulate our values and behavior. To some extent society regards this as acceptable, but where is the ethical line to be drawn? Marketing ethics overlaps strongly with media ethics, because marketing makes heavy use of media. However, media ethics is a much larger topic and extends outside business ethics. Pricing: price fixing, price discrimination, price skimming. Anti-competitive practices: these include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains. See: anti-competitive practices, antitrust law. Specific marketing strategies: green wash, bait and switch, shill, viral marketing, spam 2/12/2013 46 (electronic), pyramid scheme, planned
. Content of advertisements: attack ads, subliminal messages, sex in advertising, products regarded as immoral or harmful . Children and marketing: marketing in schools. Black markets, grey markets. See also: , disinformation, advertising techniques, false advertising, advertising regulation Cases: Benetton.
2/12/2013
47
5. Ethics of Production This area of business ethics usually deals with the . duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk. Defective, addictive and inherently dangerous products and services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing, bungee jumping).
2/12/2013 48
Ethical relations between the company and the environment: pollution, environmental ethics, . carbon emissions trading Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health. Product testing ethics: animal rights and animal testing, use of economically disadvantaged groups (such as students) as test objects. See also: product liability Cases: Ford Pinto scandal, Bhopal disaster, asbestos / asbestos and the law, Peanut Corporation of America
49
2/12/2013
6. Ethics of Intellectual Property, Knowledge and Skills Knowledge and skills are valuable but not easily "own able" as objects. Nor is it obvious who has the greater rights to an idea: the company who trained the employee, or the employee themselves? The country in which the plant grew, or the company which discovered and developed the plant's medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise. Patent infringement, copyright infringement, trademark infringement. Misuse of the intellectual property systems to stifle competition: patent misuse, copyright misuse, patent troll, submarine patent. Even the notion of intellectual property itself has been criticized on ethical grounds: see intellectual property. Employee raiding: the practice of attracting key employees away from a competitor to take unfair advantage of the knowledge or skills they may possess. The practice of employing all the most talented people in a 2/12/2013 specific field, regardless of need, in order to prevent any 50 competitors employing them.
7. International Business Ethics and Ethics of Economic Systems . International business ethics While business ethics emerged as a field in the 1970s, international business ethics did not emerge until the late 1990s, looking back on the international developments of that decade. Many new practical issues arose out of the international context of business. Theoretical issues such as cultural relativity of ethical values receive more emphasis in this field. Other, older issues can be grouped here as well. Issues and subfields include: The search for universal values as a basis for international commercial behaviour. Comparison of business ethical traditions in different countries. Also on the basis of their respective GDP and [Corruption rankings]. 2/12/2013 51 Comparison of business ethical traditions from
. Ethical issues arising out of international business transactions; e.g. bioprospecting and biopiracy in the pharmaceutical industry; the fair trade movement; . transfer pricing. Issues such as globalization and cultural imperialism. Varying global standards - e.g. the use of child labor. The way in which multinationals take advantage of international differences, such as outsourcing production (e.g. clothes) and services (e.g. call centres) to low-wage countries. The permissibility of international commerce with pariah states. Foreign countries often use dumping as a competitive threat, selling products at prices lower than their normal value. This can lead to problems in domestic markets. It becomes difficult for these markets to compete with the pricing set by foreign markets. In 2/12/2013 2009, the International Trade Commission has been 52
Ethics of Economic Systems This vaguely defined area, perhaps not part of but only related to business.ethics, is where business ethicists venture into the fields of political economy and political philosophy, focusing on the rights and wrongs of various systems for the distribution of economic benefits. John Rawls and Robert Nozick are both notable contributors. I.Theoretical Issues in Business Ethics - Conflicting interests Business ethics can be examined from various new perspectives, including the perspective of the employee, the commercial enterprise, and society as a whole. Very often, situations arise in which there is conflict between one or more of the parties, such that serving the interest of one party is a detriment to the other(s). For example, a particular outcome might be good for the employee, whereas, it would be bad for 2/12/2013 53 the company, society, or vice versa. Some ethicists
Ethics a Normative Science. Postulates of Ethics-(a) Free will, (b) Reason, and (c) Personality. Motive or Intention-What is the Objective of Moral Judgment? The Scope of Ethics-Concerns all sciences and all actions of individuals, politics and society. The Need for Ethics The Need to go beyond Ethics Spirituality is not Denial of the World Ethics and Religion
54
2/12/2013
2/12/2013 57
Role of Indian Ethos in Management : A TwentyFirst Century Perspective Fragmentation of human consciousness accelerated by science and technology is a prime cause of the widespread fall in the level of human values reflected in our lives. Prospective scenario of the Future Organization: Stress -second nature of Executives Total Quality Control-zero-defect product, quality conscious production, increased creativity, reduced obesity, flattened hierarchy, customer satisfaction etc.
58
2/12/2013
The Executive as a Yogi- Karma and Dharma Imaan and Izzat. The East and the West Plain Living and High Thinking : a Study in Contrast
2/12/2013
59
Age of Discontinuity (Peter Drucker) Age of Uncertainty (J.K. Galbraith ) Age of Future Shock (Alvin Toffler ) Age of Anxiety ( Karl Albrecht ) STRESS : Symptoms ,causes and Solutions Environmental Factors & Life style Indian Perspectives :Meditation, Yoga, Mindfulness, Music, Self-introspection, Brain stilling, family values and bonding.
60
2/12/2013
The iron Law of Responsibility To fulfil long-run Self-interest To establish a better Public Image To avoid Government Regulation or Control To avoid misuse of National resources and economic power To avoid Class conflicts To convert resistance into Resources To minimize Environmental damage.
2/12/2013
62
Responsibility of Business Towards Society Four Categories of Responsibilities: 1.Resposibility Towards the Shareholders. 2.Responsibilities Towards their own Employees. 3.Responsibility Towards the Consumers and the Government. 4.Responsibility Towards the Society in General especially Environment. Economic Objectives Social Objectives ( profits can no longer be the 2/12/2013 63 Sole objective of BusinessUrwick)
2/12/2013
64
Place of Ethics and Values. To Whom Are Organizations Socially Responsible? Total Social Responsibilities Economic Responsibilities Legal Responsibilities Ethical responsibilities Discretionary Responsibilities *Social Responsibility and Economic Performance. *Milton Friedmans Thesis *Ethics in Management.
2/12/2013
65
2/12/2013 66
Profession.
International Code Of Medical Ethics: Duties of Doctors in General :THE HIPPOCRATIC OATH. (Ancient Greece) Duties of Doctors Towards the Sick: Duties of Doctors Towards Each Other: THE DECLARATION OF GENEVA (General Assembly of World Medical Association,1948)
2/12/2013 68
B. Code Of Ethics For Engineers Code of Ethics for Corporate Members mandated by the Institution of Engineers(India),1954 , 1997. The Tenets of the Code Ethics: 11 Codes of Conduct and 10 Instructions as Guidelines. C. Professional Ethics for Chartered Accountants:( Chartered Accountants Act,1949. The Council of the Institute has two booklets2/12/2013 69 (i ) Code of Conduct and (ii) Professional
Fundamental Principles for Chartered Accountants Integrity Objectivity Professional Competence and Due Care (e.g. Satyam Scandal-PWC ) Confidentiality Professional Behaviour. (Professional Misconduct Defined by the CA Act) Four Basic Needs to be met: Credibility Professionalism Quality of Service and 2/12/2013 Confidence
70
D. Professional Ethics for Lawyers-Not Codified-Fundamental Moral Values Only. The Universal Moral Codes are wantonly violated in this Profession No Accountability( Ghaziabad Treasury Scandal) Justice Delayed, Justice Denied Plight of Common Maneither you lose all your money or lose your life before justice comes. Strict Codes for both inside and outside courts 2/12/2013 71 needed for speedy justice.
Modern Concept of Professional Behaviour Responsibilities Towards Clients Responsibilities Towards the Profession Itself Responsibilities Towards Society * Professional Ethics in Public and Private Organizations.
2/12/2013
72
73
Job Enrichment- Herzbergs two-factor theoryHygienes and Motivators Job Rotation Quality Circles* Workers Participation Organizational Development ( OD ) Labour Welfare Human Engineering-to fit man into machine.
74
2/12/2013
Modern Concept of Professional Behaviour Responsibilities Towards Clients Responsibilities Towards the Profession Itself Responsibilities Towards Society * Professional Ethics in Public and Private Organizations.
2/12/2013
75
Decision-Making and Morality Moral Approbation Organizational Culture Organizational Climate Organizational Goals Decision Processes Total Benefit Test
76
2/12/2013
Embedding Ethics in Organizational Culture *Decision Support Model .*Ethical Models Developing Organizational Values : Selection Promotion Transfer Termination Prevent other unethical practices: 1.Sexual harassment, 2. Unfair labour practices, 3Unsafe work places, bad conditions and long working hours ,4.No redresal of ILO grievances ,and 5. Non -implementation of ILO 2/12/2013 77 conventions.
Qualities of a Personnel Manager 1. Training and learning opportunities 2. Growth opportunities 3.Accountability along with power for decision making 4. Openness 5. Nurturing innovation and allowing paticipation 6 Employee welfare
2/12/2013 78
A Personnel Manager must be a good manager and to be a good manager,one has to a good man-big-hearted, genuine concern for others, commands respect,big-minded and development of people below manager. HR men should provide proper Leadership. You shall others as equals You should show the ability to forgive You shall love your fellowmen and women
79
2/12/2013
Unit 12. Ethics of Advertising Critics of Advertising argue: Ad is unethical, is inherently a social evil. It induces people to buy things they dont need or cant afford. Increases expectations. Propagates and perpetuates Capitalistic value system. It creates undue pressure on the Consumers Big firms can afford it but small producers cant Huge money involved should be better spent on improving the quality of products 2/12/2013 critics blame the tool and not the user like 80 *The
Regulation of Advertising
Legislation-Govt. Control Voluntary-Self-Regulatory Control-Ad Council as Watchdog Media Control Consumer Fora Public Control
2/12/2013
82
2/12/2013 84
2/12/2013
85