Business Ethics, Governance

& Risk
 Session 1
Chapter 2: Values, Norms, Beliefs and
Standards in Business Ethics
• Explain the concept of values, norms, beliefs and standards in an ethical
context

• Discuss the types of values

• Relate business ethics and values

• Explain the concept of value-based management

• List the factors responsible for the enhancement and dilution of human
values
 1. Values, Norms, Beliefs and Standards in Ethical Context
 Every organisation operates in a particular business network comprising
various parties, such as customers, employees, suppliers, distributors,
investors and government agencies.
 With increased competition and awareness, these business parties
always want to deal with organisations that are based on some empirical
values, a set of pre-established norms, a sound belief system and
established standards.
 Managerial decision making will always involve personal integrity &
social responsibility aspects
 The real choice is whether we answer them deliberately or unconsciously
 Thus, to be successful, organisations need to imbibe positive values,
norms, beliefs and standards.
 2. Values, Norms, Beliefs and Standards in Ethical Context
Values

 Ethical values are those beliefs & principles that impartially promote human well
being

 Values are deep-seated beliefs of a person or social group or a set of rules that people
adopt to take right decisions.

 These are key factors that drive the behaviour of an individual

 A company’s core values are those beliefs and principles that provide the ultimate
guide to its decision making to achieve business goals & objectives successfully.

 Organizational values include trust, teamwork, stewardship, safety, responsiveness,

quality of life, innovation, fairness, integrity, commitment, transparency, respect,
accountability etc

• According to M. Haralambos (2000), a value is a belief that something is good and

desirable.
 3. Values, Norms, Beliefs and Standards in Ethical Context
Norms
• Norms are informal guidelines regarding what is righteous and what is erroneous in a
particular social group.
• They form a control system as they are used as a means to influence the members of a
social group.
• Norms can be formal or informal. Formal norms are explicitly written down and people
who violate these norms face a strict action. All legal, social and religious norms are
formal in nature.
• Informal norms are not written or mentioned anywhere.
Beliefs
• Beliefs refer to basic assumptions and feelings of individuals towards other
individuals, events or various other aspects.
• They help individuals to carry out their actions in a specific way.
• The belief system of an individual starts developing early in their life; however, there is
only a little understanding regarding beliefs.
 4. Values, Norms, Beliefs and Standards in Ethical Context

Standards
• Standards refer to a level or degree of a specific parameter.

• Standards may be measurable or immeasurable. May or may not be documented.

• In an organisation, standards should be based on ethics.

• Ethical standards promote values such as transparency, trust, fairness and

honesty.

• Generally, business organisations follow a set of globally accepted standards

throughout the world.

• Ethical standards are usually stated or defined in a way that may be debatable
and open for discussion. The degree of specification may also vary.
 5. Values, Norms, Beliefs and Standards in Ethical Context
Relationship among Values, Norms, Beliefs and Behaviour
• Values possessed by an individual can be determined by behaviour they demonstrate.
It means that there exists a direct relation between the values and behaviour of an
individual.
• The views and beliefs of individuals are very difficult to change or modify.
• Personal values are communicated through words, action & behaviour subconsciously
• Norms are generally much more specific than values but values can be implemented
only if norms are observed. Manifestation of the norms can be seen in an individual’s
behaviour.
Professional behavior:
 Driven by outcomes / process / performance /standards/ code of conduct /principles /
objectivity /consistency
• Obstacles to professional ethical behaviour: sustaining commitment, unbridled self
interest, right v/s right conflict, right v/s wrong, right v/s almost wrong
 1. Types of Values
Spiritual Managerial Professional
Spiritual Values
Values Managerial Values

• Harmony
• Work is worship • Encourage others
• Truthfulness
• Individual • Creativity
• Self-giving potentiality • Intuitiveness
• Faith • Excellence at work • Knowledge
• Co-operation & • Commitment
teamwork • Kindness &
• Self introspection Versatility
• Decision making in
silence
 Business Ethics : Universal principles

1. Fiduciary principle: Act in the best interests of the company and its
investors.
2. Property principle: Respect property and the rights of those who own it.
3. Reliability principle: Keep promises, agreements, contracts, and other
commitments.
4. Transparency principle: Conduct business in a truthful and open manner.
5. Dignity principle: Respect the dignity of all people.
6. Fairness principle: Deal fairly with all parties.
7. Citizenship principle: Act as responsible members of the community.
8. Responsiveness principle: Be responsive to the legitimate claims and
concerns of others.
Can be applied to resolve ethical dilemmas
 Ethical Decision Making Model

1. Determine the facts: Be aware of perceptual differences

2. Identify the ethical issues involved: Guard against normative myopia,

inattentional blindness, change blindness

3. Identify stakeholders and their legitimate rights & interests: Avoid

tradeoffs

4. Consider the available alternatives: moral imagination

5. Compare & weigh the alternatives: understanding personal & social

consequences

6. Make a Decision: monitor & learn from the consequences

 Ethical Framework for Rational Decision Making Process

4 Ethical standards for Applying the framework:

consideration: 1. Understanding the facts
• Ethical analysis requires rigorous thought & careful deliberation, most of the times even
1.moreDuties 2. Identifying relevant standards
• Responsible decision making & deliberation will result in more responsible behavior
2. Rights 3. Maintaining objectivity while
3. Commitments applying: visibility, generality,

4. Best practices legacy

 Ethical analysis requires rigorous thought & careful deliberation, most

of the times even more
 Responsible decision making & deliberation will result in more
responsible behavior
 Value based Management (VBM)
 VBM is an approach to ensure that organisations run their business on
values.It ensures that performance targets of organisations are aligned with:

• Corporate mission

• Corporate strategy

• Corporate governance practices

• Corporate culture

• Corporate communication

• Decision process

• Performance management & reward processes

 There are three elements of a VBM system, which are:

• Creating value - Managing value - Measuring value

 Factors Responsible for the Enhancement and Dilution
of Human Values
• Materialistic pleasures at the same time forsaking their values.

• Dilution of human values leading to communalism, separatism, biasedness,

dishonesty, lack of trust, cruelty, sadism, barbarity and self-centredness.

• Self-centered / concerned about their own benefit.

• The enhancement of human values is not a job of a single individual rather

the government, citizens and various institutions should also contribute
towards bringing such change.

• Suggested Reading: How Values Influence Behaviour. (2015). Boundless.u: Retrieved 7

August 2017, from https://www.boundless.com/management/textbooks/boundless-
management-textbook/organizational-behavior-5/drivers-of-behavior-44/how-values-
influence-behavior-230-7046/