Some business ethics models are built on Immanuel Kant's philosophy. One important question in such cases is whether individuals within the organisations are really governed by the code of ethics or provide only lip service to the guidelines. The common good approach attempts to promote the common values and moral or ethical principles found in a society. For example, you believe that an organisation should promote people on the basis of merit and not on seniority. The word ethics is derived from the Greek word ‘ethos’, which means character. Second, pleasure does not constitute human well-being. THEORIES OF. Principle of Liking in Expectations – In order to establish the ethical norms and conducts in business, it is required to follow all these good and acceptable behaviour by businessmen. 2. The purpose of enforcing the acts is to protect the public interests including the business and the businessmen. are clear for everyone to see and are generally considered reprehensible. Business activity raises a host ofinteresting philosophical issues: of agency, truth, manipulation,exploitation, justice, and more. 10. Business ethics basically inspire the values, standards and norms of professionalism in business for the well-being of customers. Deontological theories suffer from the following weaknesses: (i) Deontological theories fail to provide a precise criteria to understand our moral obligations and to resolve moral conflict. Ethical communication system helps the employees in making enquiries, getting advice if needed and reporting all the wrong done in the organisation. Compliance means conforming to relevant laws, regulations, policies, standards, procedures, or contractual obligations. The ethical behaviour may determine the path of humanity. Laws are generally passed in response to social demands. The antennae of these managers are tuned to public opinion and they react to it. Traditionally, ethics referred to the philosophical study of morality, the latter being a more or less systematic set of beliefs, usually held in common by a group, about how people should live.Ethics also referred to particular philosophical theories of morality. (c) Issues affecting the privacy of the employee, workplace surveillance, drug testing. – Every businessmen are required to create and develop their role and behaviour to establish pleasure and happiness with other persons and the society at large. They argue that businesses should assume no other responsibilities, other than to produce goods and services efficiently and to maximise profits for the shareholders. Doing what is right is obeying your duties and the rule that guide a business. Ethics help us to understand why this is happening, what will be its implications and how we will address this situation. Having realised this, more and more business organisations are today accepting business ethics as part and parcel of their daily business conduct. They believe that business should not have any responsibility beyond obeying certain legal codes in achieving its economic and business goals. Various business management concepts, principles, theories, practices, goals and strategies have been under evaluation, revalidation and constant change consequent upon massive liberalisation, privatisation and globalisation of business initiated towards the end of the 20th Century and geared up in the beginning of the present century. According to teleological theories the Tightness of an action is determined solely by its consequences rather than by any feature of the action itself. 10. The Indian corporate culture has borrowed many ethical values that have been taught by Indian scriptures. 2. (2004a). Business ethics refers to the application of moral principles to solve business problems. Ethical behaviour of people doing business is very important in our society. Hence, the first and foremost ethical obligation of every business is to make profits for its shareholders, for its employees, for its creditors and most importantly, for itself, so that it can discharge its social responsibilities and welfare commitments. How is ethical theory used in contemporary teaching in business ethics? He organised a meeting of company executives to decide how to reduce the cost below $2,000. And if the fools, or the pig, are of a different opinion, it is because they know only their side of the question.”. Business needs to remain ethical for its own good. The virtue approach is a bit more difficult for businesses to implement, as its approach focuses on following ethical principles that should be evident in society. Organizations that follow high Ethics comply with the law and ensure an ethical climate inside throughout the organization. Business ethics are basically the same, but more specific to the situations that arise when conducting business; whether internally, such as hiring and promoting employees, or externally, such as how to advertise or manage competition. Teleological theories, and . Hence, it does not have universal acceptance, mainly because-. Such doubts can be solved by placing trust in each other to facilitate a better working of an enterprise. An ethical dilemma is a situation where one is in conflict between moral imperatives. Peers, Colleagues and Superiors: In the company of good friends, the child realises the importance of high ethical standards in life. The implementation of commitments should be based on honesty and responsiveness. He expressed thus, in his famous article, ‘The Danger of Social Responsibility’, –, “The danger is that all these things (social aspects of business functioning) will turn the corporation into twentieth-century equivalent of the medieval Church. Here, we take a brief look at (1) utilitarianism, (2) deontology, (3) social justice and social contract theory, and (4) virtue theory. Respect – Respect means that every individual should have respect for the beliefs and values of other individuals. According to Rogene A Buchholz, Business ethics refers to right or wrong behaviour in business decisions. They are briefly explained: 1. Certainly, they should. Service motive should be in the first place rather than profit motive, even though the very purpose of any business is to earn profits. At the same time, the mental peace and purity also becomes the ways for politeness and tolerances etc. An example of ethical violations is data fudging in which enterprises present a fabricated statement of accounts and other records, which are open to investigation. Training will help them to familiarize with company’s ethical code of behaviour. For example, the moral principles found in Japan will often be different than those in the United States. 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. The first one, consequential ethics, states that outcomes determine ethical decisions. Importance 11. Nature, 8. A business unit may be isolated from the business association if the particular business unit fails to comply with ethics. It might look like a crowded work floor with only one means of exit. Values, thus, overpower objectivity and rationality. What Are the Different Aspects of Corporate Culture. Bentham suggested a procedure called hedonistic calculus for this purpose. Business ethics is concerned with the behaviour of businessman in doing a business. Principle of Esprit – According to this principle businessmen should give due attention to make best possible services and try to develop the feelings of devotion and truthfulness in services. Moreover, businesses are thought of as being living, growing entities. Ethical theories depend on what is right and wrong and the end result of the action. Business ethics forms an important branch of applied ethics. (ii) Cultivate strong team work and productivity- Business ethics helps in building openness, integrity and a sense of oneness amongst all employees. Corporate goals are paramount and ex­ert considerable pressure on executives to change their ethical views. While discharging its obligations to the society, the company not only fulfils its own duties, but also paves the way for a stronger and more ethical foundation. It is abstract in concept. All the behaviour and activities should be based on values and service motive in business. Determinant # 2. Solomon distinguishes business ethics into three levels: micro, macro and molar. Generally speaking, costs and benefits should be equitably distributed, rules should be impartially applied, and those damaged because of inequity or discrimination should be compensated. Defining ethical stand­ards is not an easy task. The nature of a business's operations has a major influence on the ethical issues with which it … They formulate ethical policies and develop ethical standards. Doubts may create misunderstandings, problems, and chaos among individuals, and thus need to be avoided. Business ethics theories often use this approach by not imposing their missions, products, or systems on consumers. W.D. (vi) Helps in quality management, strategic planning and diversity management. Relationship between Business and Ethics 19. This View states that society consists of a number of subsystems, and business and morality are just two of these subsystems. There are examples galore, from the pages of history, where not only have ethical companies made profits, but more importantly, it is only ethical companies which discharged its social responsibilities, that have survived competition and turbulent changes through the years and have contributed to Social Welfare and have continued to flourished undiminished. The following example is a point in fact. The Company’s Act, Consumer Protection Act, M.R.T.P. – This principle emphasise that there is no need to perform all the task to be self-centered or self-interest. Since then, there has been a radical change of views and the fears expressed by philosophers and psychologists about business ethics have largely remained unfounded. Some of these ethical values are as follows: i. Ethical behaviour not only improves profitability but also fosters business relations and employees productivity. Individuals with high degree of patience are not affected by delays in getting rewards for their accomplished tasks. On this basis the businessmen can determine different roles and behaviour at their levels. If people are not treated fairly — such as one employee receiving higher compensation than another — a justifiable reason must exist, such as higher technical skills or the exclusiveness of a job position. Among the business ethics theories, this is typically seen as the oldest theory, as it was propagated by many philosophers, such as Jeremy Bentham, James Mill, and Mill's son John Stuart Mill. The theories of business ethics can be divided into two categories: The term ‘teleological’ is derived from the Greek word ‘telos’ which means an end. One important aspect of organizational community culture is that the beliefs and views of any particular culture or religion should not alienate any individual belonging to another culture. The community culture of an enterprise emerges from the varied cultural backgrounds to which its employees belong. Even pigs are capable of pleasure and his theory is criticised as a ‘pig philosophy’ fit only for swine. Accordingly, we should perform all the role and behaviour to another person’s for their esteemed interest. Ethics are broader than what is stated by law, customs and public opinion. Ethical theories in business include: Consequentialist normative theory: … Thus, classical utilitarianism does not require observing rules such as “Tell the Truth.”. That is the concern of politicians, bureaucrats, concerned organisations and individuals and the state. Values, quite often, help managers to tie the knot between employee decisions and actions with overall corporate goals. 6. It aims to remove the doubtfulness and misunderstanding among people. Is Amazon actually giving you the best price? Business Ethics was thought of as being a contradiction of terms. 5. This view is of the opinion that business is only a subset or sub-structure of the moral structure of the society. Generally, the defensive factors are the maneuvers caused by two basic internal stimuli, which are guilt and shame. Thus, teleological theories are based on the concept of goodness. Likewise, citizens have a moral right to control access to personal information about themselves and its use by public and private agencies. Disclaimer Copyright, Share Your Knowledge Hence, business can play a very significant role in the modernisation and development of the country, if it chooses to do so. (e) Insider trading, executive compensation. Business ethics are the norms and moral values of human behaviour desired by the contemporary society exclusively and inclusively dealing with commercial transactions. If these characteristics of an individual are negative then they are reflected in his/her behavior. Monitoring can be done by keen observation by ethics officer, surveys and supporting systems. The communication should be in cleared, open and justified manners. Competitors influenced newspapers to publish this accident and the newspapers in the U.S.A. highlighted the absence of the safety feature. A housewife may practically beat a thief to death, when threatened with the prospect of losing her ornaments or child. Guidelines 17. it is required to follow all these good and acceptable behaviour by businessmen. 4. The issues of Ethics faced by HRM include: (a) Discrimination issues, affirmative action, sexual harassment. 5. Ethics seeks, to improve the human condition by focusing on the causes and consequences of these malprac­tices being done by the business organisations. Here, some of the regulations are presented briefly: Enforcing the legislative measures is one of the ways of making businessmen follow business ethics. Outside agency like the business association guides the business as how to observe business ethics, stating the reasons for doing so. Few trends could so thoroughly undermine the very traditions of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. “Business Ethics is an art and science for maintaining harmonious relationship with society, its various groups and institutions as well as recognizing the moral responsibility for the tightness and wrongness of business conduct” -Wheeler. They guide our behaviour wherever we go and are the primary sources of our actions. Businesses can implement this approach, although it may run against the grain of society until the values take hold among the general public. Values define what is good or bad, right or wrong. If a decision merely results in benefits only to oneself, then that is not an ethical decision. Experiences in life teach many lessons. Act and the like are some of the legislative measures. Businessmen are not ready to pay even minimum wages. If so, certainly, the following benefits are available to the concerned groups. There is growing research evidence to show that managers at top, middle and first level have compromised their personal princi­ples to meet an organisational demand. In context of business performance, there are certain principles and guidelines, based on ethical conducts as given here: 1. According to Drucker, every individual and organisation in society should abide by certain moral codes and that there is no separate ethics of business. 1. Governments, which were hitherto discharging the responsibilities of safeguarding the customers’ interest in respect of quality, price, safe and timely delivery of the product etc., protecting the companies from unhealthy competition, restricting the concentration of economic power in the hands of a few which should be otherwise enjoyed by the majority of the population and the like, relegated and shifted the responsibility on to the shoulders of the business organisations, often simply by encouraging trade liberalization and privatisation. In classical utilitarianism, pleasure is regarded good, and pain is considered evil. For example, tobacco and alcohol. As we grow in years, we often seek environments that are compatible with the values we learned as children. Generally, individual companies try to formulate their own ethical standards for their behaviour. There are number of trade unions functioning in India. He further believed the social responsibility of business is contrary to basic business functions. BUSINESS ETHICS BINU KURIACHAN DEFINITION OF ETHICS Ethics as a moral and normative science refers to principles that define human behavior as right, good and proper. The Company President Mr. Lee Lacocca wanted to rush the development of a car costing less than $2,000, as he promised the public that his company will bring out a car at that price (as low as $2,000) and also fight the growing popularity of Volkswagen’s Beetle. Right – that which is morally correct and due; b. It studies the impact of acts on the good of the individual, the firm, the business community and the society as a whole. To answer this question, we undertook a survey of twenty-five of the leading business ethics texts. These theories propose a set of ethical principles that can be easily assessed and expressed by the typical business person--not only by ethical philosophers. For example, Concern for Task (Productivity) and Concern for Human Beings (workers) are bound to pull each other in opposite directions. Ethics is the embodiment of moral values, which describes what, is ‘right’ and what is ‘wrong’ in human behaviour and what ‘ought to be’. The reason is that there is no distinction between a businessmen and his business. Principle of Communicability – According to this principle, there is a need to make effective means of communication with the internal and external persons as engaged with business houses. He should observe ethics inspired by his own interest in his business and society as a whole. Understanding the importance of ethics in human resources is crucial for any business owner, whether in a local startup or a multinational powerhouse. (i) Teleological theories do not consider the basic obligations. 11. 5. Parents, teachers, relatives, friends and others influence an individual’s values. The fundamentally subversive doctrine.”. To survive, develop and excel, business must earn social sanction of the society wherein it exists and functions. Businessmen should follow a reasonable and justified working process in their organisation. ii. 5. There is no lack of consideration for clean environment. It is based on the social customs, traditions, standards, and attributes. This view sought to integrate the two previous views presenting a more realistic picture. They also influence how motivated we are at work; people who share same values as the organisation are committed to the organisation that those who do not. ‘Profit is a dirty word’, said Jawaharlal Nehru, in the 1950’s while referring to the public sector companies. Mrs. Priyanka A. Bansode Assistant Professor Electronics and Telecommunication, Engineering Walchand Institute of Technology, Solapur The principle of utilitarianism consists of the following elements: (1) Consequentialism – The Tightness of any action depends solely on its consequences. Technological advancements have to come, have to be used; however, what to do with the people whose life and earnings are affected by the utilisation of advanced technology, is a question which is difficult to answer. Advantages of Managing Ethics in Work Place. Moreover, their employees, executives and managers have felt proud to belong to such organisations. Managerial ethics, thus, are those principles that guide the conduct and thinking of managers with respect to what is good or bad; right or wrong (Barry). I hope this makes sense. Utilitarianism why telling the truth, keeping promise, and other acts which provide some benefit are morally relevant. b. The three leading normative theories of business ethics are the stockholder theory, the stakeholder theory, and the social contract theory. Ethics committee at the board level- The committee would be charged to oversee development and operation of the ethics management programme. People also frequently seem to believe that a profitable company must necessarily be unethical. Such observation of morality is not required out of fear for punishment. Bowen, S. A. Your attitude and behaviour towards the organisation perhaps would be very optimistic if your values match with organization’s promotion policies. Everything you need to know about business ethics. Ethics is a “consideration and application of frameworks, values and principles for developing moral awareness and guiding behaviour and action”. A company should adopt fair attitude towards everyone without any discrimination. Spirituality – It emphasizes the positive inner transformation of an individual’s life. Ethics should be brought into business by showing that ethical considerations are consistent with business pursuits, in particular with the pursuit of profit. If a custom is adopted and accepted by businessman and public, that custom will become an ethics. It deals with the responsibility of an organization to make sure that products and processes of production is not causing harm to the environment. Hence the first responsibility of a businessman is to generate surplus for his business. For example, two people give equal amounts to charity. It provides an ethical framework for evaluating business and the corporate world. Through their reinforcing actions, (rewarding good behaviours), parents incul­cate high or low ethical standards among children. Thus, the motive with which actions are done determine their Tightness. If the answer to the following questions is “yes”, then managers are said to be on track—is the decision truthful? Thus, competition forces businesses to conduct their business ethically. Many social scientists felt that the deregulation of business would encourage the business to reverse back to its orthodox objective of profit maximization by whatever means including practising unethical conduct. 6. Business ethics is a philosophy to determine the standards and norms to make mutual interactions and behaviour between individual and group in organisation. Ethics is a “consideration and application of frameworks, values and principles for developing moral awareness and guiding behaviour and action”. Business ethics implies general ethical ideas to business behaviour. For example, telling a lie or breaking a promise is right if its consequences are better than those of any alternative course of action. Bentham’s theory is criticised for two reasons. Justice as an ethical approach is where all humans are treated equally through society, regardless of rank, position, class, creed, or race. According to deontological theories certain actions are right not due to some benefit to self or others but due to their basic nature or the rules underlying them. This makes their every act conditioned to their parents’ teachings and orders. What Is the Relationship between Business Ethics and Values? This paper examines the importance of Aristotle’s theory of virtue ethics in business and organization management, in doing so, the paper summarizes the basic tenets of the virtue theory and presents some case studies. Values such as stealing is “bad”. Principle of Wishless Work – This principle emphasise that there is no need to perform all the task to be self-centered or self-interest. And ethical practices do not necessarily increase the cost of production, in fact they tend to reduce costs. : A Formal Code of Conduct, Ethics Committee. Morals play a large role in this because individuals must personally use ethical behavior in order to achieve the end goal without mistreating people. A business or company is considered to be ethical only if it tries to reach a trade-off between perusing its economic objectives and its social obligations, i.e., between its obligations to the society where it exists and operates; its obligations to its people due to whom it can even think of pursuing economic goals; to its environment, from whom it takes so much without it demanding anything back in return; and the like. It has been felt that any company which cannot make profits even for its own operations has no right to exist in the marketplace and should be wiped out. Business and Ethics overlap and hence many business decisions are guided by moral considerations. What Are the Different Types of Business Ethics Theories? Sincerity – Sincerity refers to truthfulness and transparency in the nature and behavior of employees in an enterprise. Before publishing your Articles on this site, please read the following pages: 1. (d) Issues affecting the privacy of the employer- whistle-blowing. Elements 7. Ethical dilemma is also known as ethical paradox or moral dilemma. Even private companies making profits were viewed with disdain by the public. Business ethics differ from industry to industry, and nation to nation. Imperative means excessive of command . The purpose of this article is to define ethics, then critically examine its importance in business. Adam Smith and Friedman were of the opinion that business should be left alone to play by the rules of the prevalent market system, and the introduction of ethics would make an imbalance of the market dynamics. Frequently the impression of most people is that ethics and profits are mutually opposed to one another, and that if a company is ethical, it can forget about making profits. A conflict arises in trying to achieve both simultaneously. Ethical standards are referred to as the principles or ideals of human conduct.” Thus, ethics implies good character and morality and refers to generally accepted human character and behaviour considered, Business Ethics – Concept and Definitions of Business Ethics. These principles or virtues seek to replace the current values if they do not bring about the most good or best development of humanity. 11. Such behavior may include making long-distance calls from the office, duplicating the enterprise’s system software to use at home, projecting a false report on the number of worked hours, or falsifying business records. Individuals with perseverance can keep their spirits high to achieve the desired goals. It is the discipline dealing with ‘what is good and bad’ and with moral duty and obligation. 4. Determinant # 8. iv. Similarly, when Mergers take place between companies, or Acquisition of one company by a bigger company, where Job positions are duplicated, instead of employees losing their jobs for no fault of their, ethical solutions lies in Job Reassignment or Retraining for alternative Job Assignments. Bentham and Mill explained the doctrine of utilitarianism: Jeremy Bentham (1748-1832) explains this principle as follows: “By the principle of utility is meant that principle which approves or disapproves of every action whatsoever, according to the tendency which it appear to have to augment or diminish the happiness of the party whose interest is in question – or, what is the same thing in other words, to promote or to oppose that happiness.”. Principle of Universal Values – It is required that every businessmen should conduct and perform the task and different business activities to be based on universal assumptions, customs and overall accepted norms and principles by society. He can distinguish between the end he wishes to pursue and the means to gain that end. These theories can be used on their own or in combination with each other. Principle of ‘reward’- The one who performs well is encouraged in form of rewards. It usually specifies methods for reporting violations, disciplinary action for violation and a structure of the due process to be followed. c. To help employees get guidance and resolve queries. 7. This View was proposed by Talcott Parsons, wherein he sought to integrate ethical behaviour and business in a new area called Business Ethics. Some companies have an in-house training department while others may opt for an out-source expert. (iii) Duties of Gratitude — to return favours that others do for us. HR includes numerous ethical pitfalls that can damage a company’s reputation or financial sustainability if not handled properly. Such practices help people to lead a more sensible life, increase work efficiency, and decrease stress levels. Bok, S. (1983). This is fundamentally subversive doctrine.”. Here, the word ‘morals’ refers to accepted customs of conduct in a society. iii. These are ethical questions raised about a particular business. Thus, business needs, in its own interest, to remain ethical and socially responsible. Currently, the stockholder theory is somewhat out of favor with many members of the business ethics community. Ethical dilemma is a situation in which it cannot be determined whether the action is right or wrong. It is difficult, if not impossible, to maximise both together. ‘Honestly is the best policy’. Business needs to function as responsible corporate citizens of the country. They tend to be broad views of life and are influenced by parents, teachers, peer groups and associates. 2. 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