Ethics in Business

Views of Ethics

• Utilitarian View: Decision makers should evaluate Plans and Actions on the basis of consequences.

• Plans and actions should bring Greatest good to greatest number of people.

2. Rights View of Ethics

• Respecting & protecting individuals liberties and privileges'. Right to privacy, freedom consciousness, freedom of speech, free life and safety

Theory of Justice View of Ethics

• Decision makers must be guided by fairness and equity, as well as impartiality.

Case Study- Pepsi in Burma• In your judgment did Pepsi have any moral

obligation to divest itself of all its Burmese assets?

• Can Free Trade Really Lead to Free Societies • Which approach of ethics -Utilitarian, rights,

justice or social contract is most appropriate to analyze the events in the case – Levis Withdrawal– Reeboks Withdrawal– Peepsi’s Withdrwal– Burma’s Political Environment???

PETA and Mc Donald (KFC Too!)

Some Other Incidents of Unethical Practices

• Ramalingam Raju and Satyam• Walmart (Unfair treatment of employees

(union, low wages, employment of illegal immigrants and discrimination against women)), has faced litigations and lawsuits

Types of Business Ethics

• General Business Ethics– Moral rights and duties of authorities for

shareholders, government– Ethical Issues in relation to other companies– Corporate Governance Issue

Ethics of Finance and accounting

• Misleading financial analysis, creative accounting

• Insider trading• Top executive compensation• Bribery or facilitation payments that are in the

interest of company and shareholders but are anti-competitive

Ethics of HRM

• Discrimination issues on the basis of age, gender, religion, disability, attractiveness and weight

• Issues arising out of democratization of workers• Issues affecting privacy of workers: Drug testing• Issues affecting privacy of employer: whistle

blowing• Issues related to fairness of employment contract• Occupational Health and safety• Hiring and firing based on above

Ethics in Marketing and Sales

• Pricing: Price discrimination and price skimming

• Anticompetitive practices• Media and false advertising• Black markets• Planned Obsolescence

Ethics in Production

• Defective, addictive and inherently dangerous products and services (tobacco, alcohol, bungee jumping)

• Environmental issues• Ethical problems arising out of the product

itself like mobile phones, computers, genetically modified food)

• Product testing ethics; anaimal testing, economically disadvantaged group as tests

Ethics in Intellectual Property

• Patent, copyright, trade infringement• Employee raiding: attracting key employees

from competition• Patenting Life saving Drugs

Institutionalizing Ethics

• Code of Ethics: Companies policy of Ethics• Formally constituted Ethics Committee• By Teaching Ethics in Training Programme• Sign Code of Ethics• Include Ethics criteria in Performance

Appraisal, compensation and reward• Publicize and set good Examples• Encourage Whistle Blowing

Whistle Blowing: Some Cases

• Kallol Sur (Block Development Officer, Kolkatta Topper, West Bengal Civil Service was found hanged in West Midnapur)

• Satyendra Dubey: national Highway Authority of India was working on Prime Minister Golden Quadrilateral road project in Bihar (Nov 2003) murdered

• Manjunath (IIM graduate) of IOC was found dead??

Employee Ethics- Factors Affecting

• I- Stages of Moral Development1. Sticking to rules to avoid punishment2. Following rules only when doing so is in your immediate

interest (rewards and favours)3. Living upto what is expected by people close to you4. Maintaining conventional order by fulfilling obligations

to which you have agreed (good corporate citizen)5. Valuing rights of others and upholding absolute values

and rights regardless of the majority of opinion (challenging organization policies that are wrong)

6. Following self chosen ethical priciples even if it violates the LAW

Employee Ethics- Factors Affecting

• II – Immediate Characteristics1. Locus of Control2. Ego strength

• III – Structural Variables: – Organization design and positioning of ethical

cell – PA and Awards

• Organization Culture

Employee Ethics- Factors Affecting

• V- Issue Intensity– Greatness of Harm; number of people– Consequences of harm: how likely it will cause

harm– Immediacy of consequences: will harm be felt

immediately– Proximity of victims: how close are the potential

victims– Concentration of effects