Posts Tagged ‘Business Ethics’
Business Ethics and Unethical Practices
The study of business ethics and its implications for different stakeholders have seen tremendous growth in the past few decades. There has also been a rise in the use and development of codes of ethics and announcements for ethical practices by many firms; however companies are still criticized for their unethical practices at different levels (Papers4you.com, 2006). Business ethics, according to the literature has been entrenched with the philosophical details of Ethics (Trevino & Nelson, 1999). Ethics has been defined as ‘the activity of examining the moral standards of a society, and asking how these standards apply to ones life and whether these standards are reasonable’ (Velasquez, 1998; p. 11).
The literature on business ethics is divided on its views about the motivation and reason for businesses to have an ethical dimension. Drawing upon Harrison (2001), there are two major schools of thoughts, firstly those who suggest that firms are profit generating institutions and therefore business ethics is yet another way to attract customers, secondly those who support corporate conscience and intrinsic motivation for the adoption of business ethics.
Business ethics has been considered very subjective in nature and according to Paul (2001) is considered a function of time and culture. It has been established that with the passage of time business ethics have evolved and also that the cultural values and norms drive business ethics within national and regional boundaries. One of the major studies regarding the national values has been conducted by Hofstede (1983). According to this research, which was only based on four indicators i.e. individualism, power distance, uncertainty avoidance and masculinity, there is a great deal of differences among values across different nations and consequently the business ethics. Globalization combined with standardization has made businesses financially efficient but at the same time poses questions regarding the standardized codes of business ethics across national boundaries.
Vinten (1991) has divided the business ethical issues at different levels i.e. international business, domestic business and professional ethics. At the international level ethical issues include free-masonry and socialism versus capitalism; at domestic level these include religious dimensions, social marketing and ethical education; and lastly at the individual level these include bribery, corruption and data protection (Papers4you.com, 2006).
ROI of Ethics and Compliance: Can You Measure It?
What measures would you use to measure the ROI of your company’s ethics and compliance program? At the ECOA’s “Great Debate,” the debate focused on whether or not the ROI of an ethics and compliance program could be measured. Debater information and their arguments are listed below, followed by a summary of my feelings related to the issues. Steve Priest and Jay Mumford (the debaters) debated the topic of what justifies the existence- and budget, of an ethics and compliance department. Some of the opinions expressed during the debate included that there’s a lack of empirical evidence to support determining the ROI of ethics and compliance, measuring the return through legal fees and fines avoided due to an ethics and compliance program and whether or not ethics and compliance proves that a company is better than another.
Here are my notes from the debate. Please note that each person was assigned a side in the debate, therefore, the people involved were defending the side they were assigned and not necessarily their personal opinions on the matter.
Argument from Steve Priest
Founder of the Ethical Leadership Group, Senior Advisor at Global Compliance.
Argument- Emphasizing ROI for ethics and compliance is problematic for your business.
Ethics program- goal is to help the company be more ethical. Contribute to an organization’s health, leading to improved employee engagement, trust, less EEOC claims and commitment- not necessarily the bottom line on an accounting sheet.
Can’t justify that a company that acts ethically performs better than a company that does business in a conniving way.
No empirical evidence to support the statement that ethics pays.
Despite the evidence, the speaker believes that ethics pays- along with most other businesses.
An ethics and compliance program must be sincere- if a company makes a commitment to ethics and compliance purely because they believe E&C is profitable.
When codes and training are viewed as “check the box” support from the workplace decreases.
Would you gut the E&C department because it can’t provide financial proof that it makes business better?
Ethics means that companies must always do the right thing, even if it is difficult, and costly, making it hard to prove it brings a profit to the business.
Argument from Jay Mumford
Ethics and compliance director at Accenture.
Argument- Ethics and compliance ROI is real in its value, adequate to make the case to senior management to support ethics and compliance.
Ethics in Business ? From Compliance to Commitment
By the time this article goes to print all of us will surely have had our fill of news reports about Conrad Black’s infamous lawsuit. We’ll likely be numb to the never ending allegations of fraudulent practices at Nortel. But, how many of us as human resource professionals will be asking, ‘What does this have to do with me?’
It seems that, by and large, human resource professionals have been quite happy to have the accountability for their company’s business ethics and code of business conduct rest with their legal or audit departments. In so doing, human resource professionals miss an opportunity to help their companies shift from merely being compliant with the law to demonstrating their company’s firm and unwavering commitment to build an ethical business culture.
The ‘iceberg model’ helps us to better appreciate the influences that may undermine a company’s policies and practices with respect to business ethics. Think of the ‘the Law’ and your company’s Code of Business Conduct Policy as the tip of the iceberg, visible above the surface. Now, think about the influences that exist below the surface lurking within many companies. Things like:
· Pressures to conform (“Hey, we always take off early Friday afternoons, you need to join us or else someone’s going to take notice”)
· Desire to please (“I picked up the tab for a lunch I had with my boss. He told me it was the only way he could expense it without needing to get further approval. I did it because I wanted to stay on his good side!”)
· Accepted practices (“Don’t worry, we give box seat tickets to all our clients and they sure don’t have any problem with accepting them!”)
· Performance drivers (“Hey, maybe we should just alter our numbers a bit. If we do, we’re sure to be in the top category for a bonus this year!”)
When asked, most of us do not hesitate to say that we are ‘ethical’. In fact some people are offended when asked to sign a document confirming they have read and understood their company’s Code of Business Conduct Policy. However, what we fail to recognize and appreciate is our ability to rationalize our own behavior. Sometimes we justify our actions so convincingly that we no longer even perceive that what we are doing is inherently wrong or unethical. For example:
Business Ethics
From a business perspective, working under government contracts can be a very lucrative proposition. In general, a stream of orders keep coming in, revenue increases and the company grows in the aggregate. The obvious downfalls to working in this manner is both higher quality expected as well as the extensive research and documentation required for government
contracts. If a part fails to perform correctly it can cause minor glitches as well as problems that can carry serious repercussions, such as in the National Semiconductor case. When both the culpable component and company are found, the question arises of how extensive these
repercussions should be. Is the company as an entity liable or do you look into individual employees within that company? From an ethical perspective one would have to look at the mitigating factors of both the employees and their superiors along with the role of others in the failure of these components. Next you would have to analyze the final ruling from a corporate perspective and then we must examine the macro issue of corporate responsibility in order to attempt to find a resolution for cases like these.
The first mitigating factor involved in the National Semiconductor case is the uncertainty, on the part of the employees, on the duties that they were assigned. It is plausible that during the testing procedure, an employee couldn’t distinguish which parts they were to test under government standards and commercial standards. In some cases they might have even been misinformed on the final consumers of the products that they tested. In fact, ignorance on the part of the employees would fully excuse them from any moral responsibility for any damage that may result from their work. Whether it is decided that an employees is fully excused, or is given some moral responsibility, would have to be looked at on an individual basis.
The second mitigating factor is the duress or threats that an employee might suffer if they do not follow through with their assignment. After the bogus testing was completed in the National Semiconductor labs, the documentation department also had to falsify documents stating that
the parts had surpassed the governmental testing standards. From a legal and ethical standpoint, both the testers and the writers of the reports were merely acting as agents on direct orders from a superior. This was also the case when the plant in Singapore refused to falsify the documents
Ethics in the Workplace
We’ve all heard these rules to live by: Don’t hurt, don’t steal, don’t lie, and the more famous “Do unto others as you would have done to you.” In our personal lives most people try to follow these rules. Ethics are often thought of by many as something that is related to the personal side of life and not to the business side. In some businesses, having ethics may actually be frowned upon. This is usually due to the fact that business is about doing what’s best for the bottom line and not always about doing the right thing.
It is commonly understood that there are ethics and then there are workplace ethics. Often we don’t stop to realize that there is no difference between personal ethics and ethics in the workplace; ethics are the same whether at work or in personal life.
After all, ethics are about making choices that may not always feel good or seem like they benefit you. Ethical choices are the “right” choices to make and are examples of rules to live by.
Practical Impact
Executives typically want the answers to two key questions about ethics in their offices: “How do workplace ethics apply to practical goals of my organization and the work of my employees?” and “Is there reliable data to support these assertions?” The Ethics Resource Center (www.ethics.org), a nonprofit organization, assists leaders to impact their organizations by identifying ethical risks and establishing systems to emphasize higher standards for business conduct.
The Ethics Resource Center annually conducts a National Business Ethics Survey (NBES) – a rigorous telephone survey of 1,500 U.S. employees. The NBES findings are encouraging for organizations that have an emphasis on positive workplace ethics. For example, employees have high expectations for ethics within their organizations. Nine in ten respondents say that they “expect their organizations to do what is right, not just what is profitable.”
This suggests that most employees are not cynical about ethics at work, encouraging news when considering the implementation or development of ethics initiatives as the long term success of any program rely on the active support of employees.
Formal ethics programs and informal ethics practices were shown to affect certain key outcomes. Employees who work in companies with active ethics programs who observe leaders modeling ethical behavior, and also observe the application of values such as honesty, respect and trust applied frequently at work, report more positive experiences that include the following:
BUSINESS ETHICS How to Assess Ethical Fitness
BUSINESS ETHICS
By
VIKRAM KARVE
Can Ethics and Business co-exist?
Or are the two mutually exclusive?
Is Ethics relevant in Business Management in today’s world?
Or is “Business Ethics” an oxymoron, not relevant in today’s business and corporate environment?
Is there such a thing as Ethical Fitness?
When recruiting new people, or promoting/appointing persons to senior / sensitive positions, a number of attributes ( Hard Skills and Soft Skills) like Professional Competence, Managerial Proficiency, Domain-specific or Technical skills, and pertinent soft skills comprising leadership, communication, behavioural and emotional aspects, and even physical and medical fitness are assessed, evaluated and given due consideration.
But does anyone evaluate a candidate’s Ethical Fitness before recruitment or appointment?
No, I am not talking about the routine verification of antecedents or background integrity checks. I am talking of assessing Ethical Fitness.
Ethical fitness refers to ensuring that people are in proper moral shape to recognize and address ethical dilemmas. Ensuring Ethical fitness in a proactive manner will result in preventive, rather than corrective, Ethical Management.
Before launching any inquiry pertaining to the concept of Ethical Fitness, it is necessary to explore the moral dimension. Moral development is a prerequisite to ethical behaviour; in fact, a sine qua non for ethical fitness. Kohlberg offers a handy framework for delineating the stage each of us has reached with respect to personal moral development.
Stage 1. Physical consequences determine moral behaviour.
At this stage of personal moral development, the individual’s ethical behaviour is driven by the decision to avoid punishment or by deference to power. Punishment is an automatic response of physical retaliation. The immediate physical consequences of an action determine its goodness or badness. Such moral behaviour is seen in boarding schools, military training academies etc. where physical punishment techniques are prevalent with a view to inculcate the attributes of obedience and deference to power. The individual behaves in a manner akin to the Pavlovian dog.
Stage 2. Individual needs dictate moral behaviour.
At this stage, a person’s needs are the person’s primary ethical concern. The right action consists of what instrumentally satisfies your own needs. People are valued in terms of their utility. Example: “I will help him because he may help me in return – you scratch my back, I will scratch yours.”
Stage 3. Approval of others determines moral behaviour.
CATWOE Soft Systems Model for Business Ethics
A SOFT SYSTEMS MODEL FOR BUSINESS ETHICS
CATWOE
By
VIKRAM KARVE
Before you take a decision or implement change or introduce a new system I am sure you consider the five “E’s”:
Efficacy (will it work at all?)
Efficiency (will it work with minimum resources?)
Effectiveness (does it contribute to the enterprise?)
Ethics or Ethicality (is it sound morally?)
Elegance (is it beautiful?)
Let’s talk a bit about the fourth “E” – Ethics.
There is an ethical dimension to every decision. Any time a human being, or entity, intervenes in the life of another human being, or entity, directly or indirectly, an ethical situation arises.
There is a story, probably apocryphal, which illustrates this.
There was a cyclonic storm and millions of fish were washed ashore and were struggling for life on the beach. A man came to the beach and patiently began to pick up the fish, one by one, and throw them back into the sea. An amused passerby asked him what difference it would make, to which the man pointed to the fish in his hand and said, “Ask this fish?”
Thus, we see that seemingly routine decisions, which at the organizational level do not appear to have major ethical magnitude, have large ethical significance at the individual level.
Some people believe that ethics is of little concern to business people. “Ethics is Ethics” and “Business is Business” they say.
Thus many upwardly mobile managers of today tend to rationalize when faced with an ethical dilemma and take the position that they must wear multiple ethical hats and cloak themselves with three separate conflicting codes of ethics: one code applicable to the professional or technical aspects of their work (Professional or Technical Ethics), another for their business behaviour (Business Ethics), and a third code of ethics for their personal lives (Personal Ethics).
This leads to the development of schizophrenic ethical personality wherein the individual may strive for professional excellence and high ethical standards for one’s own self and within one’s organization, but resort to unethical practices to succeed in business at all costs.
This Dr. Jekyll and Mr. Hyde approach is at the heart of many ethical dilemmas in managerial decision-making.
Each person, entity, group, institution or constituency that is likely to be affected by the decision is a “stakeholder” with a moral claim on the decision maker.
Business Ethics: The role of Culture and Values for an Ethical Workplace
Business Ethics:
The role of Culture and Values for an Ethical Workplace
Dr. Chadaram Satyanarayana,
Director,
Yadavrao Tasgaonkar School Of Business Management,
Bhiwpuri Road, Karjat,
Maharastra, India.
19th January,2011.
According to Concise Oxford Dictionary, ‘ethic’ is relating to morals; treating of moral questions; morally correct; honorable.
It is the study of morals and morals choices. It focuses on standards, rules and codes of conduct that govern the behavior of individuals and groups. In the simplest terms, business ethics are moral principles that define right and wrong behavior in the world of business. What constitutes right and wrong behavior in business is determined by the public interest groups, and business organizations as well as an individual’s personal morals and values. The other dictionary meaning of ‘ethics’ is that it is the ‘ science of morals’ ; it is that branch of philosophy, which is concerned with human character and conduct It is a treatise on morals ( capable of knowing right and wrong).’Ethics refer to the code of conduct the guide an individual while dealing in a situation. It relates to the social rule that influence people to be honest in dealing with the other people. Ethics are the principles of behavior that distinguish between the right from the wrong business ethics is the evaluation of business activities and behavior as right or wrong . Ethical conduct conforms with what a group or society, as a whole considers right behavior.
Abstract:
An ethical workplace is established through an organization’s culture, values and leadership. To promote ethical behavior, human resource professionals, people mangers and senior management need to be knowledgeable about business ethics – from leadership, codes of conduct and related legislation to compliance training, ethical decision-making, and cultural and generational differences around ethics, Transparency, fairness and communication are keys to establishing and maintaining an ethical workplace,
Introduction:
In the business world today, issues of trust, respect , fairness, equity and transparency are gaining more attention, Business ethics includes organizational values, guidelines and codes, legal compliance, risk management, and individual and group behavior within the workplace.
Effective leadership, with open dialogue and thoughtful deliberation, develops the foundation of an ethical workplace, is woven into the fabric of the organizational culture and is mirrored in ethical decision-making. Toward this end, all organizational leaders have role in establishing corporate values and modeling ethical behavior for their workforce, organization and community.