Bus

inessEt
hic
s

07/
26/
12

1
Busi
nessEt hi
c s-Int
roduct
ion
•Ethi
csi nvolvessystematizi
ng,defendi
ngandr ecommendingconc ept
sofri
ght& wrong
behavi
or•Et hicsisamassofmor alpri
ncipl
esorsetofval
uesaboutwhatisri
ghtorwr
ong,
t
rueorf al
se,fairorunfai
r,properorimproper•Whatisr
ightiset
hicalandwhati
swrongis
unet
hical

07/
26/
12

2
Busi
nessEthi
cs-Definit
ions
•Ther
ei sonl
yoneethics,onesetofrulesofmor al
i
ty,onec odethatofi
ndi
vi
dualbehavi
orin
whi
cht hesamer ul
eappl ytoeveryoneal i
ke…. .Peter•Et hi
csisabr anchofphil
osophy
whi
chi sthesyst
ematics t
udyofsel
ec t
ivec hoi
ce,ofthestandardsofri
ght&wr ongandby
whi
chitmayulti
matel
ybedi r
ect
ed…. Phil
l
ipWheel Wright
07/
26/123

Dr
ucker
Bus i
nessEthi
cs-Def
init
ions
•Supr emeonenessi
st herati
onaleofallet
hicsandmor ali
ty.Ethi
csc annotbederi
vedfr
om
t
hemer esancti
ontoanyper sonage.Someet er
nalpr i
ncipl
eoft ruthhast hesanct
ionof
ethi
cs.Wher ei
stheeternalsancti
ontobefoundex ceptintheonlyi nf
ini
tereal
i
tyt
hatexist
s
i
ny ou&usandi nall
,intheself,i
nthesoul….Swami Vi
vek ananda
07/26/124
Busi
nessEt
hics:WhatDoesI tReal
l
yMean?
Busi
nessEt
hics:Todayvs.Earl
i
erPeri
od
Soci
ety’
sExpectat
ionsofBusi
nessEthi
csEt
hicalPr
obl
em
autcAdnadetcepx EschtEssensuBf oi i

Et
hicalPr
obl
em

Act
ualBusi
nessEt
hics

1950s

Ti
me

Ear
ly2000s
5

07/
26/
12
Et
hics:

Obj
ect
ives

•Def i
nethegreatestgoodofman&es t
abli
shas t
andar
dforthesame•Set/Est
abli
shmor al
standards/normsofbehav ior•Anov er
allst
udyofhumanbehavi
or–whatismoral/i
mmor al
shouldbeasses sed•Appl yjudgementuponhumanbehav i
orbasedontheses
tandardsand
norms•Suggestmor albehavior
,prescr
iberecommendat
ionsaboutDo’
s&Don’ ts•One’ s
opini
onoratti
tudeabouthumanconduc tisexpr
essed
07/26/126
Ethics&Rel at
edTer ms
•Et hi
c s& Morali
ty:Moralit
yisasetofr ulestoguidetheac t
ionsofi ndi
vi
duals•Et hics&
Religi
on:Ethicsgetsideasf r
om r
eli
gi
on&t hroughex per
iment
si tapprovesthem asCodeof
conduc t•Ethi
cs&Law:Lawi sacodeofc onductwhichtheauthorit
yinpowerpr escr
ibesfor
society.I
tdiff
ersfrom Ethicsini
tsopti
ont ousef orcewhennec essar
y•Et hi
cs&Val ues:
Valuesar edeep-seatedi deas&feeli
ngsthatmani f
estthemselvesasbehav i
ororc onduct
Law+Knowl edge=Et hi
cs
07/26/127
Busi
nessEthi
cs
•Busi
nessethi
csaretheappl
icat
ionofgeneralet
hicalrul
est
oBus i
nessBehavi
or•Busi
ness
et
hic
sarerulesofbusi
nessbywhi chpr
opri
etyofbus i
nessact
iv
it
ymaybej udged•Busi
ness
et
hic
sisaform ofappl
i
edethi
cs

07/
26/
12

8
Bus i
nessEthic
s
•The3C’ sofBusinessEthicsare
–Compl i
anceofl aws,principl
esofmor al
it
y& pol i
ciesofthec ompany–Contri
buti
ont o
societ
yi nterms ofQual it
y ofpr oduct
s/s er
vices,employmentetc– Consequence of
businessacti
vit
ytowar dsenvi r
onment,soci
alresponsibi
l
it
ytowardsshar
ehol
der
s,bank er
s,
customers,employees&goodpubl i
cimage
07/26/129
Bus i
nessEt hics–Cas eSt udy1
Sanj ayVer mawasanMBA,speci al
izedi nMar keti
ng&Adv er
ti
sing.Hehasj ustj
oi
nedABC
AdAgenc y.Hewasac ompet ent&i nt
el l
igentper sonwi t
hout st
andingper formanc eduri
nghi s
MBAper i
odatt heinst
it
ute.Yethegott hisjobwi thgreatdi f
fi
cul
tyduet oreces si
oninthej ob
mar ket.Hehadsomehow managedt of i
ndt hisjobt hroughac ontactofhi suncl
e.The
chairmanoft hecompanywant edhimt os omehow per s uadeawel lk nownnews papert o
avoidr eport
ingonacont roversialcor
r upti
onc hargeagai nsthim &i nsteadwr i
teafavorable
edi
tor i
al.Vermawasnotconvi ncedthathi sc hai r
manwasc l
eani nthec ase.Ont heot her
handt henewspaperwaswi ll
ingt oaccommodat ethec hairman,iftheor ganizati
onwaswi ll
ing
t
ogi v ealarges izeadvert
isement .Rec entlyVer mal osthisfatherleavi
ngVer mat otakec are
ofhismot her&t hr
eesist
ers.Whats houl dVer mado?
07/26/1210
Bus i
nessEt hics–Cas eStudy2
Ami twasayoung&dy namicmanageratXYZPv tLtdandwasr ecentl
ymar r
ied.Duet ot he
natureofhi sj ob,hehadt odol otoftr
av ell
ingandthereforeunabletodevotehi sti
mef orhis
wife.Atonet i
mehewasawayf or25day stouronl
yt oretur
nf oradayandagai ngof or10
dayst our.Thi ssit
uati
onledtodi f
fer
encesi nhismar ri
edlif
e,turni
ngtoseri
ousnot e.Onc ehe
t
ookhi swi f
eal ongwi t
hhimt otourandf oundthatheandhi swifecouldstayinhot elwithi
n
t
he per mi ssiblelimi
tsofhi slodging& boar di
ngal l
owanc e wit
h no extra burden on his
company .Thushewasawayf orwor kforagoodpar tofthedaybutc oul
ds pendt i
mewi thhis
wifei ntheeveni ngs.Thiss i
tuati
onwor kedoutper fectl
yforhims el
f& hiswi feandt hei
r
rel
ationsbecamegood.Ther eforehes tartedtaki
nghi swifealongwithhim onhi stours.Isit
ethicalont hepar tofAmit.

07/
26/
12

11
BusinessEt hics-Signif
icance
•Goodbusi nessethicspr omot esgoodbus i
ness•Goodbus i
nesset hicsalway sleadst o
posi
tivec onsequences•Goodet hi
calbehaviorwi l
lincreasegoodwi llofbothbus i
nessaswel l
asthebus i
nes sman.Ifthebusi nessimagei st arnishedi twouldhav eadi rectconsequenc es
ons ales,profit
s,morale&dayt odayf unct
ioningoft hebus i
ness•GoodB.et hicsprotec t
s
boths idesoft hebusiness•Goodet hicspromot ess elfsati
sfact
ion,ment alrel
ief
,freefrom
anxi
et y•GoodB.et hicsencour ages&mot ivat
esot her
st ofol
lowands etsexampl e•GoodB.
ethi
csbr eedssuccess•GoodB.et hi
c shasus her edinaner aofNewManagementt hathas
l
aiddowna‘ codeofconduct ’basedongoodet hical pr
ac t
ices

07/
26/
12

12
ConceptofNewEthics
•Neweconomyhasbr oughti
ngreat
ert
ranspar
enc y/fl
exibil
i
tybutalsogreat
ercomplex i
ty&
r
isks•Thishasresult
edinachangeintheethi
caldimens ionbyr ai
si
ngnewet hi
calissues•
Vari
eddimensionoft henew economylikeglobali
zat
ion,t echnol
ogy,asset
s,framewor k,
r
ecrui
ti
ng&t al
entr
etenti
onhasleadt
otheneedf oranewdef i
ni
tionofet
hic

07/
26/
12

13
ConceptofNewEt hi
cs–EthicalDimension
•Agoodcodeofconductshoul dincl
udec ert
ainmanagerial&employeeguideli
nef
ormak ing
ethi
caldeci
sions.•Atypi
calcodeofet hi
cswoul dincl
ude
–––––––Donotuseabusi vel anguageManageper sonalf
inancewellDemons t
rate
court
es y,r
espect,hones t
y& f ai
rness Ex hi
bitgood at t
endance Conductbusinessi n
compli
ance wi t
hlaw Foll
ow al laccounti
ng rules& controlMaket r
ue clai
msin product
advert
isements

07/
26/
12

14
Conc eptofNewEt hi cs–Et hi calDimens i
on
•Gl obal i
zati
on:Gr owi ngi ntegr at
ionofec onomi es&s oc iet
iesar oundt hewor l
dhasl eadt o
global i
zati
on – f as ter c ommuni cat i
on, i mprov ed i nfrastr
uc ture, t echnology ,c hanged
regul ations,free trade & f ree mov ementofpeopl e.Et hics,mor al
it
y& gl obali
z ati
on ar e
connec t
ed wi t
h each ot her.•Tec hnology :ist he dr ivi
ng for ce hel ping bus i
nes sf ace
chal lenges oft oday '
sc ompet i
ti
ve bus iness env ir
onment .Al lf uncti
onalar eas oft he
organi zati
on–mar keting,finance,HR,manuf acturing,ar ebei ngf acil
it
atedbyt ec hnology•
Intangi bleassets:Ev erythi
ngt hatcanbec ounteddoesnotnec es sar i
l
yc ount;every thi
ngt hat
count sc annotbenecessar il
ycount ed. .
..AlbertEi ns t
ein.Al lintangi bleass etsl
ikec ustomer,
i
nt ellectualproperty,empl oy ee,leader ship,c ul
ture,s t
rat egy,br and,i nnov ati
on,k nowl edge,
aref utureor i
enteds otheycr eatef uturev alue.Int angi bleas set sar edi f
ficul
ttomanage&
cont rol andhenc er isky.Intangi bl
esc annotbedi rec tl
ymeas ured.
07/ 26/ 1215
Conc eptofNewEt hi
cs–Et hicalDimens i
on
Warf orTalent:•Thi sisacr i
ti
caldri
verf orcorpor ateper f
ormance.Goodt alentmanagement
i
sr equir
edf orhotec onomi ctimes.•Tal ented,s ki
ll
ed,k nowledgeablepeopl ewithi nnovati
ve
i
deasar eamongstt hemos tvaluableintangibleas setsofac ompany .Rec r
uitment,s el
ecti
on,
aswel lasr etai
ningtalentedpeopl eisabi gchallenget ocompaniest oday.•Manyc ompanies
off
erat t
ractivefi
nanc ialincenti
vest orec rui
t/ret aint al
ent.Howev erthesear einadequat e.•
Compani eswhodoabet terjobofaddr essingt heneedsoft heGenx ’
erswi l
lbet hemos t
successfulint hi
swarf ortalent.Someoft hes tepsr equir
edtoaddr essthiswarf ort al
entare
–Di scovert heneeds/ wantsoft hetalent edpeopl e–Of feragoodpac kagei nlinewi ththe
compet i
ti
on–As sessmentofgapsbas edonex pectat i
onsofemploy ees/r eali
t
ies–Addr ess
t
her ootc auseonwhypeopl ewantt oleav etheor ganizati
on–Heal thywor klif
ebal ance

07/
26/
12

16
Conc eptofNewEthics–Et hicalDimens ion
Fac t
orsCausingUnethicalbehavior•Compet iti
on•Hi ghex pectat
ionofthes takeholdersof
t
hebusi nes sl
ikeshareholders,empl oyees,c ust
omerset c•Ambi guouss i
tuati
onsc r
eates
ethic
aldilemmaleadingthemanagert otakedec i
si
ononanal ter
nati
vewhi chgi veshigher
retur
natt hecostoflosi
ngi ntegri
ty.•Pol i
ti
calcorr
upti
on•Soc i
alval
ues&c us t
omsar enot
f
ollowedbyt henewgener ation•Money&s uccessbec omest heimportantmot i
vat
orbehi nd
anyact i
vi
ty•Peopl
enegl ecti
ngsoci al
r esponsi
bil
it
y,int
egrit
y&di sci
pli
ne
07/26/1217
Conc eptofNewEt hics–Ethi
calDi
mens i
on
Unethicalconduct•Encour agecorr
uptpract
ices•Fal
ser
epresent
ati
onsofreturns&income
stat
ement s•Expl oitat
ionofscar
cenaturalresour
ces•I
gnori
ngs oci
ali
nter
es t•Unhealt
hy
compet i
ti
on •Politicaldonati
ons•Ex pl
oit
ati
on ofcommon consumer•I l
legaltr
ade wit
h
enemycount ry
07/26/1218
Conc eptofNewEt hics–EthicalDimension
Factorsforbuil
dinganEt hicalInfr
ast
ructur
e•Commi tmentfr
om TopManagement :Ethical
behav i
orshouldbef ull
ysupportedbyt opmanagementbys ett
ingexampl
es.•Setti
ngupof
anet hi
cscommi tt
ee:whichlooksinto
– – – – – – Hol ding meetings to discuss et
hicali
ssues Deali
ng wit
h grey areas
Communi cati
ng/enforc
ingthecodeofc onducttoallemployeesTracki
ngviol
ati
onsoft he
codesRewar ds/puni shmentforcompl i
ance/v i
olat
i
onRepor t
ingtotopmanagementont he
ethi
csactivi
ti
es.

CodeofEthi
cs:•Toencourageet
hicalc
onduct,f
ormalcodesofethi
csarefr
amed•Ac odeof
et
hic
sstat
esanor gani
zat
ion’
sbasi
c&pr imar
y07/26/
1219v aluesandrul
esofconduct
Conc eptofNewEt hics–Et hi
calDimension
Communi cati
ngEt hics•Thebestet hicsprogr
am i sonewhi chi sc ommuni catedwel
land
easilyunder stood byal l•Both writ
ten and v er
balform ofc ommuni cati
on needst o be
adopt ed•Communi cat
i
onneedst oc l
ear& c rispwithoutanyambi guit
yEt hicsTr
aining:
Effecti
veet hicst r
ainingshouldhav e•Empl oyeepar t
ici
pati
ont oex changev iews•Clar i
fy
ethicalvalues&enhanceawar enessofethics•Def inec r
it
eri
aforet hi
caldecisionmaking•
Foc us on et hicali ssues ofthe organizat
ion •I nvesti
gate ethi
calenv ir
onmentoft he
organizati
on,anal ys i
s,s t
rat
egies,resources & goal s an upgr ade them 20 07/ 26/12
continuous l
y.
ConceptofNewEt
hics–Et
hicalDi
mensi
on

Response&Enf or
cement•I
mplementi
nganet hi
calpr
ogr
am i
soneofthebiggestchal
l
enges
f
oranor gani
zat
i
on•Rewardsystems,i
ncent
ives&penalt
iesf
orm apar
tofenf
orcement

07/
26/
12

21
Conc eptofNewEt hics–Et hi
calDimens ion
CaseSt udy3Anai rplanemanuf act
urerhass pentgr eatdealofmoneyt odev elopanew
st
ateoft hear tai
rplane.Thecompanyneedsc as hbadl yasi tisfi
nanc i
al
lyoverextended.I fi
t
doesnotgets omel argeor derssoon,i twi l
lhav et oc losedowns omepar tofit
soper at
ion.
Doingt hatwil
lputsever althousandwor kersoutofj ob.Ther esultwil
lbedisastr
ousnotonl y
f
ort hewor kersbutal sof orthetowni nwhi cht heyl i
ve.ThePr esi
dentofthec ompanyhas
beent ryi
ngt oinfl
uenc ethegover nmentofaf oreignc ountryinal argepurchase.Hel ear ns
t
hatoneoft hekeygov ernmentmi ni
steri nchar geofmak i
ngt hefinaldeci
sionisheav i
l
yi n
debtbec auseofgambl ing.Hequi etl
yc ontactsgt hemi nist
er&of f
ershim onemi l
li
onr upees
i
nc as hifheawar dst hecont ractf
or10pl anest ohi sf i
rm.Themoneyi spai
dandt hec ontract
i
sawar ded.07/26/1222Commentont heet hi
csi ss ueinvolvedinthaabov ecase
Val ues&Et hics
Val ue:Whatwechoos easwor t
hwhil
eorbel i
ev etohav emer iti
nagener alorbr oads ens e.
I
ss uesofr ightorwrongar er el
atedtoones‘ Values’.Valuesar et hes t
andar dsofr ight&
wr ong.Whet hersomethi
ngisrightorwrongisnotamat t
eroffact.I
tisamat terofopi ni
on.An
ac ti
onmaybeuphel dbysomeasr ightwhi l
eot hersmi ghthav eac ontraryv iew.Val ues
repr esent•A speci f
icmodeofconduc torends tateofex i
stencei sper sonall
yors oc i
ally
prefer abl
et o an opposit
e orconverse modeofc onductorend s t
ateofex istence……
StephenRobbi nsEdwar dSpr angerdefinesVal uesast hec onstellat
ionofl i
k es ,di
slikes,
viewpoi nts,innerincl
inat
ions,rati
onal/i rr
ati
onalj udgment s,prejudices,and as sociati
on
pat t
ernt hatdetermi
nesaper sonsviewoft hewor l
d.

07/
26/
12

23
Values&Et hics
Char acteri
sticsofVal ues•Val uestendt ober elati
v elystable&endur i
ng.As ignifi
c antporti
on
ofourval uesar eest abli
shedi nourear l
yy ear sf rom par ents,teac hers& ot hers•Val ues
cons t
it
utet hef oundat i
onofone’ sc harac t
er.Theyar et hec oreofourper sonal i
tyanda
power fulforceaf fecti
ng/i nfl
uencingbehav ior•Theyar eabs tr
ac trepresentationofwhat
peopl ebel i
eveasr i
ght,proper& wor thwhi l
et opur sue•Somev aluesar enotf ixed,but
changeovert i
me& si t
uati
on•Val ueshav ei ntens i
tyandc ontentat tr
ibut
esi nwhi chthe
contentat tr
ibutesayst hatamodeofc onductisimpor t
antandt hei ntensit
yat t
ributeex plai
ns
how i mpor t
ant•Val ueswhi ch arei nternal
ized byan i ndi vi
dual,bec omesa par tofhi s
personal i
t
y,t hengobey ondt hez oneofc hoi
c efort heper s onc oncerned.Hi sac tionsbas ed
ont heseval uest henbecomespont aneous&c ontinuous ,aut omaticandi nsti
nc t
ive.
07/26/1224
Values&Et hics
ValueFor mat ioni nSociety:Thevaluesinani ndivi
dualsvaluesyst
em areint
roducedand
l
aterr ei
nforcedoveral i
fetimeofex peri
enc es,parti
cul
arl
ydur i
nggrowi
nguporf ormative
years.Dur i
ngt hisper i
odthemaj ori
nfl
uenc esaref r
om 1.Fami l
yoneisbornint
o2.Sc hool/
educat i
onalinst i
tut
ionsonegoest hr
ough3.Rel igi
on4.Soc iety/communit
yonebel ongst o
Valuesar efost eredbyeachoft heabov einsti
tut
ions&t oget
herformtheval
ues yst
em ofthe
i
ndividual.

07/
26/
12

25
Values&Et hics
TypesofVal uesInstrumentValues:Thev alueswhichc oncernst hewayweappr oacht he
endst ates.Thes er elat
estomeansofac hievingt
hedes i
redr esult
s.Ex amplesare•Har d
work& achi evement•Educ at
ion& i ntel
l
ec t
ualpursuit
s•Sel fs uf
fi
ciency,independence•
Truthful
ness,hones ty•Assert
ivenes s-standingupf ory ourself•Bei ngwel lmanner ed&
courteoustowar dsot her
s•Open- mindednes s–opent onewi deas•Car ingtowardsothers
07/26/1226
Values&Et hics
TerminalVal ues:Theyar ethoseends t
ategoalsthatwepr ai
ses uchasc omf ort
ablelife,a
sense ofaccompl i
shment,equalit
yamongal lpeopl
e.Some oft hem are 1.Happi nes s;
sati
sfact
ioni nlife2.Peace& har monyi nthewor l
d3.Knowl edge& wisdom 4.Pr idei n
accompl i
shment5.Secur i
ty;fr
eedom from t
hreatEthi
calValueSy stem:Ev erythi
ngthatwe
see,hear ,say,imagi neordocanbedi vi
dedintotwomainc ategori
es1.Theways it
uations
are2.Thewaysi tuati
onsoughttobeHows it
uati
onsoughttobei swhatgivesr i
s etovalues .
Thesev aluesar enoteasyt omeasur eorexpressinwords.Ifwek nowthec ons equencesof
ourac ti
ons,wecanconv ertvaluesint
or ul
esofbehav i
orthatc anbedes c r
ibedaset hics.
07/26/1227Val ue+Knowl edge=Et hics
Values&Et hi
cs
Anyi ni
tiat
ionofacti
onbeginswi t
hani nventoryofv al
ues.Thesegetc onvertedtointenti
ons
f
oract ions,whi ch t
hen getar t
iculated as ac t
ualbehav i
or.Val ues Intenti
ons Behav i
or
Cons equencesOneoft heimportantles sonstolearni net
hicsistos eel i
feasi tis,wit
hout
ourper cepti
onsandatti
tudesdist
orti
ngi ttofiti
nwi t
hwhatwewantt osee.Al lofusreactnot
t
or eali
tyitsel
f,buttoourowni nterpretat
ionofr eali
ty.Ourbehaviorisaf f
ec t
edbynotbya
part
icularsit
uati
on,butbyhowwes eeandwhatwes eei
nthats i
tuati
on.Whenwedes cri
be
t
hewor ldaroundusorpeoplei nit
,wei neffectdescri
beourselv
es,ourper c epti
on,atti
t
udes ,
ourmor ali
tyandourethi
calvalue07/ 26/1228s yst
em
Values&Et hics
Ethics& Val ueMaxi mi
zati
onWhenet hi
cs& v al
uesaret akentogether
,wes houlddothe
analysisofethicsinrel
ati
ontovaluemax i
mizati
ontofi
ndoutt hevaluesofethi
csforpeopl
e
working in any organi
zati
on Ethi
cs& Tr ustTrusti
sone oft he mos ti
mportantethi
cal
compl ements,theyarecompatibl
ewit
heac hotheraset
hicalbehavi
orleadst
ot r
ust
Ethicalbehaviorofemployees
07/26/12

Bui
l
dtr
ustamongempl
oyees

Hi
gherpr
oduct
ivi
t
yoft
heor
gani
zat
ion

29
Et
hicsi
nOr
gani
zat
ionDevel
opmentofEt
hicalCor
por
ateBehavi
or

Empl
oyeest
owar
dsOr
gani
zat
i
on

Or
gani
zat
iont
owar
dsEmpl
oyees

Et
hicsDomai
n

Organi
zat
iont
owar
dsot
herEconomi
c
07/26/
12

I
nst
it
uti
on

30
EthicsinOr gani
zationDev el
opmentofEt hi
calCor por
at eBehav i
or•Or gani
zati
ontowar ds
employees:I tcoversar easofwages& wor ki
ngc onditi
ons,hir
ing& f ir
ingandempl oyee
pri
vac y•Empl oyeet owar dsor ganizat
ion:Cov ershow empl oyeest reattheorganizati
on.
Whet heremployeesmai nt
ainhonest y&c onfi
denti
ali
tywi t
hregardtoc ompanymat ter
swhen
deali
ngwi t
houtsiders•Or ganizat
iontowardsot herec onomicinst
itut
ions:Dealswithhow
organizat
ionstr
eatsot herinsti
tuti
onslikeshareholders,suppli
ers,customers,competi
tion&
dealers

07/
26/
12

31
EthicsinOr ganizati
onDevel opmentofEt hi
c alCorporateBehav i
or
1.Met hodsf orDev elopingEt hi
calCorporateBehav i
orEt hicst r
aining:Toac hievec orporate
excell
enceacr osst heor ganizati
onc overi
ngal lfunc t
ions .Manyc ompani eshav es t
arted
regul
aret hicst r
aining.Car ef
ull
ydes i
gnedet hicstraini
ngpr ogrammec anmak eapos it
ive
contri
buti
on.Et hicst raini
nghasal onglasti
ngef f
ectunlikeot hert rainingpr ogrammes .Some
oftheobj ecti
vesaddr essedthroughtheet hic
st r
aini
ngpr ogr ammesar eCr eatesawar enes s
ofcompani eset hicalpol i
ciesHowt oapply&wher etoappl yet hi
calpr inci
plesonadayt oday
basisCover sallint heor ganizat
ionwithsimulatedcas es t
udi esbas edonac t
ualev entsint he
company

a)b)c)

07/
26/
12

32
EthicsinOrgani
zati
onDevel opmentofEt hi
cal Corporat
eBehav ior
2.Codeofet hi
cs:Thi sr ef
lect
stheor ganizati
onspr i
maryv alues,norms ,beli
efs&et hi
cal
rulesofoperati
ons.Gener allyf
ramedtoenc ourageet hi
calbehav iordul ysupportedbyt op
management .Whenmanagi ngcomplexi ssues,hav i
ngac odeofet hicshelpsinc onti
nued
dialogue & ref
lect
ion around ethi
calv alues pr oduces ethicals ensit
ivi
ty& c ons ensus.
Cont i
nuousfeedback,review,modif
icat
ion&updat i
onneedst obedone.Eac hfuncti
onc an
havei tsowncodeofethicslikef
orMar k
et i
ng,Pur chasi
ng,Des ign,Ac counts&manuf ac t
uri
ng

07/
26/
12

33
EthicsinOr ganizat
ionDevelopmentofEthicalCorpor
ateBehav i
or
3.Or ganizati
onalEt hi
csDev el
opmentSy st
em ( OEDS)Thi sinvol
vesDev el
opmentofet hics
poli
cyhandwor k&manualf orsel
f•governanceandi ntegr
it
y.Topmanagementc ommi
tment
which i s veryi mpor t
antt o • cor
porate ethicss houl
d be ef f
ect
ivel
yc ommuni cated.
Ass essmentofongoi ng i
mprovements ofet hi
cs ••Sound et hi
csr eport
ing & confli
ct
resoluti
onpr ocessf ornon-compl
iance•As s
es smentofindivi
dual/organi
zation’si
ntegri
ty
system

07/
26/
12

34
Ethi
csinOr ganizationDevelopmentofEthicalCorporat
eBehavi
or
4.EthicsCommi t
tee:Formationofanethicscommi tt
eeisanewc oncept.Someofthes ali
ent
f
eaturesare
a)b)c)d)e)f )Per i
odicalassessmentFr equentmeet i
ngsaboutet hic
ali
ssuesPr oper
communi cati
onaboutc odeofet hicsfrom topt obot t
om Est
abli
shr eward& punishment
syst
em Enf or
cingt hecodesTi mel
yreporti
ngtoBOD’ s

07/
26/
12

35
EthicsinOr ganizat
ionDevel opmentofEt hi
calCor porateBehav ior
5.EthicsAdvocat e:Anet hi
csspecial
istorof f
icerisamemberoft heBoardofDi rect
orswho
pl
aysakeyr oletogui deet hi
calconduc t&agoodandwi dec ontri
buti
oninboar d’sdec i
sion
mak i
ng.Hes howst hecor rectpathtotheboar dmember saswel lasotherdecisi
onmak ersin
t
hel i
ghtofet hi
cs.IntegrateEt hi
calConc epts:Seni orlevelexec uti
veshav erespons i
bil
it
yt o
apply&i ntegrateethicalconceptindayt odayac t
ions.Theyhav et obuil
dak indofs t
ructure
t
hats upports ethi
c albehavi orlike properi nformation to new empl oyees aboutet hics
st
andar ds,annualper for
manc eappraisals,ethicalguidanceandv eryimpor t
ants yst
em of
i
nternalwhi stle bl
owi ng which mak es highermanagementawar e ofv iol
ati
ons int i
me.
Chec kl
istMet hod:Byusi ngacheck l
i
s t
,empl oy eesc anav oi
ds it
uati
onswher einpeopl edo
unethicalbehav i
or&j usti
fyitassayingthati t
snoti l
legal
07/26/1236

6.

7.
EthicsinOr gani
zat
ionDevel opmentofEt hical Corpor ateBehavior
7.Rewar ds&Puni shmentsys tem : Mot i
vati
onhasagr eatimpactonempl oyeesbehav ior.So
t
hebestwayt ogetpeopl eonet hicalpathi ses t
abl i
shmentofaf ai
rrewards yst
em.Sowhen
peoplebehavei nanunet hicalmanner ,t heydoi tf ors omehi ddenr ewards.Henc et he
organizat
ionmus tdevelopasy stem t orewar det hicalbehavior&puni shunethicalbehav i
or.
Thiswi l
lmot i
vat
epeopl etoc onductt hems elveset hi
c all
y.8.Whistl
eBlowing:Whi st
leblowing
i
swhenanempl oyeet ell
st heempl oyer,whoi sbr eaki
ngt helaw.Thiswasf ir
stusedf or
Gover nmentempl oyeeswhomadec omplaintst opubl i
caboutc orr
upti
on.Inat rues ens e
whistl
ebl owinginvolvestell
ingsomebodyout si
det hec ompanyaboutt heil
legalactivi
ti
es
beingc ar
riedoutwithinthecompany .
07/26/1237
Et
hicsi
nOr
gani
zat
ionDevel
opmentofEt
hicalCor
por
ateBehavi
or

Whi
stl
eBl
owi
ng

Repor
tst
heunet
hicalbehavi
ort
ohi
gheraut
hor
it
iesi
nthesameor
gani
zat
i
on

I
nter
nal

Exter
nalRepor t
saboutunet
hic
albehavi
ort
oext
ernalagenci
esl
i
kemedi
a,newspaperor
publi
cint
erestgr
oups
38

07/
26/
12
Ethi
csinOrgani
zati
onDevelopmentofEt hi
calCorpor
ateBehavi
or
10.OtherGuidel
ines:Es t
ablishaudi
tagencyreport
ingtooutsi
dedi
rect
ors•‘Pract
ic
ewhat
youpreach’–shouldbefoll
owedbyt he•leader
shipteam Sur
pri
se&unpredi
ct
ableaudits••
Ethi
csmustbeeval uat
edforlong-
termimpactontheindi
vi
dualaswel
lastheorgani
zati
on

07/
26/
12

39
Ethi
c sinOrganizat i
onDevel opmentofEt hi
c al Cor
porateBehav ior
Ac ompany ‘ X’l i
sted on NSE suppl i
es c omponent st oc ompany ‘ Y’.Y mar ketst he
component sinthegl obalmar ket.Sincethec ompany‘ Y’hasas tandint heglobalcompet it
ive
market ,i
thassi gnedcer tainagreement swi thc ompany‘ X’whi c hs pecif
iesthatcompany‘ X’
wil
luse r aw mat eri
al sfrom wel lknown c ompanies‘ A’& ‘ B’.I nst
ead ofbuy i
ngt her aw
materialsfr
om ‘A’&‘ B’aspert heagr eement ,company‘ X’buy sf rom elsewherewi t
hbi l
ls&
cert
ifi
catesidenticalt o‘A’&‘ B’.Sur eshwhoi samanagerwi th‘ X’camet ok nowaboutt he
compani esunethi calpr acti
ceregardingpr i
ntedf akebill
s&c ert
if
icatespr ovi
dingsubs tandard
productstocompany‘ Y’Het ri
edt oex poset hefr
audi nternall
yandappr oachedt othehead
oftheDept t.Ast herewasl i
tt
leprotecti
ont owhi stl
ebl ower s,Sur eshhasbeenf i
redbyhi s
boss.Buthedi dnotgi veupt hateas ily.Heappr oac hedt oanex ternalagenc y‘ POLO’
servi
cest oex poset hef raud.Ast hepr oofoft hemisc hief,hes howedt hefakebill
s&t est
cert
ifi
catesincl
udi ngt heinvoicefrom wher et heywerepr inted.

07/
26/
12

40
EthicsinOr ganizationDevelopmentofEt hi
c alCorpor ateBehav ior
Some exper tsf rom POLO ser vi
ces approac hed c ompany A.The CEO ofc ompany A
scruti
nizedthebi llsandconf i
rmedthattheywer efak e.Af t
erthisSur eshwit
hper sonnelfrom
POLO v isi
t
edcompanyY andconv i
ncedc ompanyY’ stopmanagementaboutt hef raud.
CompanyY s etupac ommitteetogot hrought heent i
rec asei ndetail
.Onemont hl ater
Sures hagainappr oachedc ompanyYt ofi
ndt hepr ogres softhec asebecauseofwhi c hhe
hadl osthisjob.Het al
kedtot heCEO oft hec ompanyandwasv er
ymuc hdisappointedt o
seet hatthecasewasal lover.TheCEOt r
iedt omak eupt hethingsbymer elysayingthatas
f
arasQual i
tywasc oncer
nedt heyfoundev erythi
ngper fectl
yalrightandasc ompanyXwas
f
ac i
ngsomepr oblemsofexci seev asi
on,law woul dt akei t
sduec our
se.Sureshr egretted
aboutcompanyY’ sresponseandwasv er yc onfus edaboutwhynoac t
ionwasi nit
iated
againstthepr ovenf raud.Li
styourcomment sont hec as e
07/26/1241
EthicalLeadership
Leader shi
p:Theabi l
i
tyt oinfluenceagr ouptowar dstheac hievementofgoal s.Leader s hip
pl
aysas i
gnif
icantrolet owardsgoalat t
ainment .Leadershipisdi ff
erentfrom Management .
GoodManagementbr i
ngsaboutor der&c onsi
stencybydrawi ngupf ormalplans,des i
gning&
moni t
oring r
esultsagai nstpl ans.Leader shi
p deal swithc opingwi thchange.Leader s hip
developsa v i
sion oft he future,al i
gn people byc ommuni cat
ing thisv i
sion & mot i
v ate,
i
ns pir
ingthem t oov ercomehur dl
es .Leadersi nthe21s tcenturyar ef aci
ngac onfl
icti
ng
si
tuationwher eont heones idet hereisapr es suretoshow ex c el
lentresultsbyex ploiti
ng
oppor t
unit
iestak i
ngintoaccountnew ec onomy ,andont heot hers idetherei spressuret o
di
s chargesocialresponsibil
i
ties,respondt ogrowingex pectat
ionsf r
om c ust
omer s.
07/26/1242
EthicalLeadershi
p
Tooper ateabusi nesscompani esneedt ohavesoci
alapproval&ani mpl
ici
tli
censefr
om a
numberofst akeholders.Thissoci
alapprovaldemandsfr
om l eader
s& thei
rc ompani
esto
f
ollowpr ocesseswhi chareconsi
stentwit
hethi
cal&moralvalues.
Customer sIndustr
yr eputat
ionEmployeesPoli
ti
csSuppl
i
ers

Publ
i
cOpi
nionLaw

Company

I
nves
tor
s

Compet
it
orsI
ndust
ri
es&Mk
tSt
d

07/
26/
12

43
EthicalLeadershi p
Leader shi
p – Et hi
cs & Val ues:•Leader s who ar e abl etok eep a bal ance between
entrepreneuri
alsk i
l
ls&c orporateci
tizenshiparet heef fect
iveleadersoft henewec onomy•
Effecti
vel eadershipi saboutl ayi
ngt hef oundationsf ort heef f
ic
ient& et hicalconductof
business•Longt erm survi
valaswel lasgr owths tart
sf r
om et hi
call eadership•I nt
egrati
ng
ethicsintotheor ganizati
onneedst rueef fecti
veleader s•Or ganizati
onmi ssi
on&obj ec t
ives
canber efl
ectedbyt hei
rvisi
on•Tot ak eanor ganiz at
ionont heex cellencepat h,ablendof
str
ategic& cul turei srequir
edwhi chc anbeac hiev edbyef fect
ivel eader ship•St r
ategic
t
hink i
ng& cul t
uralbui l
dingcan be ac hi
eved bya l eader '
smor alpr inci
ples& integri
ty•
Leader shi
p mak esr ealdif
ference betweens ucces s& f ail
ure,whet herinwar ,busines s,
sports,famil
y&soci ety

07/
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12

44
EthicalLeader ship
Establi
shAnEt hicalFramewor k:TheCo- operat
iveBank ,UKaimst odel i
verv aluetoallits
Partnersinabal ancedf ashi
onovert i
me,wher evalueisdefi
nedbypar tners&nott heBank .
I
n2000,t heBankpr oducedapr e-t
axpr ofi
tof90. 3mi l
li
onpounds ,ani ncreaseof9%
compar edt o1999.Theaf t
ertaxr eturnonequi t
ywas22%.Theout st
andingc ommi t
mentof
t
he s taffwas t he single mosti mportantreason forthe success.In ever ys taf
fs ur
vey
conduc teditwasf oundt hatextraordinarylevel
sofpr i
deintheBankast heleadingpr omoter
ofethicalbusinesspr acti
ce.Mer vynPedel t
y,CEO
07/26/1245
EthicalLeader ship
The exampl ei nt he previoussl i
de clearl
ys tatesthatet hi
calframewor kwhi cht akesan
i
nc l
us i
veappr oachst art
swi th“Leader shi
pPhi l
osophy“ .Thei nt
erpr et
at i
onofet hicalval ue
system may var yf ordi ff
erentor ganizat
ions.I ti
sf armor eimpor t
antt hatv al
ues ar e
acceptabl etoempl oyeesr atherthanbei ngenforcedbyt opmanagement .Ther eforeitisqui t
e
i
mpor tantt hattoplevelmanagement&l eadersdemons trat
ethev aluest heypr each.Leader s
haveani mpor tantrol
et oes t
abli
sht hec ult
ureinwhichet hi
calbehav i
orc anbenour i
shed.By
sett
ingcl earlythepur poses&val ues,ac hi
ev i
nguniversali
tyi
ndi versity,identifyi
ngs uc ces s,
measur ing per f
ormance obj ecti
vely and pr ovi
ding appr opr
iate r ewar ds & f urther
communi catingwithal lstakehol
der s,leadersc ancontri
buteef f
ectivelyi nthes etofet hic al
i
nfrastructure.

07/
26/
12

46
EthicalLeader
ship
Toshow how al eadercani nfl
uencehi sfol
lower stof oll
ow et hics,her eisagoodex ampl e
aboutIBM.Asear lyas1961,Ic ir
culatedas tandar dofet hicsaboutwhatourpeopl ec ould&
couldnotdo.Thes ewer erulesagains tbare-Knuc kles el
li
ngpr acti
c es,suchasdi sparaging
othercompaniespr oductsorleaki
ngi nformationaboutmac hineswehadn’ tyetannounc edi n
ordert o bl
ocka compet i
torfrom mak ing sal e.Per hapst he mos timportant
,It oldthe
salesmant hati
nf ight
ingfororders,theyhadt os how as enseoff airplay.Tom Wal t
onJ r
,
PresidentIBM Mr .Wal t
on's1961not et osal es mani nc l
udest hewor ds‘Turnt hes it
uati
on
around.Suppos et hatyouwer eaCompet i
tor–s mal l,prec ari
ous l
yf inanced,wi t
houtl arge
supportorganizat
ionandwi t
houtabi gr eputationi nt hef ield,butwi thagoodpr oduc t
.How
wouldy oufeeli
tifthebigIBM companyt ookt heac ti
onwhi c hyoupr opos etotake’

07/
26/
12

47
Ethi
calDeci
si
onMak i
ng
Thev er
yspeedofchangeint
roducesanewel ementint
omanagement
,for
cingmanager
sto
makemor e&mor edeci
si
onsatafasterpace.‘
Alvi
nToff
ler
’
ManagementPlanni
ngOrgani
zingLeadingContr
oll
ing

Deci
si
onMaki
ng

Goal
s&Achi
evement
s

07/
26/
12

48
EthicalDecisi
onMak i
ng
Ethicaldecisi
onmakingisaverycomplex&di f
ficul
ttask.Therecannotbeas i
ngl
es tandard
orpr ocesswhichc anbefol
lowedbyallper
sonsi nt heorgani
zati
on.Peopl
ewhowor kinan
or
gani zati
onar ethemoralagent
s.Theymak ec ol
lecti
vedec i
si
onsandac tonthem.They
f
ollowc ert
ainruleswhi
chareexpli
ci
t/impl
ici
t,codesofc onduct&regul
ati
ons.Act
ionsbas ed
ont hefoll
owedbehaviorcanbesubject
edtoethicalapprai
sals.

07/
26/
12

49
Et
hicalDecisi
onMak i
ngStruct
ureofEt
hic
alDeci
si
onMaki
ng
I
denti
fyproblem Gener
atealt
ernat
esol
uti
ons

Eval
uat
eal
ter
nat
ivesusi
ngcost
benef
itappr
oach

Sel
ectt
hebests
olut
ion

I
mpl
ementt
hechosensol
uti
on

07/
26/
12

50
Ethi
cal Dec i
si
onMak ing
How toUs eEthicalReasoning:1.Ut il
it
arianCr i
ter
ia:Thisi sus edt oprovidet hegr eat
est
goodf orthegreat estnumberwhi chisgui dedbyt hev al
ue‘UTI LITY’.Decisi
onsar emadeon
thebasi sofout comesorconsequenc es.Itat t
emptst omak eet hi
calevaluationpr eci
seby
aggregatingthehappi nessofeveryoneaf fectedanddeduc t
ingt hei
runhappi ness .Tobeon
the safersi de deci sion makersc hoos e ut i
l
it
ari
an c r
it
eri
af ori mport
antdec i
sions l
ike
‘
termination’
,closingdownpl ants,l
ayingof flargenumberofempl oyees,r
aisingpr icesinthe
bestinterestoftheor gani
zat
ion.Manypeopl ehav ec ont
radict
or yviewsandt heyar guethat
theper specti
veneedst ochange.Henc es omemor ec r
it
eri
ahasbeendev elopedt oguide
decisi
onmak ersusingnon- ut
il
it
ari
anc ri
teria

07/
26/
12

51
Ethical Dec i
si
onMak i
ng
2.Ri ghtsCr i
teri
a:Deci sionmak ingbas edonRi ghtsDec i
si
onwhi chisc onsi
s t
entwi ththe
fundament alrightsandl ibert
iesasl ai
ddowni nt hec onsti
tutionl i
ket herightt os peech
Exampl e:Aswhi stlebl owi ngist helatestphenomenonoc cur r
ingint hemoder nc orpor
ate
wor l
doft he21stcent ury.Soi fdecisi
onmak ersus er i
ghtscriteri
a,agoodpr otectioncanbe
givent othewhi s
tleblower swhent heybl owt hewhi st
leagai nstwr ongdoer s3.Di st
ri
buti
ve
Jus t
iceCr i
ter
ia: Thiset hicalreasonings eesj usticev alueasamos tli
kelyoutc omeofan
ethicalprocessofdeci sionmaki ng.Thees senti
alf eatureoft hisc onceptisTrans parency&
ful
lpar ti
cipati
onoft hoseaf fec
ted.Thisr equi
resi ndiv i
dualstoi mpos e&enf orcer ulesfai
rl
y&
i
mpar t
iall
ysot hereisequaldi str
ibut
ionof07/ 26/1252benef i
ts&c osts
EthicalDeci
sionMak i
ng
4.SocialCont r
actCri
ter
ia:I tsuggeststhatempiri
cal&normati
ve–whatisandwhatoughtt o
bemus tbecombined.Itintegratestwoc ontr
acts
a)b)Gener alsocialcontractamongec onomicpart
ici
pant
sthatdefi
nest
hegroundrul
esf or
doingbusinessAmor especi f
iccontractamongs peci
fi
cmember sofacommunit
ythatcovers
acceptablewaysofbehavi or

Studies haves hown t hatUt i

li
tari
an i sc onsistentwi t
h obj ec t
ives such as ef fi
cienc y,
producti
vit
y&hi ghpr ofi
ts.Butbecaus eoft hec hangingwor ldofmanagement ,thisopinion,
perspecti
veshoul dalsobechanged.New s oci
etydemandst of oll
ow non-uti
li
tari
anc r
iteria,
manager smustf ixsomeet hicalstandards.Commonl yac ceptedv i
rtuessuchashappi nes s,
l
awf ul
ness,consistency,int
egri
ty,&l oyalt
ymaybei ns peci
fics i
tuationsconfl
ictoneanot her .
Thusmanager st ypical
lyfacemor aldi l
emmasi ntheirdecisionmak ing.Thet woappr oac hes
t
omor alquest
ionsar ea)Nat uralLaw:Thi sappr oachc onsiderst hatc er
tai
nul t
imatev alues
are mat t
ersofnat urallaw.Undert hi
sv iew,c er t
ain act
ionsar e alwayswr ong07/ 26/ 12
becaus etheybreaks omebasi cintui
tivelaw.53
Ethi
calDeci
sionMaki
ngb)Si tuat
ionall
aw:Todet er
minethatanac ti
onisrightorwr ong,it
t
otall
ydependsonthesituat
ioninwhi chtheacti
onoc cur
s.Thisview hol
dst hatanac t
ion
underonesetofcir
cumstancesandoneenv ir
onmentwoul dber i
ght.Whereast hes ame
acti
onunderanot
hersetofcircumstancesandinanotherenvi
ronmentwouldbec onsi
der ed
wrong.Deci
si
onMaking

Ends

Means

Mot
i
ves

For
eseeabl
eOut
comes

07/
26/
12

54
Ethi
calDeci
si
onMak i
ng
Ethi
cal&unet hi
calact
ionsarelar
gelyafunct
ionofbot
htheindi
vi
dual’
scharact
eri
s t
icsand
t
he envir
onmenti n which he Works.The f
oll
owi
ng modelexpl
ainsthe et
hical
/unethi
cal
deci
sionmakingbehavior.

Mor
alDevel
opment

Or
gani
zat
ionEnvi
ronment

Locusofcont
rol

Et
hical
/unet
hicaldeci
si
onmak
ingbehavi
or07/
26/
1255
Ethical Deci
sionMak i
ng
Mor alDevelopment:Gener albeli
efi
sthataper s
onsv aluesar eformeddur i
nghisc hi
ldhood
anddonotchangesubsequent ly.Theabil
it
ytodealwi t
hmor ali
ssuesdev elopsast heymov e
t
hr ought heirli
ves.Thepr ocessofex amini
ngonesmor als t
andardsandappl yi
ngt hem to
conc retesit
uati
onsi ncludest wopar t
s1.Aper sonsabi l
itytous eandev aluatehis/hermor al
standar ds,whichdevel opsinthecour seofaper son’
slife.2.Reas oni
ngpr ocessesthrough
whi ch these mor alst andards are employed and ev aluated.The highes tone’ s mor al
developmenti s,thel essdependenthei sonoutsideinfl
uenc e.Example:Manager swithhigh
mor al devel
opmentpl aceincreasedvaluesonther i
ghtsofot hersandregar dl
essofmaj ori
ty’s
opinion.Theyar elikel ytochallengeorgani
zati
onpr act
iceswhi chtheybelieveareper sonally
wrong.
07/26/ 1256
Ethical DecisionMak i
ng
Organi zati
onEnvi ronment
:Whet hert hewor k/organizati
onet hicsali
gnwi t
hpersonalethics.
Doest heor gani
zati
onsupport/enc ourageet hi
calbehav i
orbyr ewardingitordiscourage
unethic albehaviorbypuni
shingit.Ani ndivi
dualwi thhi ghethi
c albehaviorgetsdemotivat
edi f
t
heor ganizat i
ondoesnotr ecognizet hes ame.Thec onverse–anew c omerinanet hical
organiz ati
on,t hough notso et hicalper s onally,s l
owly moul ds i
nt he morall
ys t
rong
envir
onment .Locusofcont rol
:Loc usofc ontrolisaper sonalit
yt r
aitwhi chmeasurest he
extentt owhi chpeoplebel
i
evet heyar es el
frespons ibl
ef orthehappeni ngsandev entsintheir
l
if
e.
07/26/1257
EthicalDecisi
onMaking
LocusofCont rol
I
nternalEx t
ernalMeani
ng–believeswhathappensMeaning–bel i
evesthatwhattot hem in
l
if
ei sf ul
l
ybecauseofhappenst othem isbecauseoft heirownac t
ionsl uckorc hance.
Cons equences–bel i
eveinConsequences–r el
yonex ternalthemsel
v es;fol
l
ow theirown
i
nfluence,lessli
kel
ytotakei
nternalst
andardsofri
ght/wr ongresponsi
bil
i
tiestoguidetheir
behav i
or

07/
26/
12

58
Ethic al Dec i
si
onMak ing
Probl emsi nEt hic
alDeci sionMaking1.Duet ogl obali
zation,asc ompani esdealwi thot her
count rieswher ecros scultur
edi v
ersityissuear i
se.Manager swor k i
ngi nMNC’ sf i
ndi tv er y
dif
ficul ttos t
andardizeethicalst
andar dsast heydoc hangeass ocietyc hanges2.Somet i
mes
deci sionmaker sdonotf ol
lowwhatt heymus tfollowast heyhav ec onfl
ictinindividualv alues
vs.or ganizati
onalgoal s.3.Indi
vidualmor als t
andar dsaffec twhol eor ganizationdec i
si
onsi f
t
heyar emor all
ystrong,et hi
caldecisionswoul dbet heout come4.I fthedec isi
onmak ers/
manager s/pol i
cymaker sar egreedy,lookf ors hortcutroutest oear ninthes hort
es tpos sible
t
ime,t heyhaveanupperhandont hemor alv aluesandt hereforeet hi
callythedec i
s i
on
proc es swoul dbec orr
upt.5.Compet it
ivepr essurewoul dal sobeoneoft hemai nc aus es
whichf orcesdeci si
onmaker stochoos es uchpat hwher et heyhav et ok il
ltheirmor al s,
valuesandmoveonunet hi
calpathj usttoc opewi t
ht hec ompet it
ion.6.Poordec isions
withoutdeept hinki
ngofconsequenc es7.Ambi guouss it
uationsc reatepr oblem whi c hputt he
manageri ndi l
emmaast owhichdec isiontheys houldmak e&f ol
low8.07/ 26/ 12Pr essur eof
budgets ystems59
Ethi
calDecisi
onMaki
ng
Guidel
inesforManagerforEthicalDec i
si
onMak i
ng1.Hav eindi
vi
dualc odesofc onduct
(per
sonalcodeofet
hics–moral,right&ethi
cal
)2.Indust
ri
alcodesofet
hics-listofDoNot’
s
/Do’s
a)b)c)d)Nondecepti
vead'sFairdeali
ngwithcust
omersSafetymeasur
esQual itypr
oduct
s

3.4.5.

Professi
onalmanagerswhoaremoreethi
caldonotgof orcompr
omisesSomet
imesGov t
.
rul
es,v al
ues&belief
sguidemanager
stofol
low et
hicspat
hindecisi
onmaki
ng.Corpor
ate
Codeofet hi
cs
07/26/1260
Ethi
calDi
lemmas
Ethi
calDi
lemmasi nOr
ganizat
i
onEthicaldi
lemmasaresi
tuat
ionswherebusi
nessmenface
l
otsofchoicesandnocl
earcutri
ghtanswer.Busi
nessmenfi
nddilemmasoutoftheet
ernal
confl
i
ctbetweenends& means.Ethicaldi
lemmasarecomplexjudgment
sont hebal
ance
betweent
heeconomicperf
ormance&thes oci
alper
for
mance

07/
26/
12

61
EthicalDi l
emmas
SalientFeat uresofEt hicalDi l
emmasUnc ertai
noutcomes :One cantbes ure aboutt he
cons equencest hat•r esul tfr
om mos tet hicalchoi
ces.Multi
pl
ec hoi
c esandal ternati
ves:
Thes ear es ituat
ionswher ewef i
nd•mor et hantwoalter
nateswhichhav etobec ons i
dered.
MixedCons equences:Et hicaldil
emmasi nmanagementwhens ol
ved,the•out comeoppos e
eachot her.Onedeci s
ionconsi deredasf avorablebyonepar t
yandunf avorablebyanot her
party.Exampl e–adeci si
ont oterminate10% oft heworkf
orce&incrementi nthes al
ari
esof
t
he r emaining 90% wor kf or
ce.Di rect
/Indirectinvol
vement:Ethi
caldi l
emmas ar e mor e
promi nent•when one i s directl
yi nvolved as againsta person who has an i ndi
rect
i
nv olvement .Ex ample-Whatdoyoudowheny ourbosswantsyoutomak efal
seTA/DAbi ll
s
andt ransfert hebenefi
tstohi m.

07/
26/
12

62
EthicalDi
lemmas
Approaches/Met hodforResolvingEthi
calDil
emmas.Therearenoeasyapproachesto
resol
v eethi
caldil
emmas.Ast hedegr eeofcompl
exi
tyincr
eas
es,theri
skt
oc hooseand
Applyt heapproaches& met hodswillbecomemore.Someoft heappr
oachesarelis
ted
below.
ApproachestoResol veEt
hicalDil
emmas

Ut
i
li
tar
ian(
End-
based)

Uni
ver
sal
i
sm (
Rul
e-based)

Car
e-based

Vi
rt
ueet
hics

07/
26/
12

63
Ethical Dil
emmas
1.Ut il
it
arian ( end-based)appr oach:Thi s was or i
ginat ed by the Br i
ti
sht hinkerJ eremy
Bent ham.I taimsatcr eati
ngt hegr eatestdegreeofbenef i
tsforthel argestnumberofpeopl e.
Acc ordingt ot hiss ystem,ahumanc onduc tiscons i
der edasgoodi fitresult
si nbenef i
tsfor
societyandbadi fitgenerateshar mt os ociet
y.2.Uni vers ali
sm( r
ule-bas ed):Thisisbas edon
thedut i
es& obl i
gat i
onsofani ndividual.Themor alwor thoni ndi vi
dualac t
ions houldbe
j
udgedbyt hei ntentionoft heper sonandnotbyt heout c omeoft heac ti
on.I tass umest hat
goodi ntentionsal waysr esultingoodout comes ,ulti
mat elyifnotimmedi ately.3.Car e-
bas ed
appr oac h:Youhavet oreservet hedi l
emmak eepinginmi ndthaty ouhav eobl i
gati
ont oc ar e
forthos ey ouhav eacl oser elations hiporwhoc aref oryou.Youmus tcaref orthem j ustt o
maint ainast rongbondi nrelationshi p.Buts omemenar guet hatthiswoul dc reatef avori
ti
s m
whilewor kingwi t
ht hoseyouhavev aluablerelat
ions hipaswel lasi tcandegener ateint o
unjus tfavor i
ti
sm &sacr if
iceofownneedst ocareforc hi l
dren,parent s,spous e&f r i
endswi th
whom y ouhaveacl oserelati
onshi p.07/ 26/1264
Et hicalDil
emmas
4.Vi rtueEt hi
cs:Vi r
tueethicscanber epr esentedasament alcons tr
uc t
ionwi thprudence..
Thi sment alconstr
uctionhastwocei lings–onei sc rownedbypr ivateprudenc eandt heother
bypubl icprudence.Ingeneralwes ayt hatwhenaper sonfoll
owsv i
rt
ueet hic s,t
hatmeans
whi leper f
orminganyact i
on,he/s hes houl ddevelopamor all
yv i
rt
uousc haracter.Methodsof
resol vi
ng ethicaldil
emmas:Et hicaldi lemmasoc curi n organi
z ati
onsi n di f
fer
entforms ,
f
r amewor kandst ructur
e.Henc eas ingleuni que/ standardmet hodc annotbeappl iedto
resol vethem.Eac hor gani
zati
onhasi t
sowns tr
ategies,plannedpr ocedur esf ordeali
ngwi t
h
ethical di
lemma.Someoft hemet hods/s tepsadoptedbydi f
ferentorganizationsare
07/ 26/1265
Ethi
c alDil
emmas
1.2.3.Def i
netheproblem andclearl
yrec ogni
zet hemor ali
ssueinitDeter
minewhowi llbe
aff
ec t
edbyt hedecisions?Whatwoul dbey ourr ole?Untiltheethi
caldil
emmasc anbe
reduc ed t
o common i ssueswhi ch ar
e manageabl e,itishar dtoresolvethem.Col lect
i
nformat i
on&f actsaboutt heprobl
em.I solat
ethei ll
egaliss
uesi nv
olvedintheproblem by
t
es t
ingrightver
suswr ong.Ident
if
yri
ghtv/sr i
ghtparadigm suchas
a.b.c.d.Just i
ce v/smer cyShor tter
m v /
sl ong ter
m Tr uthv/sloyal
tyIndi
vidualv /
s
communi t
y

4.5.

6.

Atthi
sst
ageyoucansel
ectanyoneappropr
iat
eapproachtor
esolvedi
l
emmal
i
ke
a.b.07/
26/
12c.d.Car
ebasedRulebasedEndbas edVirt
uebased

66
Ethical Dil
emmas
7.Fi ndouti ftherear eanyot herwayoutoft hesit
uat i
on8.Dec i
de&ac t–us eappr oac hthat
i
smostsui tableandt akeaction9.Rev iewt hedec i
sion.Plat
inum St andardofEt hics:Sc oft
Vent rell
apr ov i
dedapl ati
num standardofet hicsfordeal i
ngwi thet hi
caldilemmasasl i
sted
below.I .As ky ourself–whosepr obl
em iti s?Isitac as eofconf l
i
c t
inginter
es t
soraques ti
on
ofrightandf air
ness?Legal/ i
l
legalII
.Doest hedec isi
onac curatel
yr efl
ectsthek indofper son
youar e?Doesyourchar actermat chy ourdec i
si
on?Doy ouf oll
ow –Pr acti
c ewhaty ou
preac h?I I
I.Becar efulandawar eofwhatac ti
onsy ous howandt rytoimagi net hes ituat
ions
t
hati fallyourdeal s ,acti
ons,phonec all
sbei ngobs erved,recordedandf urt
herr eported,what
woul dbet heout comes?I V.Keepy ourwor ds–How f ir
mlyy ouf ulf
il
lyourc ommi t
ment ?V.
Devel op&s ustainintegrit
y–t hemos tpower fulval
uei sintegr
itywhi chis
a.b.c .d.e.Cour age( t
ell
i
ngthet rut
h)Sel fdisci
pli
neGoodnes s-hones ty,mor ali
ty,kindnes s,
f
airnes s,gener osit
y Cent eri
ng powerLi vi
ng by i nnert r
uth and i nnermi nd t or emain
i
nc orrupti
blei e.Letyourmi ndbegui dedbyc onsci
enc e67

07/
26/
12
EthicalDil
emmas
Cases tudyA:Ami t
hMi shra,GM (HR)f oramanuf acturi
ngfir
m ABC.Thef i
rmisunder goi
nga
majorc hangei ndirecti
on.Ther apidChangesi ni ndustr
iesaswel lasc ompetit
orsdy namic
poli
ciesandpl ans,put sabi gpr essureov ert hef ir
mt oadapti nt henew env i
ronment .
Mr.Mishraist hinki
ngofhi ri
ngsomey oung& ener geti
cper sontoc opewi t
ht hec hanging
dynamicSi tuati
on.ABChasor ganizedawal kinintervi
ewf orthenewRec r
uit
ment s
.Ms .Isha
Patil
,wellqualif
iedaswel lasexper i
encedi ns i
milarfi
eldhasappear edfortheintervi
ew.She
hasjustleftoneoft hecompet i
tor
’sc ompanybec auseofSomeper s
onalreasons.Meanwhi l
e
i
nt heinterviewshei ndi
rectl
ygavehi ntsthats hewoul dbehappi ertotel
lyouallthe07/26/12
compet i
tor
spl ans&pol i
cies.Whatshoul dMi shrado?68
EthicalDilemmas
Cases t
udyB:Mr .Mur t
hywaswor ki
ngasanof f
i
c erint heex c i
sedeptofar eput eds t
eel
company .Hewasf rom aver yr eputed& goodf ami ly.Thes teelc ompanywasr epor t
edly
i
nv olvedinex ci
seevasi onofi t
sgoods .Ex ci
seev asionr esul
tedi nthedeal er
ss ell
ings t
eel
whichwasnotexci s epai d.Mr .Murthyal ongwi t
hhi sbos swer edirect
lyinvol
vedi nex c i
se
evas i
on.Thei rphil
osophybei ngthatt heyar edoingitforthegoodoft hecompanyandnotf or
t
hemsel ves .Thegovt .hadr ecentlyraidedaf ewc ompani esprac ti
ci
ngex ci
seev asionint he
vi
cinit
yoft hest eelcompany.Ther ef
or eMr .
Mur t
hywasundert remendouss t
ressthes eday s.
Evenheknewt hathehi snamewoul dc omei nthel i
stasoneoft hec ompany ’
sex ec ut
iveto
bei nter
rogat ed.Mr .Mur t
hywi fe,knowi ngaboutt heent iresit
uationadv i
sedhi mtogetoutof
suc hacti
v i
tyorel sequi tthecompany .Mr .
Murthywasi nadi l
emma.Whats houldhedo?
07/26/1269
Corpor ateSoci alResponsi bil
iti
es
Whybus inessshoul dbesoci al
lyresponsible?1.Longt erms urv i
v al
:Ifanor gani zationwant s
tosur vi
v ei nthel ongr un,i thast oes t
ablishal oyalbrandofc us t
omer setc .Ifthebus i
nes s
doeshar mt osoci etybyt heirirr
espons i
bleac ts,soc i
etywi l
lnotal l
ow them t oex i
sti nthe
fut
ure.2.Publ icExpect at
ion:Gener alpubl i
cex pectsc ert
ainbehav i
orfrom or gani zati
ons
apartf r
om qual i
typr oducts,f ai
rpric
es ,goods erviceset c.Whi l
edoi ngbus ines stheys hould
notdi sturbanybal anceofsoci etylikepol l
uti
on,c ri
me,c orruptionet c.3.Goodwi ll:Aswe
know t hatgoodwi llneedst obeear nedbyf i
rmsunder s t
anding& di schar gingt heirs ocial
responsi bili
ti
es4.Gov t
.Laws& Regul ati
ons :Somet imesgov t.l awsf orcet hebus i
nes sto
behav ei nasoc iall
yr esponsi bl
emannert os urviveint helongr un.5.Bet terEnv ir
onmentt o
Oper ate:I fanorgani zati
onc animprov ethequal i
tyoflif
eofc ustomer s,trytoi ntegratepr i
vate
good&publ i
cgood,mor efocusedons ol
v i
ngapar t
icularproblem ofs oci
ety ,thebet t
eritwi l
l
beabl et os olveitsownpr oblemsandi nabet t
er07/26/1270env i
ronmentt ooper ate.
CorporateSocialResponsibi
li
ti
es
6.Keept hebalance(give&t akerelat
ions hip):Busi
nessorgani
zati
onexist
s&oper at
eswithin
soci
ety.Asittakessomuc hfrom society,itshouldowes omethi
ngbac k.Whenbus i
nessmen
understandthefactthattheyaresoc ialent it
iesandwi t
houtsoci
ety’
sapprovaltheywouldn't
exi
st,theyac cepttheirresponsi
bili
ti
est owar dssoci
etyandat t
emptt oful
fil
lthem.Soc i
al
Responsibil
i
ti
esModel:I nputs
HumanResour cesRawMat eri
alMac hineryMoneyI nf
rastr
uct
ureInf
ormati
onMar ketMaterial

Processi
ng
•Uti
l
izat
ion ofal
lki
ndsofi
nput
s•Pr
ocessi
ng ofi
nfor
mat
ion t
o manuf
act
ure pr
oduct
s&
servi
ces

Outputs
•
Empl oymentgener
ation•
Goods&s er
vicest
osati
sfycust
omer
sneeds•
Wor
kasacor
por
ate
ci
ti
zentomeets oci
ety’
sexpect
ati
ons•
Spreadeducat
ion

Feedback
07/
26/1271
Cor
por at
eSocialResponsi bil
it
ies
To understand socialr esponsibil
it
yt echnicall
ys ome model s have been devel
oped 1.
Ackerman’sModel :Thebasi cgoalofanyc orporateenti
tyshouldbes oci
alresponsi
veness.
Al
lf i
rmsi n or
dert o be s oci
all
yr esponsibl
e pas sthrough some developments t
ages»
Awarenessstage»Pl anning&act i
ons t
age»I mplement
ationst
age
––Topmanager s&deci sionmak erslearnofanex i
st
ingsocial

pr
oblem.
Pl
anning st
age to addres
st he problem (
hir
ing a speci
ali
storcons
ult
antifr
equi
red)
I
mplementat
ionstage–mustbei ntegralpar
tofdail
yoperati
ons–Tr
uec ommit
ment
satall
l
evel
softheorganizat
ionmustbeobtained–07/26/
1272
Corporat
eSoci
alResponsi
bil
i
ti
es
2.
i
.ii
.ii
i
.iv.

Car rol
l
'sModel :AccordingCar rol
l
’s,therearef ourc ategori
esofs oci
alres ponsibil
i
ti
es
Economi cr esponsi bi
li
ti
es–t heprimaryr espons ibil
it
yofanybus i
nes si stobeec onomic.
Pr oduci
nggoods&ser v i
c estomeetneeds/want sofs ociet
yandgener atepr ofi
tbysell
i
ng
t
hem Legalr espons i
bil
i
ties–Each&ev erybus i
nes smus toperat
ewi thinthel aw andlegal
f
r amewor kwhi char econsi deredaslegal r
es ponsibili
ti
esEt hic
alrespons i
bil
it
ies–Meet i
ngthe
ethicalexpec tati
onsofs ociet
yDiscreti
onar yr espons i
bil
it
ies–ar es tepsf orwardofet hi
cal
responsibil
i
ties,inwhi chf irmsgof orvoluntaryac ti
onst os ervesociet
y .Ther eisnodemand
f
r om soci
ety.Thef i
rm wi l
li
nglycontri
butestot hewel fareofs oci
ety.

07/
26/
12

73
Corporat
eSocialResponsi
bil
i
ti
es
3.ApproachestoSocial
Responsibi
l
it
y–
SocialCont
ri
buti
onSoc i
alResponseSoci
alObl
i
gat
ionSoci
alOppos
it
ion

LevelofSoci
alResponsi
bil
i
ty

a)Soci
alOpposi
ti
on:Whenbusinessesoppos essoci
etybyf
eel
ingorshowi
ngnoobli
gati
ons
t
owardsiti
scall
edsocialoppos
it
ion.I
fwhiledoinganyunethi
calactt
heyarecaught
,they
pl
aysafebydenyi
ngitorsomeotherpract
icesli
ke07/26/
1274bri
ber
y.
Corpor ateSoci alResponsibil
it
ies
b)c)Soc ialObl i
gat
ion–Thef i
rmi nthi
sc at
egorybeli
evet hatast heyar eoperati
ngins oci
ety
soi tistheirdut ytodobusi nessint helegalboundari
es .Soc i
alRes pons e–Thef irminthis
degr ee do mor et han theirsocialobl i
gati
ons.They r eali
zet hatmer el
yf ul
fi
l
ling l
egal
requirement sarenotsuf fi
cient.Sot heygobey ondtowar dsethicalc onductofbus i
ness.
Soc i
alCont ri
buti
on–Thef i
rmswhi chcontr
ibut
ethems elvest osocialdev el
opmentfalli
nthis
category.I tisthetopmos tstepont heladderofsoc i
alrespons i
venes s.Thedobus inesswith
f
ulldedi cation&commi tmentt osociety.

d)

07/
26/
12

75
CorporateSoci alResponsi bil
it
ies
MainSoci alResponsi bil
it
iesofBusi nessOrganizat
ion1.Res ponsi
bil
it
yt omak eprofi
t–The
basicobjec t
iveofanybusi nessi stomak eprofit
.Asal os smak i
ngfirm,i tc annotproduc e
quali
typroduc t
s ,cannotfulfi
llcommi tment
sandt heref
orecannotgener aterev enues/prof
itsto
i
tsshar eholders.Henceor gani zat
ionshav eas oci
alresponsibi
l
it
yt obepr ofitabl
eandonl y
t
hen i tc an meeti ts soci alobl i
gati
ons /c ommi t
ments.2.Res pons ibi
li
tyt o generate
employment–Al lbusinessesmustpr ovi
defai
roppor t
unit
iestoallpeopl e.Themus tcreate
t
hec onditions/s it
uati
onswhi chhel ptheemployeest oputforwardtheirbes tef f
ort
sac hieve
organi
z at
ionalgoal s.
07/26/1276
Corpor at
eSoci alResponsi bil
it
ies
3.Res ponsibi
li
tyofOpt i
mum Ut il
izati
onofRes our cesEac hor ganiz ationmus tunder s t
and
thati
thassomemor alobl igati
onst out il
izet hes carc enat ionalr es ourc esoft hec ount r
yi nan
opti
mum way,wi thoutwast i
ng,avoi ddamagesormi s-util
izet heres our ces .Res pons i
bil
it
yt o
Provide Qual i
tyPr oduct s– Pr ovidingqual it
ypr oduc tsatf ai
rpr icesi sone oft he mos t
i
mpor tantsocialr es ponsi bil
it
ies.Res pons i
bili
tytoPr otec tt heEnv i
ronment–Pr otecti
onof
envir
onmenti s equal lyi mpor tantas ot her res pons ibil
ities.Bus ines s organi zati
on as
responsiblecor poratec iti
zensmustt akes eriousstepst opr ot ectenv i
ronmentandk eepi tina
healt
hycondi t
ion.Res ponsibili
tytoPr ov ideQual ityofLi fe–Qual it
yofl i
fei sonesi nternal
growth,gr owthofchar acter,mi nd& s oulandenr ichedl ife.Henc ebus i
nessor ganization
shouldpr ovideoppor tuni tytoi t
sempl oy eesaswel lass oc i
et ytoenr icht heirli
vesandbet t
er
quali
tyofl i
fe.Res pons i
bili
tytoSaf eguar dt heheal t
h–Saf eguar dtheheal th&phy sicalsafet y
ofcons umer saswel lasempl oyeesbec omeav i
talar eat obec aredbyor gani
z ations.Thi s
becomesmor eser iouswi t
hdr ug&ot herc hemi calc ompani es .Theymus ttak eadequat ec are
tocheck&s af
eguar dconsumer sheal th&wel lbeing.Fai rTr adePr actices–I fbus i
nes sf i
rms
ares howingsoci allyr es ponsiblebehav iort heymus tgof orf ai rtr
adepr ac tices,someofwhi ch
are–notmak ingf alseadv ert
isement s,av oidmonopol istictr adepr ac ti
c es ,notgof orar ti
ficial
scarcit
y,notbr ibi
ngpubl icser vants ,pr ov i
dingqual i
typr oduc t
s& s er vices,fairpr ices&
provi
det imely&accur ateinfor mati
ont oi ts07/ 26/1277s tak eholder s.

4.5.

6.

7.

8.
CorporateSoci alResponsi bil
i
ties
9.Responsi bil
i
tyt o DevelopmentofNat ion – I fc ompani esar einvolved ininternational
business,theymus tc ontr
ibutetheiref
for
tstowar dsdev elopmentoft hei
rc ountr
ybyear ning
f
oreigncur rency,ear ninggoodwi l
l,andreputationi nglobalmar ket
,mak egoodr elati
ons hip
amongnat i
ons.10.Responsi bil
i
tytofulf
il
lalldut ies&nat i
onalobl i
gati
on–Asac orporate
ci
ti
z en,businessf ir
msar er equir
edt oful
fil
lc ertainobligationsunderv ariouslawsandt o
perform certain duti
es.Theymustoper atet heirbus i
nes swi thi
nthe boundar i
esofl egal
f
ramewor kpr ov i
dedbygovt .Theymus tcontr
ibut et onati
onalpr osperi
ty&t r
yt or
educ es ome
nati
onalprobl emsl i
kecor r
uption,unemploymentet c.
07/26/1278
Corporat eSocialResponsi bi
li
ties
Corporat e Soc i
alRes ponsibil
ity and I ndia -CSR ac t
ivi
ti
esar e now an i ntegralpar tof
organizationalobjecti
v esinI ndia.Pos tliberal
izationI ndi
anc ompani eshav ec omet ot erm
withCSRandi t
swi derr amif
ications.Bot hPubl ic&Pr ivat
es ec t
orshav eac ceptedCSRasa
part&par celoftheireconomi cact i
vit
ies .SomePubl i
cs ectorc ompani eshav ebeenmor e
acti
vei nCSR.Ex ampl esbeingOi lI
ndia,NTPCet c.NTPCi st hef i
rstPSUt ohav edev eloped
ac ompr ehensiveRes ettl
ement&Rehabi l
itat
ionpol icy.Themai nCSRpol i
ciesofNTPCar e1.
Tol eadt hesect orint heareasofr es ett
lement&r ehabili
tationandenv i
ronmentpr otecti
on
i
nc l
udingef f
ecti
veashut il
i
zation,per i
pher aldev elopment&ener gyc onservati
onpr ac t
ices2.
To c ontinuously attr
ac t& devel op compet ent& c ommi t
ted human r es ources to mat ch
st
andar ds3.0. 5% ofi tsprofi
tsar esetas i
def orc ommuni t
ydev elopmentmeas uresundert he
umbr el
laofCSR4.07/ 26/
12Tocont r
ibutet os ustainablepowerdev elopmentbydi schar gi
ng
CSR79
Corporat
eSoci alResponsi bil
it
ies
Indi
anpr i
vates ectorhaveal soshownt heirgoodef f
ort
satCSR ac ti
vit
i
esTheTATAgr oup
whos ebeli
efiss hapingas oci
etywiths ocialpur poses.Jams hedjiTata,thefounderofTATA
groupandhi ssonsbel i
evedt hattherealpur pos eofIndustr
ywast ogobey ondt hec reati
on
ofwealthtothebui ldi
ngofanewsoc ietythroughpr operall
oc ati
onofweal th.Itwasf rom thi
s
visi
onthatTat aI nstit
uteofSoci alScienc ewasbor n.J RDTat aconduc t
edhi sbus i
nessina
verysocial
l
yr espons ibl
eway .Hewant edt obr ingani ndustr
ialrevolut
iontoanec onomicall
y
backwardI ndia.Thespec ifi
cgoal sofJ RD Tat awast oes tabl
is
hahy droel ectr
icpower
proj
ectatBombayasacheapsour ceofener gy ,t
hes teelindustr
yatJ ams hedpurandt he
Indi
anInsti
tuteofSci enceatBangal oretopr ovi
deSc i
enti
fi
c&Tec hnicaleduc ati
on.

07/
26/
12

80
CorporateGov ernance
Corporatemeansl egallyuni t
edi ntoabodys oast oac tasani ndi
vidualandGov ernanc e
meanscont rol
.SoCor porateGover nanc eisnot hingbutt hewaybywhi chc orporat
ionsar e
contr
oll
ed& di rected.CG r efer
st ogui delines,pr ocedures,rul
esf ordec i
sionmak i
ng.I tis
means ofachi eving targets on c or
por ate aff
ai r
s.I talso deal s with how t o meas ure
perf
ormanc e.Theor i
ginofCG t ookpl ac ei nUKi n1990.Someoft hef act
orst hatdrivesCG
are a.The maj or
ityofshar eswer ef rom I nst
ituti
onsr atherthan ndi vi
dual s.Inst
ituti
onal
i
nves t
orsli
kepens ionfundsownedbi gamountofc apitalwhichrepres entst hes avi
ngsand
pensionsoflak hsofpeopl esoi fthec ompanyi snotbei ngmanagedwel ltheneedypeopl e
wouldbei nt rouble.b.Asgl obaloper at i
onswer es peededup,i tc ameupasat oolfor
att
racti
ngforei
gni nvestment .c.Duet oc ompet it
ivepr essure,t
henooff al
sedoc ument ati
on,
f
raudcasesandunet hicalpracticeswer ei ncreas i
ng.d.I twast houghtt hatt hec ompani es
wouldunder minet hesoci al,ethical07/ 26/1281& env ir
onment alc oncernsi nt heer aof
pri
vati
zati
on
Cor por ateGov er
nance
Fac torsBehi ndt heOriginofCor porateGov er nance–1.I nthiseraofgl obali
zat
ion,when
expans ion,i
nnovat i
on,diversi
fi
cati
onoft hebus i
nes sishappeningatar apidrate,foreign
i
nv es t
or shavebecomever ycarefulabouti nves ti
ngt hei
rmoney .Soinordert oatt
ractforeign
capital,youneedt opracticeCG 2.Gov er nmentofI ndiahasal soi
mplement eds t
ric
tr ul
es/
l
awst obef oll
owed.3.Thenoofi nst
itut
ionali nves t
orshasi ncr
easeds othereisaneedf el
t
t
os afeguardt heirint
erest.4.I ncr
eas ei ni nv esti
gati
vej our
nali
sm in bus i
ness5.No of
i
nter nat i
onaleventsl i
ke joi
ntv entures,mer ger s,takeovershav elead tot he mandat ory
prac ti
ceCG.
07/26/ 1282
Corporat
eGov ernance
I
mpor t
antIssuesofCor porate Governanc e 1.Soci
alresponsi
bil
i
ty2.Mul t
iple divergent
expect
ati
ons ofs hareholders 3.Ec onomi c,Soci
al& Env i
ronmentobligat
ions are al so
i
mpor t
antfororganizat
ions.4.Fairbus inessdeals& corr
upti
onCor por
ateGov ernanc ei n
I
ndiaThecor por
atewor l
dinIndiacompr i
s esoftwopar
ts1.Publi
cSec t
or2.Pri
v at
es ector

07/
26/
12

83
Corporat
eGov ernance
Pri
vate Sect
or– I nI ndi
at he broad categor
iesofs harehol
derforpr i
vat
es ect
orsare•
Promoters•FinancialInst
it
uti
ons•I ndivi
duali
nv es
torsAnypr ivat
esec t
orboardconsi
stsof
t
hreetypesofdirect
ors•Pr omoterdirect
or•Professi
onal di
rect
or•Inst
it
uti
onalnomi
nee

07/
26/
12

84
Cor porateGov ernance
Publ i
cSec t
or–Thef i
rmswher eequit
ys haresar eownedwhol l
y(51% ormor e)byGov tof
I
ndi a(int henameoft hePr esi
dentofIndi
a)ar einthec at
egor
yofPubl i
cSectors.Theboard
ofPubl icSec t
orswouldcompr i
seof•Func t
ionaldir
ec t
ors•Govt.direct
ors•Outsi
dedirect
ors
Profess i
onali
zati
on ofCor por
ate GovernanceI nor dertobri
ngaboutr ef
ormst oCG t he
f
ollowinghav ebeendev el
oped.
07/26/1285
Corpor ateGov ernance
•Dis t
inguishManagementf r
om Cont r
ol:Itmeansthatcontrolneedst obes epar
atedfrom
management .Someoft hecomponent sofManagement&Cont rolare
Cont r
olRat i
fi
cat
ion–Pr oposal
sdev elopedintheinit
ialst
agesar eev aluatedandi ff
ound
suit
ablet hey are approved Moni t
ori
ng – As sess
mentofex ecut
ive’
s per formance and
i
mpl ement ationofproperr ewardsystemsManagementI ni
ti
ati
on–Pr opos alsformanagi ng
t
he r es ources ofthe firm are devel
oped Implementati
on – Ex ecuti
on oft he appr
oved
proposal s.

•
Ac t
iver oleofi
nsti
tut
ionalinvest
ors:I
ns t
it
uti
onali nvest
orsc anc ontr
ibut
eef fecti
vel
ytowards
i
mpr ovementinCGast heyhaveahi ghers t
ak e.• Expandr oleofnon- executi
vedi r
ect
ors:To
i
mpr ovet hequali
tyofCG,t heroleofnon- exec utivedir
ectorsmus tbeenl argeds i
ncethey
canpr ovideri
chexperience&goodobj ect
ivit
yi nmoni tori
ngc orporate07/26/1286behav i
or.
CIIhasr ecommendedacodeofCGwhi char er elatedtonon-
Corporat
eGov ernance
–NonE. Dshoul doccupyatl
eas t30% boardseats–Li
mitont
henumberofboardsonwhi
ch
apersoncanser ve–Anaudi tcommi t
teehavi
ngatleast3nonEDmus tbesetupandgi
ven
accesstoalli
nformati
on–Degr eeofac count
abil
i
tymustbehighert
hanatpr
esent–Al
lnon
E.
Dmus tbecompensat edwellf
orthei
rti
me&ef f
ort

•Proper&Timelyi
nfor
mati
ont
otheBoard:Theboar
dof
di
rect
orsmustgetful
li
nfor
mat
ionaboutl
ongter
m pl
ans
,budget
s,compet
it
ivedevel
opment
s,
quart
erl
yresul
tset
c

•Si
zeoft
heboar
d:Li
pton&Loeschhavedonesomeexcel
l
ent

r
esear
ch&pr
ovi
dedt
her
esul
twi
t
hopt
imum si
zeoft
heboar
das10-
12

07/
26/
12

87
Corporat
eGov er
nance
•Improveac count
ing&Repor t
i
ngPr acti
ces:Accounti
ng
repor
tsar eimportantmeansofi nf
ormationfors har
ehol
ders,cr
edi
tor
s,& inves
tor
sofany
company .SEBIhasbr oughtinsomei mprovementsinc or
porat
eac count
ing& repor
ti
ng
pract
ices.Furt
herimprovementsarerequir
edli
ke

a)
b)

Bus
inessl
i
ner
epor
ti
ng:Fi
nanci
erss
houl
deti
ntegr
ated

i
nformat i
onaboutpr ofit
abil
it
yofdi f
ferentdi
v er
sionsofas ingl
ec ompany .GroupAc count
ing:
I
nternationalaccountings tandardsclassi
fyinvestorcompaniesin3c at
egories.
Subsidiarycompani esJ ointl
yc ontr
oll
edc ompani esAssoci
atec ompaniesHenc ei
tisrequi
red
t
hatf i
rmspr escr
ibedifferentaccountingreporti
ngt r
eatmentsfortheseinvest
mentstor ef
lect
t
heirfi
nanci alImpli
cations.07/26/1288
CorporateGov er nance
c)Taxef f
ectaccount i
ng:I tel i
mi natest heef fectsoft i
mingdi ff
erenc esi ntaxl i
abi
litywhi l
e
arr
ivi
ngatr epor tedear nings.I nI ndiac ompani esac countf ortaxesasandwhent heyar e
payables oitisdi fficulttoc alculaterepor tedear nings.d)Ear ningspers harereporti
ng:EPSi s
aver ycommonl yused t ermi nst oc kmar ketanal ys i
s.I nIndiat her ear enoac count i
ng
st
andar dspr escr ibedf orcompi l
ingEPS,nouni formit
yi nt heway sEPSi sc omputed.Butas
wek now t hatt hepr ac t
icalsi gni f
icanc eofEPS i sgr eat,itises sentialtof or
mulates ound
st
andar dst oc alcul ate&r epor tEPSi nI ndia.Howt oac hievegoodc or porat
egov ernanc eIn
t
henewmi l
l
enni um bi gacc ount i
ngs candalsl i
keEnr on,Ty co&Wor ldCom hav es hownt he
f
ail
ureoff inanc i
alaccount i
ngsyst em,c orrupt
ion&weakc orporategov ernance.Corpor ati
ons
arerealizi
ngt her oleofgoodCG i nthes ucces soft heirbus i
ness,t heyhav estart
edt aki
ng
st
epsi ni mprovi ngt hebal ance.Acc ordingt oar ecents urvey,70% ofc ompaniesar eus i
ng
t
echnologyt ool st ogetac cur acyi nfinanc i
al/ac countingmat t
ers.07/26/ 1289
Corpor
ateGovernance
ANAO–Aust ral
i
a’sNati
onalAudi
tOffi
cesuggest
sfi
v ekeyoperat
ing
pr
inci
pl
esthatdemonstrat
edi
ff
erentdi
mensionsofcorpor
ategovernanc
ewhi
char
e

1.2.

Leadershi
p:Thebasi cf
undament al
sofCGar eleadershi
p&di recti
on.TheCEO/MD&ot her
di
rect
orsshouldf oll
ow goodCG pr acti
cesManagementEnv ir
onment:Shouldensur
et he
f
oll
owing
•••••Soundbusi nessplanni
ngwi t
hc learobj
ecti
vesYar dst
icksforperf
ormancemeasur
es,
eval
uati
ngper f
ormancewi thfeedbackCl earcutdivi
si
onofwor k&r esponsi
bil
i
ti
esEst
abl
ish
anethi
calframeworkEnsur eri
ghtdec i
si
onaboutwor kfor
ce

1.2.3.

RiskManagement:Effecti
veriskmanagementpr acti
cesMonit
ori
ng:Moni
tor
ingofQual
i
ty
syst
ems,adherencet
opl ans&procedures.
Monit
ori
nghelpstoensurebestpract
ic
esbyc ont
inuousimpr
ovements
.

Account
abi
li
ty:Acc
ount
abi
li
tyis measured by ef
fect
iveinter
nal& ext
ernalr
epor
ti
ng on
conf
ormance&perf
ormanceagai
nstset07/
26/1290object
i
v es.
EthicsinMar ket
ing
Mar ket
ingi sat askofc r
eati
ng,pr omoting& del i
veri
nggoods& s er
v i
cest oconsumer s&
businesses.CommonUnet hi
calPr act
ices :•Dupli
cationofor i
gi
nalbrands•I nadequac yof
warrantyofferi
ng•Poorqual i
typroducts•Uns afeproduc t
s•Unaut hori
zedmf gofhaz ardous
products •Pr oducts whi
ch are notbi o- degr
adablel eading to envi
ronmentalpollut
ion •
Discri
mi nat
ioninpr i
ci
ng•Diff
erent
iati
oni npr i
ces•Ex cessivemar kupinprices•Misleading/
deceptive adverti
sement•Fal se promis es•Lowert he digni
tyofwomen •No f air
nes s,
t
rans parencyinrelati
onwi
ths uppl
iers&r etail
ers•Arti
fi
cialscarci
ty07/
26/1291
Ethicsi nMar keting
Factorsbehi ndEt hicalPr acti
ces:1.ToCol l
ec tthePowerbySoc i
ety :Soc i
etygivesthepower
t
omar keters,whi cht heyear nbyt heirownef f
ort
s&i nfl
uenc e.Sot heys houl
dut i
li
zet heir
poweri nsociallyres ponsible&accept ablemanner .2.Goodwi lloftheOr ganizat
ion:Goodwi ll
,
reputationsar ebi gasset sf oranyor ganizati
on.Asmar keti
ngex ec utivesrepresentthewhol e
organiz ati
on,t heyneedt obui ldupt hei mageofc ompanyashi ghlyethical& c arryout
business i n a di gnifi
ed manner .3.Gov ernmentRegul ations:Somet i
mes gov ernment
regulationshav ean i mpac tont heet hi
c albehav iorofor ganizations.Ther eforetoav oi
d
exces siver egulations,compani esneedt obec omes elfregulatorybyl ivi
ngupt oet hical
practi
c es.4.Bui l
dupTr anspar ency:Buy er sbec omemor es uspiciouswhi lebuy i
ngdubi ous
product sduet ol ackoft r ansparenc y.Highl ev eloftr
ansparenc yc onv i
ncespubl icthatthey
areawar eoft heirsoci alrespons ibi
li
ti
es.07/ 26/1292
Ethi
csinMar keti
ng
I
mpor t
antIssuesi nMar keti
ngEt hi
cs1.Pr oduc t
:Thi sisthef i
rst& import
antelementi n
marketi
ng.Apr oduc tisanythi
ngthatcanbeof f
eredtoamar kett
os ati
sf
yneedorwant .The
manufactur
erk nowsmor eabouttheproductthant hebuy er
.Henc etheymus tbec arefult
o
nott
obr eakthet rustofthebuyer.Someoft heimpor t
antfact
orstobec onsi
deredare
a)b)c)d)e)f )I deai ni
ti
ati
onPlanning&s c r
eeningofpr oductdesignProductdevelopment
Marketi
ngstrategyI nt
roduci
ngtheproductinthemar ketDecl
inestage

07/
26/
12

93
Ethi
csinMar keting
2.EthicsinPr i
cing:Pr i
cei sacr i
ti
calelementi nmar keti
ngwhi chpr oducesrev enues.I
t
communicatest ot hemar ketthec ompany ’sint
endedv aluepr oposit
ioni
ngofi tsproduct
.
Companiesgener all
ydo notgo f ora s ingl
e pri
ce buta pr i
c es t
ructur
et hathass ome
vari
ati
onsacc ordingt opurchaset
iming,orderlevel
s,geographicaldemands ,marketsegment
requi
rementslike
Pri
cedi scount sDiscr
iminat
orypri
cingGeogr aphi
calprici
ng

Therearefourmajorareasofunet hicalpri
ci
ngpr acti
celi
ke Pr icedi
sc r
iminat
ion:I
toccurs
whenac ompanys ell
sapr oductatt woormor epr i
cesthatdonotr efl
ectapr opor
ti
onal
di
ff
erencesin costsbutbecomesunet hi
calwhen s ell
ersoff
ersdif
ferentpricetermsto
di
ff
erentpeopl
ewi t
hinthes amegr oup. Pr edat
oryprici
ng:Sel
li
ngbel
owt hecostwhenjust
havi
ngthe07/26/1294i nt
entiontodes t
roycompet i
ti
on
Ethi
csinMarket
ing
•Decepti
vepri
ci
ng:Deceivethecust
omer
stos
howt
hem t
hewr
ongpi
ct
uresaboutt
hepr
ices
by
a)b)Lowpri
ceof f
ersI
nfl
atedpri
ce

•
––

Pri
c eFixat
i
on:Pr i
c esarefixedatcert
ainlevelseit
herby
Hor i
zont
alpri
cef ixing:pri
cef i
xi
ngatar tif
ici
all
yhighl evel
sVert
icalpri
cefi
xingPri
cef i
xi
ng
agreementsbet weenmanuf act
urers&r etai
lersorbetweenmanuf act
urers&dist
ri
buti
ons.It
say sthatproductwi l
lbe sol d atthe manuf actur
er’ssugges
ted pri
ce and wil
lnotbe
discount
edbyt her etai
lerorwholesal
er

3.

Ethicalpromot
ion:Promoti
onpl
aysanimpor
tantrol
einmar
keti
ngofanyproduct/servi
ce.
Gener al
lycomprisesofsal
espr
omoti
on,adver
ti
si
ng,sal
esf
orce,publ
i
crel
ati
on,di
rectmail
etc.
07/26/1295
EthicsinMar keti
ng
CaseSt udyBr eastmilkisanat ural,saf e&f reehumanpr oduc t.Br eas tfeedi ngc reat
esa
str
ongmat ernalbondbet weenmot her&c hildandi sdesi gnedt opr otec tthebabyagai nsta
numberofcondi tionssuchaspneumoni a&di abetes .Notonl yar et hes e,butwomenwho
breastfeedt hemsel vesarepr otectedf rom br eas t&ov ari
anc anc ers.I nt hi
smoder nwor ld,
manywomenf eelawkwar di nbreas tfeedi ngands ometimest hemedi cals t
af fdonothav e
t
het imet opr ovideadequat etrainingt ot eac hnew mot hershow t obr eas tf eed.Now,t he
i
nfantf ormulai st heobviousal ternati
ve.Howev erthispr oduc tisder ivedf rom c ow’smilk,
whichi snotdesi gnedforhumans.Thoughi tc ans upplementt hedi etofahungr ybaby,or
helpawor k i
ngmot herduringtheday ,buti ts houldnotbemar ketedasanopt ion,thatcan
repl
acebr eastmi lkenti
rely.Thewor kingmot herseas i
lygetc onv incedwi tht hef or
mul a
manuf acturers,as t he infantformul ai s muc h eas ierand mor ec onv eni
entt o use.I n
developingnat i
ons,thear eaofbr eas tfeedi ngi sver ypathetic,s adand&uneduc atedone.
Thebi gpower f
ulmul t
inati
onalst hatc ont r
olt hewor ld’
sinfantf ormul amar kett akeallthe
advantagesoft hepooranduneduc atedi nor dert oincreaset heirownpr ofit
s.
07/26/1296
EthicsinMar keting
TheWor ldHeal thOr gani zat
ionhasamar k eti
ngc ode,endor sedbyUNI CEFwhi chbansal l
promot i
onf orbabyf ormul ami l
k–bot ht hroughadv ert
isement sandt hroughheal t
hwor kers
andmi dwi ves,butt hesepower fulcompani espayl i
ttl
emor ethanl i
ps er
vicet oit
.Ast hedat a
say s,i
nt hedevel opingwor ld,onebabydi esev er y30s econdsf rom uns afebot tl
ef eeding.
Thes eMNC’ swhi c henj oysal most40% oft hewor ldwidei nf antf ormulaandt ryt oc apt
ur e
mor e&mor e.Theysendt heirrepres entativ etodev el
opingc ountrieswhogi vefrees ampl es
offormulat ohospi tal
s&heal t
hwor ker s.Themot herisenc our agedbyt hes eheal t
hwor kers
alongwi tht hemedi calst af
ft ous ei nfantf ormul abypr ovidingf rees ampl eandt heref
or e
discouragingbr eas tf eedingobvi ous l
ypr omot ingt heirproduc t
sbyf r
eegi f
ts&i ncent i
vest o
l
oc alhealthof fici
als.Ot herkindofpr omot ionoft hei rproduc t
si si nt heform ofpos t
ersont he
wallsofc l
inics,someadver ti
sement si nmagaz ineset c.Ast hec ompany ’
smai nai mi st o
encourage mot her st o use t he formul a,t heynev erpr ovi
de adequat ei nformation about
f
or mulafeedi ng.Theydonott eacht hes ewomenabouts t
er i
l
izingt hebot tl
est heyus e.Sot he
uneducat ed&unawar emot her suseun- steril
i
z edbot tl
es&di r
tywat ermi xedwi ththei nf
ant
f
or mulawhi chc ausessever edi ar
rhea&dehy drat i
oni nt hebabi esr esult
ingi ndeat halso.
Ver ysoon,af terthei nfantshavebec omedependantont hef ormul aandt hemot her ’
smi l
k
hasdr i
edup,t hef r eesampl ess topc omi ng.
07/26/1297
Ethi csi nMar keti
ng
Theonl yopt ionist obuyt hei nf
antf ormul aathi ghpr ices.Themaj orityofthefami l
iesc annot
affor dt hi
s.Soei thert heygowi thoutfoodt hems elvesandf eedt heirbabi esorj ustdil
utet he
powdert omak ei tlastlonger.Agai nthebabi eswi llbes uff
er i
ngf rom mal nourishmentand
oftenl oset heirli
ves.Thesecompany ’
sdonotf ollowWHOc odesac c ordi
ngt owhi chtheyar e
requi redt oputl abelsonf ormulapr oduc t
si ntheappr opri
atelanguage.Theyac tivelypromot e
t
heus eofi nfantformul aasopposedt obr eastmi lkandal wayst ryt omak easheal thyapr ofi
t
aspossi ble.Doy our egardthesemar ketingpr acticesaset hical?Ex plainy ourview.-----
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--Marketi
nget hicsi sas ub-setofbus iness
ethic sandex ami nest hemor ali
s suesr el
at i
ngt omar keti
ngdec i
sionsmadebyor ganizati
ons.
I
tsr oot scanbet racedt othe1960’ s,mar k eti
nget hi
c sisbeli
ev edt ohav ec omeofageonl yin
1990’ s.
07/ 26/ 1298
Ethi
csinFi
nance
•Thereisaclos
erel
ati
onshi
pbet
weenet hi
cs&fi
nance.•Hi
ghf
inanceist
hepar
ti
cul
ararea
wheremostofthebr
eakdownofethi
calnormsoccur
.•Thebasi
cfoundat
i
onofbusi
nessis
t
rust

Fi
nance
Fi
nanci
almarket•Commodi ty market
s• Curr
ency market
s• Opt
ion mar
ket
s Financi
al
oper
ati
ons&servi
ces•Fi
nanc
ialpl
anner•Taxadvi
ser•
Stockbrok
er•I
nsur
anceagent
s

07/
26/
12

99
EthicsinFi nance
Somec ommonunet hi
calact
ivit
iesinfi
nanc e1.Uns uitabil
it
y:I nsuranceagent s,br
okersand
othersal es per sons cheati nnocenti nv estors by r ecommendi ng uns ui
tables ecuri
ti
es /
f
inancialpr oduct s2.Decept i
on:Mos tc ommonunet hi
c alpract
icebys trengtheningthereturn
&mi nimi zingt heweakness&r i
skf act
or s.Sal esper son,agent s,adv i
sersdec ei
vethepubl i
c
usingthemi sleadingstatementl i
ketaxf reeor0% i nterestetc.Theymak epubl i
cunablet o
mak er ationalchoi cesamongsomanyal ternatives.3.I nappropri
ateandex cessi
vetradi
ng:
Thiss it
uat ionar iseswhenbr okerk eepsani nt
entiont ogener atec ommi s si
onr at
hert han
benefit
st ocl ientinthestandingofhav ingc ontroloverthec li
entsac count
07/26/12100
Ethi csinFinance
4.Fr aud&mani pul
ati
oni nmar ket s:Bylawal lthepar ti
ci
pant sinthef i
nanc i
almar ketsar ethe
same.Sof air
nessi nourdeal i
ngsi sdes ired.Fr audmeanswhenac ompanyf ail
st or eport
properi nf
ormationandmani pulationofbuy i
ng/s ell
i
ngofs ec uri
ti
est omi sguidei nves t
ors.
I
nv es torshavet or el
yoni nformat ionavai labletot hem whi chi shardt ov erif
y.5.Unequal
Bar gaining Power:The pr i
nciple ofequalbar gai
ning powers ay sthatal lpar ti
eshav e
relati
v elyequalbargainingpower .6.Insi
derTr adi
ng:Theac tofbuy i
ng/s ell
i
ngac ompany ’
s
stockbas edoni nsideinfor
mat ionaboutt hec ompanyi sc al
ledi nsi
dertrading.Insidertrading
i
si ll
egalaswel lasunet hical.A per son who pr acti
cesI nsidertradingenj oy sthe unf ai
r
advant agesov ertheot hergener alpubl i
c .Et hicsinf i
nanc ei saboutf armor et hant r
ust.
Financ e woul
d be i mpossible wi thoutet hicss i
ncet hev eryac tofpl acingouras s etsin
07/ 26/12101t hehandsofot herpeopl erequi resimmens etrust.
Et
hicsinHumanResour cesManagement
A.EthicsinJobDes ign:Anunder s
tandingofjobdesigncanhelpex ecut
ivest
odes ign&
r
edesignjobinsuc hawayt hati
tposi
ti
velyaff
ect
semployeemoti
vat
ion.Iti
ncl
udes
Works i
mplif
icat
ionJ obr ot
ati
onJobenl argementJobenri
chmentJobs hari
ngIndependent
wor
kt eamsDej obbingEmpower ment

B.C.D.E.F.G.H.

1.2.3.4.5.6.7.8.

Et
hicsi nHumanRes our
cePlanningEthi
csinRec r
uit
ing& sel
ect
ionsEt hi
csintr
aini
ng&
DevelopmentEthi
csincareerdevel
opmentEthi
csinperfor
manceevaluat
ionEthi
csi
nwages
&salaryadmini
str
ati
onEthicsi
nLayoff
’s07/
26/12

102
Ethi
csinHumanResour cesManagement
Ethi
calGuidel
i
nes:Wehaveseenhowet hi
csi sinvol
v edineachandev eryc or
nerofHRM.
Hencesomegui deli
neshavebeenev ol
vedtohel ptheHR pr of
es si
onaltohandleethi
cal
i
ssuesinmuchbetterways.1.Et
hicalLeadership2.Pr of
essi
onalr
es ponsi
bi
lit
y3.Fair
ness&
Just
ice4.Prof
essi
onaldevel
opment5.Confli
ctofI nt
erest6.UseofInfor
mation

07/
26/
12

103
EthicsinI nformati
onTec hnology
•Ethicsi nIThaveopenedupnewi ssues&di mensions•I Thasnogeogr aphi
c alboundari
es,
butappl i
cat i
on & usage ofI T may affectdiff
erentlyin di f
fer
entc ul
ture /env i
ronment.
Comput erEt hi
cs:Thiswasf oundedbyPr of
f.NorbertWi enerinear l
y1940’sdur i
ngwor l
dwar
2 when he was hel pi
ng to develop an aircr
aftc annon c apable ofshooting down fast
War planes .Heal ongwi t
hhiscolleaguesc r
eatedanewbr anchofs ci
encec al
ledCy bernet
ics
–t hesci enceofi nformati
onf eedbac ksystem.Hef ores aw revol
uti
onarys ocial& ethi
cal
cons equences.
07/26/12104
Ethi
c si
nI nfor
mat ionTechnology
TechnologyEt hics:Thisisrelat
ivelynewandi nter
est
ingsubj
ect.Someoft heet hi
calissues
are1.Thi nket hi
call
yabouthumanbi otechnol
ogy2.Tak i
ngr esponsi
bil
it
yf orE-waste3.
Unprofessionalemai l
s4.Useofcl oni
ng5.Cy bersmut–fr
om blocki
ngs of
twaretolegi
s l
ati
on,
addressi
ngchi ldren’saccesst oobjecti
onablemateri
alonint
ernet6.Invasionofprivacyon
i
nternet

07/
26/
12

105
Ethi
csinInfor
mati
onTec hnology
Thesearevar i
ousethicalissuesinvol
vedinITwhi
chcanbecat
egor
izedi
ntof
ourgr
oupsa)
Accessi
bil
it
yb)Privacyc)Pr opert
yd)Ac cur
acy

07/
26/
12

106
Envi
ronment
alEt
hics
ENVIRONMENT

Nat
uralResour
cesLandAi
rWat
erFuel
sFauna&Fl
oraRawmat
eri
alsMi
ner
als

Man-
madeResour
cesPeopl
eHer
it
ageSoci
oeconomi
cSt
ruct
ure

Envir
onment
alethi
cs:This deals wit
h how tok eep a bal
ance between busi
ness&
envi
ronment
.Duetorapi
dspr eadofenv i
ronmentconsci
ous
ness,t
hetradi
ti
onalperc
epti
on
abouttr
ade-
off
’sbet
ween env i
ronmentquali
ty& economicgr
owthis07/ 26/
12 107 al
so
changi
ng.
Envi
ronmentalEthi
cs
•Pol
luti
on:
–––––ai rpol
luti
onwat
erpol
l
uti
onnoi
sepol
l
uti
onear
thwar
mingoz
onedepl
eti
on

•Roleofet
hicsi
nEnvi
ronmentalProtect
i
on
–Res ol
vi
ngconf
li
ctsi
nboththev i
sibl
e&i nvi
si
bl
ear
eas–I
nter
gener
ati
onalet
hics–Spi
ri
tual
et
hic
s

Env i
ronmentPr
otect
ioni
nIndia•Theenv
ironmentpr
otect
ionact(
1986)•
Thef
act
ori
esact
,
1948andi t
samendmentin1987
07/26/12108
Envir
onmentalEt
hics
•Haz ar
dous Wastes •Publi
cl i
abi
l
it
yI nsur
ance act(PLIA)1991 Nat i
onalEnvi
ronment
Tri
bunalact1995•TheNat i
onalEnvir
onmentAppell
ateAut hor
it
yAct,1997•Ex amplesof
Envir
onmentalPoll
uti
on 1.BhopalGasTr agedy2.Ex xon ValdezDisast
er3.Cher nobyl
Acci
dent

07/
26/
12

109
Corrupti
on&Et hics
The dicti
onarymeani ngofcor r
upt i
on i
st he misuse ofpubl
icpowerf orpr i
vat
e gain.1.
Corrupti
onisthepr act
iceofunlawf ulori
mpr operuseofinfl
uence,powerorothermeansf or
personalgains2.Cor rupt
ionist hel ackofi nt
egri
tyorhones t
yCaus esofCor rupt
ion1.
I
ndividual
’sperspecti
ve–mot ivati
onbyper s onalgr
eed2.Soc i
ety’
sStruct
uralperspect
ives–
duet opoli
ti
cal
,social&culturalneedsofs oc i
ety
.Corrupt
iondevel
opswhent her i
skofbeing
caughtisfarl
esst hantherewar dofbeingcor r
upt.

07/
26/
12

110
Corrupt
ion&Et hi
cs
Someoft hebasi cfact
orsbehi
ndc orr
upti
onare1.Cul t
ure2.I
nadequat
e/l
ow s al
ari
es3.
Weakl egalframewor kandabsenceofr ul
es&r egulat
ions4.Adher
encetot
ranspar
ency&
accountabi
li
ty5.Ot herr
easonsl
ike
a)b)c)Oppor tuni
ti
esCircumst
ancesInter
nati
onalphenomenon

I
mpactofc or
rupt
ion:Slowseconomi cdevelopment•Reduc esi
nvest
ment••I ncr
eases
pover
ty Leads to pooradmi nist
rat
ion • Decli
ne in human devel
opment• Incr
eases
di
scri
minat
ion & unfai
rt r
eatment•Suppor tsc r
iminalact
ivi
ti
es •07/
26/
12 111 Dist
ort
s
i
ncenti
ves&c reat
esuncertai
nti
esaboutexpectedprofi
ts•
Genderet hics,SexualHarassment&Di scr
imi
nati
on
•Discri
minat i
on–Unf airdisti
nct
ionsleadingtounjusttr
eatment .Notbas edonmeri
tbuton
otherconsiderati
onsli
kegender ,economi cst
atus,raci
al&di sabil
i
ty•Sex ualHar
assment
-a
kindofdiscr i
minati
ondirectedpr i
maril
yatwomen.Di ff
icul
ttodef i
neandhenc epr
event&
poli
ce.Itmayi ncl
ude
–––––––––Remar ksLooksTouc hi
ngJ okesAtti
tudesSex ualcommentsRecurr
ing
request
sfordat esUseofsexual ar t
if
actsUseofs exual
l
yex pli
citl
anguage

•Genderethics-Men&womenshouldbet
reat
edasequals.Totr
eatt
hem asdif
fer
entwoul
d
beunet
hical.Equal
i
ty11207/
26/
12needst
ober ei
nfor
cedbylaws&regul
ati
ons.
Genderet
hics,SexualHar
assment&Di
scr
imi
nat
ion

07/
26/
12

113