BUSINESS ETHICS INTRODUCTION

ETHICS - DEFINITION

Ethics are the principles of right and wrong that are accepted by an individual, community, social group or corporate entities. Ethics is a system of rules that helps in ordering of values.

VALUES

Deep seated feelings that are held by a person Foundation of ones character and powerful force affecting ones behaviour Formed through:

Family one is born into School and educational institutions Religion Community and society Workplace

BUSINESS ETHICS

Comprises the moral principles and standards that guide behaviour in the world of business. It is the application of general ethical principles & standards to business behaviour. Relates to application of values in the corporate decision making process.

CLASSIFICATION OF BUSINESS ETHICS

Philosophy of business to determine the fundamental purpose for the existence of corporate entity.
Corporate Social Responsibility (CSR) companys belief in being accountable to the community and society.

CLASSIFICATION OF BUSINESS ETHICS

Aspects pertaining to moral rights & duties between a company & its shareholders. Ethical issues related to competitors or between different companies.

BENEFITS OF BUSINESS ETHICS

Help in improving society: Introduction of laws and regulations have led to greater rights of deprived classes in society. Help in maintaining a moral course in difficult situations: Create an environment of openness, integrity, involvement & commitment leading to desirable values, harmonious teams, better productivity & a strong public image.

BENEFITS OF BUSINESS ETHICS

Overall benefits: Legitimizes managerial actions, strengthens organizations culture, improves trust in relationships, and supports greater consistency in standards & qualities of products.

CATEGORIES OF MANAGERS

Moral Manager: Have high ethical standards both regards to their own behaviour and also their expectations as to the way the companys business has to be operated. They adhere to and comply with the law.

CATEGORIES OF MANAGERS

Immoral Manager: Oppose ethical behaviour in business, and consider legal standards as obstacles that need to be overcome. They believe that result oriented business people have to be concerned with achievement of profit at any cost.

CATEGORIES OF MANAGERS

Amoral Manager: Either intentionally or unintentionally amoral. Intentionally amoral managers believe that business and ethics need not be mixed up as different rules apply to business & non-business situations. Unintentionally amoral managers are blind to ethical aspects of business decisions. Both comply with the bare minimum legal stipulations.

ETHICS OF LEADERSHIP STYLE

Manipulator

Egotistical Economically motivated End justifies means

Acts on rational principles Fixed rules for all functions Efficiency do things right

Bureaucratic Administrator

ETHICS OF LEADERSHIP STYLE

Professional Manager

Aims at effectiveness Doing things right through others Behaviours governed by ground rules and ethics Organisation culture and social contract based on implicit/explicit and open agreements Group think/ collective/consensus may lead to biased thinking or lead the manager astray

ETHICS OF LEADERSHIP STYLE

Transformational leader

Grounded on personal ethics Charisma, energy, excitement Involved in growth and self-actualisation of others Empowers, coaches, mentors, promotes other leaders.

FAILURE OF ETHICAL LEADERSHIP

Ethical Blindness: Do not perceive ethical issues due to inattention or inability Ethical muteness: Talk the talk but do not walk the talk Ethical incoherence: Not able to see inconsistencies among values, eg. They value integrity but may reward performance purely on numbers irrespective of how the numbers were achieved.

FAILURE OF ETHICAL LEADERSHIP

Ethical Paralysis: Unable to act due to lack of knowledge or fear of consequences of their own actions. Ethical hypocrisy: Not committed to values, delegate things they are unwilling to or cannot do themselves. Ethical schizophrenia: Act at work in one way, act differently at home. Ethical complacency: Believe they are immune from being unethical. They can do no wrong because of who they are.