Global business ethics lesson 02

14 Global Business Ethics LESSON 2 NATURE AND PURPOSE OF ETHICS CONTENTS 2.0 Aims and Objectives 2.1 Introduction 2.2 Nature of Business Ethics 2.3 Objectives of Business Ethics 2.4 E

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Global Business Ethics LESSON

2 NATURE AND PURPOSE OF ETHICS

CONTENTS

2.0 Aims and Objectives 2.1 Introduction 2.2 Nature of Business Ethics 2.3 Objectives of Business Ethics 2.4 Ethics vs Morals and Values 2.5 Morals for Organisational Interests 2.5.1 Ideas at Work

2.5.2 Creating a Training and Development-oriented Organisational Culture 2.5.3 Values of Work

2.5.4 Fundamental Questions 2.5.5 Need for Values

2.5.6 Education and Training 2.5.7 Nature of Work 2.6 Let us Sum up

2.7 Lesson End Activity 2.8 Keywords

2.9 Questions for Discussion 2.10 Suggested Readings

2.0 AIMS AND OBJECTIVES

After studying this lesson, you should be able to understand:

z Nature of business ethics

z Objectives of business ethics

z Morals of organisational interests

2.1 INTRODUCTION

Ethics does not bind people in a society through a framework of rules regulations and code of conduct That is put in a literature what is vital to the understanding and adaptation of principles of Ethics is the design development and implementation of an organisation That would facilitate inculcation of the principles and philosophy

15 Nature and Purpose of Ethics

2.2 NATURE OF BUSINESS ETHICS

z Ethical issues commonly "occur in management It goes many a times for beyond

the commonly discussed problems of bribery, collusion and theft, reaching into

areas of corporate acquisitions, merger of firms, marketing policies and capital

investments

For example, if two firms are merged, ethical question arises with regard to

demoting or firing the employees of those who have been serving honestly for

many years

z Ethics is unstructured (does not have standard format or framework; abstract in

concept; does not have universal concept) as shown in figure 2.1

z Ethical decisions should express some obligations to others If a decision helps in

benefitting only to oneself, then that is not an ethical decision The very concept

of being ethical means that results in some good for the larger society and not just

for oneself

Highest good for all concerned

Honest &

Due

Appropriate &

acceptable

Justice is not only done;

Also seen to have been done

Right

Just

Proper

Good Equitable

Right

Morally correct and due Characteristics needed

for a decision to be ethical

Just & Equal

Figure 2.1 Characteristics of an Ethical Decision

Ethics

Their Background and childhood Experience

Value system

of people

Moral Standards

D

I F F E R E N

T

Depends

Depends on

Hence, Ethical practices of people are different.

Figure 2.2: Different Ethical practices of people

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Global Business Ethics

2.3 OBJECTIVES OF BUSINESS ETHICS

As per Peter Pratley, Business ethics has a two fold objective:

1 Evaluates human practices by calling upon moral standards

2 Gives prescriptive advice on how to act morally in a specific kind of situation

Scope of Business Ethics

Stake Holders level

Personal policy level

Societal level Internal policy

level

1 Employees Security of

job Better working conditions Better recommendation Participative Management Welfare facilities

2 Customers Better

Quality of Goods

Goods and services at reasonable price Not to corner stocks and create securities Not to practice discriminatory pricing Not to make false claims about products in advertisements

3 Shareholders Ensure

capital appreciation Ensure steady and regular dividends Disclose all relevant information Protect minority stake holder’s interest Not to window dress balance sheets Protect interests in time of mergers, amalgamations and takeovers

4 Bank and Other Lending Institutions

Guarantee safety of borrowed funds Prompt repayment of loans

5 Government

Complying with the rules and regulations

Honesty in paying taxes and other dues

Acting as partner in the progress of the country

1 Not to use Office car, stationary and other facilities of own use

2 Not fall prey to short ends

3 Not to misuse others for personal

4 Not to indulge in politics to gain power

5 Not to spoil promotional chances to others

6 Promise keeping

7 Mutual help

1 Concern for poor and

downtrodden

2 No discrimination against any particular section

or group

3 Concern for clean Environment

4 Contributing to better quality of life

1 Fair practices relating to requirement, compensation, layoffs perks, promotion, etc

2 Transformational leadership to motivate employee to aim

at better and higher things in life

3 Better communication at levels

Figure 2.3: Scope of Business Ethics

1 The first objective implies Analysis and evaluation It leads to an ethical diagnosis

of past actions and events

17 Nature and Purpose of Ethics

Analysis consists of clarifying standards and lines of argument Here ethics can be

useful as one is often unaware about most moral values and habits of thought The

basic assumptions behind our moral actions and judgements are mainly taken for

granted Normative ethics sets itself a second and more curative purpose Ethics

develops rational methods for answering the present and future issues In order to

achieve the second objective, one has to inform Balanced judgements are based

on the careful assessment of the relevant information One has to be quite specific

when deciding upon appropriate normative standards If both these conditions are

met, ethical thought may lead to valid prescriptions

2 The second objective is to provide therapeutic (curative) advice It suggests

solutions and policies when facing the present dilemmas and future dangers, based

on well-informed opinions This especially requires an identification of relevant

stakeholder and a clear understanding of the vital issues at stake

Check Your Progress 1

What are the objectives of business ethics?

………

………

2.4 ETHICS VS MORALS AND VALUES

Ethics can be distinguished from 'morals' which are rules or duties that govern our

behaviour as persons to persons (such as "do not tell lies" or "do not hurt another

person") Ethics can be distinguished from 'values' which are ends or goals sought by

individuals (such as health or happiness)

Ethics is an area dealing with moral judgement regarding voluntary human conduct

Moral judgement requires moral standards by which human conducts are judged

Ethics are for the ultimate end or the highest good to be pursued Moral standards are

also related to moral obligations It is for the duty to do what considered to be right

and proper

2.5 MORALS FOR ORGANISATIONAL INTERESTS

2.5.1 Ideas at Work

On the quality of our aim in life depends the quality of life We are what our thoughts

are Doing is very good, but that comes from thinking Fill the brain, therefore with

high thoughts, highest ideals, and-place them day and night before you

Motivating the man in the manager to work for his self-development

What are we all working for? What is our purpose in life? Knowingly or unknowingly

we are all working for the attainment of the highest ideal of perfection This perfection

is already within us It is our real nature It is a state of limitless knowledge, happiness

and life The question is this - how can we work so that whatever we do brings us the

realization of that perfection within us? A manager must work in such a way that

he/she will manifest more and more of his/her inner perfection through his/her work

Managers are leaders of men Whatever a leader does, people follow that

If the Managers adopt for themselves a higher set of ideals; develop a visionary

purpose in life and a missionary zeal in action, then the entire organisation becomes

surcharged with effectiveness What is the ideal of work placed before us? Each

Manager is potentially perfect The goal is to manifest this perfection within Do this

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Global Business Ethics by work (or by knowledge, or worship or control techniques, by one, or more, or all of

these) and be free This then is the ideal of work; to attain the highest perfection through work and be free Our actions and its consequent reactions presently disturb this perfection within; the question is this, Is our daily work at par with this perfection? How can we work so that whatever we do, brings the realization of that perfection? This is the subject of Karma Yoga, the philosophy and science of work, which should be studied and practiced by every manager This is the science, which

we have inherited from the rishis

The responsibility for the effectiveness of organisation rests with the level of development of the individuals who run them The development of the individual to achieve the development of the organisation is necessary and it really means developing the man in the manager

The reason of low productivity in India is jealousy three men cannot be in concert in India for five minutes Each one struggles for power and in the long run, the whole organisation comes to grief

As per Vivekananda's analysis, India's thousand years of slavery and political imprisonment has generated this quality in the Indian people just as it has for others who had experienced similar servitude The solution lies in surrender to love and discipline throughout the management and entire workforce Indian managers need to return to sadhana to turn to specific practices for developing themselves, since all management is finally subjective

2.5.2 Creating a Training and Development-oriented Organisational Culture

The river is continuously giving It, therefore, always remains fresh A pond on the Other hand, does not give and so it stinks Knowledge is also like a river The more you give, the more you get This is a universal law Thus, the more the efforts the senior managers make in imparting their knowledge and skills in developing their juniors, the more will they themselves grow This chain reaction leads to organisational growth and, expansion

Any intervention to change or the development of the organisations culture should come from the top with total faith and commitment HRD is an important intervention Unless the top and senior management puts its heart and soul into training and development and is totally committed to it, these interventions will have no impact The senior managers should first be inspired towards undertaking self-development programmes for themselves and then inspire and motivate their managers and help them to grow and develop

Training and development does not merely mean going on a training programme but it means a continuous, deliberate effort to improve one self This is not easy; we always have to be on the lookout for inspiration

2.5.3 Values of Work

Work we must, because values are no substitute for hard work But values give direction and add flavour to the work and give it an altogether new dimension, a profundity that converts work into worship

What is the essence of the Indian thought as applicable to the managers?

Very simply stated, it is as follows:

Each manager is potentially perfect and the purpose of life is to manifest this perfection within This perfection can be achieved through work itself if we have the right perspectives and perform the work with the right attitudes

19 Nature and Purpose of Ethics

Instead of just working, without a higher purpose, if we spend some time in seeking

answers to some fundamental questions, it will help us in being better managers It

will give our work a sense of direction and the work will acquire a new meaning

2.5.4 Fundamental Questions

The fundamental questions are:

Who am I? Who is the man behind the manager? Who is the person who sees and

perceives the objective world? What is our mind? What is our intellect? What is the

Universe? What is its purpose? What is the relationship between me, the work and the

Universe?

2.5.5 Need for Values

Management is decision making Decision making has always been, is always and

shall always be in the ultimate analysis, subjective The training and the purification

of the subjective, the man behind the manager is thus, imperative for effective

decision making

Having a set of values and ideals as our guide and practising sadhana - the techniques

for self-development every day gives us that all-important subjective quality that may

be called character efficiency Its results may not be immediately perceived but

nevertheless it is this that ultimately leads to individual and organisational

effectiveness

If not apparent in the short run, it will most certainly show up in the long run

It is our duty to determine our purpose and mission in life We may have many goals

to achieve but the purpose of life is something higher It is the road we decide to travel

on Goals are mere milestones on this road and one should avoid treating goals as the

purpose of life The purpose of life is an ongoing, continuous process and requires a

long-term vision and corporate leaders have to be men of vision

It is up to the managers to improve the image of India and bring back our pride in

being Indians as is the case with the Indian goods in the world market

It is a universal law that whatever a leader does, people follow that Thus managers, as

the true leaders of the workforce of the nation, must lead the way and adopt for

themselves the highest philosophy, the highest values and ideals and the best

techniques available for self-development The workforce will then follow suit and the

nation will prosper

Check Your Progress 2

Fill in the blanks:

1 _ guarantee safety of borrowed funds, prompt repayment of loans

2 Moral standards are also related to moral _ It is for the duty to do

what consider to be right and proper

3 Good actions will entail upon us _

2.5.6 Education and Training

Education and training is meant not only to give us knowledge and information, which

the present systems provide, but also builds up our character for which we have not

yet made any provisions We need a set of values and ideals as our guide, and

self-development techniques, to make values a part of our character The works and

examples of men who have lived with such ideals give us the inspiration to strive for

it The education and training programmes must therefore cater to this need and if not

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Global Business Ethics at the school or college level then at least the professional organisations must do it for

their managers

2.5.7 Nature of Work

By the very nature of things we must all work incessantly And all work by its very nature, is composed of good and bad Every work will be a mixture of good and bad Yet we have to work incessantly Good and evil will both have their results and will produce their karma Good actions will entail upon us good effect; bad action bad, and both will bind us What then is the solution? The solution reached, in regard to this is that, if we learn to be a witness to the work we do, it will not have any binding effect

on us These ideas of the science of work, Karma - Yoga, need to be thoroughly discussed and understood since we all have our own misunderstandings This confusion is quite natural and is to be expected and accepted Through constant study, analysis, reflection and Sadhana, we move towards clarity of vision But first we should have Shraddha, faith in the values and then we should ask questions to clear our doubts and seek to understand This process makes understanding easier, in Algebra, when we assume 'X', we can assume it This is shraddha

The philosophy of Vedanta and the science of Karma Yoga, perhaps are the foundations of the Indian management culture, Indian management ethics, and Indian work culture We, as professionals have to usher in, to rediscover it, to imbibe it and

to spread it in our organisations and make it our guide in our work and day-to-day life

2.6 LET US SUM UP

Ethics want a manager to be honest with himself and also with the society The manager has to perform his jobs well and his quality reflects in the success of a business Ethical issues may be sometimes occur as managerial dilemmas, measured

by revenues, cost and profits and the stated performance (in terms of obligation to persons both inside and outside the organisation) The essentials of designing developing and implementation of an organisational framework is vital if a society has

to learn to enjoy the benefit of ethical value system

2.7 LESSON END ACTIVITY

“The responsibility for the effectiveness of organisation rests with the level of development of the individuals who run them.” Do you agree with the statement?

Give reasons for your answer

2.8 KEYWORDS

Moral: Standards to do what considers to be right and proper

Values: Quality of being useful or desirable

Moral Values: Desired level of morals

2.9 QUESTIONS FOR DISCUSSION

1 Business ethics is a form of applied art Comment on this statement

2 Examine the scope of ethics in business

3 Discuss the purpose of ethics in an organisation

4 Does business ethic leads to the organisational morals and values?

21 Nature and Purpose of Ethics

Check Your Progress: Model Answers

As per Peter Pratley, Business ethics has a two fold objective:

1 Evaluates human practices by calling upon moral standards

2 Gives prescriptive advice on how to act morally in a specific kind of situation

CYP 2

1 Bank and Other Lending Institutions

2 Obligations

3 Good effect

2.10 SUGGESTED READINGS

Manuel G Velasquez, Business Ethics

Laura P Hart Man, Business Ethics

John R Boat Right, Ethics in Conduct of Business

William A Wines, Ethics Law and Business