Business Ethics and the Changing Environment

Lecture 12Shahid Iqbal

Concern for Ethical and Societal Issues

• An organization that wants to prosper over the long term is well advised to consider business ethics – which refers:

To the standards of conduct and moral values

The governing actions

The decisions in the work environment

• Businesses also must take into account a wide range of social issues !!!

How a decision will affect the environment

How a decision will affect the employees

How a decision will affect the customers

These issues are at the heart of social responsibility, whose primary objective is !!!

The enhancement of society’s welfare through !!!

Philosophies

Policies

Procedures

Actions

Business ethics are also shaped by the ethical climate within an organization.

How ???

Codes of conduct and ethical standards play increasingly significant roles in businesses in which doing the right thing is both supported and applauded.

Circle Codes of conduct

The Contemporary Ethical Environment

• Business ethics are now in the spotlight as never before.

Companies realize that they have to work harder to earn the trust of the general public, and many have taken on the challenge as if their very survival depends on it.

This movement towards ethical behavior is believed to Benefit ALL — Consumers, the Environment, and the Companies themselves.

Although, not all companies set and meet high ethical standards, the ethical climate seems to be improving despite the recent recession.

The current ethical environment of business also includes the appointment of new corporate officers specifically charged with deterring wrongdoing and ensuring that ethical standards are met.

• Ethics compliance officers, whose numbers are rapidly rising, are responsible for conducting employee training programs that help spot potential fraud and abuse within the firm, investigating harassment and discrimination charges, and monitoring any potential conflicts of interest.

Minimum Requirements for Ethics Compliance Programs

Establish standards and procedures, such as codes of ethics and identification of areas of risk, capable of reducing misconduct or criminal activities.

Assign high-level personnel, such as boards of directors and top executives, the overall responsibility to actively lead and oversee ethics compliance programs.

Avoid delegating authority to individuals with a propensity for misconduct or illegal activities.

Communicate ethical requirements to high-level officials and other employees through ethics training programs or publications that explain in practical terms what is required.

Our Monitor and review ethical compliance systems, and establish a reporting system employees can use to notify the organization ofmisconduct without fear of retribution

Consistently enforce ethical codes, including employee discipline.

Take reasonable steps to respond to the offense and to prevent and detect further violations.

Self-reporting – Report misconduct to the appropriate government agency.

Follow government regulations and industry standards.

• Islam has its own distinctive value-based ethical system for business dealings. It prescribes certain specific guidelines for governing business ethics.

It enumerates ALL the general ethical rules of business conduct.It identifies ethically desirable forms of business.It specifies the undesirable modes of transactions.