What is ETHIC ?....

A few years ago, sociologist Raymond Baumhart asked business people, "What does ethics mean to you?"

Among their replies were the following:

"Ethics has to do with what my feelings tell me is right or wrong.“

"Ethics has to do with my religious beliefs.“

"Being ethical is doing what the law requires.“

"Ethics consists of the standards of behavior our society accepts.“

"I don't know what the word means." These replies might be typical of our own. The meaning

of "ethics" is hard to pin down, and the views many people have about ethics are shaky.

Like Baumhart's first respondent, many people tend to equate ethics with their feelings. But being ethical is clearly not a matter of following one's feelings. A person following his or her feelings may recoil from doing what is right. In fact, feelings frequently deviate from what is ethical.

Nor should one identify ethics with religion. Most religions, of course, advocate high ethical standards. Yet if ethics were confined to religion, then ethics would apply only to religious people. But ethics applies as much to the behavior of the atheist as to that of the saint. Religion can set high ethical standards and can provide intense motivations for ethical behavior. Ethics, however, cannot be confined to religion nor is it the same as religion.

Being ethical is also not the same as following the law. The law often incorporates ethical standards to which most citizens subscribe. But laws, like feelings, can deviate from what is ethical. Our own pre-Civil War slavery laws and the apartheid laws of present-day South Africa are grotesquely obvious examples of laws that deviate from what is ethical.

Finally, being ethical is not the same as doing "whatever society accepts." In any society, most people accept standards that are, in fact, ethical. But standards of behavior in society can deviate from what is ethical. An entire society can become ethically corrupt. Nazi Germany is a good example of a morally corrupt society.

Moreover, if being ethical were doing "whatever society accepts," then to find out what is ethical, one would have to find out what society accepts. To decide what I should think about corruption, for example, I would have to take a survey of American society and then conform my beliefs to whatever society accepts. But no one ever tries to decide an ethical issue by doing a survey.

Further, the lack of social consensus on many issues makes it impossible to equate ethics with whatever society accepts. If being ethical were doing whatever society accepts, one would have to find an agreement on issues which does not, in fact, exist.

Ethics is two things. First, ethics refers to well based

standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from stealing, murder, assault, slander, and fraud

Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well founded reasons.

Secondly, ethics refers to the study and development of one's ethical standards.

As mentioned above, feelings, laws, and social norms can deviate from what is ethical. So it is necessary to constantly examine one's standards to ensure that they are reasonable and well-founded.

Ethics also means, then, the continuous effort of studying our own moral beliefs and our moral conduct, and striving to ensure that we, and the institutions we help to shape, live up to standards that are reasonable and solidly-based.

What is Ethics and Morality?

Ethos (Greek) and Mores (Latin) are terms having to do with “custom,” ”habit,” and “behavior.

Ethics is the study of morality. (a) What is morality? (b) What is the study of morality?

Ethics: Study of morality Branch of Philosophy

Morality System of Rules Rules of conduct

What is business ethics?

Ethics – study of what is good and evil, right

and wrong, and just and unjust Business ethics - study of what is good and evil, right and wrong, and just and unjust in business Principles and standards that guide behavior Discussions of business ethics frequently emphasize unclear situations However, applying clear guidelines resolves the majority of them

Determinants of Business Ethics

Individual factors Organizational factors/relationships Organizational culture Ethical climate Opportunity/environment What encourages or discourages

unethical behavior?

Why be concerned with ethics?

Laws are insufficient and do not cover all aspects or gray areas of a problem

Free-market and regulated-market mechanisms do not effectively inform

owners and managers about how to respond to complex crises

ETHICAL BEHAVIOR

Ethical behavior is that which is morally accepted as "good" and "right" as opposed to "bad" or "wrong" in a particular setting.

At organizational level, the ethical failures occurs because the norms are not properly designed. Ethical failure are essentially control failures. While internal auditing can check frauds and misappropriates the ethical misconduct can be checked only through properly designed norms and standards.

Maciariello and Kirby provide a cybernetic model of instituting ethics program in organisations:

Decide the desired state set the ethical goals in terms of

compliance with all laws. Translate the ethical goals in terms of code of conduct and ethics policies.

Measure the current stateFind the current state of compliance of

laws, find the deviations from the code of conduct. In essence, conduct an ‘ ethical audit’.

Initiate remedial actionInvestigate the alleged violations and

initiate a remedial action to ensure that the loose ends are tightened and to prevent reoccurrence of unethical practices, issue proper warning signals to prevent unethical behavior.

It is better to foster ethical behavior than to police ,catch and punish unethical behavior.

Those indulging in unethical behavior may need ‘ ethics counseling’ for moral and ethical correction.

WHY INDIVIDUALS AND ORGANIZATIONS INDULGE IN UNETHICAL CONDUCT AND PRACTICES?

The overall environment is one of corruption and moray decay, leading to legitimization of unethical behavior on the part of citizens. This is a macro level problem that should be tackled by the enlightened citizens of the nation through a collective voice and collective choice.

The effective management of ethical issues requires that organizations ensure that their managers and employees know how to deal with ethical issues in their everyday work lives. Therefore, organizational members must first understand some of the underlying reasons for the occurrence of unethical practices.

Some common rationalizations used to justify unethical behavior are easily derived from Gellerman (1986):

Pretending the behavior is not really unethical or illegal.

Excusing the behavior by saying it's really in the organization's or your best interest.

Assuming the behavior is okay because no one else would ever be expected to find out about it.

Expecting your superiors to support and protect you if anything should go wrong.

Some Surveys

International Survey of more than 300 companies worldwide – top ethical issues

– Employee conflict of interest 91%, – Inappropriate gifts 91%, – Sexual Harassment 91%, – Unauthorized Payments 85% Wall Street J survey of 1400 working women -Managers lying, expense-account abuses,

taking credit for other’s work

Surveys - Incidence of unethical behaviorsin areas (from a Wall Street Journal survey):

– Government: 66% – Sales 51% – Law 40% – Media 38% – Finance 33% – Medicine 21% – Banking 18% – Manufacturing 14%

Common examples

Individual values and the company– Receiving or offering kickbacks– Stealing from the company– Padding expense accounts to obtain reimbursements for questionable business expenses – Divulging confidential information or trade

secrets– Using company property and materials for personal use– Conflict of interest

Language of Ethical Lapse

Everybody else does it – Not a valid choice – specially if law is

being broken If we don’t do it, someone else will That’s the way it has always been

done We’ll wait until the lawyers tell us it’s

wrong – What’s legal may not be ethical It doesn’t really hurt anyone The system is unfair

The nature of ethical decisions –Complex and Difficult

Managers confront facts and values when making decisions

Knowledge of consequences are limited

Existence of multiple constituencies conflicts of interest

Multiple constituencies can also use ethical arguments to justify their position

The cost of unethical business practices?

In all cases, companies had to pay fines or are suffering bad publicity

But unethical behaviors hurt organizations financially also.

Conclusion

Nature of ethical problems– Ethical standards change over time– Human reasoning is imperfect– Ethical standards and principles are not

always adequate to resolve conflicts- Which theory should be used?– Each approach has strengths and

weaknesses– Need to look at situation and apply best

analysis/judgment