Unit - 5

Business Ethics & Corporate

Governance

Organizational Ethics

• It is a code of moral principles & values that govern the behaviors of a person or a group w.r.t. what is right & wrong.

• Organizational ethics are the standards used to determine how a business and its managers ought to behavior in the workplace and larger social environment.

• Globalization has brought about greater involvement with ethical considerations and most importantly achieving competitive advantage through business ethics.

• Business Ethics are moral principles that define right & wrong behavior in the business.

Views on Ethical Behavior

There are different views on the constituents of Ethical Behavior: -

1. Utilitarian View: - It says that ethical behavior is the one which does good to largest number of people.

2. Individualism View: - Behavior which is in the interest of the individuals long term benefit.

3. Moral – Right view: - Behavior which takes care of fundamental rights that are enjoyed by all Human Beings.

4. Justice View: - According to this Ethical Behavior is which is fair and impartial towards people that is treating everyone equally

Ethics in Business

• Ethically responsible company is one which has developed a culture of caring for people & environment.

• It is a Top-Down approach. i.e. it flows from top management.

• Globalization has brought about greater involvement with ethical considerations and most importantly achieving competitive advantage through business ethics.

• In today’s scenario It is the necessity of being ethically proactive company rather than being ethically reactive company.

Ethics in Marketing

• Ethical attacks on marketing will continue as long as there is difference in opinion over the right and wrong moral values.

• In today's competitive environment it is very difficult for firms to stay with in the law. One must try to have some new ethical standards for marketing practice.

• Deceptive advertising i.e. that gives false information to the consumers about the benefits of the product should be taken care properly.

Ethics in HR

• Companies should try and avoid carelessness while hiring. Over ambitious, dishonest & wealth oriented people are dangerous most of the time.

• Proper training should be give to employees. They should know the working environment & culture properly.

• Promotions & punishments can also lead to the condition where an employee can behave unethically.

• Proper monitoring & performance discussion is to be made regularly with the supervisors.

• Management should deal politely & patiently with employee unions. These unions should not be taken as enemies.

Globalization

There are various issues raised by different countries on the working of MNC’s.

• Paying of low wages to labors is common in less developed countries.

• Providing unsafe working conditions.

• Violation of various human rights.

• Proper share of various taxes according to the policies of the country.

• Extensive utilization of natural resources without developing the society & related people.

Guidelines for Global Companies

Two kind of guidelines have been offered to global companies. They are: -

1. Human Rights.

2. Welfare.

The Human Rights guideline says that: -

• Physical Security.

• Minimal Education.

• Freedom of speech.

• Freedom from torture.

• Nondiscriminatory treatment.

• To provide physical security.

Welfare guideline says: -

• It should be good or positive for the host country.

• Company should contribute in the development of host country.

• Human rights is to be respected.

• All the taxes should be paid genuinely.

• Not to intentionally harm employees.

• To respect the local culture & to avoid doing things which is against the local culture.

Cross cultural Issues

• Globalization has made employees of any organization to be more internationally aware.

• Many companies are forced to work with other companies abroad & to develop international relations with them.

• Regular involvement in the process may result to various difficulties in adjusting because of different cultures.

• The major reason is employees bring their social culture to work with others in different form such as language & customs.

According to a research there are 5 dimensions with highest magnitude of differences among employee. They are: -

1. Individualism.

2. Power Distance.

3. Uncertainty Avoidance.

4. Masculinity or Femininity.

5. Time Orientation.

Work Force Diversity

• Diversity in the workplace refers to differences we recognize in ourselves and others, such as: Gender, Culture, Race, Ethnicity, Age, Religion, Sexual Orientation, Family Structures, Physical and Mental

Disabilities or Challenges.

• Diversity is about learning from others who are not the same.

• It is about dignity and respect for all, and about creating workplace environments and practices that encourage learning from others and capture the advantage of diverse perspectives.

• The firms acquire competitive advantage when they recognize and leverage the distinctive talents that their different employees bring in.

Sexual Harassment: Unequal Power in the Workplace

What is sexual harassment?

• Unwelcome advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature

• Any unwanted activity of a sexual nature that affects an individual’s employment and creates a hostile work environment.

• It includes unwanted physical touching or continuous requests for dates when it is clear that the other person is not interested.

• Any kind of coercive touching threats that a person will lose their job if they sexual proposition.

• Not only women but men also face these types of act.

Steps for Managers to take for preventing Sexual Harassment

• Make sure a policy against it is in place.

• Ensure that employees will not encounter retaliation if they file a complaint.

• Investigate every complaint and include the human resource and legal departments.

• Make sure offenders are disciplined or terminated.

• Set up in-house seminars and training.

Equal Employment Opportunity (EEO)

• Equal opportunity employment refers to the approach of the employers to ensure the practice of being fair and impartial in the employment process.

• Equal employment opportunity (EEO) is a broad concept holding that individuals should have equal treatment in all employment-related actions.

• Various laws have been passed to protect individuals who share certain characteristics, such as race, age, or gender.

A protected class is composed of individuals who fall within a group identified for protection under equal employment laws and regulations. Many of the protected classes historically have been subjected to illegal discrimination.

The following bases for protection have been identified by various federal laws: -

• Race, Ethnic origin, Color, Gender (women, including those who are pregnant) • Age (individuals over 40) • Individuals with disabilities (physical or mental) • Religion (special beliefs and practices)

Protected Class

1. Changes in Societal Values: -

• People should be rewarded according to the worth of their contributions.

• Profit Motive – If employer is not considering women and minorities then they are not using large reservoir of human talent available.

2. Economic status of women and minorities.

3. Emerging role of government regulation.

There are three factors that led to the development of EEO: -