Ethical Practice Do They Work

ETHICAL PRACTICES IN MANAGEMENT :DO THEY WORK? 2010

ETHICAL PRACTICES IN MANAGEMENT: DO THEY WORK ?

INTRODUCTION

"A moral or ethical statement may assert that some particular action is right or

wrong; or that some actions of certain kinds are so; it may offer a distinction between good

and bad characters or dispositions; or it may propound some principle from which more

detailed judgments of these sorts might be inferred - for example that we ought always aim

at the general happiness or try to minimize the total suffering of all sentient beings, or ...

That it is right and roper for everyone to look after himself. All such statements express

first order ethical judgments of different degrees of generality."

Definition of Ethics

“Ethics is defined as critical examination of standards of ‘Good & Evil, Right &

Wrong and Virtue & Vice”

The concept has come to mean various things to various people, but generally in the

context of organizations coming to know what it right or wrong in the workplace and doing

what's right -- this is in regard to effects of products/services and in relationships with

stakeholders. (We will have a discussion on stakeholders later) In times of fundamental change,

values that were previously taken for granted are now strongly questioned. For example, lifelong

employment is considered one of the best policies of organizations. However in the changed

competitive situations we find that downsizing, delivering, outsourcing production systems raise

questions about the fundamental premise of previously laid down good practices. Consequently,

there is no clear moral compass to guide leaders through complex dilemmas about what is right

or wrong.

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Meaning of Ethics

Ethics involves learning what is right or wrong, and then doing the right thing -- but "the

right thing" is not nearly as straightforward as conveyed. Most ethical dilemmas in the workplace

are not simply a matter of yes or no. For example Azim Premji tells all his employees whatever

that is, “Grey is Black”. That means even if there is some kind of doubt about a transaction, do

not go for it. We have to answer a question is there are always a right thing or Ethics depend on

situation?

We may consider Ethics to be the "Science of Conduct.” Ethics includes the fundamental

ground rules by which we live our lives. Philosophers such as Socrates and Plato have given

guidelines for ethical behaviour. Many ethicists consider emerging ethical beliefs to be legal

principles, i.e., what becomes an ethical guideline today is made into to a law, regulation or rule.

Therefore following law of the land is one of the basic virtues of Ethics. Values, which guide

how we ought to behave, are moral values, e.g., values such as respect, honesty, fairness,

responsibility, etc. Statements around how these values are applied are sometimes called moral

or ethical principles.

Ethics may be

1. Individual.

2. Organisational

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WHAT IS ETHICAL PRACTICE IN MANAGEMENT

Management is a broad perspective.

”Management is all about using all the available resources to obtain maximum profitability.”

Management is done in each and every walk in life. Management is done in Home, in School, in Institute, in Temple, on Road in any organization any firm etc.

Management can’t be done on the basis of assumptions, it has to be done on the basis of certain rules & regulations or norms or certain followings. These are called as Ethics when we talk about what is wrong -what is right, what’s legal-what’s illegal, what’s true-what’s false. Every individual possesses its own Ethics. Ethics differ from person to person, organization to organization.

As we know about MBO that is management by Objective in which keeping in mind the ultimate objective management is done. Similarly, in ethical management the Ethics (rules, Norms, codes) are kept in mind and management process is altered. Honesty, Legality, Fairness, Responsibility, Compassion, Faith, Peace, Respect etc. is some ethical practices that are being followed by the organization. Every organization formulates its own Ethics or norms and followings that each individual has to practice.

That is what called ETHICAL PRACTICE IN MANAGEMENT.

PRINCIPLES

By making business ethics its unique selling proposition, a company can accelerate its

profit making process. Business ethics incorporates certain issues and principles.

Transparency

Accountability

Honesty

Trust

Legality

Fairness

All these are interlinked, as network. If the stakeholders believe that the entity they

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are dealing with is transparent, accountable for its actions and honest in its dealings, it will

build up trust. Without a proper cohesion among these interlinked factors, it is difficult to

survive in an expanding complex business environment.

This is more relevant in case of multinationals. When companies move to other nations in search

of revenue and non saturated markets, ethics can build and sustain a reputation. The challenge of

operating in foreign markets is now more daunting because they now exist in an alert media

landscape where accountability for corporate actions is greater.

MAKING ETHICS WORK

There are several key ingredients to making an Ethics policy work in the real world.

According to the Ethics Resource Center, research has identified six basic elements:

written standards

Training

A way for employees to seek Ethics-related advice

An anonymous way for employees to report misconduct.

Clear consequences for violations.

Inclusion of ethical conduct as part of an employee's performance valuation.

HOW DO WE DESCRIBE AN ETHICAL ORGANISATION

1. They are at ease interacting with diverse internal and external stakeholder groups. The

basic guidelines of these firms make the good of these stakeholder groups’ parts of the

organizations' own good.

2. They are obsessed with fairness. Their guidelines emphasize that the other persons'

interests count as much as their own.

3. Responsibility is individual rather than collective, with individuals assuming personal

responsibility for actions of the organization. These organization guidelines mandate that

individuals are responsible to themselves.

4. They see their activities in terms of purpose. This purpose is a way of operating that

members of the organization highly value.

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The following characteristics are common the companies that are mentioned:

1. There exists a clear vision and picture of integrity throughout the organization.

2. The vision is owned and practiced at every level of management.

3. The reward system is aligned with the vision of integrity.

4. Policies and practices of the organization are aligned with the vision and no mixed

messages are being sent.

5. It is understood that every significant management decision has ethical value

dimensions.

6. Everyone is expected to work through conflicting-stakeholder value perspectives. Most

of these organizations have Ethics programs that convey corporate values, often using

codes and policies to guide decisions and behavior, and can include extensive training

and evaluating, depending on the organization. They provide guidance in ethical

dilemmas.

ETHICAL DILEMMAS : SOME SOLUTIONS

Ethical and moral degradation is vast prevalent in all societies and consequent in the

corporate world. The action strategies to control this spreading evil are as follows :

The most powerful lessons about eithics and morality do not come from school

discussion or classes in character building. They come from family life where people

treat one another with respect, consideration and love.

Good behaviour is a result of exposed culture, upbringing and the company one keep.

It is a matter of the heart and not the mind. The solution is to develop and build such a

culture.

Behaviour of a corporation is generally shaped by the behaviour of its CEO and other

leaders. Leadership is a potent combination of strategy and character. But if one have

to be without one, be without the strategy. We need CEOs who are of integrity,

people who will walk the talk in demonstrating their commitment to a value system.

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To quote noble laurete Jane Adams words ; action indeed is the sole medium of

expression for Ethics.

CEOs should realize that the best index of success of a corporation is its longevity.

The long term success of a corporation is predicted on maintaining harmonious

relations with employee, customers, vendor-partners, the government and the society.

This is predicted on trust and confidence

Building trust and confidence requires an environment where there is premium on

transparency, openness, and lack of fear, fairness and justice. The CEOs should

encourage this environment.

Create a climate of opinion which says respect is more important than wealth.

(Narayanamurthy, 2002)

Transparency in working and accountability at all levels.

Create atmosphere where each individual will get an opportunity for the realization of

his highest ethical personality.

Assess the ethical position and moral climate of the organization.

Be willing to pay the price to your ethical conduct.

TEN MYTHS ABOUT ETHICS

1. Myth: Business Ethics is a matter of religion than management.

2. Myth: Our employees are ethical so we do not need attention to business Ethics.

3. Myth: Business Ethics is a discipline best led by philosophers, academics, theologians, and

only a fad for manager.

4. Myth: Business Ethics is superfluous -- it only asserts the obvious: "do good!" Many people

react that codes of Ethics, or lists of ethical values to which the organization aspires, are

superfluous because they represent values to which everyone should naturally aspire.

5. Myth: Business Ethics is a matter preaching and it is meant for people who are unethical.

6. Myth: Many believe business Ethics is a recent phenomenon because of increased attention to

the topic in popular and management literature.

7. Myth: Ethics cannot be managed. In reality, they are managed indirectly.

8. Myth: Business Ethics and social responsibility is the same thing.

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9. Myth: Our organization is not in trouble with the law, so we are ethical.

10. Myth: Managing Ethics in the workplace has little practical relevance.

UNETHICAL BEHAVIORS

The media feeds us with information of unethical behaviours in our environment

revealing the unethical social issues that demand our attention. The newspaper accounts of

unethical behaviours in business have raised concerns about business Ethics which have led to

studies on their causes in organizations (Carroll, 1978, 4). These unethical behaviours are from

unsavoury individuals that have no moral character. In 1961, the survey conducted by Reverend

Raymond C. Baumhard S. J., showed that there was a very high concern about ethical

behaviours.

The Civil Service Commission of Philippines defined an unethical behaviour as any

behaviour prohibited by law. In a dynamic business environment, a "large gray area" exists that

makes it difficult and unclear to distinguish what is ethical. An unethical behaviour would

therefore be defined as one that is not morally honourable or one that is prohibited by the law.

Many behaviours will fall in the classification including corruption, mail and wire fraud,

discrimination and harassment, insider trading, conflicts of interest, improper use of company

assets, bribery and kickbacks, compliance procedures, ethical relations with others, disciplinary

action, fraud, illegal business donations, patent infringement and product liability (Barrcus &

Near, 1991, 12). Unethical behaviours that stimulated interest in Ethics include Watergate

events, Lockheed Scandal, the 1972 United States presidential election, illegal business

donations and bribery of foreign officials in order to induce business abroad (Carroll, 1978, 5).

Today, the most common ones are false communication, collusion, conflicts of interest, gifts and

kickbacks, health services providers' unfair practices, insider trading, discrimination and

harassment, and embezzlement.

A well known Example is SATYAM COMPUTERS.

That condition of Satyam is only because of AN UNETHICAL PRACTICE.

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Do They work??

There is vast to study about Ethics and Ethical practices, even after studying, the question still arises that the so called Ethics work in real life or not?? Or they are just confined up to the showcases of references or libraries………..???? Whether companies follow the ethic or not.???

Example of ethical management:

-Tata’s Code of Conduct

1. Quality of Products and Services

A Tata company supplies goods and services of the highest quality standards, backed by

efficient after sales service consistent with the requirements of the customers to ensure their total

satisfaction.

2. Ethical Conduct within each element.

Every employee of a Tata company, which shall include whole time directors and the

managing director, shall deals on behalf of the company with professionalism, honesty and

integrity, as well as high moral and ethical standards.

3. Financial Reporting and Records

A Tata Company prepares and maintain its accounts fairly and accurately in a accordance

with the accounting and financial reporting standards which represent the generally accepted

guidelines, principles, standards, laws and regulations of the country in which the company

conduct its business affairs. Any willful material misrepresentation of and or misinformation on

the financial accounts and reports shall be regarded as a violation of this code, apart from

inviting appropriate civil or criminal action under the relevant laws.

4. Competition

A Tata company fully strives for the establishment and support of a competitive, open

market economy in India and abroad and shall cooperate in the efforts to promote the progressive

and judicious liberalization of trade and investment by a country. Specifically, a Tata company

does not engage in activities, which generate or support the formation of monopolies, dominant

market positions, cartels and similar unfair trade practices.

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5. Equal-opportunities Employer

A Tata company shall provide equal opportunities to all its employees and all qualified

applicants for employment, without regard to their race, caste, religion, colour, ancestry, marital

status, sex, age, nationality, disability and veteran status. Employees of a Tata company shall be

treated with dignity and in accordance with the Tata policy to maintain a work environment free

of sexual harassment, whether physical, verbal or psychological.

6. Health, Safety and Environment

A Tata company strives to provide a safe and healthy working environment and comply.

In the conduct of its business affairs, with all regulations regarding the preservation of the

environment of the territory it operates in. A Tata company is committed to prevent the wasteful

use of natural resources and minimize any hazardous impact of the development, production, use

and disposal of any of its products and services on the ecological environment.

7. Corporate Citizenship

A Tata company is a good corporate citizen, not only in compliance with all relevant laws

and regulations, but also by actively assisting in the improvement of the quality of life of the

people in the communities in which it operates, with the objective of making them self-reliant.

Such social responsibility would comprise, to initiate and support community initiatives

in the field of community health and family welfare, water management, vocational training,

education and literacy and encourage application of modern scientific and managerial techniques

and expertise. This will be reviewed periodically in consonance with national and regional

priorities.

8. Group Policies

A Tata company shall recommend to its board of directors the adoption of policies and

guidelines periodically formulated by Tata Sons.

9. Gifts and Donations A Tata company and its employees shall neither receive nor offer

or make, directly or indirectly any illegal payments, remuneration, gifts donations or comparable

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benefits which are intended to or perceived to obtain business or uncompetitive favors for the

conduct of its business.

Apart from TATA INDUSTRIES, TOYOTA, ITC, INFOSYS, SAIL, P&G, HUL,

WIPRO, EXCEL, ALACRITY, AMUL etc. are considered as ethical companies.

Their progress and their position is maintained due to their ethics that they follow. They

implement it on each and every element of organization. These brands follow the Ethics and they

have reached to such a height today.

YES THE ETHICAL PRACTICES ACTUALLY WORK IN REALITY…

BENEFITS OF MANAGING ETHICS IN THE WORKPLACE

The following list describes benefits from managing Ethics in the workplace.

1. Attention to Ethics has substantially improved society.

2. Ethics programs help maintain a moral course in turbulent times.

3. Ethics programs cultivate strong teamwork and productivity.

4. Ethics programs support employee growth and meaning.

5. Ethics programs help ensure that policies are legal. .

6. Ethics programs help avoid criminal acts “of omission” and can avoid punishments.

7. Ethics programs help manage values associated with quality management, strategic planning

and diversity management -- this benefit needs far more attention.

8. Ethics programs promote a strong public image.

9. Overall benefits of Ethics programs Managing ethical values in the workplace legitimizes

managerial actions, strengthens the alignment of the organization’s culture, and improves trust in

relationships between individuals and groups.

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CONCLUSION

“What will it profit a man if he gain the whole world

but lose his own soul?”

-“Jesus Christ”

“A business that makes nothing but money, is a poor kind of business"

Henry Ford, 1863-1947

A business, which wants to survive long term and also generate good revenue, has to achieve market credibility by making brand loyalty as its main goal which can only be achieved by following ethical standards. Developing ethics will not stop unethical behavior but the efforts to follow such standards will be perceived by the people. The track record to follow such rules is vital for developing long term relationships with employees, investors, investors, clients, stockholders. If ethical is allowed to grow, it inspires stakeholders and also marks a firm as performing its functions as a socially responsible entity.

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Ethical Practice Do They Work

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