18 Ethical Practices in Management- Some Examples

1.      Learning Outcome

2.      Introduction

3.      Ethics

4.      Business ethics

5.      Rules of Ethics

6.      Nature of ethics

7.      Business ethics as discipline

8.      Teaching of ethics in management schools

9.      Arguments in favour of teaching ethics

10.  Arguments against teaching ethics

11.  Summary

1.    Learning Outcome:

• After completing this module, the students will be able to learn about the following:
• Ethics
• Business ethics Rules of ethics Nature of ethics
• Business ethics as discipline
• Teaching of ethics in management schools Arguments in favour of teaching ethics
• Arguments against teaching ethics

2. Introduction

Today this idea is growing very fast that the business cannot be transacted for nay long time without taking into consideration the ethics, values and ethos for the business. Business ethics have emerged as the separate discipline in itself which supplement the entire management discipline. With the emergence of the concept of the social responsibility of the business, the business ethics concept has been considered as a part of the management. In the 1960s decade when the social awareness movements were raised, the expectations of the businesses to use their massive financial resources and the social influence in addressing the social problems such as poverty, crime, environmental protection equal rights, public health and improving education. There were many people who asserted that the businesses were making profit from using the country’s resources, these businesses owed it to our country to work to improve the society as well. Many researchers, business schools and managers have recognised this broader constituency and in their planning and operations have replaced the word stockholder and stakeholder, including employees, customers, suppliers and wider community.

3.    Ethics

The word ethics is derived from Greek word “Ethos” which means custom, usage and habit. The word ethics means character, belief, and standards that pervade a group, a community or group of people. Ethics concerns attempts to distinguish right from wrong, good from bad, and constitution of desirable conduct in a particular set of social circumstances. In fact the term ethics refers to value oriented decisions and behaviour.

4.    Business ethics

Business ethics are also known as corporate ethics. Business ethics is a set of applied ethics and professional ethics that examines the ethical principles and morals or ethical problems that arise in a business environment. It applies to all the aspects of the business conduct of individuals and business organisation as a whole.

5.    Rules of ethics

• The following are the forms of the golden rules in ethics. Each of these forms the basis of all human values:
• Everything you want others to do to you, you should do to others.
• Do not do to others anything, which you do not wish them to do to you. Do not do anything to others that if done to you would harm you.

6.  Nature of ethics

Ethics are the centre functioning in the organisation. The natures of ethics are as follows:

Normative science: It is science because ethics has certain rules which need to be followed. Ethics are said to be normative science because it deals with the ideas.

Ethics are concerned with the ideals of good. A normative science determines norms, ideals, standards or values. But ethics is not a natural or pure science like physics and chemistry.

Self imposed: Ethics is a code of conduct and behaviour which we need to adhere to ourselves only. Ethical principles are self imposed. The laws of the state are extremely imposed on the individual by the state. Non-compliance of laws may attract punishments.

Morality: Ethics have moral connotations. Morality is the essence of ethical behaviour and it should be reflective. Any conduct is based on social rules and understanding of duties. In cases where there is a conflict of duties, conventional morality fails. Conventional morality ensures well being and survival of the society.

Discipline: Ethics are observed in the spirit of self-discipline. Ethics follow the rule of discipline. Discipline is necessary for the ethics and it plays a vital role in ethics. Ethics contain principles, rules and regulations.

7. Business ethics as discipline

When the organisations realised that they need to radiate the more positive image to the public, the recent discipline of public relations was born. When the organisations realised that they needed to manage their human resources in a more efficient manner, the recent discipline of human resources was born. Similarly as commerce began to be more complicated, the organisations realised that they needed more guidance to ensure their dealings supported the common good and do not harm others, this lead to the need for the emergence of the business ethics concept. Today, ethics in the workplace can be managed through the use of codes of ethics, codes of conduct, role of ethical committees, policies and procedures and also the procedures with regard to the resolving of the ethical dilemmas and ethical training.

With the growing number of corporate scandals all over the world, the business schools all over the world became conscious of the fact that the traditional value free management education is to be blamed for this disgrace. Not it is well known that the corporate misconduct and criminality is caused due to lack of training of students in business ethics. In fact, the personal values that students get from their families get stifled by the value free education they get in business schools. In fact, the business schools kill their potential of becoming ethical leaders. Therefore, there is need to instil the values and ethics among the business students at the business schools so that business frauds and misconducts can be avoided in the future. Thus, today the study of business ethics becomes very important today.

8.    Teaching of ethics in management schools

Today, at the national and at the global level, the ethics have acquired a distinct niche and have been included as a main course in the management education. It is the sense of soul of the business operations. As an academic discipline, business ethics emerged in 1970s. Business ethics is a part of the philosophy of business, branch of philosophy that deals with the philosophical, political and ethical underpinnings of the business and economics. Business ethics operate on the premise that the ethical operation of a private business is possible. Very often it is held that the business is not bound by any ethics other than abiding by the law. This view is given by Milton Friedman. He held that the corporations have the obligation to make profit within the framework of the legal system. He made it explicit that the duty of the business leaders is to make as much money as possible while confirming to the basic rules of the society. As stated by Koehn Dary in his address to the Society of Business Ethics, that the business schools instil wrong values or ignore issues critical to developing integrity. Therefore, the business schools must have business ethics in their curriculum so that the stronger ethical systems in the corporate world can be developed. Some of the common changes that the business schools have made to strengthen ethical training are as follows:

• Instituting mandatory courses on ethics, professional responsibility or corporate social responsibility
• Integration of the ethical concepts into non-ethics classes such as accounting and management.
• Promotion of service learning Implementing on oath
• Implementing the codes of honour
• Teaching of business ethics includes the following:
• Stimulating the moral thoughts
• Developing problem solving skills Creating a sense of moral obligation Recognising the ethical dilemmas
• Tolerating or reducing the ambiguity

However, the main question is how one acquires ethics. There are some skills that one can learn by reading books, and by training also. For example , how to run computer, how to do calculations, etc.

9.    Arguments in favour of teaching ethics

Some of the arguments in favour of teaching business ethics in the business schools are as follows:

Values are relative: Values are relative and these are different for different people. Every individual holds one value as the prime, more significant and precious for his existence. Another one holds some other values. This does not mean we have only one value to go with. However, the preferences are different and subjective. Accordingly, the interests we serve of the organisation are different. Someone upholds honesty will not dishonest behaviour.

Values shaped by external environment: Values are developed under the influence of the external environment. Values cannot be fully developed on their own. They develop in a conductive environment. We need to assess the environment and take due precaution to let our values develop and prosper. Values need time to take root in one’s personality , it is not an overnight process.

10.  Arguments against teaching ethics

Some of the arguments against the teaching business ethics in the business schools are as follows:

People are born with certain values: People have a set of value system of their own.

Values are inborn. They cannot be enhanced by reading or training. One’s conditions at birth are responsible for the establishment of the certain values in that individual. Unless that condition and upbringing are changed, the values cannot be taught externally.

Values are cultured in home: Values are imparted in families at home. This is an extension of the previous cause. A child’s first character is built by his parents as he fist come in the contact of his parents not the society. Therefore, the upbringing or education by parents plays an important role in the definition of one’s values. A truly moral person is the one who has developed a moral disposition through the development of the right habits and behaviour in the formative years.

Values are eternal: Values are eternal and absolute. There cannot be external values. Ethics are internal character traits such as loyalty, sensitivity, justice, compassion and honesty. These may be reinforced in an academic course but they really do not originate there. These cannot e added to one person like clothes. These are the internal traits of a person.

11.  Summary

Today this idea is growing very fast that the business cannot be transacted for nay long time without taking into consideration the ethics, values and ethos for the business. Business ethics have emerged as the separate discipline in itself which supplement the entire management discipline. With the emergence of the concept of the social responsibility of the business, the business ethics concept has been considered as a part of the management. In the 1960s decade when the social awareness movements were raised, the expectations of the businesses to use their massive financial resources and the social influence in addressing the social problems such as poverty, crime, environmental protection equal rights, public health and improving education. There were many people who asserted that the businesses were making profit from using the country’s resources, these businesses owed it to our country to work to improve the society as well. Many researchers, business schools and managers have recognised this broader constituency and in their planning and operations have replaced the word stockholder and stakeholder, including employees, customers, suppliers and wider community. The word ethics is derived from Greek word “Ethos” which means custom, usage and habit. The word ethics means character, belief, and standards that pervade a group, a community or group of people. Ethics concerns attempts to distinguish right from wrong, good from bad, and constitution of desirable conduct in a particular set of social circumstances. In fact the term ethics refers to value oriented decisions and behaviour. Business ethics are also known as corporate ethics. Business ethics is a set of applied ethics and professional ethics that examines the ethical principles and morals or ethical problems that arise in a business environment. It applies to all the aspects of the business conduct of individuals and business organisation as a whole. When the organisations realised that they need to radiate the more positive image to the public, the recent discipline of public relations was born. When the organisations realised that they needed to manage their human resources in a more efficient manner, the recent discipline of human resources was born. Similarly as commerce began to be more complicated, the organisations realised that they needed more guidance to ensure their dealings supported the common good and do not harm others, this lead to the need for the emergence of the business ethics concept. Today, ethics in the workplace can be managed through the use of codes of ethics, codes of conduct, role of ethical committees, policies and procedures and also the procedures with regard to the resolving of the ethical dilemmas and ethical training.

Suggested readings and references

• Pramod Sharma, “Business Ethics and Corporate Values: An Indian Perspective”,Ravintanaya Publications, Shimla
• S.K. Bhatia, “Business Ethics and Corporate Governance” Deep & Deep Publications,New Delhi
• A.C. Fernando, “Business Ethics and Corporate Governance” Pearson Publications
• SB Gogate, “Human Values & Professional Ethics”, Vikas Publishing House, NewDelhi.
• Harris & Hartman, “Organizational Behavior” Jaico Publication House, 2002