Ethics: Ethics are the principle of conduct governing an individual or a group.

Ethics relates to what

is
good
or
bad,
and
having
to
do
with
moral
duty and
obligation.
Business
Ethics:

Ethics in business refers to the application of day-to- day moral or ethical norms to
business. Business Ethics are the principles and standards that determine acceptable
conduct in business organizations.
Business Ethics in a business organization relates to a corporate culture of values,
programs, enforcement and leadership.
Business ethics is a set of principles or reasons which should govern the conduct of
business at the individual firm Level or at the collective Industry Level, by the
application of ethical reasoning to specific business situations and activities.

Requirements: Being

ethical

in

business

requires

acting

with

an

awareness

of

a).The need for complying with rules, e.g. (1) laws of the land, (ii) customs & expectations of the
community, (iii) principles of morality, (iv) policies of the organization, and () general concerns such
as
the
need
s
of
others
and
fairness.
b). How the products, service and actions of a business enterprise, can affect its stakeholders (i.e.
employees, customers, Suppliers, Shareholders, and community / Society as a whole), either
positively
or
negatively.
Distinguish between Morals and Ethics.
Particulars

Morals

Ethics

1.Meaning

Moral is defined as relating to principles of right and

wrong.

Ethics relates to what is good or

bad, and having to do with oral
duty and obligation.

2. Root word
& Analysis

Latin word mos, meaning custom. Custom is

defined by a group over time. Societies have Custom.

Greek word ethos, meaning

character. Character is a
personal
attribute.
People have character

3. Nature

Morals are accepted from an authority. (cultural,

religious, etc.)

Ethics are accepted because

they;; follow from personally
accepted principles.

4. Expression

Moral Norms can usually be expressed as general rules,

and statement, e.g. always tell the truth.

Ethical Norms are comparatively

abstract and cannot be described
in general rules and statements.

5. Absorption

Morals are typically first absorbed as a child from

family, friends, school, religious teachings and other
associations.

Ethics are adopted/ absorbed by

an individual gradually by taking
reasonable actions / decisions in
appropriate situations.

6. Scope

Morals work on a smaller scale than ethics, more

reliably, but by addressing human needs for belonging
and emulation.

Ethics has a much wider scope,

and includes evaluation of moral
standards of an individual or
society, to see whether these

standards are reasonable or

unreasonable
in
concrete
situations and issues.
Some of the factors justifying the need for business ethics are:

Society bestows upon businesses the authority to own and use land & natural resources. In return
society has the right to expect that productive organization will enhance the general interest of
consumers, employees & community. Society may also expect that organization will honour existing
rights and limit their activities within the bounds of justice.
The products and services of an organization and the actions of its members can affect its
stakeholders i.e. employees, the community and society as a whole, either positively or negatively.
Business ethics provides guidance regarding the expectations of the community, principles of
morality, consequences & complications of their actions, etc. Hence, business ethics are extremely
needed for well-being of organization as well as community as a whole.

Importance of Business ethics in present corporate environment.

Ans. The term Ethics has a variety of meanings. One of the meaning of Ethics are The Principles
pf Conduct governing an individual or a group. Another definition describes ethics as relating to what
is good or bad and having to do with moral duty and obligation.
Business ethics is that set of principles or reason which should govern the conduct of business
both at the individual or collective level by the application of ethical reasoning to specific business
situations & activities.
Requirements:
Being ethical in business requires acting with an awareness of:a) The need for complying with rules. Egg.:- Laws of land, customs & expectation of community,
principles of morality, policies of organization & General concerns such as the needs of others.
b) How the products, services and actions of a business enterprise can effect its stakeholders i.e.
employees, the community and society as a whole, either positively or negatively.
Present corporate scenario of constant change & global competition, ethics is an important
factor because it builds trust and confidence in business relationships and a positive image of the
company ethical programs cultivates a strong team work & productivity, support employee
recruitment, retention and growth. Ethical actions may result in negative publicity declining sales &
even legal action as demonstrated by the recent corporate scandals leading to the downfall of giant
corporation like ENRON.

i)

Benefits of Business ethics.

Helps to build a strong public image.

ii)
iii)
iv)
v)
vi)
vii)

Cultivates strong team work & productivity among employees.

Helps to manage values associated with quality management, strategic planning &diversity
management.
Helps in creating legal policies.
Avoids criminal acts & lower fines.
Supports employee growth.
Attention to be substantially improves society.
RELATIONSHIP BETWEEN BUSINESS AND ETHICS
Functional Area Ethics: Functional areas of business are likely to confront ethical issues. Accounting
is a critical function of any business. Accounting statement reveal to the managers and owners about
the financial soundness of a company. Managers, investors, regulating agencies, tax collectors and
absolute requirements of the accounting function. Professional accounting organizations have evolved
generally accepted accounting standards whose purpose is to establish uniform standards for reporting
accounting data. When they are followed, these standards ensure a high level of honest and ethical
accounting
disclosures.
Rarely
are
they
followed
in
practice.
Ethical dilemmas crop up in purchasing departments where strong pressure are felt to obtain the
lowest possible prices from suppliers and where suppliers and where suppliers too feel a similar need
to bag lucrative contracts ,Bribes, kickbacks and discriminatory pricing are temptations to both the
parties.
Marketing is another area of the ethics issue. Pricing, promotions, advertising, product information,
relations between agencies and their clients and marketing research are potential areas
of ethical dilemmas. Then there is thee area of sophisticated communication technology which is
grossly abused or misused to realize ones ambitions.

WHAT IS BUSINESS ETHICS?

Lets start with what is ethics? Simply put, 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 in a great
deal of business ethics literature. Most ethical dilemmas in the workplace are not simply a matter of
Should
Bob
steal
from
Jack?
or
Should
Jack
lie
to
his
boss?
The concept has come to mean various things to various people, but generally its coming to know
what is right or wrong in the workplace and doing whats right-this is in regard to effects of
products/services and in relationship with stakeholders. Wallace and pekel explain that attention
to business ethics is critical during times of fundamental change-times much like those faced now by
business, both nonprofit and for profit .In times of fundamental change, values that were previously
taken for granted are now strongly questioned. Many of these values are no longer followed.
Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what
is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should
act .Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and

managers are struggling in times of crises and confusion, they retain a strong moral compass.
However, attention to business ethics provides numerous other benefits; as well as listed later in this
document. Note that many people react that business ethics, with its continuing attention to doing
the right thing. Only asserts the obvious (be good, dont lie etc.), and so these people dont
take business ethics seriously. For many of us, these principles of the obvious can go right out the
door during times of stress. Consequently, business ethics can be strong preventative medicine.
Anyway, there are many other benefits of managing ethics in the workplace. These benefits are
explained later in this document.
RELATIONSHIP BETWEEN BUSINESS AND ETHICS

Functional Area Ethics: Functional areas of business are likely to confront ethical issues. Accounting
is a critical function of any business. Accounting statement reveal to the managers and owners about
the financial soundness of a company. Managers, investors, regulating agencies, tax collectors and
absolute requirements of the accounting function. Professional accounting organizations have evolved
generally accepted accounting standards whose purpose is to establish uniform standards for reporting
accounting data. When they are followed, these standards ensure a high level of honest and ethical
accounting
disclosures.
Rarely
are
they
followed
in
practice.
Ethical dilemmas crop up in purchasing departments where strong pressure are felt to obtain the
lowest possible prices from suppliers and where suppliers and where suppliers too feel a similar need
to bag lucrative contracts ,Bribes, kickbacks and discriminatory pricing are temptations to both the
parties.
Marketing is another area of the ethics issue. Pricing, promotions, advertising, product information,
relations between agencies and their clients and marketing research are potential areas
of ethical dilemmas. Then there is thee area of sophisticated communication technology which is
grossly abused or misused to realize ones ambitions.
ETHICS TRAINING PROGRAMMES

Nearly all Companies which take ethics seriously provide training in ethics for their manager and
employees and employees. Such training programs acquaint company personnel with the official
company policy on ethical issues, and they show how those policies can be translated into the
specifics of every day decision making .Often simulated cases based on actual events in the company
are used to illustrate how to apply ethical principles to on the job problems.

FORMULATION OF ETHICAL VALUES

Depending on the size of the organization, certain roles may prove useful in managing ethics in the
workplace. These can be full-time roles or part-time functions assumed by someone already in the
organization. Small organization certainly will not have the resources to implement each the following
roles using different people in the organization. However, the following functions point out
responsibilities
that
should
be
included
somewhere
in
the
organization.

1.
The
organizations
chief
executive
must
fully
support
the
program:
2.
Consider
establishing
an ethics committee
at
the
board
level:
3.
Consider
establishing
an ethics management
committee:
4.
Consider
assigning/developing
an ethics officer:
5.
Consider
establishing
an
ombudsperson:
6.
Note
that
one
person
must
ultimately
be
responsible
for:
7. Review any values needed to adhere to relevant laws and regulations:
8. Review which values produce the top three or four traits of a highly ethical and successful product
or
service
in
your
area,
e.g.
for
accountants:
9.
Identify
values
needed
to
address
current
issues
in
your
workplace:
10. Identify any values needed, based on findings during strategic planning:
11.
Consider
any
top ethical values
that
might
be
prized
by
stakeholder:
12. Collect from the above steps, the top five to ten ethical values which are high priorities in your
Organization:
13.
Examples
of ethical values
might
include:
a)
Trustworthiness;
Honesty,
integrity,
promise
keeping,
loyalty.
b)
Request;
Autonomy,
privacy,
dignity,
courtesy,
tolerance,
acceptance.
c)
Responsibility;
Accountability,
pursuit
of
excellence.
d)
Caring;
Compassion,
consideration.
Giving,
sharing,
kindness,
loving.
e) Justice and fairness; Procedural fairness, impartiality, consistency, equity, quality, due process.
f) Civic virtue and citizenship; Law abiding, community service ,protection of environment.
14.
Compose
your
code
of ethics.
15. Include wording that indicates all employees are expected to conform to the valus stated in the cod
of ethics:
16.
Obtain
review
from
key
members
of
the
organization:
17. Announce and distribute the new code of ethics (unless you are waiting to announce it along with
any
new
codes
of
conduct
and
associated
policies
and
procedures):
18.
Update
the
code
at
least
once
a
year:
19. Note that you cannot include values and preferred behaviors for every possible ethical dilemma
that
might
arise:
20.
Examples
of
a
code
of ethics:

BENEFITS OF ETHICS MANAGEMENT

Many people are used to reading or hearing of the moral benefits of attention to business ethics.
However, there are other types of benefits, as well. The following list describes various types of
benefits
from
managing ethics in
the
workplace.
1.
2.

Attention

to business

Ethics program

help

ethics has
maintain

moral

3.

Ethics programs

cultivate

strong

4.

Ethics program

support

employee

substantially
course
teamwork
growth

improved
in

society.

turbulent
and
and

times.

productivity.
meaning.

5. Ethics programs are an insurance policy they help ensure that policies are legal.
6.

Ethics programs

help

avoid

criminal

acts

of

omission

and

can

lower

fines.

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

9. Overall benefits of ethics programs.

strong

public

image.