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Ethics

ETHICS COMPARED
E
ETHICS MORALS VALUES

Theories about rules. Moral Rules that we Likes and dislikes,


follow
Ordering, questioning, things that we consider
awareness, Double Connotations- worth and things that
investigation of what Positive: goodness, we don't consider worth
we believe guidance, humanitarian
Are we justified in attitude Moral preferences
believing it? Is it Negative: Bigotry
consistent? Should we repression, double
remain open to other standards,
beliefs?
ETHICS DEFINED

• Inquiry into the nature and grounds of morality


where the term morality is taken to mean moral
judgments, standards and rules of conduct
- Paul Taylor

• The study of the general nature of morals and of


specific moral choices; moral philosophy; and
the rules or standards governing the conduct of
the members of the profession.
-The American Heritage Dictionary of the English
Language
Factors Affecting Ethical/ Unethical
Decision-Making
ISSUE INTENSITY
MAGNITUDE OF CONSEQUENCES
SOCIAL CONSENSUS,
PROBABILITY EFFECT,
PROXIMITY,
CONCENTRATION EFFECT

INDIVIDUAL FACTORS
1.PERSONAL MORAL PHILOSOPHY ETHICAL /UNETHICAL
2.STAGE OF MORAL DEVELOPMENT DECISION

ORGANISATIONAL FACTORS
1.ORGANISATIONAL CULTURE
2.CO WORKERS AND SUPERIORS
3.OPPURTUNITY
PERSONAL MORAL PHILOSOPHY

Philosophy Meaning
1.Teleology Stipulates that acts are morally right or
acceptable if they produce some desired
result, such as realization of self interest or
utility

#Egotism Defines right or acceptable actions as those


that maximize a particular person's self
interest as defined by the individual
#Utilitarianism
Defines right or acceptable actions as those
that maximize total utility or the greatest
good for the greatest number of people
Deontology Focuses on preservation
of individual rights and
on the intentions
associated with a
particular behaviour
Relativist Evaluated ethicalness
subjectively on the basis
of individual and group
experiences
I act or don't act in a certain way
because:
• I fear being caught by the authorities
Stage 1 Punishment and obedience

• It serves my needs.
Stage 2 Individual instrumental purpose

• It leads to well being of others along with my obedience


to rules
Stage 3 Mutual interpersonal expectations

• It is my duty towards the society


Stage 4 Social system and consicence maintainence
I act or don't act in a certain way
because:
• I have to uphold basic rights, values and legal contracts of the
society.
Stage 5 prior rights, social contracts

• I follow universal ethical


principles that everyone should follow
Stage 6 universal ethical principles

KOHLBERG`S MODEL OF COGNITIVE


MORAL DEVELOPEMENT
Stake holders and Conflict of
•Conflict of
Interest
Interest
exists when
an employees
individual banks customers
must
choose
Share
whether to media
holders
advance
his/her own Company
interests, Trade
the investors
associations
organizatio
n’s, or
others’ government Environment
communities
What is Organizational Culture:
The behavioral patterns, concepts, values,
beliefs, customs, rules, ceremonies and
ways of solving problems, accepted,
shared and circulated throughout the
organization.
Framework of Organizational
Typologies (by N.K.Sethia and
C M.A.Von Glinow)
O
N
C high Caring integrative
E
R
N
F
O
R apathetic exacting
low
P
E
O
P
L
E low high

CONCERN FOR PERFORMANCE


-Communicating the Codes:
Free Access
Training programmes
Meetings
Internal communiation
-Establishing Robust processes for handling
ethical issues:
Living statements of ethics
Importance of Leadership
Guiding Motivating
Enforcing Directin

Leadership Styles according to Daniel Goleman:


1.Coercive leader
2.Authoritative leader
3.Affiliative leader
4.Democratic leader
5.Pacesetting leader
6.Coaching leader
• The Power of the Leader:
1.Reward
2.Coercive
3.Legitimate
4.Expert
5.Referent
Creating organizational Symbols
• However, it is these ethical exceptions that are
increasingly becoming the rule. N.R. Narayana
Murthy, the chairman of Infosys Technologies, the
company with the largest market capitalization today,
does not lounge in a Lexus or breeze through in a
BMW to work. His office in Bangalore does not have
an airconditioner. Murthy may have the vision and the
drive to make it happen, but he does not know
driving. So, on Saturdays, when his driver takes his
weekly off, his wife drives him to the bus stop from
where the venerable chairman boards the Infosys bus
to work.
The Role of Ethics in Performance:

Employee Commitment

Investor Loyalty
Ethical Climate Profits
And Trust

Customer
Satisfaction and Trust
• What are GREEN Issues?
• Who is Responsible for GREEN Issues?
• What are the implications of GREEN
Issues?
Shades of Green Suggested by
Edward Freeman
Light Green /Legal Green:
• It involves complying with the law.
• It relies on the public processes to drive its
strategy.
• Is it profitable???
• It creates possibilities for competitive
advantage.
• Market Green:
• Rather than focusing on public policy this approach
focuses on customers.
• It attempts to create and sustain competitive
advantage by paying attention to environmental
preferences of customers.
• E.g. Macdonald`s decision to ban Styrofoam.
Selling it Green
• BP Plc.
• Chevron Corp.
• General Electronics
• Ford Motor Company
• Dow Chemical Company
• Wal-Mart
Green Washing
• Disinformation disseminated by an
organization so as to present an
environmentally responsible public image
The Role of Stakeholders
• Supplying Tangible and Intangible
Resources
• Two-way power structure
• Dictate the standards of what is
acceptable or unacceptable corporate
behaviour or practices
• Primary and Secondary Stakeholders
• Stakeholder Green:
• This approach seeks to create and sustain
competitive advantage by responding to the
environmental preferences of stakeholders.
• 2001 Sony Lost $ 85million when illegal
Cadmium was found in the cables bought from
suppliers…
• Dark Green:
• To create and sustain value in a way that
sustains and cares for the earth.
• It upholds the idea of living with earth and
treating it with respect.
SUSTAINABLE
DEVELOPMENT??
• According to Gro Bruntland the Prime
Minister of Norway who has authored the
U.N. report
• “to meet the needs of the present withot
compromising the ability of future
generations to meet their own needs”
Kyoto Protocol
• An agreement made under United Nations
Framework Convention on Climate
Change (UNFCC).
• List fo Green House Gases that lead to
Greenhouse Effect.
• Commitment to bring down GHG by 2012
• Fixed Targets for Emission Reductions- at
least 5%-purchase- estimate of reduction
of at least 1.9 billions
Kyoto Protocol

Emission
Reductions

Tweaking Existing Clean


Technology Development
Mechanism
(CDM)
Clean Development Mechanism

• CER Certified Emission Reductions

• Carbon Exchange
CDP Carbon Disclosure Project
284 Institutional Investors- 2400 companies
asked to fill up the 8 page questionnaire-
Reliance
NTPC
ICICI
Ranbaxy
Infosys
Bombay Stock Exchange
• TERI (The Energy and Resource Institute )
Global Compact that require signatories to
"support a precautionary approach to environmental challenges" (Principle 7);
"undertake initiatives to promote greater environmental responsibility"
(Principle 8)
promote the "diffusion of environmentally friendly technologies" (Principle 9).
Special Action Groups
• Conceding to the demands of citizens groups and
Greenpeace, Unilever has agreed to the permanent
closure of its polluting mercury thermometer factory in
Kodaikanal, and to undertake a clean-up of 5.3 tons of
mercury wastes dumped by the company at a local
scrapeyard. Amidst denials by the company of
environmental double-standards or any illegal toxic
waste dumping, Greenpeace, Unilever ex-workers and
Kodaikanal community groups exposed and cordoned off
one of Unilever's illegal dumpsite in a crowded part of
the Southern Indian tourist town.
The Centre for Science & Environment (CSE) has adjudged ITC's Paperboard Unit at
Bhadrachalam, Andhra Pradesh, as India's most environment-friendly paper mill.
CSE's Green Rating Project evaluated 30 paper mills accounting for over 60% of
production of paper in India  27 Sep 2004 : The Centre for Science & Environment
(CSE) has adjudged ITC's Paperboard Unit at Bhadrachalam, Andhra Pradesh, as
India's most environment-friendly paper mill. CSE's Green Rating Project evaluated
30 paper mills accounting for over 60% of production of paper in India. It has now
awarded the highest rating to the Bhadrachalam Unit for 'leadership in upgrading
technology to eliminate elemental chlorine use and for its initiative in promoting farm
forestry'. ITC's Paperboard Unit in Bhadrachalam is the only paperboard
manufacturing facility in the country to produce Elemental Chlorine-Free (ECF) pulp..
The 'Top Green Rating' recognised ITC's Paperboard Unit for implementing a
sustainable fibre strategy, water conservation efforts, eco-consciousness, minimum
or no utilisation of chlorine and other chemicals and the forestry programme that ITC
has pioneered in partnership with local communities.
Organisations and Companies
• In particular, it is ITC’s EHS policy:
• To contribute to sustainable development through the establishment and
implementation of environment standards that are scientifically tested and meet the
requirement of relevant laws, regulations & codes of practice.•To take account of
environment, occupational health and safety in planning and decision making.•To
provide appropriate training and disseminate information to enable all employees to
accept individual  responsibility for environment, health and safety, implement best
practice and work in partnership to create a culture of continuous improvement.•To
instil a sense of duty in every employee towards personal safety as well as that of
others who may be affected by the employee’s actions.•To provide and maintain
facilities, equipment, operations and working conditions which are safe for
employees, visitors and contractors at the Company’s premises.•To ensure safe
handling, storage, use and disposal of all substances and materials that are classified
as hazardous to health and environment.•To reduce waste, conserve energy and
promote recycling of materials wherever possible.•To institute and implement a
system of regular EHS audit in order to assure compliance with laid down policy,
benchmarked standards and requirements of laws, regulations and applicable codes
of practice.•To proactively share information with business partners towards
inculcating world-class EHS standards across the value chain of which ITC is a
part.All employees of ITC are expected to adhere to, and comply with the EHS Policy
and Corporate Standards on EHS
Procter & Gamble Releases 10th Annual Sustainability
Report
20/11/2008
• Titled ‘Designed to innovate…sustainably’, the report highlights the company’s long-term
commitment to responsible growth and progress toward meeting its sustainability goals. These
goals include measurable objectives for developing ‘sustainable innovation products’, improving
the environmental profile of P&G operations, and improving lives through the company’s ‘Live,
Learn and Thrive’ corporate social responsibility programmes.  
Developments highlighted by the document include:
  During the last year, P&G operations reduced water consumption by seven per cent, energy
usage by six per cent, carbon dioxide emissions by eight per cent and waste disposal by 21 per
cent (per unit of production).  Including last year’s results, P&G has reduced water consumption
by 51 per cent, energy usage by 46 per cent, carbon dioxide emissions by 52 per cent and waste
disposal by 50 per cent since 2002 (per unit of production).  
  P&G achieved $2.05 billion in cumulative sales of products with a ‘reduced environmental
footprint’ (>10% reduction versus previous or alternative products).  
  P&G delivered 430 million litres of clean drinking water through the Children’s Safe Drinking
Water programme – water which prevented an estimated 18 million days of disease.
P&G, which has approximately 138,000 employees working in more than 80 countries, has made
the report available online at www.pg.com/sustainability.  
Consumer's choice
• Creating Awareness
• British Rail and “Recyclable” Paper
• AEG and save Newts issue
Joint Force
Gaining Credits and Credibility- HSBC and its
Green Audits- Carbon Neutral
Aditya Birla Management Corporation LTd and
ETP
Tata Group’s TCCI(Tata Council of Community
Initiatives) and Tata Business Excellence Model
Shell India and Balanced Score Cards
Sanyo`s Rechargable Battery-Eneloop
P&G and Refill packages
Privacy??
• Spyshop.com claims to service one third
of the Fortune 500 companies.
• Office Systems reports that more than 30
million workers were subject to workplace
monitoring in 1999 in comparison to 8
million in 1991
• Omnitrack
• Spyzone
Computer based monitoring
• Websense
• Net Access Manager
• Web Track
• Internet Watch dog
• Beeper buster
• Truth telling device
Monitoring devices allow
managers-
• to track the web use
• To observe the downloaded files
• To filter sites
• To restrict certain sites
• To know how much time employees spend
on various sites
• Video monitoring
• Monitoring personal investments
Conflict of Rights
Integrative Social Contracts
Theory(ISCT)
Tom Donaldson and Tom Dufee
• Privacy is a fundamental human aright
recognized in all major international treaties
and agreements on human rights. Nearly
every country in the world recognizes
privacy as a fundamental human right in
their constitution, either implicitly or
explicitly.
• Privacy and Human Rights : An
international survey.
Ethicist Gary Marks
more ‘no’= more unethical
• Does the collection of the data involve physical or psychological
harm?
• Does the technique cross a personal boundary without
permission?
• Could the collection produce invalid results?
• Are you being more intrusive than necessary?
• Is the data subject prohibited from appealing or changing the
information recorded?
• Are there negative effects on those beyond the data subject?
• Is the link between the information collected and the goal sought
unclear?
• Is the data being used in such a manner as to cause a
disadvantage to the subject?
The implementation of an Ethical
resolution-

“ Assuming for the purposes of this


argument that privacy is a hyper norm, but
one that may be limited by the employer`s
congruent right to managerial autonomy,
how should the matter be resolved a
fairness based decision based on two
values: integrity and accountability”
• Of 67% of the mid to large sized
companies that monitor, 84% notify their
employees of this activity.
Intimating about digital fishing
• The notice may range from one line in the
employee manual like
Columbia/ HCA Health Corp. issues a
warning policy in its electronic
communication policy
• “It is sometimes necessary for authorized
personnel to access and monitor their
contents and in some situations, the
company may be required to publicly disclose
e-mail messages, even those marked private’
Adopting ‘Zero Tolerance’ policy

• Like Ameritech whose business code


states that computers and other
equipments are to be used only to provide
service to the customers and for other
business purposes.
Privacy as a benefit
• Bell South was a hardliner on the issue of
monitoring until they started offering they
decided to loosen up to benefit the
employees. Though a dialogue box would
pop up when they hit send button to send
the e mail notifying them against misuse of
email and internet.
• Al Gore:
• ‘ New technology must not reopen the oldest
threats to our basic rights: liberty and privacy.
But government should not simply block or
regulate all that electronic progress. If we are
to move at full speed ahead into the
information age, government must do more to
protect your rights-in a way that empowers
you more, not less. We need an electronic bill
of rights for this electronic age.”
Global Business
• Advances in Communication
• Technological advancements
• Easy transportation
• Transactions across national boundaries
Differences
Cultures

Values

Laws

Ethical Standards

Ethical Complexities
Whose Values do we follow??
When in Rome, do as Romans do.
You must adapt to the cultural practices of
the country you are in…
or
We should evolve a set of global or
universal ethical standards.
Matrix for Global Relativists
Home Country Perceptions

Ethical Unethical

Foreign Ethical Ethical Ethical


Country
Perceptions
Ethical unethical
Unethical
• Intellectual Property Rights
Patent
Copyright
Counterfeit products

www. Fake-busters.com
Ethics & Performance
Correlations...

• intrafirm trust
• commitment to quality
• customer satisfaction
• employee commitment
• profitability
Benefits of Intrafirm Trust...

• efficiency in decisions and actions of


employees
• many human resource problems
decrease (turnover, conflict,
absenteeism, and apathy)
• effectiveness results from
communication improvements
throughout the organization
Ethics & Commitment to
Quality...
• the # 1 breach of ethics was the compromise
in quality, with respect to customers (EOA,
1998)
• majority of employees (80%) admit to doing
the ‘bare minimum’ with respect to quality
(Kelly, 1987)
• ethical climate has been linked to
improvements in the commitment to
quality=customer satisfaction (Loe, 1996)
Customer Satisfaction &
Ethics...
• 70% of customers will switch to brands
or stores based on ethics & societal
issues (Cone/Roper, 1997)
• 88% of consumers are more likely to
buy from a socially responsible firm
(Walker Research, 1998)
• the cost of ethics is an investment in
customer loyalty
Committed Employees &
Ethics...
• creates employee loyalty
• encourages personal sacrifices
• focuses on organizational success
• honors organizational policies & contractual
obligations
• reduces turnover
• satisfies customers
Ethics & The Bottom Line...
• sales growth, profits, and ROI are
correlated with corporate citizenship
(Maignan, 1997)
• an investment in the 10 most admired
Fortune firms would result in 3 times the
return of the S&P 500
• business ethics = profits!
Corporate Ethics = Profits...

• top management support


• core values/organizational culture
• code of conduct
• ethics training/program
• reporting and monitoring
• continuous improvement
• …profitability...
Ethics Filters
• P = Policies
Is it consistent with my organization's policies,
procedures and guidelines?
• L= Legal
Is it acceptable under the applicable laws and
regulations?
• U = Universal
Does it conform to the universal principles/values
my organization has adopted?
• S= Self
• Does it satisfy my personal definition of right,
good and fair?

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