15 Ethics
Ethics refers to a system of moral principles a sense of right and wrong, and goodness and badness of actions and the motives and consequences of these actions. As applied to business firms, ethics is the study of good and evils, right and wrong and just and unjust actions of businessmen. Ethics is a body of principles or standards of human conduct that govern the behavior of individuals and groups. Ethics arise not simply from man's creation but from human nature itself making it a natural body of laws from which man's laws follow. Ethics is a branch of philosophy and is considered a normative science because it is concerned with the norms of human conduct, as distinguished from formal sciences such as mathematics and logic, physical sciences such as chemistry and physics, and empirical sciences such as economics and psychology. Ethics is seen as an individual’s own personal attitude and a believe concerning what is right or wrong, good or bad. It is important to note that ethics reside within individuals and that organization doesn‟t have ethics. People have ethics. Consequently, its definition and understanding varies from person to person. These are not absolute, but are relative. Ethical behaviors are in the eye of beholder. What is right or wrong is a personal individual matter, but is still influenced by socially accepted norms. Right, and proper and fair are the ethical terms. It expresses a judgment about behavior towards people they felt to be just. Ethics are useful tools for sorting out the good and bad components within complex human interactions. Business ethics does not differ from generally accepted norms of good or bad practices. If dishonesty is considers to be unethical and immoral in the society, then any business man who is dishonest his or her employees, customer‟s shareholders, or competitors is unethical and immoral person. Businessmen should not try to evolve their own principles to justify „what is right and what is wrong‟

A.16 Formation of ethics

An individual‟s ethics are formulated through the operation of forces in the individual‟s environment. These are discussed in the succeeding paragraphs.

Family influences
The formation of ethics begins when the individual is a child. Thus the family environment has a significant influence in determining what the child learns about good and bad, right and wrong.

Peer influences
As the child develops contacts outside the home through home, school, play and work, peers exert considerable influence on the individual‟s ethical beliefs.

As a person matures and develops as a human being, he or she will be exposed to many critical experiences that will be affect his or her ethical standards.

Values and morals
One‟s ethical standards are also greatly influenced by values and morals. People who place high value on money and material possessions may not have strong ethical standard regarding behaviors that facilitate the accumulation of that wealth.

Situation Factors
People often change their ethics in response to unknown situational factors. An employee, who is threatened with loosing a job that has been held for years, may commit unethical acts in order to save the job.

One of the oldest sources of ethical inspiration is religion. More than 1,00,000 different religion exist across the globe .Despite doctrinal differences, the major religion coverage on the believe that ethics is an expression of divine

The blame for these death and injuries had to be shared by employees and employers who fail to adhere to occupational health and safety laws. hundred of employees die because of occupational disease.They codify ethical expectations and change as new evils emerge. The legal system Laws are rules of conduct.Businesses that degrade the environment by disregarding environment protection laws cause misery to the society.17 IMPORTANCE OF BUSINESS ETHICS Ethics is important to business in general and HR in particular. Consumer suffer because of poor quality and high priced products by the supplied by the businessmen .Law breaking in business is common. But law cannot cover all ethical expectation of society. for several reasons as stated below: . Obeying the law is presumed to be ethical behavior . and million others receive disabling injuries on the job. The society expects businesses to abide by the law. approves by legislatures. A. many perish because of industrial accidents. that guide human behavior in any society .will that reveals the nature of right and wrong in business and others walks of life. Taxes are evaded. Whenever ethics the law codifies. it is binding on businesses.

because they perceive its purpose activities to be honest and beneficial to society. A company perceived by the public to be ethical and socially responsive will be honored ands respected even by those who have no intimate knowledge of its actual working.decision which are in the interest of the public. Values create credibility with the public. Valued give the management credibility with its employees. and language. Values are supposed to be a common language to bring the leadership and its people together. but perceived moral and social uprightness can. The HR management can have credibility with its employees simply because it has credibility with the people. This is so because respect for ethics will force a management to take various aspect. even though the decision making is slower. and the company‟s own long-term good. There will be an instinctive prejudice in favour of its products. being a manager he knows that his decisions may affect the life of thousands of employees. Neither a sound business strategy. These bases ethical needs compel the organizations to be ethical oriented. create common goals. It is men basic nature that he desires to be ethical. nor a generous compensation policy and fringe benefits can win employee credibility. they (managers) themselves feel an equal need to be genuinely proud of the company they are directing. social and ethical-in making decision. values. . Another point of great importance is that an ethical attitude helps the management make better decisions.Ethics corresponds to basic human needs. Moreover.Organisational ethics. not only in his private life but also in his business affairs where. Most HR manager would like to respond to this need of their employees and. their employees. Its public issues will attract an immediate response. since people believe that the company offers value for money. when perceived by employee as genuine. Values help better decision making. that is .economic. most people want to be the part of organization which they can respect and be proud of.

People in an industry know the dangers in the particular technology better than the regulatory agencies. Where law fails. and adopted a code of fair business practices. who can reach out to agitated employees. Industry association have evolved codes of conduct their own.Futher. A company which is inspired by ethical conduct is also profitable. The CFBP has initiated a set of prizes . The code constitutes a primary level. ethics can. For example. Value-driven companies are most likely to be successful in long run. the council of fair business practices (CFBP) established in 1916. will quell a trouble more effectively than the police. though in the short run.Nearly 95 percent of the Fortune 500 companies have codes. An ethically-oriented management takes measures to prevent pollution and protect workers health even before being mended by law . self regulation character for enlighten citizenship among business entities. ethics can succeed. by leading private sector industrialist in western India. and a trend is visible in the corporate sector in India also.An ethically sound HR manager. the government cannot always regulate all activities which are harmful to the society. A.Ethics and profit go together. Ethics is important because.18 Code of ethics Code of ethics has become popular . they may lose money. law and lawyer cannot do every thing to protect society. Law can’t protect society. Technology develops faster than the government can regulate.

public relations. or rules that guide behaviors. Haryana and Delhi chamber of commerce has also lately formulated a code of ethics. its purpose is to provide guidance to manager and employees when they face ethical dilemma. social responsibilities. A.which includes the MNCs)has recently issued a declaration on Norms of business consisting of ten points.and awards called „Jamnalal Bajaj Uchit Vyavahar Puraskar‟ or(Jamnalal Bajaj prize for fair Business Practices) to promote exemplary application of the above norms . and corporate behaviors with in and with out. including penalties for violating the codes. An internal enforcement mechanism.The CFBP president claimed that sustained pressure from his council has resulted in creation of Advertising standards Council of India (ASOI) and in promulgation of the consumer protection act (CPA) . Principles. The most effective codes are those drawn up with the cooperation and widespread participation of employees.19 Objectives of code of ethics A code of ethics aims at the following: . adds teeth to the code. besides giving an individual identity to that organization. advertising.1986. Code of ethics is guidelines to steer the conduct of both the organizations and its employees in all business activities. A code is a statement of policies. Whoever evolves the code. such as expectation of society.The Federation of Indian chambers of commerce industry (FICCI. The Punjab. fair completion. Code of ethics provide general guidelines with respect to the values and ethical standards of the company Business ethics is concerned with truth and justice and has a variety of aspects. consumer autonomy. These are intra and inter organizational in nature and relate to all activities of an organization and its environment. They provide positive and productive orientation and direction to the code of business.

so that they know how to conduct themselves in terms of ethical behavior and give them a sense of common identity. Ethical behavior starts at the top. Companies now commit considerable time and money to illustrate their reliance on ethical behavior. Further. are increasingly adopting ethical codes of conduct. Ethical behavior by the leaders of an organization will inevitably set the tone for the rest of the company-values will remain consistent. Modern ethics codes aren't just some simple platitudes set in a break-room plaque. led by top management. and top management dictates the mood. Before a company can expect to be viewed as ethical in the business community. but by demonstrating through leaders the commitment of the organization to ethical behavior. ethical behavior within its own walls-to and by employees-is a must. . Initiative: it provides initiative and stimulation to the suppliers andcustomers for proper conduct by creating a sense of moral obligation Ethical culture: It promotes a culture of excellence by not justformally teaching ethics. a wellcommunicated commitment to ethics sends a powerful message that ethical behavior is considered to be a business imperative. Confidence: It inspires public confidence besides enhancing thereputation of the organization. A.20 Business ethics Companies.Guidance:It provides direction to the most important element of anorganization namely the “People”.

Ethics are important not only in business but in all aspects of life because it is an essential part of the foundation on which of a civilized society is build. Hiring a full-time ethics officer is another signal to employees that ethical violations will be taken very seriously. and starting ethics hotlines to report possible policy violations.    The polices should be fair and transparent    Proper provision of safety should be provided by the company to the employees. measurement and a new ethical code have been developed. loyalty. companies are also hiring full-time ethical compliance officers. just as efficiency and productivity companies must innovate ways to measure ethical behavior.21 THE MAJOR PRINCIPLES OF BUSINESS ETHICS:  No discrimination should be done on the basis of caste .Companies are also interested in determining whether ethical behavior can be measured.    The company’s resources should not be utilized by the employees for their personal usage    Company should provide better environment condition  . A business or society that lacks ethical principles is bound to fail sooner or later. Once training. and religion.color . and integrity in the employees. this person isn't just a watchdog-they will take a proactive approach to identifying possible violations before they develop. However. A.    There should be proper honesty. which in turn motivates ethical behavior.

   . Some of the acts which seek to ensure fair business practices in our country are the followings:  The Foreign Exchange Regulation Act. and workevaluations should be kept confidential. Similarities and differences apart. benefits to obtain business or favours. health. donation. remuneration.    Employee should report to management any actual or possible violation of code or an event that could affect the business or reputation of the employee’s company. 1969. Ethical concepts are more complex than writing rules. Laws are the society‟s attempt to formalizethat is to reduce to written rules.idea about what is right and what is wrong in various walks of like. However. or comparable. gift.Information about employee’s personal lives.  Ethics And Law Laws and ethics have common aim.  Regular measurement of employee satisfaction should by company. But the two are not quite same. now replaced by FEMA.    To comply with all regulations regarding preservation of the environment. legal rules help promote ethical behaviour in organization.defining proper and improper behaviour. Ethics deals with human dilemmas that frequently go beyond the formal language of laws and the meanings given to legal rules.   The Monopolies and Restrictive Trade Practices Act.    To neither give nor take any illegal payment. it is rarely possible for written rules to capture all the sublet variations that people give to ethics.   The Companies Act. 1973. 1956.

1955. Instead. The process typically links a company‟s value to the development of policies and performance targets and to the assessment and communication of the performance.   The Essential Commodities Act.   The Environment Protection Act. With the focus on the concerns of society . and by societal norms and deregulations. human resource management and community development . and community development and hence with the sustainability of a company‟s activities. environment and animal protection. and to improve performance.   The consumer Protection Act. human rights. social.  Social and ethical accountability Social and ethical accounting is a process that can help businesses to stakeholders. Companies have begin to open themselves up to their stakeholders. the are defined by company‟s value and aims by the interests and expectation of its stakeholders. 1986. the social and ethical accounting framework implicitly concerns itself with issues as a wide as economic performance working conditions . 1986. In this way and through engagement with stakeholder social and ethical issues are tied into a company‟s strategic management and operations. partly because of the “push” factor of the pressure group activities but also because . fair trade and ethical trade. environmental and economic. Social and ethical accounting model there is no standard balance sheet or units of currency.

the realize that a greater awareness of the impact of their activities and how they are perceived is necessary to improve strategic decision making. Other principles can be put into three broad relating to the:  Scope and nature of the company‟s social ethical accounting process. standard business practice talking to customers and suppliers to identify the issues as they arise to satisfy new needs and a company realize that it is failing to involve important groups or there is mistrust or misleading in its relations with stakeholder. . This principle requires that the aspirations needs of all stakeholder groups are taken into account at all stages of the social and ethical accounting process. of course. Principle of social and ethical accounting These principles can be used in designing and managing a process. More and more companies are now incorporating stakeholder in their decision making processes.The inclusion in the accounting process of allappropriate areas of activity relating to an organization‟s social and ethical performance.    Continuous management of the process. The dominant principle of social and ethical accounting is inclusively. Much of this is.  Scope and nature of the process Completeness. or in assessing its quality.    Meaningfulness of the information created by the process.

The audit is concerned with building credibility in the process with all stakeholder groups.  Continuous management of the process .  Comparability.The ability to compare information on an organization‟s performance with previous periods. or external benchmarks drawn from other organizations. Materiality.The inclusion of significant information that is likely to affect stakeholder groups and their assessment of an organization‟s social and ethical performance.    Regularity and timeliness.The characteristic that allows an organization and its stakeholders to depend on the information provided by the accounting to be free from significant error or bias. performance targets.The audit of an organization‟s process by anindependent and competent third party. systematic and timely action of the accountings process to support the decision making of an organization and its stakeholders. and hence developing meaningful stakeholder engagement.The need for regular. Accessibility– Appropriate and effective communication to anorganization‟s stakeholders of its accounting process and its performance. statutory regulation or non statutory norms.    Reliability.  Meaningfulness of information Quality Assurance.

not just a one-off exercise to produce a report. that is.    Continuous improvement. Embedded ness.Steps taken to improve performance in response to the results of the accounting process.Making the accounting process part of an organization‟s operations. systems and policy making.  The Social and Ethical accountability model Embedding Planning Stakeholder Engagement Auditing And Reporting Accounting . or systems integration.

& defines & reviews its values & social & ethical objectives & targets.The company commits to the process of social & ethical accounting.  PLANNING.    EMBEDDING.The scope of the process is defined. information is collated & analysed. auditing & reporting. structure & systems are developed to strengthen the process & to integrate it into the company‟s activity. & the report is made accessible to stakeholder in order to obtain feedback from them.    REPORTING.The concerns of stakeholder are addressed at each stage of the process through regular involvement.    AUDITING.A report on the company‟s systems & performance is prepared.The generic model of social & ethical accounting includes six elements in a continuing process that a business undergoes in order to manage & improve its accountability & performance.To support each of the stages.    STAKEHOLDER ENGAGEMENT. & performance targets & improvement plans are developed.    ACCOUNTING.The process of preparing the report & the report itself are externally audited.  .

Section 1 – Membership of any class shall be contingent upon conformance with the established principle of professional Ethics. representation or claims in regards to professional matters. and inviolability of confidence are incumbent upon every member as professional obligations. Fidelity to trust. fairness. Integrity. Loyalty. Impartiality.Members shall not falsely or maliciously attempt to injure the reputation of others. Section 2 – Honesty. misleading or unwarranted statements. Section 4. Section 3. . nor shall they engage in false or deceptive advertising.it must be flexible enough to learn & innovate from the process.Members shall not make false.At every stage a company should incorporate useful experience from the previous cycle.

This helpline comprises senior members of the company. legal or ethical issues that a Wiproite may face. The award. Wipro has compiled an "Integrity Manual" that defines the way Wiproites should deal with their customers. Article 2 Press release. Haryana and Delhi Chamber of Commerce and Industry (PHDCCI). recognizes Wipro‟s ethics and value-based business performance. who are available for guidance on any moral.2 in 'India's Most Respected Companies' . Literature review Article 1 Wipro gets PHDCCI's Ethics in Business Award Our Corporate Bureau 30 November 2002 Mumbai: Wipro has been awarded the “Ethics is Good Business” award for the Year 2002. like Chairman Azim Premji. instituted by the Punjab.Section 5 – Member shall endeavor to cooperate with others in profession and shall encourage the ethical dissemination of geoscientific knowledge. Wipro has also introduced a helpline known as “Wipro SOS”. 3 November 2004 Reliance Industries ranks No.

it. 1998 Infosys Technologies is chosen Company of the Year The Economic Times today announced its Awards for Corporate Excellence. however. 2004. RIL also emerged as the only Indian company in the list of global companies that create most value for their shareholders. Article 3 Thursday.Reliance emerges as India's 'Most Dynamic Organization' Reliance Industries ranks No. The company has arguably pioneered in India the concept of valuing intellectual capital. June 22 .India's Most Respected Companies Survey IMRB International . has an employee stock offer plan in place for five years now. Article4 ``Ethics in business has to reflect ethics in society' Our Bureau Kolkata. and has aggressively attempted to introduce employee stock options . RIL is the first and only private sector company from India to feature in the 2004 Fortune Global 500 list of 'World's Largest Corporations' and ranks amongst the world's Top 200 companies in terms of profits.Business world. Infosys is expected to be the first Indian company to have its shares listed on an American stock exchange. 3 September.2 in 'India's Most Respected Companies' survey . in consonance with its philosophy of recognizing and celebrating business at its best.

and former Chairman of HLL said that. Because we are a public sector corporation. no formal instructions as such. It has its own budget. As a responsible corporate citizen. We have a Corporate Citizenship Policy. It stresses the fact that the company is a responsible corporate citizen. “Ethics was such an inborn concept that all of it cannot be contained in our law. Castrol India Ltd. an integral part of our business is reaching out to the community. Ranbaxy Founded in 1962.M. The company is now moving from a generic company to a research oriented company and it is at the same time increasing its international presence. It manages operations with a high concern for safety and the environment. Nobody teaches us ethics.Mr. administered by our HR Department. Saket Gupta. The company also urges its employees to avoid actions or relationships that might conflict with their job responsibilities. Engineer (E&T) “ONGC's Communication on Progress on Global Compact” Our corporate mission also explicitly requires us to maintain high standards of business ethics and to enrich the quality of community life through our commitment to Safety. Health and the Environment. Ranbaxy ensures transparency in their dealings with enforcement agencies. Article 5 Date: 2005/7/19 Contact person: Mr. S. Supdt. the figure is substantial. the ethical dimension of business has to rest on the three key aspects of "legitimacy. equitability and transparency". or the interests . and extends their co-operation to officers of statutory bodies for the purpose of audits and inspections. and we are just left to learn it through experimentation. While admitting that the primary task of business was to create wealth by adding economic value to society. Dutta. funded from a percentage of our profits. Ranbaxy is India‟s largest pharmaceutical company. Chairman.

Its books are open to investors. Reliance stresses environmental responsibility. and reduce wastes. maximize recycling. and it was the first Indian company to be listed on a U. Reliance has India‟s largest marketing network and all its brands are market leaders. Plant trees.S. Emphasize every employee‟s responsibility in environmental performance. It is located in Bangalore Infosys has become a well-known player in the software industry for its ethical business practices and generous treatment of employees.of Ranbaxy. stock exchange. The company has its own set of environmental policies and the policies are available to the public. Conserve natural resources by their responsible and efficient use in all our operations. Reliance Industries Limited Reliance is India‟s largest private sector enterprise and it plays a major role in India‟s petrochemicals sector. Infosys Founded in 1981 by a former socialist. Promote awareness among contractors. discharges and emissions. it ensures responsible consumption of natural resources through processes that are eco-friendly. As for business ethics practices. ensure appropriate operating practices and training. "We certainly find it useful to benchmark ourselves against companies like Infosys." said the . it offers a stock option plan to employees. Highlights of its policies are: Prevent pollution.As for the environment. suppliers and customers for shared responsibility towards environment protection. develop green belt and promote lush green surroundings at manufacturing locations to work in harmony with nature.

" Respect for People: Balrampur contributes its success today to its people and is committed to treating its people with dignity. solvents. Transparency: Balrampur strives to maintain global standards of corporate transparency. the Indian subsidiary of personal care products giant Unilever. . The company is backed by strong R&D and is continuously innovating its processes and products. books. Furthermore. and a subsidized bus service for school children. established in 1969. is the pioneering petrochemical company in India. and one of the leading petrochemical companies. IPCL also provides technical assistance to the National Institute for the Blind and camps for social welfare. library furniture. catalysts and adsorbents. The program sets up low cost sanitation facilities to rural families and provides school buildings. It maintains a set of ethical standards and emphasizes the following: Integrity: "We demand of ourselves and others the highest ethical standards. Balrampur Chini Mills Limited Balrampur is India‟s premier sugar company. Indian Petrochemicals Corporation Limited (IPCL) Indian Petrochemicals Corporation Limited. Outside its business. provides ambulances and trains people in primary health care. Its products include polymers. the company is known for its rural development programs. synthetic fiber. and to increase shareholder confidence in management. playgrounds. It also supports environmental preservation. surfactants. constructs primary health centers. Community: One of the company‟s goals is to focus not only on its earnings but also on its efforts to make the world a better place to live.chairman of Hindustan Lever.

1997 0 1998 1 ($ 300) 1999 1 ($ 300) 1 2000 0 * * 0+ ($ 4. Shell’s Shell‟s 2001 annual report provides details of disciplinary action taken by the company against staff who has breached the company‟s code with regard to bribery.Mitsubishi Corporation Mitsubishi Corporation. In addition.562) . The company has its own internal environmental guidelines for business activities and has formulated an Environmental Charter that follows the international standard for environmental management systems. one of the major global enterprises. the Mitsubishi International Corporation Foundation was also established to help serve the educational needs of economically disadvantaged young people. Environmental responsibility is also an integral part of Mitsubishi’s corporate philosophy. conducts various businesses in India including marine product trading and automotive parts. The company is committed to serving the welfare of world and local communities. The company set up a Committee for Philanthropy in 1991 to come up with ways to make corporate responsibility to society a part of the company‟s activities. contractor employees directly or indirectly to third parties. Reported cases of bribery in Shell Number of bribes and total value $ Bribes offered and/ or paid by Shell company employees directly or indirectly to third parties Bribes offered and /or paid by intermediaries.

HONEYWELL No employee will give. With the following expectations: Items of a strictly advertising nature (that is. offer or promise to give. Standard Chartered Bank Nothing may be given or received which might distort commercial judgment or harm the Groups reputation…. Any business-related personal benefits which you or your family give receive must be reported in writing within three working days to the person to whom you normally report.000) * * 1 1 (unknown) (Zero) * Data not available.000) ($89. imprinted with the company‟s name……) which are less than $10 in value.000) ($153.Bribes solicited and/or accepted by Shell company employees Brides solicited and/ or accepted by intermediaries .. contractor employees or others 23 4 3 4 (small) ($75.. . + One Case in which a shell employee used an intermediary to make payments of us$300 has been included in the vases concerning company employees. or ask or accept anything of value….

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