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ANALYSING ETHICAL PROBLEMS

1)Economic Issues in Business


Businesses face many economic issues that can help or hurt their bottom lines. When the
managers of a business understand economic issues, they can decide how best to change or
maintain operations to deal with a short- or long-term economic situation. Businesses can also
learn a lot from how similar firms have dealt with economic issues in the past. The economic
crisis of 2008 was caused by economic factors, but ethical issues almost certainly made it worse.
Low interest rates and rapid growth caused a housing bubble, which eventually burst, but the US
economy has experienced several such bubbles without the major dislocations of this one.
Ethical failures on the part of most of the major banks and some consumers inflated housing
prices to a much larger extent than previously, and the resultant crash turned out to be much
more severe.






1)Monopoly
A monopoly is a company that controls an industry due to a lack of big competitors. A possible
example is Microsoft's Internet Explorer monopoly in the Internet browser market. A company
that is a monopoly can be sued if the government believes it is engaging in illegal practices to
maintain its monopoly. This happened to Microsoft due to the practice of bundling Internet
Explorer in computers. The government sued them and the company paid a fine.
A company interested in defeating a monopoly must have a product or service that is a big
improvement over the monopoly. It must also dedicate lots of money to marketing the product
since consumers will be used to the monopoly's products.
2) Mergers
Mergers between two firms help companies become bigger and reach a larger market. Mergers
are a positive sign of a company's financial health and usually increase the resulting company's
stock price.
ECONOMIC
ISSUES
1) MONOPOLY
2) MERGERS
3) LAYOOFS
4) RECESSIONS
5) LENDERS
6) BORROWERS
7) GOVERNMENTS
8) ETHICAL BEHAVIOUR IN
THE FINANCIAL
INDUSTRY


3)Layoffs
Layoffs occur when a company wants to cut costs drastically and quickly. Some layoffs focus on
a few departments, while many firms cut employees from all over the company. Layoffs
instantly reduce expenses, but there is no easy way to calculate the costs of losing employee
knowledge and forcing the remaining employees to take on a heavier workload. Productivity can
decrease if too much work is forced on the employees who are still there.

4)Recessions
economic recessions occur due to a drop in consumer spending. This leads to businesses finding
different ways to reduce their own spending. Since consumers spend less, businesses may
increase the number of sales to reduce inventory or delay building new offices and factories.
Businesses can survive recessions if they have enough extra cash so that reduced consumer
spending doesn't result in more extreme actions like layoffs. Recessions hurt industries that
depend on discretionary income or extra income, like the film and advertising industries.
5)Lenders
The most flagrant ethical abuses were seen in the behavior of the financial organizations that
made loans without verifying creditworthiness. They sometimes misrepresented the terms of
mortgages to buyers, and in some cases used appraisals that were inaccurate. They then did not
follow appropriate procedures when registering loans and mortgages and, when the lack of
documentation was discovered during foreclosures, some companies fabricated documents
fraudulently. In many cases, the ethical failures can be traced to a lack of training of low-level
workers who were told they were acting correctly. Such failures point to a lack of a code of
ethics and a lack of an ethical orientation at the management level. A major unresolved issue of
the crisis is that such behavior has not been punished and ethical abuses continue.
6)Borrowers
While many financial institutions took advantage of borrowers and even actively misled them,
many borrowers were only too willing to go along with unethical practices to obtain loans. Some
borrowers misrepresented their assets and incomes while others lied about their intention to
reside in an owner-occupied residence. Within an ethically appropriate framework, such
behavior would not result in rewards as the financial institutions would normally have verified
borrower information, and refused loans to unqualified applicants. When the banks stopped
making such verifications, unethical behavior on the part of borrowers grew as a result

7)Governments
Governments have been acting unethically, first in promoting home ownership among people
who couldn't afford it, and then by refusing to hold accountable those who played the biggest
part in precipitating the crisis. Government officials in 2011 maintain that the financial system is
still tool fragile to allow prosecutions and fines of major financial institutions that caused the
crisis, but this position itself is unethical. The major issue for governments is the extent to which
superficially unethical behavior in government can be justified in the name of avoiding a further
crisis that would damage everyone even more.
8)Ethical Behavior in the Financial Industry
It is clear that there were ethical lapses in the behavior of some companies and some consumers
prior to the financial crisis. It must be noted that financial institutions, had they behaved
ethically, would have stopped unethical behavior on the part of consumers, while the latter have
no such power over the financial companies. Rather than regulating the behavior of financial
institutions, forcing them to develop and implement a code of ethics might be more effective.
More than any other business, financial transactions have a large trust component that is difficult
to maintain when unethical behavior is common.

2)Legal Issues in Business
It is possible to satisfy legal requirements for human resource management but still not operate
ethically. Legal counsel will provide guidance for compliance with applicable laws, but the
manager must supply his own yardsticks to ensure that he runs an ethical organization. An
additional challenge is that different people may not define the concept of ethical operation in the
same way. Going back to some basic ethical core values will help a manager make the right
ethical decisions.





LEGAL
ISSUES
1) EQUAL OPPORTUNITY
2) FAIRNESS
3) RESPONSIBILITY
4) ETHICAL DECISIONS

1)Equal Opportunity
Ensuring equal opportunity when considering candidates for hire or employees for promotion is
both a legal and an ethical requirement. Making decisions based on factors other than the ability
and willingness to perform the tasks in question is always unethical. When such decisions are
based on such things as race, they are also illegal. In either case, the manager introduces
influences into the workplace that have nothing to do with the job at hand. Such influences are
usually detrimental to a healthy workplace atmosphere.
2)Fairness
A characteristic of an ethical workplace is that everyone is treated fairly. Key components of fair
treatment are equal pay for similar work, equal praise or criticism in similar situations and equal
non-monetary rewards for similar achievements. There may be legal implications to unfair
treatment of employees but it is always unethical. Since applying fair treatment in all situations is
often complicated, written guidelines for major elements of the compensation, reward and
evaluation of employees can be useful

3)Responsibility
In an organization that has high ethical standards, all employees take responsibility for their
actions. It is the manager's role to ensure that, rather than assign blame, the focus will always be
to find solutions and avoid repetition of mistakes. When there are complaints or when something
doesn't work, an employee's focus must be on ways the employee contributed to the failure and
what he could do better. The manager must lead the way by example and then achieve consensus
on what went wrong and what to do about it.
4)Ethical Decisions
Legal counsel must review decisions with legal consequences but ethical decisions are more
personal and often challenging. Two methods for determining whether the decision being
considered is the right one are the "Authority Test" and the "Public Scrutiny Test." In the former,
the manager identifies a person whose judgment she respects and asks herself what that person
would do. Alternatively, the manager might ask herself what that person would think about the
manager's decision. For the "Public Scrutiny Test," the manager asks herself whether she would
be comfortable defending her decision in public. A formal code of ethics for the company may
also be useful.



Ethics in Management & Its Impact on Decision Making
Ethics in management refers to the moral standards that determine the actions of a manager in an
organization. These moral standards can originate from the manager's own values, or they may
be the official policy of the organization. Whatever the reason of their existence, ethics in
management have serious effects on the productivity and public image of the organization. The
biggest challenge for managers is to understand their importance and keep the balance between a
prosperous and popular organization.
Definition of Ethics in Management
Ethics in management is more than a moral commitment of an individual manager or an
organization in general that managers have to abide by. It's a structured code of behavior,
standard policies and decision guides, which apply to every aspect of the organization's functions
and relations. Ethics can determine the manager's stance on issues such as employees' rights,
commitment to environment-friendly policy and fair trade.
1)Benefits
A strong emphasis on the ethos and the appropriate behavior by everyone, from junior level
employees to executive members, can have a positive effect on teamwork and the subsequent
productivity of the organization. Strong teams, consisting of employees satisfied about their role
and ready to contribute to the organization's success, are created on the basis of common values,
between them and the managers. In addition, the public image of the organization will be
benefited from the management's public commitment to certain values, which will have a
positive effect on the consumers' stance against the company.
2)Effects on Profit
Despite its benefits, management based on ethics is arguably costly for companies. High salaries,
a pleasant working environment, benefits for workers and "fair," not only "legal play" in the
market, can have a serious financial cost for the organization. Every company tries to minimize
costs that go above their legal obligations, so that even if the income is not extraordinary, the
profits remain the same. However, managers who have moral -- on top of their legal --
obligations, must keep the income on the rise, to balance costs and reach the organization's target
for profit.
3)Impact on Decision Making
With moral values on one hand, and the duty to perform well on the market track on the other,
managers have a difficult task in making decisions. Even decisions that other companies would
have made, such as reducing the personnel's salary to cover the losses, or taking advantage of a
gray area of the law to avoid the costly organized waste disposal, are unacceptable for managers
who depend on ethics. In such cases, managers are faced with a dilemma which has seemingly
no other solution than putting either the organization's image, or its profitability at stake.

NATURE OF ETHICS IN MANAGEMENT
Management ethics is the ethical treatment of employees, stockholders, owners, and the public
by a company. A company, while needing to make a profit, should have good ethics. Employees
should be treated well, whether they are employed here or overseas. By being respectful of the
environment in the community a company shows good ethics, and good, honest records also
show respect to stockholders and owners.
Ethics and ethical behavior are the essential parts of healthy management. From a management
perspective, behaving ethically is an integral part of long - term career success. Wide access to
information and more business opportunities than in the past makes ethics a need in modern
business world.

The four levels of organizational ethics
Social disregard': the company shows carelessness for the consequences of its actions.
Social obligation: the company does not wish to extend its activity any further than just meeting
its legal responsibilities.
Social responsiveness: the company adjusts its policies according to the social conditions,
demands and pressures.
Social responsibility: the company decides to concentrate on its long-term goals for the benefit
of society in general.
Primarily it is the individual, the consumer, the employee or the human social unit of the society
who benefits from ethics. In addition ethics is important because of the following:
1. Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human
needs. Every employee desires to be such himself and to work for an organization that is
fair and ethical in its practices.
2. Creating Credibility: An organization that is believed to be driven by moral values is
respected in the society even by those who may have no information about the working
and the businesses or an organization. Infosys, for example is perceived as an
organization for good corporate governance and social responsibility initiatives. This
perception is held far and wide even by those who do not even know what business the
organization is into.
3. Uniting People and Leadership: An organization driven by values is revered by its
employees also. They are the common thread that brings the employees and the decision
makers on a common platform. This goes a long way in aligning behaviors within the
organization towards achievement of one common goal or mission.
4. Improving Decision Making: A mans destiny is the sum total of all the decisions that
he/she takes in course of his life. The same holds true for organizations. Decisions are
driven by values. For example an organization that does not value competition will be
fierce in its operations aiming to wipe out its competitors and establish a monopoly in the
market.
5. Long Term Gains: Organizations guided by ethics and values are profitable in the long
run, though in the short run they may seem to lose money. Tata group, one of the largest
business conglomerates in India was seen on the verge of decline at the beginning of
1990s, which soon turned out to be otherwise. The same companys Tata NANO car was
predicted as a failure, and failed to do well but the same is picking up fast now.
6. Securing the Society: Often ethics succeeds law in safeguarding the society. The law
machinery is often found acting as a mute spectator, unable to save the society and the
environment. Technology, for example is growing at such a fast pace that the by the time
law comes up with a regulation we have a newer technology with new threats replacing
the older one. Lawyers and public interest litigations may not help a great deal but ethics
can.

STRUCTURE OF ETHICS MANAGEMENT
Every one who is entrusted to manage ethics in this organization is bound to prepare a
sound ethical programme which should include the following components:
-
1. Formal code of conduct
2. Ethics committee
3. Ethical communication
4. An Ethic office with Ethical officers
5. Ethics Training Programme
6. A disciplinary system
7. Establishing an ombudsperson.
8. Monitorin

1. Code of conduct
Several organizations that have undertaken to implement ethical behavior at their
workplaces have started the process with developing and implementing codes of conduct for
their employees. Codes of conduct are statements of organizational values. It comprises of three
elements such as a code of ethics, a code of conduct and statement of values. a code of conduct is
a written document, inspirational in contents and specifies clearly what is acceptable or
unacceptable behavior at workplace and beyond ,when the employees represent their
organizations outside. In general the code should reflect the managements desire to incorporate
the values and policies of the organization. The statement of values envisages by the
management to serve the public and normally addresses the stakeholders groups

2. Ethics committee

Ethics committee is formed in many organizations. They are wholly devoted at work places.
These committees can rise concerns of ethical nature; prepare or update code of conduct, and
resolve ethical dilemma in organizations. they formulate ethical policiesand develop ethical
standards. The committee evaluates the compliance of the organization with these ethical norms.
The members of the ethical committee should be selected from those persons who have
knowledge in their industry, their code of ethics and community standards. The committee
members are also conscious about the corporate culture and ethical concise of the organization.

3. Ethical communication system

The next step is the establishment of an effective ethical communication system. Ethical
communication system place an important role in making an ethics programme successful. It
should allow employees to make enquiries , get advice if needed or report wrong doing. Ethical
communication system is a necessity to educate employees about the organizations ethical
standard and policies. It has the following objective
1.to communicate the organizations values and standards of ethical conduct or business to
employees.
ii.to provide information to the employees on the companys policies and procedure regarding
ethical conduct of business.
iii.to help employees to get guidance and resolve questions regardingcompliance with the firms
standards of conducts and values.
iv.to set up the means of enquiry such as telephone hotlines, suggestion boxes and email
facilities for employees to contact with and get advice from competent authorities

4. Ethics office and officers

Ethics offices are to be established to communicate and implement ethics policies among
employees of the organization. For this purpose an ethics officer is to be appointed. The ethics
officer should develop a reputation for credibi
lity, integrity, honesty and responsibility through establishment of such ethics monitoring bodies.
Functions of the ethics officers
1. Ethics officers are responsible for assessing the needs and risks that an organizationwide
ethics programme must address.
2. To develop and distribute a code of conduct or ethics
3. To conduct ethical training programme for employees
4. To establish and maintain a confidential service to answer employees questions about ethical
issues.
5. To ensure that the organization isin compliance with governmental regulations
6. To monitor and audit ethical conduct
7. To take action on possible violations of the companys code
8. To review and update code in time

5. Ethics Training Programme

To ensure a good ethical behavior in the organization the employees are to be given training. For
this purpose a corporate ethical training programme is to be devised. The main objective of an
ethical training program is to offer assistance to employees to understand the ethical issues that
are likely to arise in their work place. When new employees are to be recruited, the induction
training should be arranged for them.
6. Disciplinary system

Code of conduct or ethical behavior codes should be properly enforced in the
organization to achieve the organizations objectives. A disciplinary system should be
established to deal with ethical violations promptly and severely. If unethical behavior is not
properly dealt with, it will threaten the entire social system that supports the ethical behavior of
the organization. While enforcing disciplines to ensure ethical conduct, companies should be
consistent. ,i.e., the company should adopt a fair attitude towards every one without any
discrimination or bias

7). Establishing an ombudsperson

The ombudsperson is responsible to help coordinate development of the policies and procedures
to institutionalize moral values in the workplace. This position usually is directly responsible for
resolving ethical dilemmas by interpreting pol
icies and procedures

8. Monitoring

To become an ethical programme fruitful and successful, an effective monitoring
committee is to be formed. It can be monitored through keen observation by ethics officers,
internal audits, surveys, investigations and supporting systems.