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Business Ethics

Corporate Ethics.
 Ethical Extent of Access to Corporate
Information
 Corporate Disclosure
 Trade Secret & Insider Trading
 Computers & Privacy
 Concept of Corporate Culture
 Concept of Code of Ethics
 Factors that lead to uestiona!le "nethical Practices
 Concept of Social Audit
 The Social Audit Process
 Institutionali#ation of Ethical Conduct$
Ethical Extent of Access to Corporate Information.
Corporate Disclosure:
 Two substantive moral principles:
%$ Each person has the right to the information he needs to enter into a transaction fairly$
&$ Each person has the right to 'no( those actions of others that (ill seriously and adversely
affect him$
 Deal with three questions:
%$ To (hom must disclosure !e made availa!le)
&$ *ho must !e disclosed)
+$ *ho from should disclosure ta'e)
Ethical Extent of Access to Corporate Information.
Corporate Disclosure:
 ,ased on t(o principles a corporation has the moral o!ligation to disc louse needed information
to those (ith (hom it enters into transaction$
 *hat morally must !e disclosed)
a- *hat must !e disclosed to (or'ers) They have right to 'no( the conditions of (or'
including their rights !enefits and o!ligations$
!- .overnment has the right to 'no( that corporations are complying (ith the la($
c- The corporation from a moral point of vie( should disclose to its suppliers (hatever is
necessary to ma'e the contracts !et(een them fair$
d- Disclosure of information to stoc'holders and to potential stoc'holders has caused a great
deal of de!ate$
e- The mem!ers of the !oard of directors are the legal representatives of the shareholders/ so
they o(e the shareholders appropriate information as (ell as honest service in the interests$
f- The consumers should !e informed of any dangers posed !y the use of the product he !uys
(ill !e reasona!ly safe if property used$
 *hat form should disclosure ta'e) Shareholders are informed of corporation0s activities through
the annual report and the annual shareholders meeting government is informed of a company0s
activities through legally mandated reports and (here appropriate through on1site investigation
and inspection and (or'ers are informed of the conditions of employment prior to their
employment$
 Trade secrets refer to all 'no(ledge developed a firm (hich it guards as proprietary$
 Trade secrets designate an alternative to patents and copyrights as a means to protecting
inventions formulas and the li'e$
Indicators which mae information secret
 The amount of securit!: A company may treat the information techni2ues of inventions/ or consumer
and3or suppliers list as highly confidential that is it ta'es measures to endure that the information is not
availa!le routinely !y restricting access and so on$
 The amount of mone!: The amount of money the firm has spent in developing the information$
Information that can !e easily developed does not ma'e any sense$
 The value of information to competitors: It is unli'ely that a firm (ill initiate great security to protect
information valua!le only to the firm itself$ If the information is valua!le to the competitors the
company (ill employ enough resources to protect the information$
 Insider Tradin": Information that someone (ithin a company has !ut that is not availa!le to those
outside the company$ It includes only trade secrets$
 Computers and privac!: The fear of many people concerning computers and privacy can !e descri!ed
as !ig !rothers$ 4ur society recogni#es areas of privacy for the individual into (hich others have no
right to penetrate unless serious harm is threatened to others$ Each person0s thoughts are his o(n as are
his !eliefs$ *hen employee records are 'ept in computer files rather than filing ca!inets/ employers are
!ound to secure that information at least as (ell as they secure filling ca!inets$
#actors that lead to questionable unethical practices.
5any companies place employees in such situations in (hich they are li'ely to perform unethically$
Examples6
 4veremphasis on !oth individual & corporate performance$
 5ission statements/ evaluation systems & corporate culture that focus on profit as the company0s sole
o!7ective$
 Severe competition !et(een companies/ departments or individuals$
 5anagement concern for the letter of the la( rather than spirit$
Code of Ethics
 A formal (ritten statement specifying the 'inds of things that the !usiness !elieves should !e
done of those things that should !e avoided$
 ,usiness conduct standards are expressed in meetings/ company maga#ines/ policy manuals &
countless other (ays$
 To tell employees ho( to approach & resolve ethical issues$
 Deals (ith the most common issues rather complex ethical issues and offer general guidance$
$ocial Audit.
 A systematic revie( of an organi#ation0s performance of social responsi!ility activities$ It includes more
than legal re2uirements$
 Difference between $ocial % #inancial Audit:
 In a financial audit there are standards of the profession and standards of lo( that must !e
adhere to
 *hereas/
 In a social audit there are no standards of social responsi!ility !ut there are !asic legal
standards responsi!ility pollution safety and employment discrimination and the li'e$
$teps of $ocial Audit &rocess.
 Determine social expectations
 4utline firm0s position and response
 State program o!7ectives and resources committed
 Monitor progress and implement corrections
Articulate the firm's values and "oals
 The corporation should develop a philosophy of ethical conduct in the !usiness$
 The top management of the corporation should set the fools follo(ing moral and ethical norms$
 8esponsi!ility should !e not only repaired !ut taught !y example$
 Determination should !e made a!out ho( much disclosure is appropriate and to (hom$
 Companies should have the information regarding the demands and perception of employees/
consumer9s stoc'holders and pu!lic$
Adopt an Ethical Code
 Ac'no(ledge the importance of conducting !usiness morally$
 5a'e a real effort to encourage their mem!ers to ta'e moral responsi!ilities seriously$
 End their defensiveness in the face of pu!lic discussion and criticism$
 8ecogni#e the pluralistic nature of the social of (hich they are a part$
Committees to Institutionali(e Code of Ethics.
 Communicate the code and decisions !ased on it$
 Provide clear guidelines for ethical !ehavior$
 Teach ethical guidelines and their importance$
 Clarify and interpret the code (hen need arises$
 Facilitate the code9s use$
 Conduct fre2uent and unpredicta!le audits$
 Investigate grievances and violations of the code$
 Discipline violators (ith due punishment and re(ard$
 Compliance and ma'e the same pu!lic$
Arran"e Appropriate Ethics Trainin"
 A training module is developed$
 Trainers should first !e trained !y outside experts in the line$
 *or'shops/ seminars conferences are arranged periodically$
 Informal social (arming li'e picnics/ sports/ and group travels group prayers etc$ 5ay !e used$
 Silent o!servation of the decisions ta'en and treatment done (ith the interest groups$
 Superiors at every level should !e encouraged to sho( actions and decisions$
Ethical Issues to Emplo!ees.
 Employee 8ights
 Factors that demand Ethical Considerations from Employees$
 Crime of Employees$
Ethical Issues to Emplo!ees.
 :o( employers conduct them selves on the 7o! can enhance or diminish the (or' environment
than any other single facet of employer1employee relations$
 Employees ran' honest company communication/ personal recognition/ and respectful treatment
as more important than good pay$
 This (or'place reality tons contrary to the teachings of almost all management theories$
 In his classical (or' the human side of enterprise$ Douglas 5c.regor formulated theory ;$
Ethical Issues to Emplo!ees.
 The management style premised on the !elief that (or'ers essentially disli'e (or' and (ill do
everything they can to avoid it$
 5c.regor advocated theory < (hich assumes that employees !asically li'e (or' and vie( it as
something natural and potentially en7oya!le$
 Theory =/ (hich touts >apanese1style respect for (or'ers$
#actors that demand Ethical Considerations from Emplo!ers.
)irin" % $election
Interview
 Intervie(er must exercise care to avoid thoughtless comments that may hurt or insult the person
!eing intervie(ed$
 For instance passing remar's a!out a person0s physical disa!ility or personal situation ?a single
parent-$
 A comment that an unthin'ing intervie(er might consider innocent or even friendly could !e
distressing to the persons sitting cross the ta!le$
 Panel intervie( (ith uniform list of 2uestions for all applicants can help to increase o!7ectivity$
$creenin"
 Screening is to attract only those applicants (ho have a good chance of 2ualifying for the 7o!$
 Screening !egins (ith 7o! description ?duties responsi!ilities/ (or'ing conditions and physical
re2uirements- and 7o! specification ?s'ills/ educational experience and physical attri!utes-$
)ealth % safet!
 Industrial accidents don0t 7ust happen$
 They are caused !y inade2uate (or'er training lac' of understanding of the 7o! improper tools
and e2uipment ha#ardous (or' environments poor e2uipment maintenance and overly tight
scheduling$
 5any experts !elieve that (or'place in7uries are related to !ehavior not shortcomings in
technology$
 4ne as' management consultant says that industrial accident is the cause of hidden culture the
unspo'en rules that are adhered to and that is proactively oriented to(ard safety$
*ew )ealth Challen"es
 The redesign of 7o!s/ ad7usta!le chairs/ training in the proper use of diode display terminals and
other preventive measures can often reduce the pro!lem or repetitive strain in7ury$
 In case of in7ury/ it is not only the employees (ho are sufferings !ut having a s'illed (or'er go
out on long term disa!ility and vacation reha!ilitation can cast a company a small fortune$
 Day care and maternity leave$
 4ne often overloo'ed area in discussions of (or'ing conditions is the provision of
maternity3paternity leave and child1care services for (or'ers (ith children$
 Employers are in good position to assist in leave and child care services for (or'ers (ith
children$
 5oral issue is (omen have a right to compete on an e2ual terrain (ith men$
 The moral value here is not to promote any single vision of the good life !ut rather to permit
individuals/ couples and families as much autonomy as possi!le olden other social goals$
#actors that demand Ethical Considerations from Emplo!ers.
 .ifts
 *histle ,lo(ing
 Executive Privacy
 Disclosure of facts
 "nion
 >o! Security
 Sto'e
 Treatment (ith respect
 Freedom of speech and Association
 8ight to a fair trial (ith due Process
 8ights in Promoting and fining$
Crime of Emplo!ees
 Stealing Company Products
 em!e##lement of Company Funds
 Ta'ing or .iving "nethical .ifts
 Insider Trading
Ethical Issues relatin" to Bu!ers
 The position of ,uyers compared to the Sellers$
 The 5oral 8esponsi!ilities of ,usiness in the Area of Consumer Safety$
 Sellers 8ights as a 5ar'et po(er
 Concept of Consumerism
 5a7or 8ights of ,uyer
 5ar'eting Ethics
 Ethical Pro!lem Areas in 5ar'eting
 *ays of Ethical & Societal 5ar'eting
 Guidelines for Proper Advertisements.