End-Term Examination

(PGP 2019 – 21), Term - VI

Course Name: Business Ethics

Name: Subhasish Das

Regn. No.: 2019PGP187
Total marks: 40 Time: 2 Hours

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1. (a) Distinguish between Monetary and Behavioural Unethicality with suitable examples.

(b) Behavioural Unethicality leads to colossal loss of psychological energy in modern

organizations. – Examine the validity of this statement with pertinent examples from
organizational reality. (10+10)

Ans 1a: Unethical behavior is an action that falls outside of what is considered morally right or proper
for a person, a profession or an industry. Individuals can behave unethically, as can businesses,
professionals and politicians. Unethical behaviour can therefore be both from a monetary perspective
and from a behaviour perspective.

Examples of monetary unethicality

 Stealing money from the cash drawer

 Overreporting expenses and refusing to give an employee a final paycheck for hours worked
after the employee leaves the company.
 Not paying an employee for all of the hours worked.
 Incorrectly classifying an employee as an independent contractor and not as an employee in
order to reduce payroll taxes and avoid purchasing unemployment and workers' compensation
insurance.
 Engaging in price fixing to force smaller competitors out of business.

Examples of behaviour unethicality

 Lying on your resume in order to get a job.

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  Using bait and switch or false advertising tactics to lure customers in or convince them to buy a
product.
 Talking about a friend behind his back.
 Taking credit for work you did not do.
 Cheating on a school paper by copying it off the Internet.
 Dumping pollutants into the water supply rather than cleaning up the pollution properly.
 Releasing toxins into the air in levels above what is permitted by the Environmental Protection
Agency.
 Coercing an injured worker not to report a work injury to workers' compensation by threatening
him with the loss of a job or benefits.

Ans 1b: Unethical behaviour at work can negatively impact the mental and physical health of everyone
involved – not just the victims. A lot has been said about the consequences of unethical work behaviour
on organisations, markets and professions, there is another area that is often less considered but is of
great importance. What does unethical work behaviour do to the wellbeing of people who undertake it
or see others engage in it?

There is ample evidence to show that such behaviour impacts individuals’ mental and physical health,
including their levels of stress, anxiety, depression, burnout, heart disease and blood pressure.

An ethical culture, on the other hand, has been found to be associated to a significant degree with a
sense of wellbeing. "Unethical behaviour...also affects those who witness it and even those who commit
it." For the victims of unethical behaviour, such as bullying, the negative effects on their wellbeing can
cause a range of well-documented psychological and physiological ailments. But unethical behaviour at
work does not only affect its victims – it also affects those who witness it and even those who commit it.

Doing something that a person considers unethical may, in fact, go against their values and what they
consider right. But they may do it because they feel it is a requirement of their work role or is expected
by authority. This misfit between personal and organisational values is likely to diminish an employee’s
wellbeing.

The same negative consequences can result when an organisation’s stated values do not match what
the organisation actually does. Indeed, such a mismatch has been found to be a leading factor in
burnout.

Wellbeing at work can be improved by the following practices:

 Focus on sustaining an ethical work culture, where there is consistency between what we say
and what we do. We must also be aware that ethical culture is not uniform across organisations,
so the local or team subcultures need to be understood, as they will impact their own people’s
wellbeing.
 Provide support, opportunities and encouragement to people to discuss ethical issues, dilemmas
and concerns.
 Ensure that people have clarity about the demands of their roles and clear expectations and
standards of behaviour.
 Ensure people have adequate resources, including time, to do their work, particularly given the
ever increasing demands of work. Otherwise, even if there is clarity and congruence of ethical

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 values, people may not be able to act in accordance with the set values, and this would affect
their wellbeing.
 Individuals’ wellbeing is important for organisational wellbeing. But beyond its instrumental
value, we have reached the time when we must agree that work should not harm people.

2. Discuss the principles and processes of building a sustainable ethical culture in organizations. (20)

Ans 2:

The culture of a company influences the moral judgment of employees and stakeholders. Companies
that work to create a strong ethical culture motivate everyone to speak and act with honesty and
integrity. Companies that portray strong ethics attract customers to their products and services.

Customers are happy and confident in knowing they’re dealing with an honest company. Ethical
companies also retain the bulk of their employees for the long-term which reduces costs associated with
turnover. Investors have peace of mind when they invest in companies that display good ethics because
they feel assured that their funds are protected. Good ethics keep share prices high and protect
businesses from takeovers.

Creating an ethical organizational culture is possible for any company by taking the following 5 steps:

Top Management Leads Ethics by Example

One of the most noticeable ways that companies can demonstrate their commitment to creating an
ethical organizational culture is to ensure that top managers and leaders lead by example. Employees
look to the behavior of top management as an example of the type of behavior that the company finds
acceptable in the workplace. Actions speak louder than words, so when top executives display ethical
behavior, it sends a positive message to employees. Senior leaders need to be mindful of the fact that
they’re being watched and be sure to practice what they preach.

Research backs up the notion of leading by example. Stanford psychologist, Al Bandura’s research on
observational learning and stages of observational learning are well recognised:

 Attention
 Retention
 Reproduction
 Motivation

The stages suggest that people pay attention to the behavior of others and retain thoughts about it.
Then they reproduce the behavior. After repeated times of having a good experience with behavior,
people are motivated to repeat it.

Communicate Clear Expectations of Good Ethics

Companies that create and disseminate an official code of ethics send a clear message of the
expectations for their employees. A code of ethics or code of conduct clearly outlines the organization’s
primary values and ethical rules that they expect everyone to follow. The code should indicate that it
applies to attire, attitudes, and behavior. Cultural norms and expectations are also inferred and are
easily detected by observing the environment.

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While it’s good to have a written record of the code of ethics, means nothing if top management fails to
model ethical behavior. Employees are observant. They take note of whether the company is adhering
to the ethical principles that it set or whether they are merely paying lip service.

Offer Formal Ethics Training

A formal ethics training program sends a strong message about a company’s ethical stance. Seminars,
workshops, and other ethical training programs reinforce the organization’s standards of conduct and
clarify the types of behaviors that the company deems permissible or out of bounds. Situational
examples help to address how to handle possible ethical dilemmas. Workshops can help employees to
work on their problem-solving skills. Trainings may include consultations from peers or mentors.

Reinforce Behavior You Want, and Don’t Reinforce Behavior You Don’t Want

Corporate culture always begins at the top. Managers should be evaluated on their ethical behavior as
part of their annual performance appraisals. Their appraisals should include specific questions about
how their decisions measure up against the code of ethics. Top executives should also be evaluated on
the means they take to achieve their ethical goals as well as how the means lead to the ends.

Once again, research supports ethical principles. The principle of operant conditioning, by B.F. Skinner,
represents that it’s possible to reinforce the behavior you want to see in others. The principle of operant
conditioning also shows that companies shouldn’t reinforce behavior they don’t want to see in others.

People who act ethically should be noticeably rewarded for their behavior and those who fail to act and
behave ethically should have consequences for unethical behavior. Rather than fire good employees
who demonstrate a single ethics violation, the company may choose to provide correct feedback for the
behavior along with a short probationary period. Correction should be conducted in the spirit of
collaboration and education rather than punishment or chastisement.

This step should encourage companies to offer their employees opportunities for rewards, recognition,
and social reinforcements. Rewards and recognition should be thoughtfully considered taking care to
deliver it with attention to detail to avoid unintended consequences.

Provide Protection for Employees

Most employees will want to do the right thing especially if they work for a company that has high moral
and ethical standards. It can be difficult for anyone to report unethical behavior that they witness in
other people at the company. Shy or introverted employees may find it particularly challenging to report
unethical behavior. Almost anyone would feel intimidated if they felt the need to report the unethical
behavior of one of their superiors or someone in a senior management position.

There are several ways that companies can assure their employees that they can safely report unethical
behavior without fear of losing their jobs or getting some sort of punishment or consequence. An
objective third party such as an ethics counselor, ethics officer, ombudsman, or ethics consultant can be
helpful in these situations. An ombudsman can get the tools and resources to help with a consultation or
investigation of a complaint about ethical behavior.

Using Technology to Support Creating an Ethical Organizational Culture

In the best-case scenario, your company will never have to deal with an infraction of your Code of Ethics
policy. Unfortunately, that’s not the reality for many companies. Here’s where it pays to take a modern
approach to creating an ethical organizational culture. Invest in an perfect electronic platform for

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securely storing your code of conduct policies, reports, investigations, and the outcome of investigative
results. Such a platform provides a secure, confidential online space where a team can investigate,
communicate, and collaborate about ethical reports that have the potential to harm the company’s
reputation. In the event that an incident takes a legal turn, attorneys have quick access to the company’s
code and all other documentation regarding the incident. The board administrator will have the ability
to limit the users who can participate in such discussions.