Scope of Business Ethics

Asst. Prof. Sugandha Muduli

Advantages of Business Ethics

Professional Ethics
 Asst. Prof. Sugandha Muduli
SCOPE OF BUSINESS ETHICS
ETHICS IN COMPLIANCE
 Compliance means abiding by a set of rules.
 Ethics in compliance means all about obeying
and adhering to rules and authority.

Asst. Prof. Sugandha Muduli

 Ethics in compliance is done for the benefit of the
organization and the employees of the
organization.
 Ethics helps to create a positive environment in
the workplace.
 An ethical climate in an organization ensures
that compliance with law is fuelled by a desire to
abide by the laws. Organizations that value high
ethics comply with the laws not only in letter but
go beyond what is stipulated or expected of them.
THERE ARE TWO TYPES OF CODES OF ETHICS
EXIST: COMPLIANCE-BASED AND INTEGRITY-
BASED.
 Compliance-based ethics are a set of specific rules
meant to protect businesses and employees from legal
repercussions due to violating laws.

Asst. Prof. Sugandha Muduli

 Integrity-based ethics are meant to establish business
values and moral principles that employees should adhere
to, during daily business affairs.

 The similarities between the two types are that they create
a system of self-governance amongst employees and there
is always a set of rules for someone to monitor.
 The differences between the two are that compliance-based
ethics are in place specifically as an emphasis for not
violating laws for a fear of legal prosecution. Integrity-
based ethics are in place as core principles for employees to
do what is right based on their own moral compass.
 Compliance-based ethics follow internal procedures to
ensure that a company does not face any legal
reprimands for ethical misconduct.
 A compliance-based code of ethics follows the pattern
of prevention, detection, and punishment. The ethics
and compliance officer would communicate the
standards of the document to all employees.
An ethics and compliance officer is responsible for the

Asst. Prof. Sugandha Muduli


oversight of educating, auditing, and monitoring
employees to make sure they are following the
document, following up on reports of noncompliance,
and performing internal discipline for those who are
found to be in violation.
 Therefore, with this type of code, expectations are
always clear and procedures are in place to follow up
on reports of misconduct.
 Companies with a compliance-based code of ethics'
have a primary goal of avoiding legal burdens.
Employees are essentially motivated by fear, so this is
considered a low-road approach to ethical behavior.
EXAMPLE
 Think of how a child acts when no one is looking.
Does he refrain from stealing a candy bar because he
might get caught by the store manager or yelled at by
his parents (compliance with rules and expectations)?

Asst. Prof. Sugandha Muduli

Or does he simply not steal because, in his heart, he
knows it is wrong to take something that is not his
(guided by an inner moral compass)?
 Ethics, takes a proactive approach, as it guides you to
moral thinking and behavior based on the internal
motivation of your own character, values, and
principles.
 On the other hand, compliance takes a more reactive
approach, as it forces you to make a mindful decision
to follow a rule or law that someone else created.
As Ethisphere notes, “compliance is letter of the law
and ethics is spirit of the law.”
ETHICS IN FINANCE
 Ethics in Finance talks about financial behavior
or activities that are ethically right or wrong.

Asst. Prof. Sugandha Muduli

 Business ethics that are followed by financial
institutions, financial services, or
financial markets are the integral parts of ethics
in finance.
CODES OF ETHICS IN FINANCE
 Acting with honesty and integrity while handling dilemmas of the world of
finances
 Not associating with any real/clear conflicts of interest in personal, or
company relationships

Asst. Prof. Sugandha Muduli

 Providing information that is full, accurate, fair, complete, relevant,
objective, understandable, and timely in and for different documents and
reports
 Acting in accordance with all the applicable rules, laws, and regulations of
governments along with other relevant public/private regulatory agencies
 Acting responsibly and in good faith with due care, carefulness, and
competence without any sort of misrepresentation of material facts
 Respecting the confidentiality of information which is acquired in the
business course and such information should not be used for the personal
benefit
 Promoting ethical behavior among all the associates and stakeholders of a
company
 Adhering and promoting code of ethics in the company
THE ETHICAL ISSUES IN FINANCE THAT
COMPANIES AND EMPLOYEES ARE CONFRONTED
WITH INCLUDE:

 In accounting – window dressing, misleading

financial analysis.

Asst. Prof. Sugandha Muduli

 Insider trading, securities fraud leading to
manipulation of the financial markets.
 Executive compensation.

 Bribery, kickbacks, over billing of expenses,

facilitation payments.
 Fake reimbursements
ETHICS IN HUMAN RESOURCES
 Ethics in Human Resources basically deals with
the affirmative moral obligations of the employer
towards employees for ensuring equality and

Asst. Prof. Sugandha Muduli

equity justice.

 HRM ethics is responsible for-

 Basic human rights
 Civil and employment fight
 Safety in the workplace
 Privacy
 Justifiable treatment to employees like equity and
equal opportunity
 Respect, fairness, and honesty based process
 Human resources are the key element of every
business and have an important role in its success.
 Ethics helps in improving the employer-employee
relations and overall productivity of the business.
 Ethics related to human resource are introduced and

Asst. Prof. Sugandha Muduli

implemented by Human resource management in
business.
 HRM covers all ethical issues related to employer-
employee affecting their relationship. The various
issues covered are Discrimination issues, sexual
harassment, employee’s privacy issues, salaries and
wages issues, safety and health issues.
 Ethics aims at overcoming all these issues so that
employees are happy and motivated towards their
roles. This booms the overall performance and reduce
the risk.
SOME ETHICAL ISSUES IN HR
• Issues affecting the privacy of the employee:
workplace surveillance, drug testing.

Asst. Prof. Sugandha Muduli

• Issues affecting the privacy of the employer:
whistle-blowing.
• Issues relating to the fairness of the employment
contract and the balance of power between
employer and employee.
• Occupational safety and health.
IMPLEMENTATION OF ETHICS IN HR
 Some of the steps that HRs can take to
implement ethics in Human Resource are-

Asst. Prof. Sugandha Muduli

 Stay informant of the laws
 Give professional development a priority
 Be an ethical leader in the organization
 Understand the various conflict of interest that
arise
 Implementation of inclusion and diversity
principles
 Keep company information safe and
confidential
ETHICS IN MARKETING
 Marketing ethics revolves around ethical marketing
principles and standards that show acceptable
marketing conduct.

Asst. Prof. Sugandha Muduli

 Marketing ethics serve as moral principles and values
that should be followed during marketing
communication. They are the guidelines that let
companies decide about their new marketing
strategies.
 But also keep in mind that it depends on one’s
judgment of ‘right’ and ‘wrong.’
 Any unethical behaviour is not necessarily unlawful.
For example, if a company makes any claims about its
products and cannot live up to those claims, it may be
called unethical behaviour.
 Marketing ethics fosters fairness and honesty in all
advertisements. Any fraudulent claims to the
customers, intruding on consumers’ privacy,
stereotyping, and targeting the vulnerable audience
(like children and elderly) are deemed unethical.
Even trying to damage the competitor’s image is

Asst. Prof. Sugandha Muduli

considered immoral.

 Ethical areas in 4Ps of Marketing can be visibly seen:

 Product: Adulteration, Packaging, Performance of
prodcut/services, Quality, etc.
 Price: Price discrimination, Odd pricing, etc.
 Place: Positioning candies and other items at lower
shelves at store to manipulate kids’ decisions.
 Promotion: Misleading and providing false information,
omitting key information, etc.
SIGNIFICANCE OF ETHICAL MARKETING
 Customer Loyalty
 Long-term gains
 Improved credibility
 Advanced Leadership qualities

Asst. Prof. Sugandha Muduli

 Display of a rich culture
 The attraction of the right talent at the right place
 The satisfaction of basic human wants and needs
 Reaching financial goals
 Enhancement of brand value in the market

 Once a proper code concerning ethical marketing is

followed by the organization, the public in the form of
consumers, competitors, stakeholders, etc., look up to such
organizations. They pursue such brands with religious
dedication, providing a sufficient boost to mark the market.
ETHICS IN PRODUCTION
 Ethics in production is a subset of business
ethic that is meant to ensure that the
production function or activities are not

Asst. Prof. Sugandha Muduli

damaging to the consumer or the society.
 Like other ethics there is a certain code of
conduct or standards to be followed, however
ensuring that the ethics are complied with is
often difficult.
 One of the most important characteristic of the
business today is that there is a great degree of
interdependence between various business
functions. Production cannot happen without
marketing and sales and vice versa
ALL THE PRODUCTION FUNCTIONS ARE GOVERNED BY PRODUCTION
ETHICS BUT THERE ARE CERTAIN THAT ARE SEVERELY HARMFUL OR
DELETERIOUS WHICH NEED TO BE MONITORED CONTINUOUSLY. THE
FOLLOWING ARE WORTH MENTIONING:

 New technologies: Technological advancements like

genetically modified food, radiations from mobile phones,
medical equipment etc are less problems are more of

Asst. Prof. Sugandha Muduli

dilemmas.

 Defective services and products or products those are

innately deleterious like alcohol, tobacco, fast motor vehicles,
warfare, chemical manufacturing etc.

 Animal testing and their rights or use of economically or

socially deprived people for testing or experimentation is
another area of production ethics.

 Ethics of transactions between the organization and the

environment that lead to pollution, global warming, increase
in water toxicity and diminishing natural resources.
DILEMMA OF ETHICS IN PRODUCTION

 There are certain processes involved in the

production of goods and a slight error in the same
can degrade the quality severely.

Asst. Prof. Sugandha Muduli

 In certain products the danger is greater i.e. a
slight error can reduce the quality and increase
the danger associated with consumption or usage
of the same exponentially. The dilemma therefore
lies in defining the degree of permissibility,
which in turn depends on a number of factors.
 Bhopal gas tragedy is one example where
the poisonous gas got leaked out due to
negligence on the part of the management.
 An ethical business ensures all parts of their
product production is energy efficient and
as safe for the environment as possible.

Asst. Prof. Sugandha Muduli

 Ethical businesses go beyond the basic legal
restrictions to minimize their production of waste
and emission as much as possible.
ADVANTAGES OF BUSINESS ETHICS

 Provide a competitive advantage to customers’

conditions
 Improving employee happiness

Asst. Prof. Sugandha Muduli

 Attract more investors
 Good for society
 Strengthens teamwork and productivity cultivation.
 The focus of business ethics has significantly
improved society.
 Help maintain a moral course in annoying times.
 Helps to ensure that the policy is legal
 Supports employee growth and finance.
 Ethics programs can “avoid” criminal acts to avoid
and reduce penalties.
 Promotes a strong public image
Asst. Prof. Sugandha Muduli
PROFESSIONAL ETHICS
 Professional ethics are principles that govern the
behaviour of a person or group in a business
environment.

Asst. Prof. Sugandha Muduli

 Codes of professional ethics are established in order to
provide guidance to professionals, usually to not abuse
client relationships and preserve the integrity and
reputation of the applicable profession.

 When a person violates one or more of these given

ethics, he or she is subject to disciplinary action by the
governing body of the profession.
 Professional ethics are those that apply to a
specific profession and will vary based on the
specific knowledge, skills and duties of those in
the role.

Asst. Prof. Sugandha Muduli

 One of the best-known examples of professional
ethics is the Hippocratic oath sworn by doctors to
do no harm to those they are treating. While this
is a good ethical standard for most people, it
applies more directly to those in the medical
profession than those working as a lawyer.

 That is why there are many types of ethics for

many different professions.
UNIVERSAL PRINCIPLES APPLICABLE TO
ALL PROFESSION

 Generally, people in all lines of work should

adhere to a basic list of professional ethics that
include the concepts of

Asst. Prof. Sugandha Muduli

 honesty,
 trustworthiness,
 loyalty,
 respect for others,
 adherence to the law,
 accountability and
 avoiding harming others whenever possible.
PROFESSIONAL ETHICS INCLUDE:
 CODES OF CONDUCT
 Many industries, such as the legal and medical fields,
institute professional codes of conduct that are based

Asst. Prof. Sugandha Muduli

on ethical principles. These codes specify standards of
behavior for those involved in the profession.
 These are often governed by a professional
association such as the Bar Council of India that
overlooks those in the legal field. The association may
create and modify rules as time goes on and help
members of the field understand the expectations set
out for persons in that line of work.
 In many cases, failure to adhere to these guidelines
can result in removal from the professional society
and sometimes result in an inability to work in that
area
 MEDICAL CODE OF ETHICS
 While the Hippocratic Oath may be the most famous
ethical code, it is far from the only ethical standard of

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the medical field.
 The Medical Council of India gives ethical codes for
medical professionals under Indian Medical Council
Act 1956.
 Among other ethical guidelines, doctors and nurses
must maintain patient confidentiality, respect the
patient's dignity, be honest in all professional
interactions and respect all human rights
 ETHICS AND THE MEDIA

 The Society of Professional Journalists says that

an ethical journalist will always act with

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integrity.
 The group bases their Code of Ethics on the
following principles: "Seek Truth and Report It,"
"Minimize Harm," "Act Independently" and "Be
Accountable and Transparent."
OTHER PROFESSIONAL ORGANIZATIONS
 It is always a good idea to know the commonly

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accepted ethical practices of a profession or
company for whom you work.
 Most professional organizations and many larger
companies have their own code of ethics. These
can usually be found by searching for the
profession, organization or company's name,
followed by the words "code of ethics."
Asst. Prof. Sugandha Muduli