BUSINESS ETHICS

WHAT IS BUSINESS?

● The term business refers to an organization or enterprising entity engaged

in commercial, industrial, or professional activities. The purpose of a
business is to organize some sort of economic production (of goods or
services).
● Business also refers to the efforts and activities undertaken by individuals
to produce and sell goods and services for profit.
WHAT ARE ETHICS?

Ethics moral principles that govern a person's behaviour or the conducting of an

activity.

It is the study of morally appropriate behaviour and decisions, and examining what
should be done. Ethics helps to mould and shape human behaviour.

“Ethics is the science of judging specifically human ends and the relationship of
means to those ends. In some way it is also the art of controlling means so that they
will serve human ends.” — Thomas Garret
The word ethics is derived from the Greek word ‘ethos’, which means character. Ethics is a branch
of philosophy concerned with human character and conduct. It is the discipline dealing with ‘what
is good and bad’ and with moral duty and obligation. Ethics is the embodiment of moral values,
which describes what, is ‘right’ and what is ‘wrong’ in human behaviour and what ‘ought to be’.

Ethics is a “consideration and application of frameworks, values and principles for developing
moral awareness and guiding behaviour and action”. Commonly, ethics is also referred to as
“moral, good, right, just and honest. Ethical standards are referred to as the principles or ideals of
human conduct.” Thus, ethics implies good character and morality and refers to generally
accepted human character and behaviour considered as a desirable by contemporary society.
Business Ethics

● Business ethics is the prescribed code of conduct for businesses. It is a set of

guidelines for dealing with various procedures ethically.
● The discipline comprises corporate responsibility, personal responsibility, social
responsibility, loyalty, fairness, respect, trustworthiness, and technology ethics.
It emphasizes sustainability, customer loyalty, brand image, and employee
retention.
● The motive is to prevent unethical business practices, both deliberate and
inadvertent. Some unethical practices circumvent law enforcement. Even then,
businesses risk paying a hidden cost—the loss of reputation.
Business ethics ascertain social, cultural, legal, and other economic limitations and
safeguard the interest of parties involved. Further, it emphasizes moral and social values
like consumer protection, welfare, fair business practices, and service to society.
Factors Influencing Business Ethics

The application of ethics depends on the personal values of the business owners. At the end of the day,
what is right and wrong within a firm boils down to individual ethics. Therefore, when managements
choose leaders, ethics play a huge role. These individuals represent the firm. The management is
ultimately liable for any unethical practice conducted by an executive or employee.

More importantly, there are industry-specific government guidelines for working conditions, product
safety, statutory warning, and social responsibilities. The guidelines need to be followed for the smooth
functioning of the firm. The social culture impacts ethics; businesses are expected to adopt certain
social and moral practices. If businesses fail to comply with societal norms, they risk ruining brand
image, reputation, and credibility.
Characteristics of Business Ethics

1. Business ethics are based on social values, as the generally accepted norms of good or
bad and ‘right’ and ‘wrong’ practices.

2. It is based on the social customs, traditions, standards, and attributes.

3. Business ethics may determine the ways and means for better and optimum business
performance.

4. Business ethics provide basic guidelines and parameters towards most appropriate
perfections in business scenario.
5. Business ethics is concerned basically the study of human behaviour and conducts.

6. Business ethics is a philosophy to determine the standards and norms to make mutual
interactions and behaviour between individual and group in organisation.

7. Business ethics offers to establish the norms and directional approaches for making an
appropriate code of conducts in business.

8. Business ethics are based on the concepts, thoughts and standards as contributed as well as
generated by Indian ethos.

9. Business ethics may be an ‘Art’ as well as ‘Science’ also.

10. Business ethics basically inspire the values, standards and norms of professionalism in
business for the well-being of customers.

11. Business ethics is to motivate and is consistently related with the concept of service motives
for the customers’ view point.

12. Business ethics shows the better and perspective ways and means for most excellences in
customisation.

13. Business ethics aims to emphasise more on social responsibility of business towards society.
Significance of Business Ethics

The importance of general and business ethics, in particular, is huge. If we talk about following
ethics in the business environment, the code of conduct framed by an organization plays a
pivotal role in helping an employee to understand their rights, responsibilities, and duties. Let’s
understand thoroughly the importance of business ethics in day-to-day corporate life:

● Following business ethics strictly leads to profits, both in terms of boosting sales, revenue
generation, customer attraction, and workforce development.
● From manufacturing, distribution to wholesale and retails, efficient dealing with clients and
strengthening of employment policies leads to transparency in the business landscape. In
order words, everything will be in hunky-dory, from customer satisfaction to pitching of
sales, if ethics are properly taken into consideration.
● Business ethics help the company to get talented employees on board which ultimately
reduces the recruitment cost and brings productivity in the company
● It also helps in setting a safer and conducive environment in the company for employees to work
in.
● Business ethics will create a positive image of the company. If both the employees and an
employer follow business ethics with enthusiasm without getting indulged in unscrupulous
activities, it will create a positive image in the society of the organization.
● If business ethics are strictly followed, it will safeguard consumer rights as well. Not only will they
get complete information about what they are consuming, but their grievances can be redressed
ethically.
● It will ensure there are no unfair or malpractices taking place in the company.

Hence, such ethical practices prioritize the needs of consumers, ensures transparency, and
diversity in the workplace, respects consumer information, reduces conflict of interest, endorses
teamwork and builds corporation.
Principles/ Codes of Business Ethics

The fundamental principles/codes of business ethics are as follows:

● Accountability: Ethics is all about taking individual responsibility. It goes both ways.
Individuals are responsible for unethical practices of the firm because they did not
come forward to become whistle-blowers. Similarly, when an employee indulges in
unethical business practices, the firm is responsible.
● Care and Respect: Professional interactions between co-workers should be
responsible and respectful. Firms should make sure that the workplace is safe and
harmonious.
● Honesty: The best way to gain the trust of the employees is to have transparent
communication with them.
● Avoid Conflicts: Firms need to minimize conflicts of interest in the workplace.
Excessive competition within the workforce can end disastrously.
● Compliance: Firms need to comply with all the rules and regulations.
● Loyalty: The employees should be faithful to the organization and uphold the brand
image. Grievances, if any, should be dealt internally.
● Relevant Information: It is necessary to provide information that is comprehensible.
All the relevant facts, whether positive or negative, must be disclosed. It is unethical
to hide unreasonable terms and conditions in the fine print.
● Law Abiding: Corporate laws protect the rights of every section of society. Any kind of
discrimination is unethical. Personal biases of individuals should not affect the
decision-making of leaders.
● Fulfilling Commitments: It is unethical to justify non-compliance by interpreting
agreements unreasonably.
TYPES OF BUSINESS ETHICS

● Corporate Responsibility: The organization works as a separate legal entity with certain
moral and ethical obligations. Such ethics safeguard the interest of all the internal and
external parties associated with the firm. This includes the employees, customers, and
shareholders.
● Social Responsibility: Making profits should not be at the cost of society. Therefore,
corporate social responsibilities (CSR) have been a common practice where businesses
work towards environmental protection, social causes, and spreading awareness.
● Personal Responsibility: Employees are expected to act responsibly with honesty,
diligence, punctuality, and willingness to perform excepted duties. Individuals should settle
dues in time and avoid criminal acts.
● Technology Ethics: In the 21st century, companies have adopted
e-commerce practices. Technology ethics includes customer-privacy,
personal information, and intellectual property fair practices.
● Fairness: Favouritism is highly unethical. Every individual possesses certain
personal bias. But at the workplace, personal beliefs and biases should not
affect decision-making. The firm has to ensure fair chances of growth and
promotion for all.
● Trustworthiness and Transparency: Businesses should maintain
transparency in business practices and financial reports.
APPROACHES TO ETHICAL DECISION MAKING
The following are five universal approaches to Ethical decision making:

1. Utilitarian Approach -What benefits and what harms will each course of action produce, and which alternative
will lead to the best overall consequences?This question answers the dilemma of which option will produce the
greatest benefits and least harm. According to this approach, moral worth of actions and practices is determined
by their consequences. An action is morally desirable if its good consequences are more than its bad
consequences. Therefore, social benefits and costs of an action should be considered. The best decisions are
those that produce the greatest good for the maximum number of people. Cost benefit analysis and risk
assessment techniques are based on the utilitarian approach. The utilitarian approach recognises that an action or
decision can have several consequences, some good and some bad.
● But this approach suffers from some drawbacks.
● First, it is very difficult to measure the costs and benefits of an action.
● Second, this approach does not consider justice. The action that produces the greatest good for the greatest
number of people may lead to unjust treatment of a minority. Such action cannot be ethical because it is unjust.
For example, to reduce health insurance costs, the government decides to screen people for the HIV virus and
deny insurance coverage to those who are HIV positive. Such action may benefit a large number of people by
reducing costs but the action is unjust as it discriminates unfairly against a minority.
2. Universalism: A Duty-Based Approach

Universalism is a principle that considers the welfare and risks of all parties when considering policy decisions and
outcomes. Also needs of individuals involved in a decision are identified as well as the choices they have and the
information they need to protect their welfare. This principle involves taking human beings, their needs, and their values
seriously. It is not only a method to make a decision; it is a way of incorporating a humane consideration of and for
individuals and groups when deciding a course of action. As some have asked, “What is a human life worth?”

Cooper, Santora, and Sarros wrote, “Universalism is the outward expression of leadership character and is made manifest
by respectfulness for others, fairness, cooperativeness, compassion, spiritual respect, and humility.” Corporate leaders in
the “World’s Most Ethical Companies” strive to set a “tone at the top” to exemplify and embody universal principles in
their business practices.19 Howard Schultz, founder of Starbucks; cofounder Jim Sinegal at Costco; Sheryl Sandberg, chief
operating officer of Facebook; and Ursula M. Burns, previous chairperson and CEO of Xerox have demonstrated setting
effective ethical tones at the top of organizations.

Limitations here also show that using this principle may not always prove realistic or practical in all situations. In addition,
using this principle can require sacrifice of human life—that is, giving one’s life to help or save others—which may seem
contrary to the principle.
The film The Post, based on fact, portrays how the daughter of the founder of the famed newspaper, the Washington
Post, inherited the role of CEO and was forced to make a decision between publishing a whistle-blowers’ classified
government documents of then top-level generals and officials or keep silent and protect the newspaper. The classified
documents contained information proving that generals and other top-level government administrators were lying to the
public about the actual status of the United States in the Vietnam War. Those documents revealed that there were
doubts the war could be won while thousands of young Americans continued to die fighting. The dilemma for the
Washington Post’s then CEO centered on her having to choose between exposing the truth based on freedom of
speech—which was the mission and foundation of the newspaper—or staying silent and suppressing the classified
information. She chose, with the support of and pressure from her editorial staff, to release the classified documents to
the public. The Supreme Court upheld her and her staff’s decision. A result was enflamed widespread public protests
from American youth and others. President Johnson was pressured to resign, Secretary of State McNamara later
apologized, and the war eventually ended with U.S. troops withdrawing. So, universalist ethical principles may present
difficulties when used in complex situations, but such principles can also save lives, protect the integrity of a nation, and
stop meaningless destruction.
3. Rights: A Moral and Legal Entitlement–Based Approach

This principle is grounded in both legal and moral rights. Legal rights are entitlements that are limited to a particular
legal system and jurisdiction. This theory recognises that every human being has certain fundamental rights and
privileges. These human rights establish a minimum level of morally acceptable behaviour. In business, stakeholders
have basic rights and it is unethical to violate these rights. Along with rights there are some obligations. People and
institutions are under an obligation to protect the rights of others. For example, several firms in the West shipped their
waste to Nigeria to save high costs of toxic waste disposal. These firms and the Nigerian Government failed to protect
the rights of people in Nigeria.

Some limitations when using this principle are (1) it can be used to disguise and manipulate selfish and unjust political
interests, (2) it is difficult to determine who deserves what when both parties are “right,” and (3) individuals can
exaggerate certain entitlements at the expense of others. Still, the U.S. Constitution’s Bill of Rights, ratified in 1791, was
designed as and remains the foundation of, which is based on freedom and justice to protect the basic rights of all.
4.Justice approach According to this theory, a fair and equitable distribution of economic goods and services is
necessary.The valid principles of justice are those to which all people would agree. Everyone should be permitted the
basic liberty compatible with similar liberty for others. In the context of business, it is unjust, for example to pay foreign
workers less than workers in the company's own country, unless such inequality benefits the least advantages members
of the world.This principle has at least four major components that are based on the tenets that (1) all individuals should
be treated equally; (2) justice is served when all persons have equal opportunities and advantages (through their
positions and offices) to society’s opportunities and burdens; (3) fair decision practices, procedures, and agreements
among parties should be practiced; and (4) punishment is served to someone who has inflicted harm on another, and
compensation is given to those for a past harm or injustice committed against them.

A simple way of summarizing this principle when examining a moral dilemma is to ask of a proposed action or decision:
(1) Is it fair? (2) Is it right? (3) Who gets hurt? (4) Who has to pay for the consequences? (5) Do I/we want to assume
responsibility for the consequences?lmitations when using this principle involve the question of who decides who is right
and wrong and who has been harmed in complex situations. This is especially the case when facts are not available and
there is no objective external jurisdiction of the state or federal government. In addition, we are sometimes faced with
the question, “Who has the moral authority to punish to pay compensation to whom?” Still, as with the other principles
discussed here, justice stands as a necessary and invaluable building block of democracies and freedom.
Causes of Unethical Behavior in Business
Several factors motivate people to violate the accepted principles of right and wrong. Some of them are given
below:

1. Poor Personal Ethics: The personal code of ethics guides an individual's behaviour in business. This code is
formed by one's parents, school, religion, media, etc. A person with a weak sense of personal ethics is more
likely to behave in an unethical manner.

2. Narrow Outlook: Many a times business people fail to incorporate ethical considerations in decision making
as they take business decisions only on economic considerations of cost, quality and delivery. For example, Nike
subcontracted work to id some firms in Vietnam and faced criticism due to use of sweat shop labour in these
firms.

3. Poor Corporate Culture: The organisational climate in some companies deemphasises business ethics. For
example, the culture at Enron emphasized greed and deception. Top managers at Enron engaged in self dealing
to enrich themselves and their bo own families. The company's CEO, Kenneth Lay created an unethical culture.

4. Pressure to Achieve Goals: Another cause of unethical behaviour is pressure from top management to
achieve unrealistic goals. For example, Lay's successor as CEO, Jest Skilling put a be performance evaluation
system that weeded out 15 percent of binod underperformers' every six months. Such a myopic focus on
short-term performance led some executives to justify their performance.
What is Normative Ethics?
Normative ethics, that branch of moral philosophy, or ethics, concerned with
criteria of what is morally right and wrong. It includes the formulation of moral
rules that have direct implications for what human actions, institutions, and ways
of life should be like. The central question of normative ethics is determining how
basic moral standards are arrived at and justified. The answers to this question fall
into two broad categories—deontological and teleological. In teleological ethics, the
goodness or badness of action is determined by examining the consequences of that
action, whereas, in deontological theories, the goodness or badness of action is
determined by examining the action itself.
Deontological theories use the concept of their inherent rightness in establishing such standards,
while teleological theories consider the goodness or value brought into being by actions as the
principal criterion of their ethical value. In other words, a deontological approach calls for doing
certain things on principle or because they are inherently right, whereas a teleological approach
advocates that certain kinds of actions are right because of the goodness of their consequences.
Deontological theories thus stress the concepts of obligation, ought, duty, and right and wrong,
while teleological theories lay stress on the good, the valuable, and the desirable. Deontological
theories set forth formal or relational criteria such as equality or impartiality; teleological theories,
by contrast, provide material or substantive criteria, as, for example, happiness or pleasure.The
application of normative theories and standards to practical moral problems is the concern of
applied ethics. This subdiscipline of ethics deals with many major issues of the contemporary scene,
including human rights, social equality, and the moral implications of scientific research, for example
in the area of genetic engineering.
What is Descriptive Ethics?
Descriptive ethics or comparative ethics is the study of people’s views about moral beliefs. In
other words, it analyses ‘what do people think is right?’ Thus, the study of descriptive ethics
involves describing people’s moral values and standards as well as their behaviour.

Furthermore, descriptive ethics is a type of empirical study that incorporates research from the
fields of psychology, sociology, anthropology, and history. Such empirical studies observe that all
cultures and societies have their own moral standards that advocate or forbid certain types of
actions. Descriptive ethics also analyse the differences and similarities between the moral
practices of different societies, and evaluate the development of the standards behind these
practices.
 Difference Between Normative Ethics and Descriptive Ethics

The main difference between normative ethics and descriptive ethics is that
normative ethics analyses how people ought to act whereas descriptive ethics
analyses what people think is right.

Basically, normative ethics is the study of ethical action whereas descriptive ethics is
the study of people’s views about moral beliefs. Descriptive ethics, as its name
implies, describes the behaviour of people and what moral standards they follow. In
contrast, normative ethics is concerned with what is morally right and wrong..
NORMATIVE ETHICAL THEORIES

Normative ethical theories are classified into three main groups teleological, deontological and virtue
ethics theories.These types of theories differ in how they determine the moral worth of an action –
whether an action is morally right or wrong, permissible or impermissible.

■ Teleological Ethics
■ Teleology finds its etymology in the Greek word ‘telos’ which means “end” and logos,
“science”.
■ The teleological approach is also called “consequentialism”. It determines the moral worth
of any action by the consequences or outcomes of that action.
○ An action is good if its consequences are good; an action is wrong if its
consequences are bad.
○ Hence, for judging an action morally, we have to consider its actual or likely
results. Ethical egoism and utilitarianism are teleological.
■ Teleological moral theories locate moral goodness in the consequences of our behavior and
not the behavior itself.

○ According to teleological (or consequentialist) moral theory, all rational human

actions are teleological in the sense that we reason about the means of achieving
certain ends. Moral behavior, therefore, is goal-directed.
■ Example: From a teleological standpoint, stealing could not be judged inherently right or
wrong independent of the context and the foreseeable consequences. Suppose one is
contemplating stealing a loaf of bread from the neighborhood grocery store. Many moral
theorists would argue that morality requires an analysis of my motives (or intent) that
brought about that behavior.

○ However, from a teleological perspective, motives really have nothing to do with

the rightness or wrongness of the act. What really matters lies in the potential
pains and pleasures associated with the short-term and long-term consequences.
○ If thief’s children were starving, and if stealing a loaf of bread would immediately
prevent them from starving, then the act might be called moral.
■ Deontology
■ The term deontology finds its etymology in the Greek word “Deon”, meaning ‘duty,’ or
‘obligation,’ or ‘that which is necessary, hence moral necessity’.
■ The deontological approach rejects that the moral worth of any action depends on its
consequences.

○ Deontological approach to ethics holds that moral agents have to rigorously fulfil
their moral duties or obligations unmindful of the consequences.

● Moral agents have to honour human rights and meet moral obligations
even at the cost of an optimal outcome.
● Deontology argues that the moral worth of an action does not depend
on its consequences, but that a different criterion should be used.
■ A deontological moral theory might hold that character assassination is wrong and inhuman, even
if it produces good consequences.
■ Example: In early nineteenth-century America, many members of the anti-slavery movement
argued that slavery was wrong, even though slaveholders and southern American society in
general, economically benefited from it.
○ The slaveholders were also able to condition the slaves to the point where they
actually enjoyed living under slavery. From a teleological perspective, slavery might
appear to be an ideal economic institution. Everybody is satisfied and happy!
○ A deontologist, however, would argue that even if the American government
conducted a detailed cost/benefit analysis of slavery and decided that it created more
pleasure in society than pain (good for majority), it would still be wrong.
● Hence, slavery is wrong, not because of its negative consequences, but
because it violates an absolute moral rule.
■ According to this theory, some actions are morally obligatory irrespective of their consequences.
■ Historically, the most influential deontological theory of morality was developed by the German
philosopher Immanuel Kant (1724-1804)
Virtue Ethics: Character-Based Virtues
Virtue ethics is based on character traits such as being truthful, practical wisdom, happiness, flourishing, and
well-being. It focuses on the type of person we ought to be, not on specific actions that should be taken.
Grounded in good character, motives, and core values, the principle is best exemplified by those whose examples
show the virtues to be emulated.
Basically, the possessor of good character is moral, acts morally, feels good, is happy, and flourishes. Altruism is
also part of character-based virtue ethics. Practical wisdom, however, is often required to be virtuous.
This principle is related to universalism. Many leaders’ character and actions serve as examples of how
character-based virtues work. For example, the famous Warren Buffett stands as an icon of good character who
demonstrates trustworthy values and practical wisdom. Applying this principle is related to a “quick test” before
acting or making a decision by asking, “What would my ‘best self’ do in this situation?” Others ask the question
inserting someone they know or honor highly.
There are some limitations to this ethic. First, some individuals may disagree about who is virtuous in different
situations and therefore would refuse to use that person’s character as a principle. Also, the issue arises, “Who
defines virtuous, especially when a complex act or incident is involved that requires factual information and
objective criteria to resolve?”
Ethos of Vedanta in Management

Meaning of ethos- The characteristic spirit of a culture,era or community as manifested in its

attitudes and aspirations.

Meaning of Vedanta- Vedanta is the systematic presentation of teachings of upnishads.In the

Indian context, Vedanta is considered to be the highest spiritual knowledge knowing which, there
remains nothing further to be known. It contains the self knowledge (Atmavidya) and also the
knowledge of the Absolute Truth (Brahmavidya). The term Vedānta is a Sanskrit compound word
that is formed with a combination of two basic words: Veda and anta. The Sanskrit term ‘Veda’ is
derived from ‘vid’ which means - to know or to see directly or to have the knowledge and ‘anta’
means ‘the end of’ or ‘the goal of’ or ‘culmination’. Knowledge here means the gen of the
potential divinity of our Ātman. So, the compound term Vedānta means ‘the quest for
Self-knowledge’ or ‘the knowledge of Truth’ or ‘the knowledge of our divine nature.’ In Hinduism,
the term ‘Veda’ indicates the four ancient scriptures (śastras) viz. Rig, Yajur, Sāma and Arthava.
ETHOS OF VEDANTA IN
MANAGEMENT
● Vedanta is the systematic presentation of teaching of the Upanishads.
● All cultures in India have roots in Vedanta.
● Vedanta is a living philosophy of life in India which is a part of the mental
structure of our people.
● Simplicity is the key note of Vedantic ethics.
● Vedantic gurus grasped the truth that problems of secular pursuits can
not be resolved by secular route
Indian ethos in management is based largely on the Vedanta philosophy This philosophy has been well
explained in Gita and other Indian scriptures. According to our scriptures, there are four ways of dealing with
people- Saam (diplomacy), Daam (reward), Dand (punishment and Bhed (divide and rule.) There are three
character sets, namely Satwik (wise), Rajasik (forceful) and Tamasik (simpleton). If we combine the four styles
with the three character sets, we get the following framework:
The non-violent strategy of Mahatma Gandhi is based on the teachings of
Gita. In the Gita, Lord Krishna advises Arjuna :"It is your duty to kill the
Kauravas even though they are your own kin for the sake of Dharma."The
Indian ethos of vedanta in management is now an integral part of higher
education in management. Several Indian companies such as Ranbaxy,
Crompton Greaves, ONGC, are practising Indian ethos in management.
Principles of Indian Ethos

(1) Infinite potential and divinity of all souls :

Every human being has immense potential and reflects the divine. However humans must realize that
they are the Spirit, the Divine.
You are not a human being who sometimes goes through a spiritual experience – you are, indeed, the
spirit, going through a human experience. As Emerson said – “Man is God playing the fool”! Once man
understands his divinity and Infinite power, he is at peace with the world.
“Tesham Sukham Tesham Shanti Shaswati” – infinite happiness and infinite peace come to those who
see the Divine in all beings. Human must understand that even though our outward appearances are
different, all of us have the same consciousness.
“Paraspar Devo Bhava” – regard the other as a divine being. Have strong, steady and inextinguishable
faith that you and all others around you are divine. There is, as it were, an infinite ocean behind, and
each of us is a wave coming out of that infinite ocean – and each one trying to manifest that infinite
outside.
(2) Welfare of All:

Accepting the divinity in oneself and in all creation, and that we are all interconnected, we must strive towards
perfection in our work as well as for the welfare of the world. This holistic approach, if applied in management,
will lead to the competent functioning of the enterprise and the greatest good for the entire environment.

“Atmano Mokshartham Jagat Hitaya” – i.e. “for gaining perfection in individual life, as well as for the welfare of
the world.” This is the motto of the Ramakrishna Math & Mission, and depicts the ideology formulated by
Swami Vivekananda.

(3) Work Results and Detachment :

This is really the essence of the Bhagavad Gita which says that one must perform duty without ego and
expectations of results – i.e. in the true spirit of Nishrkama Karma, selfless or desireless action : An action must
be performed without any expectation of fruits or results. When you are doing a job, put your heart and soul
into it and the results will follow. This implies working for the sake of work, generating excellence for its own
sake, and not for any extrinsic rewards. This would be called “detached work”.
(4) Equanimity :
Equanimity is a state of mental or emotional stability or composure, arising from a deep awareness and
acceptance of the present moment.
Everything in life comes in duality, whether it is day and night, summer and winter, mind and matter created
by God, or the pleasures and pain, success and failures experienced by man. It is so, because both things are
incomplete without each other. The irony is that humans, inspite of knowing this, seek and pursure one side of
the coin only. We tend to forget that both pleasure and pain are merely a play of the Divine and we must
accept both with equanimity.
(5) Unique work culture :
“Work is worship, Duty is God.” According to Indian Ethos, work must be offered to the Supreme Power to
God, because the energy which enables us to perform work is given by the Power or God. Hence work is
considered as worship. All kinds of work are sacred – there is no superior or inferior work. Work is meant
to bring out Divinity and foster spirited growth of an individual. Such thinking is also seen in the Zen
philosophy of the Japanese which aspires them to achieve perfection in work.
(6) Dignity of Work :
Believing that all humans are equal and embody divinity, each one’s work is of equal importance. In the Indian
culture, whether at home or the workplace, respect for all individuals at all levels is important.
“Archet Dana Manabhyam” – “Worship people not only with material possessions but also by showing
respect to the divinity within each of them.” If this concept be applied in life and management today, there
would be increased tolerance and no problems between labour and management.
(7) Know Yourself : (Who Am I?)
Before you start to manage resources and others, what is very important according to the Indian Ethos is to
manage yourself and that will only be possible if you know yourself. Be aware of your strengths and
weaknesses and your reactions to your environment. Recognizing that you and all others are part of the Divine
Spirit, and therefore all have Divine qualities, will lead to peace and harmony in living.
(8) Co-operation & Collaboration :
Accepting the divinity in all creation, humans must nurture one another.
“Parasparam Bhavayanta Shreyah, Param Bhavasathya” – by cooperation, respect and feeling of
fellowship, all of us can enjoy the highest good, both material and spiritual. Hence what is prescribed in
the “Spirit of Yajna” i.e. cooperation and collaboration for the greater good rather than for competition.
(9) Good thoughts lead to good actions :
In the Indian context, the attention to the means ensures the end.
“Yadishi bhavanayasya siddhi bhavati tadrishi” – As we think, so we succeed, so we become.
(10) Vasudhiva Kutumbakam :

The concept of the entire universe being a family has been an integral part of the Indian ethos.
Indians have been true global citizens treating the world as a family rather than territory meant to be
conquered or acquired This concept of extended family exists even in business organizations and allows
the employees to function in harmony.
(11) Ananda or Bliss :

Ananda means happiness or bliss. Literally, ‘aa’ means ‘from all sides’ and ‘nanda’ means joy or
happiness. Thus, literally speaking, ‘ananda’ means joy from all sides. In the spiritual context, ananda is
an external aspect of Brahman which we experience when we are united with Him. When there is no
distinction between the knower and the knowing, the object and the subject, one becomes immersed in
bliss.
Role of various agencies in ensuring ethics in
corporation
Factors that ensure ethical practices in companies:
1.Public opinion
2.Role of auditors
3.Role of Board of Directors in Ensuring Ethical Business
4.Media and business ethics
5.Role of Government Agencies in Ensuring Ethical Practices
6.Role of SEBI
7.Role of whistle-blowing
 1. Public Opinion
Public opinion can initiate new requirements,help crystallization of policy initiatives and force public
authorities to create an ethically conducive environment.
2. Role of Auditor
Defining Auditor:
An auditor is a certified accounting professional who verifies the financial statements and records of
individuals and companies. They check whether companies comply with taxation and legal guidelines.
Auditors identify discrepancies, highlight accidental or deliberate misrepresentation of financial data and
protect companies and financial institutions against fraud.

He is required to certify that the accounts produced by his client companies have been prepared in accordance
with normal accounting standards and represent a true and fair view of the company. Usually, Charterer
Accountants are appointed as auditors.An auditor is a representative of the shareholders, forming a link
between the government agencies,stockholders , investors and creditors.
TYPES OF AUDITORS:

1. Government auditors
Central and state audit agencies employ auditors to work with government agencies, bureaucratic departments,
ministries and private business entities. The primary goal of a government auditor is to ensure that institutions
properly account for their expenses and income, as per regulatory requirements. Auditors assess whether
government departments are ready for audits by reviewing their financial statements and internal audit reports.
They also conduct performance and compliance audits to identify operational irregularities and productivity issues
within departments.

2. Internal auditor
The board or the management of a company may hire an internal auditor to review and audit its internal
functions. Some companies may hire experienced auditors from auditing companies to work as internal
auditors on a contract basis. They scrutinise financial records and documents to ensure legal and regulatory
compliance. They may identify methods to improve a company's processes and suggest steps to reduce
expenses and wastage of resources.
3. External auditor
An external auditor may be an independent contractor or part of an auditing company. Companies hire
them to conduct annual audits for specific departments or for the entire company. Though external
auditors work with a company's internal auditors, they may not allow internal stakeholders of a company
to interfere with or influence their auditing processes.

DUTIES OF AN AUDITOR:
The duties of an auditor are :
1. To enquire whether loans and advances made by the company on the basis of security have been
properly secured
2.To enquire whether transactions of the company which are represented merely by book entries are not
prejudicial to the interests of the company ;
3.To enquire where the company is not an investment company within the meaning of Section 372 or a
banking company,whether so much of the assets of the company as consist of shares, debentures and other
securities have been sold at a price less than that at which they were purchased by the company ;
4.To enquire whether loans and advances made by the company have been shown as deposits ; and
5.To enquire whether personal expenses have been charged to revenue account.
RESPONSIBILITIES OF AUDITOR:

As per the Standard Auditing Practices (2), the auditor:

● Is responsible for forming and expressing his opinion on the financial statements. He assesses the reliability and
sufficiency of the information contained in the underlying accounting records and other source data by making a
study and evaluation of accounting systems and internal controls.
● Determines whether the relevant information is properly disclosed in the financial statements by comparing the
financial statements with the underlying accounting records and other source data to see whether they properly
summarize the transactions and events recorded.
● Has to ensure that his work involves exercise of judgment, as for example, in deciding the extent of audit
procedures and in assessing the reasonableness of the judgments and estimates made by the management in
preparing the financial statements.
● Is not expected to perform duties which fall outside the scope of his competence. For example, the professional
skill required of an auditor does not include that of a technical expert for determining physical condition of certain
assets.
3. Role of Board of Directors in Ensuring Ethical Business:
● The separation of ownership from active direction and management is an essential feature of the company
form of organization. To manage the affairs of the company,shareholders elect their representatives called
the“Directors” of the company.
● A number of such directors constitutes the “Board of Directors”.The board generally has only part time
directors.
EFFECTIVENESS OF THE BOARD OF DIRECTOR

The realistic functions of the board are:

a. Confirming management decisions on company matters;
b. Providing constructive advice to the executives on business outlook, new governmental legislation, wage
policy etc.;
c. Selecting the chief executives and confirming the selection of the other executives in the company made by
chief executives; and
d. Reviewing the results of current operations.
RESPONSIBILITIES OF DIRECTOR

●An efficient and independent board should be conscious of protecting the interests of all
stakeholders and not be concerned too much with the current price of the stock.
●Another important function of the director is to set priorities and to ensure that these are
acted upon.
●A director is also expected to have the courage of conviction to disagree.
●Directors have great responsibility in the matter of employment and dismissal of the CEO.
●One of the toughest challenges confronted by boards arises while approving acquisitions.
●An efficient board should be able to anticipate business events that would spell success or
lead to disaster if proper measures are not adopted in time.
●The directors have a duty to act bona fide for the benefit of the company as a whole.
●In recent times, those who advocate reform of laws governing corporate practices stress
the importance of reformulation of the concepts behind these laws.
4. Media and Business ethics

The media can play a role in ensuring ethical business by affecting reputation in at least three ways:

1. It can drive politicians to introduce corporate law reforms or enforce corporate laws.
2. It could affect reputation through the standard channel that most economic models emphasize.
3. It affects managers' and board members' reputations in the eyes of shareholders, future
employees and society at large.

ETHICS IN ADVERTISING
A number of humanities and social science scholars view advertising as intrusive and environmental and
its effects as inescapable and profound.They see it as reinforcing materialism, cynicism, irrationality,
selfishness, anxiety,social competitiveness, sexual preoccupation,powerlessness and loss of self
respect.These are strong indictments which imply that advertising is a powerful force.
ADVERTISING STANDARDS
The code of the Advertising Standards Council of India expects,inter alia, that there will be :
a. No offence to generally accepted norms of public decency
b. Truthfulness and honesty in claims and representations
c. No indiscriminate use of advertising for products which are hazardous to society or to
individuals.
d. References to eminent personalities/political figures and the use of national emblems are not
normally permitted.
e. Comparative advertising should respect the principles of fair competition generally accepted
in business.
 5. Role of Government Agencies in Ensuring Ethical Practices

In India, the Department of Company Affairs (DCA), the Ministry of Finance, the Commerce and Industry
ministries have powers to oversee corporate activities and take corrective action against corporate
misdemeanors.
Additionally, there are regulators such as SEBI, RBI, TRAI, IRDA, which as public authorities have the
power and responsibility to monitor and supervise companies.

6. Role of SEBI
Establishment of SEBI: set up on 12 April 1988 by the Government of India; given legal status by
the Securities and Exchange Board of India Ordinance 1992.
Basic objectives:
● protection of investors' interests in securities
● promotion of the development of the securities market and
● regulation of the securities market
SEBI has been clothed with the following powers:
● To promote fair dealing by the issuers of securities and ensure a marketplace where companies
can raise funds at relatively low cost;
● To provide a degree of protection to investors and safeguard their rights and interests and
● To regulate and develop a code of conduct and fair practices by intermediaries
7. Role of Whistle- Blowing

Grounds for whistle-blowing:

● Internal: to make the product safe or change the process

● Governmental: faulty design, decisions, which will affect the public
● External: Individual user who runs the risk

When is whistle blowing permitted:

1. Motives are moral
2. Exhausted all existing internal procedures and failed to get the moral error corrected
3. Employee has reached the last and sixth stage of Kohlbergh’s six stages of evolution-the stage of
universal ethical principles.
Assessing Ethical Performance
Identifying and measuring the ethical standards and personal integrity of others is difficult. Philosophers disagree
about what constitutes ethical standards, and there is more than one framework in which to approach the concept
of ethics. For example, the ethical behavior of those who believe in fairness to all may seem in stark contrast to that
of people who believe in the common good. In the end, an employer must decide what behavior she deems ethical
in her business before she can begin to evaluate her employees.Following steps could be taken to measure the
ethical behaviour of the employees:

STEP 1:
Meet individually with employees on a regular basis -- perhaps once every few months or a couple of times
per year. Personal interviews are a useful tool in assessing attributes, such as communication skills, problems
solving skills, ability to work with others and character. Research by Norwood and Briggeman indicates that
an employer may get a good sense of an employee’s work ethics, skills and personality traits by meeting with
him to discuss and evaluate work in a relaxed atmosphere.
STEP 2:

Evaluate employees’ demonstrated work ethics against a checklist. Bradley University uses a
well-thought-out Employee Performance Appraisal that includes sections entitled “Judgment,”
“Integrity” and “Attendance, Availability and Dependability.” It is easier to evaluate and measure
concepts, such as integrity, in others when those concepts are broken down into individual traits, such
as sensitivity to confidentiality and compliance with procedural standards of conduct.

STEP 3:
Monitor attendance and work productivity. Showing up and working agreed-upon hours is a sign of
integrity and ethical behavior; arriving late and leaving early on a regular basis shows a lack of
ethics. Many factors may result in mediocre work. Sometimes an employee needs help or additional
training; in other instances, the employee is lazy or does not care. Schedule special meetings with an
employee whose work is sub-par to ascertain whether he wants to do a good job. Employees with
integrity and good work ethics are more likely show improvement in their work.