GOVERNANCE AND BUSINESS ETHICS

GOVERNANCE AND
BUSINESS ETHICS
Prof. Bimal Jaiswal

Faculty of Commerce
University of Lucknow
Lucknow
Dr. Deepak Verma

Subject Expert
Faculty of Commerce
University of Lucknow
Lucknow
New Royal Book Company

Lucknow
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ISBN :
First Published : 2021
Published by Imran Mirza and Mirza Furqan Beg for

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PREFACE
Profit is the main obligation of any business but
doing business ethically along with profit the biggest
challenge these days. Ethics are moral values
especially for any profession which tells the people
what is right and what is wrong. These values are
developed eventually with experience. Initially, a child
learns about right and wrong with the help of reward
and punishment. It means the upbringing of a child is
also behind ethical or unethical behaviour later in life.
When children grown-up individuals, they learn from
their peer group that what is right and what is wrong.
Eventually, they also learn which action is in line with
the legislations or laws. However, some of them learn
that how to apply the values while taking ethical
business decisions.
In business, the scope of ethics is extremely broad.
Ethics is pervasive should be practiced by all the
members of the organization. For example, ethics is
used in Human Resource Management, Marketing
Management, Sales Promotion, Financial management,
Information Technology, etc.
Though ethical practices of business attract an extra
cost of production, this is a misconception that ethical
business cannot earn a profit. People have deep trust
in the business which follows ethical practices of
business and support these businesses as well.
In this book, we tried to cover all the aspects of
business ethics. We tried to connect concepts and
IV Governance and Business Ethics
theories of ethics with business practices. Concepts of
Business Ethics have been explained with suitable
examples and illustrations.
This book deals with the Definition and nature of
ethics, causes of unethical behaviour, ethical abuses,
work ethics, ethical dilemma, ethics for managers,
code of ethics, cost of ethics, ethics in functional areas
like HRM, Marketing, Finance, Information
Technology, Corruption, Gender issues.
The approach of the book is student-friendly and
covers the syllabus of B. Com, B. Com (Hons.), BBA,
and MBA courses of many universities. I hope this
book will be helpful for the students and business
professionals and help them taking the right decision
in business and social life.
Bimal Jaiswal
Deepak Verma
CONTENTS
Conte nt a nd Con tr ib ut ors
S.No. CHAPTER PAGE

No.
1. Business Ethics: An Introduction 1
2. Causes of unethical behaviour 20
3. Ethical abuses 28
4. Work ethics, Code of conduct& Public 37
good
5. Ethics Analysis and Ethical Dilemma 48
6. Ethics in practice 55
7. Code of Ethics & Cost of Ethics 63
8. Business and Environmental Issues 77
9. Ethic in Functional Area: Marketing 91
10. Ethic in Functional Area: Finance 101
11. Ethic in Functional Area: Human 111
Resource Management
12. Ethic in Functional Area: Information 118
Technology
13. Corruption and Ethics 125
14. Gender Issues—Gender Ethics, 136
Harassment and Discrimination
15. Case Study 143
Chapter-1
Business Ethics: An Introduction
B usiness E th ics: An I ntr od uct ion
Ethics can be explained as a moral principle that

governs a person’s behaviour or the conducting activity in a
profession. It can also be explained as the branch of
knowledge that deals with moral principles.
According to Britannica, Ethics, also called moral
philosophy, the discipline concerned with what is morally
good and bad and morally right and wrong. The term is
also applied to any system or theory of moral values or
principles.
Ethics Helps in the major decision-making process,
especially the decisions where human actions can be
judged, whether it is right or wrong. Many times, it is
observed that managers remain skeptical that what should
be done in a particular situation where a decision is to be
taken without doing any discrimination or being biased. In
such a situation ethics can help the managers to find out the
answer to the questions that what decision is being made is
not discriminatory, immoral, or biased.
Ethical practices are not new in our society. in the
Indian context, Bhagavad Gita guides the managers in
decision-making ability if any difficult decision becomes
necessary under challenging circumstances. With the help
of ethical practices, decisions can be taken without any fear
of being criticized. Decisions based on ethics are long-
lasting in comparison to the decisions which are made
based on the immediate perception of the people.
Business ethics means adapting to business practices of
the concepts of general ethics. And, in other words, it is the
application of ethical principles to the business’s behaviour.
2 Governance and Business Ethics
Definitions
Ethics can be defined in various ways, some are
following.
The English word ethics is derived from the Ancient
Greek word ēthikós (ἠθικός), meaning "relating to one's
character", which itself comes from the root word êthos
(ἦθος) meaning "character, moral nature".
This word was transferred into Latin as ethica and then
into French as éthique, from which it was transferred into
English as ethics.
Rush worth Kidder says that "standard definitions of
ethics have typically included such phrases as 'the science
of the ideal human character' or 'the science of moral duty'".
Richard William Paul and Linda Elder describe ethics as
"a set of concepts and principles that guide us in
determining what behavior helps or harms sentient
creatures".
Paul and Elder state that most people get confused
about ethics with behaving by following social conventions,
religious beliefs, the law, and do not treat ethics as a stand-
alone concept.
According to the Cambridge Dictionary of Philosophy,
the word "ethics" is "commonly used interchangeably with
'morality’ and sometimes it is used more narrowly to mean
the moral principles of a particular tradition, group or
individual."
According to Wheeler, ‘‘Business ethics is an art and
science for maintaining a harmonious relationship with
society, its various groups, and institutions as well as
reorganizing moral responsibility for the rightness and
wrongness of business conduct.’’
Business Ethics: An Introduction 3
Williams describes the content of this area of inquiry as
addressing the extremely broad question, "how one should
live". Ethics can also refer to a common human ability to
think about ethical problems that are not particular to
philosophy.
Nature of Ethics
Nature of ethics refers to the standard of behaviour or
the ideal code of conduct. These are established standards
that are developed over the period by the association of
experts like code of conduct for the medical profession is
prescribed by the Medical Council of India.
Ethical codes are different from the religious do’s and
don’ts’. Ethics are like a common rule which applies to
everyone irrespective of one’s religious beliefs.
Ethical codes also differ subsequently from laws of the
land. In contradiction of any law punishment can be
awarded by the courts but on the breaking of such ethical
codes’ punishment is not awarded.
Concept
The word ethics was drawn from the Greek word ethos
which originated from the substantive ethos. Ethos can be
explained as customs, usages, or habits. Literally, ethics
means the science of customs or habits.1
Ethics is the science of the habitual conducts of men or it
can be called as science of character and conduct. It assesses
the voluntary and habitual action of a person and analyses
whether it is right or wrong. Ethics cannot be called positive
science as it does not explain causal and effect relationships.
1. Business ethics and Indian value system, Dr. Anand Singh, Himalaya
Publishing House
To understand ethics, it is important to understand the
value and how it is different from ethics.
Ethics also called moral philosophy, is a branch of
philosophy that seeks to determine the correct application
of moral notions such as good and bad and right and wrong
or a theory of the application or nature of such notions.
Both 'ethics' and 'morality' have their roots in a word for
'customs', the former being a derivative of the Greek term
from which we get 'ethos', and the latter from the Latin root
that gives us 'mores', a word still used sometimes to
describe the customs of a people. Although ethics has
always been viewed as a branch of philosophy, its all-
embracing practical nature links it with many other areas of
study, including anthropology, biology, economics, history,
politics, sociology, and theology. Yet, ethics remains distinct
from such disciplines because it is not a matter of factual
knowledge in the way that the sciences and other branches
of inquiry are. Rather, it has to do with determining the
nature of normative theories and applying these sets of
principles to practical moral problems.
Ethics is traditionally subdivided into normative ethics,
metaethics, and applied ethics.
1. Normative ethics seeks to establish norms or
standards of conduct; a crucial question in this field is
whether actions are to be judged right or wrong based on
their consequences or based on their conformity to some
moral rule, such as “Do not tell a lie.” Theories that adopt
the former basis of judgment are called consequentialist
those that adopt the latter are known as deontological (see
deontological ethics).
2. Metaethics is concerned with the nature of ethical
judgments and theories. Since the beginning of the 20th
century, much work in metaethics has focused on the
logical and semantic aspects of moral language. Some major
metaethical theories are naturalism (see naturalistic fallacy),
intuitionism, emotivism, and prescriptivism.
3. Applied ethics, as the name implies, consists of the
application of normative ethical theories to practical moral
problems (e.g., abortion). Among the major fields of applied
ethics are bioethics, business ethics, legal ethics, and
medical ethics.
Ethics are commonly misunderstood as values. Where
values help individuals to take the right decision in
common life, ethics help individuals to take the right
decision in the profession. Though values are foundation
stones for ethics thus it is significant to understand the
values.
Values
Is racial discrimination, right? Is quota in education
institutes and government jobs, right? The answers to these
questions are value-laden. Somebody will say positive
while a large number of people may be against it.2
Values are beliefs and are defined as beliefs about what
is desirable and “good” and what is undesirable or bad
(dishonesty).
The value represents the basic conviction that “a specific
mode of conduct or end-state of existence is personally or
socially preferable to an opposite or converse mode of
conduct or end-state of existence”.
A manager who believes strongly in the work ethics will
tend to voice attitudes towards workers or work practices
as a means of reflecting this value and say, “you got to
2. Organisational behaviour V.G. Kondalkar, New Age international Publisher

work harder, that has been the custom and tradition of the
organization and reason for being in the present position”.
Value has contents and conviction elements. Every
person has value inbuilt in him; it is faith that he deposes in
certain ethical aspects.
Values are stable and genetically inherited to a large
extent of the total value possessed by an individual. These
are stable and do not change.
Types of Values
1. Allport and associates described six types of values.
These are discussed briefly as follows:
(a) Theoretical value: Theoretical value is associated
with significance and discovery of truth through a rational
approach. If all the employees practice truth in a true sense,
the organization would operate itself and there will not be
any need for regulation. Truth is such a powerful value that
the British Empire had to leave Indian soil.
(b) Economic value: It highlights the usefulness and
practicability of resources, efforts put in by individuals, and
the consequent value derived therefrom. If the project is
economically viable (in an exceptionally large sense) then it
can be undertaken. Economic value is appreciated from an
extremely broad sense and it spells apart from the
economics of the issue. It also adds human value to it when
it is considered. It is the human aspect, which makes
economic value enlarged.
(c) Aesthetic (Appreciation) value: It is a form of
Harmony in life. We believe that all work must be done
smoothly and that there are mutual understanding and a
sense of participation among all human elements. Aesthetic
value is displayed by cordial relations among various levels
of the organization, effective communication, a conflict-free
atmosphere, and a very congenial work environment. The
work in organizations, which has an aesthetic value system
among workers, is done in harmony, peace, and
participation of one and all.
(d) Social value: This value is related to love of people,
sense of belonging, and an attitude of ‘we’ feeling. Such
value is especially crucial in the organization that brings
together the employees who are bound by a sense of
participation that leads to a high level of motivation and
high productivity.
(e) Political value: It refers to power and influence in
the organization. Right people must be placed in the right
positions so that they will be able to influence the people.
(f) Religious value: This value is related to the display
of value which would bring unity and understanding
amongst the people in the organization based on a common
religious platform. This value is no more being preached in
the organization as a cross-section of people are now
working in organizations the world over. However, the
positive impact on the work environment in the
organizations cannot be underestimated based on religious
values.
When did ethics begin and how did it originate?

Virtually every human society has some form of myth to
explain the origin of morality. In the Louvre in Paris there is
a black Babylonian column with supportive structure,
showing the sun god Shamash presenting the code of laws
to Hammurabi (died c. 1750 bc), known as the Code of
Hammurabi. The Old Testament account of God’s giving
the Ten Commandments to Moses (flourished 14th–13th-
century bc) on Mount Sinai might be considered another
example. Thus, we can observe ethics as not a
contemporary concept.
Figure: Types of values

The Origins of Ethics
The revival of classical learning and culture that began
in 15th-century Italy and then slowly spread throughout
Europe did not give immediate birth to any major new
ethical theories. Its significance for ethics lies, rather, in a
change of focus. For the first time since the conversion of
the Roman Empire to Christianity, man, not God, became
the chief object of philosophical interest, and the main
theme of philosophical thinking was not a religion but
humanity—the powers, freedom, and accomplishments of
human beings. Although the Renaissance did not produce
any outstanding moral philosophers, there is one writer
whose work is of some importance in the history of ethics:
Niccolò Machiavelli (1469–1527). His book The Prince (1513)
offered advice to rulers as to what t must do to achieve their
aims and secure their power. Its significance for ethics lies
precisely in the fact that Machiavelli’s advice ignores the
usual ethical rules: “It is necessary for a prince, who wishes
to maintain himself, to learn how not to be good, and to use
this knowledge and not use it, according to the necessities
of the case.” There had not been so frank rejection of
morality since the Greek Sophists. So startling is the
cynicism of Machiavelli’s advice that it has been suggested
that The Prince was an attempt to satirize the conduct of the
princely rulers of Renaissance Italy. It may be more
accurate, however, to view Machiavelli as an early political
scientist, concerned only with setting out what human
beings are like and how power is maintained, with no
intention of passing moral judgment on the situation
described. In any case, The Prince gained instant notoriety,
and Machiavelli’s name became synonymous with political
cynicism and deviousness.
Reacting against the worldly immorality apparent in the
Renaissance church, Martin Luther (1483–1546), John Calvin
(1509–64), and other leaders of the new Protestantism
sought to return to the pure early Christianity of the
Scriptures, especially as reflected in the teachings of Paul
and of the Church Fathers, Augustine foremost among
them. They were contemptuous of Aristotle and non-
Christian philosophers in general. Luther’s standard of
right and wrong was whatever God commands. Luther
insisted that one does not earn salvation by good works;
one is justified by faith in Christ and receives salvation
through divine grace. It is apparent that if these premises
are accepted, there is little scope for human reason in ethics.
As a result, no moral philosophy has ever had the kind of
close association with any Protestant church that, for
example, the philosophy of Aquinas has had with Roman
Catholicism. Yet, because Protestants emphasized the
capacity of the individual to read and understand the
Gospels without first receiving the authoritative
interpretation of the church, the ultimate outcome of the
Reformation was greater freedom to read and write
independently of the church hierarchy. This development
made possible a new era of ethical thought. From this time,
too, distinctively national traditions of moral philosophy
began to emerge; the British tradition developed largely
independently of ethics on the Continent.
Sources of Ethical Standards
Ethical standards are drawn from the following sources.
1. Utilitarian Approach
2. Deontological or Rights Approach
3. Justice or Fairness Approach
4. Common Good Approach
5. Virtue Approach
Utilitarian Approach: This approach helps in finding
the answer to the question that what benefits and what
harm will each course of action produce, and which
alternative will lead to the best overall consequences. this
approach also helps in finding out the best option which
will produce the greatest benefit and least harm.
1. Deontological or Rights Approach: These
approaches concern the moral rights of the individual and
which course of action best represents those rights. This
approach follows the belief that any person could make his
or her decision with freedom. if any action or belief does
not respect everyone's moral rights then it should be
considered as a wrong act or wrong belief.
2. Justice or Fairness Approach: This approach is based
on the concept of equality. Which course of action treats
every individual as the same without any biasness, except
where there is a morally justifiable reason not to and does
not show favouritism or discrimination. This approach
dates any individual towards an opportunity to reflect if the
action is fair to other people.
3. Common Good Approach: this approach is based on
that which action leads an individual towards a common
good. This approach helps in taking decisions that are good
for the individual as well as for the community and society.
4. Virtue Approach: This approach helps an individual
in developing their moral virtues. Every individual has
some virtues and moral values which help in determining
that what kind of person one should be and what it will do
to one’s character.
Characteristics of Ethics
To understand business ethics, it is crucial to
understand the characteristics of business ethics. Some
characteristics of business ethics can be identified as
follows.
1. Business ethics are writing principles to conduct any
business. This is the knowledge that helps how to
deal with any complex business situation.
2. Business ethics is not a new concept. it has its origin
in the development of human civilization.
3. The concept of business ethics is closely related to
the human. Business ethics studies all the activities
behaviours and decisions which are concerned with
the human aspect.
4. business ethics helps in identifying whether any
decision was good or bad, proper, or improper to all
stakeholders of the business.
5. It is a goal-oriented concept which in shoes
justifiable end of any process.
6. Business ethics are different from social
responsibility. Social responsibility is part of policies
open enterprise where business ethics are related to
conduct and behaviour of managers and
businessman.
7. Business ethics are all also different from Laws, as
law controls the social behaviour of an individual
forcefully while ethics controls the behaviour of an
open individual voluntarily.
Reflectors of Ethical Business/ Organization
Any business which is based on ethical practices can
sustain itself for a long. Businesses that are ethical in nature
may show the following characteristics.
1. Ethical Leadership: The culture of any organization
depends on the philosophy that the founder of the business
follows. For a business to be ethical, it is a leadership must
demonstrate ethical practices in every situation. If leaders
are ethical in their business practices it creates a culture in
the organization which is followed by all the members of
the organization has been which leads the organization
towards being an ethical organization.
2. Vision Statement: An ethical business Show its
commitment to stick with its core value statement which
describes the ultimate vision admission of the organization.
Search organizations have a code of conduct that supports
their vision and mission. The code of conduct is the
guideline for employees to follow the ultimate vision and
mission of the organization.
3. Integrity and Fairness: Honesty and truthfulness
are characteristic of any ethical organization. Ethical
Organizations follow all the laws and regulations at the
local state and federal level. Such organizations treat their
employees fairly without any discrimination. It
demonstrates fair dealing with customers and vendors by
placing competitive price and value for money products,
timely payments to the vendors.
4. Respect for Employees and Customers: Respect and
ethical practices are two aspects of a coin. organizations
always respect the views of their employees and customers.
Search organizations promptly solve any grievances of
employees and their customers.
5. Concern for People and Environment: Ethical
organizations always remain concerned about the impact of
their business on people and the environment. Such
organizations adopt production methods and business
practices that are harmless for the people and environment.
6. Social Responsibilities: Ethical organizations also
remain concerned about their social responsibilities.
Businesses utilize various types of resources which come
from society thus it becomes its responsibility to return
something to society as well.
Theories of Ethics
Ethics is the branch of philosophy that tells an
individual that what is right and what is wrong. It deals
with well-defined standards that describe human
behaviour. Several philosophers have propelled different
types of ethical theories which are as follows.
1. Teleological Ethical Theories
2. Deontological Ethical Theories
3. Virtue Ethical Theories
4. System Development Ethical Theories
1. Teleological Ethical Theories: These types of theories are
concerned with the consequences of the action being
committed by an individual. There are three important ethical
theories under technological theories.
a. Ethical Egoism: This theory is based on a notion that it is
always moral to promote once on good but sometimes
one can avoid the personal interest to pursue others
interest. This makes ethical vision different from
psychological egoism which tells that people are self-
centered and self-motivated and have the intention to
maximize their personal interest without thinking about
others.
b. Utilitarianism: Utilitarian theory ethics says that any
action can be considered good if it results in maximum
satisfaction for many people. For example, an HR
manager is making any HR policy after taking views of
all the employees which will benefit all the employees of
the organization then he would be acting in a way that
shall maximize the pleasure of all the employees.
c. Eudaimonism: This theory is based on the concept that
any action is good if it results in the fulfillment of goals
along with the welfare of human beings. In other words,
we can say that goal should be achieved but not at the
cost of the welfare of people. Suppose a manager
enforces employees to take part in any training session
which would be fruitful to them in near future is an
ethical decision. Because it is done for the welfare of
employees.
2. Deontological Ethical Theories: These theories are based on
the concept that the action is morally right independent of its
consequences. there are three types of theories under
deontological Ethical Theories.
a. Negative and Positive Rights Theories: The negative
right theory says that any action will be considered right
if it protects the individual from any type of harm or
interference from others. For example, if any person has
all the rights to conduct the business should not be
restricted to conduct the business by authorities or any
individual person.
positive right theory intel's that any action will be
considered right if it provides individual with anything
that he needs to exist. For example, if any individual has
the right to get adequate medical facilities should be given
the medical facilities.
b. Social Contract Theories: This theory is based on the
concept people interact with each other in society and
follow certain rules and regulations with the obligation
towards the society. If there will not be any law in society
then people will live with full freedom which will lead to
a disorganized society and continuous war with each
other. Thus, people agree to leave certain freedom and
have some obligations towards society according to
commonly accepted laws.
c. Social Justice Theories: This theory states that the action
will be considered right if it confirms the fairness in the
distributive, retributive and compensatory dimensions of
cost and rewards. The distributive dimension implies the
perceived fairness in the distribution of social benefits
and burdens among the group members. The retributive
dimension reflects the punishment proportionate to the
extent of crime while the compensatory dimension is the
way people are compensated concerning the injuries
inflicted upon them.
3. Virtue Ethical Theories: According to this theory ethical
values of individual are determined by their character. There
are 3 types of theories virtue ethical theories.
a. Individual Character Ethics: This theory states that the
individual character ethics hold that the identification and
development of noble human traits help in determining
both the instrumental and intrinsic value of human ethical
interactions. These noble traits are courage, self-
discipline, prudence, gratitude, wisdom, sincerity,
understanding, benevolence, etc.
b. Work Character Ethics: The identification and
development of the reflective, practitioner, noble traits at
works such as creativity, honesty, loyalty, honour,
trustworthiness, civility, dependability, shared work pride,
empathy, etc. determine the intrinsic and instrumental
ethical quality of work life.
c. Professional Character Ethics: Professional character
ethics hold that self-regulation, loyalty, impartial
judgment, altruism, truthfulness, public service
determines the intrinsic and instrumental ethical quality of
an individual associated with some communities.
4. System Development Ethical Theories: The Ethical Theories
of System claims that the ethical value of behaviour in an
organization is defined by the degree to which the
organizational system is responsive to the need to develop a
work culture that promotes ethical conduct. There are three
types of system development ethical theories.
a. Personal Improvement Ethics: This theory entails that
any action is good and justified if it is intended to
promote the individual’s personal responsibility for
continuous learning improvement and overall
development.
b. Organizational Ethics: This theory states that ethics hold
that the action is right if it validates the development of
the formal and informal organizational processes, which
enhances the procedural outcomes, respectful caring,
innovation in ethical work culture, and systematic justice.
c. Extra organizational Ethics: This theory suggests that
ethics asserts that if it facilitates or tends to promote
strategic collaborations and respects global and domestic
constituencies representing the various political,
economic, legal, social, ecological, and philanthropic
issues affecting the business, the action is correct.
Corporate Governance
Corporate governance refers to the way a corporation is
governed. This is the methodology by which organizations
are guided and controlled. It means running the company
according to the wishes of the stakeholders. It is worked out
by the Board of Directors and the commissions involved
with the good of the company's stakeholders. It is all about
balancing individual and community interests, as well as
economic and social objectives.
Corporate governance is the relationship with the
different actors (shareholders, boards of directors, and the
management of the company) in influencing the success of
the organization and how it is proceeding. The relationship
between owners and managers of a company must be
healthy and there should be no friction between them.
Corporate governance is a simple difference between
owners and management. Managers are the decision-
making authority. In modern companies, the
functions/tasks of owners and managers should be
explicitly defined, rather than harmonized. Corporate
governance is concerned with finding ways to make
successful business decisions. It provides definitive
authority and absolute accountability to the Board of
Directors. There is a need for corporate governance in
today's market-oriented economy.
Corporate governance guarantees accountability and
ensures good and sustainable economic growth. This
further means that the interests of all owners (the majority
as well as the minority shareholders) are safeguarded. It
guarantees that all owners exercise their rights in full and
that the company properly respects their rights.
Corporate governance has a wide scope. It encompasses
both the social and the structural dimensions. Corporate
governance creates a trustworthy, moral, and ethical
climate.
Figure: Structure of Corporate Governance

Benefits of Corporate Governance
1. Strong corporate governance guarantees market
prosperity and economic development.
2. Good corporate governance retains customer trust
and allows the organization to collect capital quickly and
successfully.
3. It reduces the cost of capital.
4. There is a positive effect on the price of the share.
5. It offers the owners and management the right
opportunity to accomplish goals that are in the interests of
the shareholders and the company.
6. Strong corporate governance also minimizes waste,
abuse, threats, and mismanagement.
7. It assists in the formation and creation of brands.
8. It means that the company is run in a way that is in
the best interests of everyone.
Thus, "Corporate Governance" is the term used to refer to
policies and procedures by which a company (or any broad
or any institution) is governed and directed. It relates to the
way authority and responsibility flow between owners,
boards of directors, CEOs, and senior managers. As
transparency and accountability are an integral part of
corporate governance, cannot be achieved without following
ethical best practices in business. For creating an ethical
organization there should be harmony among various
governance factors like mission, vision, strategy, objectives,
and goals. A successful programme of ethics involves the
constant reinforcement of good principles. Organizations are
concerned about how to make their workers Imbibe the codes
and principles of the organization. To maintain the right
ethical climate, a fusion of governance with ethics important.
Questions
Write short notes on the following:
1. Ethos
2. Values
3. Reflectors of Ethical business
4. Vision statement
5. Corporate governance
Long Answers
1. What do you understand by ethics? How ethics can be
used in business?
2. Discuss the concept and nature of ethics.
3. Discuss how business ethics are different from values.
4. What are various sources of Ethical standards, Discuss in
detail.
5. Elucidate various theories of Ethics.
6. Discuss the significance of Ethics in business.

Chapter-2
Causes of Unethical Behaviour
Causes of Une thical B ehavio ur
Generally, it is expected from all organizations to be

ethical organization. In the present cutthroat competitive
market, it is hard too difficult to distinguish what is ethical
and what is unethical due to the existence of Gray areas.
Before understanding the causes of unethical behaviour,
we should understand what unethical behaviour is. Some
governments like the Philippines define unethical
behaviour as anything or any behaviour prohibited by law.
Thus, in present business practices, unethical behaviour can
be defined as one that is morally not correct or prohibited
by any law.
In business practices, there may be various types of
behaviour and business practices that may fall under the
category of unethical behaviour. These unethical
behaviours maybe corruption, communication frauds, any
type of discrimination and harassment, insider trading,
conflict of interest, improper use of assets, bribery,
noncompliance, Illegal business donations, any type of
misrepresentation for fraud with customers and suppliers,
etc.
Today, fraudulent communication, bribery, conflicts of
interest, gifts and kickbacks, unfair practices of health care
companies, insider trading, discrimination and abuse, and
embezzlement are the most prevalent unethical practices in
the business world.
False Communications
False communication falls under different
classifications. These involve falsification of the report of
the auditor or controller or some sort of deception that does
Causes of Unethical Behaviour 21
not say the full truth. These include cheating on tax returns
or an improper depreciation plan and incorrect
expenditures (Brennan Jr., Valtz, Shallenberger & Stanton,
1961, 164). Feeding the public with an incorrect report of the
business results of the company to make the organization
look good in the market is another false communication
practice.
J&J faces more than 19,000 customer and survivor
lawsuits alleging that its talc products caused cancer due to
asbestos exposure which the company kept hidden for a
longer period.
Collusion
Today, collusion, especially with rivals, to set prices, is
an unethical business practice that is considered stealing
from consumers. There are, however, differences of opinion
about whether price-fixing is theft from consumers. This
business practice is also known as Carter Which is illegal in
India according to Competition Act, 2002.
Gifts and Kickbacks
There are various departments every organization
closes the deals with outside stakeholders of the business
and suppliers. Di suppliers or windows he often tries to
give a gift, kickbacks, or other types of favours to get their
work done with ease. Many organizations do not allow
their employees to accept any kind of gift from clients or
vendors during the normal course of business. Sometimes a
buyer may request or kickbacks or entertainment hey which
is not provided may lead to loss of order. It is also observed
that due to pressure of management to get the business
employees do not hesitate to adopt such practices.
Conflict of Interest
Conflict of interest is an interesting concept. Many
times, people do not realize that whatever they are doing is
a matter of conflict of interest. Conflict of interest arises
when the private interest interferes with the organization's
interest or tends to intervene in some way. It can be argued
that there is no conflict of interest, according to Sliglitz,
because, based on the opinion of Adam Smith, people
genuinely seek the general interest of society while seeking
their own self-interest. Some examples of conflict of interest
are,
a. Hiring an unqualified vendor who is relative as well to
provide services that your organization requires.
b. Starting a business that offers facilities that are close to
your full-time employer.
c. Failure to disclose that the company considering
recruiting a candidate is your relative.
d. Having any financial relationship with the competitors.
Unethical practices in the Health Care Sector
The Healthcare sector has become like any other
industry which have a motive to earn profit instead of
providing welfare services to society. Though many
practitioners are devoted towards service of mankind some
are involved in unethical practices. These unethical
practices are many of the types.
The first is the refusal of patients who have no medical
insurance to get health care services. Some health centers do
not admit non-insured patients unless they can provide
proof that they are able to pay for the health service. In the
health care industry, the second unethical activity is the
overtreatment of patients to raise profits.
Insider Trading
Insider trading is an illegal activity in most the
countries. It happens when the data is used or exchanged
for stock trading purposes or for some other purpose by a
person who has access to confidential information except
for the conduct of daily company business. The company's
confidential information is not to be used for personal gain
or to be circulated directly or indirectly to friends.
Due to sensitive information being passed by an
employee of the organization do any outsider may affect
the business of the organization very badly that is why
insider trading is considered an unethical practice is
punishable under various laws.
Discrimination and Harassment
Discrimination is a purpose of business and partiality
based on race, gender, nationality, religion or anything like
that. According to the International Labour Organization
(ILO), discrimination can be of two types; hey one direct
discrimination which is visible documentary proves;
another is indirect discrimination which is done by using
any blue hole in the system.
Why People Behave Unethically
Dedicated workers, who are generally trustworthy,
often act unethically because of four rationalizations:
a. that no one will ever find out,
b. that the behaviour is not immoral,
c. that it is in the organization's best interest, and
d. that they will be covered by the organization.
The costs of unethical behaviour are difficult to
calculate. Low incomes, unemployment, and poverty can
be included in the costs of unethical behaviour. If top
management wants to maximize operational efficiency,
they need to stand firm that the only ways to do business
are ethical methods.
Causes of Unethical Behaviours

The research commissioned by the American
Management Association (AMA) and conducted by the
Human Resource Institute (HRI) using 1121 managers and
human resource experts as participants, revealed that the
main cause of unethical corporate behaviour is pressure to
meet unrealistic business goals and deadlines. The study
also showed that the desire to promote one's career is the
second leading factor that causes unethical behaviour, while
the third leading factor is the desire to protect one's
livelihood (Schwartz, 2006) and (MacDo, 2006).
Figure: Causes of Unethical Behaviour

According to the report, work pressure leads workers to
indulge in unethical activities that include cutting corners
on quality control, covering up accidents, and lying to
clients. Another big cause of unethical behaviour is
ignorance. The analysis of (AMA) and (HRI), (MacDo,
2006), revealed that unethical actions are triggered by
denial that the activities are unethical and not
understanding the severity of the consequences when
detected.
Competition for limited resources, authority, or role
may lead people to engage in unethical behaviours. Hosmer
stressed that an attempt to strengthen their competitive
corporate roles made executives take unethical acts
(Hosmer, 1987). Bazerman and Banaji thought that the
existence of a few bad apples among organizational actors
was the cause of unethical activity in organizations
(Bazerman & Banaji, 2004). The primary cause of unethical
behaviour can be attributed to the absence of the form of
clear leadership needed to operate an ethical organization.
This opens workers to opportunities that make them
indulge in unethical behaviour.
Kinds of Unethical Behaviour in Business
As we have discussed earlier in this chapter that there
may be a different type of unethical behaviour. There may
be the following type of commonly observed unethical
behaviour in business.
Theft
Theft at work comes in a variety of forms, and
oftentimes employees do not view it as unethical behaviour,
believing no one gets hurt by the action. Employees take
home office supplies, use business computers for personal
tasks, pad expense accounts and abuse sick time or allotted
personal days. Unethical behaviour also includes having
another employee punch a timecard, or not punching out
for lunch hours or other non-approved time off. Though
these may seem like minor infractions, they eventually have
an impact on the bottom line of the company, which then
hurts all employees. Theft also affects employee morale and
is disheartening to those who choose to behave ethically.
Vendor Relationships
Businesses that buy from and sell products to other
businesses are sometimes subject to unethical behaviour.
The practice of accepting gifts from a vendor in exchange
for increased purchasing is not only unethical but it may
also have legal repercussions. The same can be said for
offering customer kickbacks to increase their purchasing
habits. Ethics policies often contain guidelines for giving or
accepting gifts with vendors or other business associates,
such as a cap on the value of the gift. Other businesses
strictly forbid giving gifts or any other item with monetary
value. This is a safeguard to prevent any perception of
unethical behaviour.
Bending the Rules
In a business environment, bending the rules is always
the consequence of a psychological stimulus. If an employee
is ordered by a supervisor or boss to conduct an immoral
task, he will do so because his loyalty to authority is greater
than his need to comply with the law. It is always unethical
to turn the other way to prevent problems for another
employee, even if the motive might be empathetic.
Knowing that a co-worker has difficulties outside of work,
for example, justifies seeing him leave early every day
without reporting it. Even if the perpetrator thinks he is
doing what is in the best interest of the organization, hiding
the knowledge that can modify a result still comes under
the umbrella of unethical behaviour. For instance, until after
a stockholder meeting, if a bad earnings report is withheld.
Environmental Issues
Companies' unethical actions, such as releasing toxins
into the environment, will affect towns, cities, rivers, and
masses of citizens. While accidents can occur, it is unethical
to release harmful toxins into the atmosphere due to weak
safety standards, insufficient equipment maintenance, or
other preventable reasons. If a corporation knowingly
chooses to manufacture a product recognizing that there are
inherent environmental consequences, it may undoubtedly
be classified as unethical conduct.
Wages and Working Conditions
Such unethical activities include not paying a decent
wage to workers, hiring children under the legal working
age, and working conditions that are hazardous or
unsanitary. This category covers any activities which do not
comply with fair labour standards and federal working
guidelines.
Figure: Types of Unethical Behaviour

Questions
1. Collusion
2. Insider trading
3. Discrimination
4. Ethical vendor relationship
5. Harassment
Long Answers
1. Discuss various causes of unethical behaviour in business.
2. What do you understand by a conflict of interest, discuss
with suitable example?
3. Enumerate various kinds of unethical behaviour in
business in detail.

Chapter-3
Ethical Abuses
Eth icalA b uses
An atmosphere ripe for ethical abuse in the company is

generated by questionable conduct at the top. If workers see
that it is not only agreed to bend or break the rules, but the
best way to excel, some may be tempted to begin emulating
their leaders. Then they will get on the bandwagon while
other workers see those individuals getting away with it
and getting ahead.
Abuse can be explained as the improper use of
something. Thus, concerning the above example we can
infer that ethical abuses are a misuse of authority in an
organization.
Usually, it is perceived that ethical abuses are a practice
by top management where we hear that any CFO has
committed any financial fraud. More likely when somebody
who lied to his supervisor for leave or present false expense
reports or bills are involved in ethical abuses.
Some common unethical behaviour shown by
management or employers are as follows.
Ethical abuses of Management/Employers
The ethics of the workplace are not for workers alone.
Employers are also bound to honesty in the workplace and
can be tried for unethical conduct as well.
Undue Pressure
Deadlines are a perfect way of ensuring that the job is
completed on time. However, they end up with low
efficiency for on-time output when workers are put under
excessive pressure.
For a project that would usually take a week, an
example of excessive pressure would be to give an
Ethical Abuses 29
employee a 1-day deadline. In such situation, employees
need to sacrifice their family time as well face health issues.
Unpaid Overtime
Some employers take benefit of distressed job seekers
and the dynamic job market to use the leisure time of
workers as they wish. They do it with the mentality that, by
hiring them, they are doing workers a favour, not
understanding that the favour is reciprocal.
Employees who are fearful of losing their job are not
willing to appeal the employer's violation of their private
time.
Verbal Harassment
It is normal for managers to threaten workers verbally
when they make minor errors. This would decrease morale
and efficiency for workers. Though it is not possible that
employers would say nice things to their workers at all
times but during these meetings superiors should choose
the words carefully to maintain dignity.
Nepotism
This is a common form of workplace exploitation that
exists. Because of another employee who is a family
member, family or friend of the employer, an employee
who has been working hard for years while contributing
growth of the company may get sidelined for a promotion.
This is what lowers the productivity of workers or even
drives talented employees from dropping a resignation.
Unrealistic Expectations
Management usually has it worse when it comes to
having unrealistic expectations from employees. Especially
in the sales department employees are assigned unrealistic
sales targets. Performance of employees are evaluated
based on achievement of these targets only. Such behaviour
of management sometimes induces the employees to use
unfair means to achieve the sales targets.
Unfriendly Work Environment
Unfriendly workplaces can reduce productivity. This
can come as a combination of abusive leadership, lack of
praise, nepotism, etc. An unfriendly atmosphere is an
atmosphere that incorporates multiple unethical practices
into one.
Ethical abuses of Management/Employers
Not only management, but employees can also be
involved in ethical abuses as well. Such ethical abuse may
be listed as follows.
Lies
In and out of the office, deception is a behaviour that is
not accepted. This kills trust, influences relationships, and
can even put people in trouble.
It is observed that employees speak lies in different
situations which led toward other lies to cover up the first
one. For example, employees may lie to take a day off. They
may tell a lie when they do not reach the office on time.
That could be a sales manager who lies about the number of
customers they could receive in a month or an employee
who pretends to be sick only to attend another work
interview.
Often workers begin to lie from their CV, incorporating
experiences that they have not acquired and skills that they
do not have. Employees need to realize that they can
potentially get into trouble by lying about jobs and need to
quit this before they risk their job.
Though employees lie because of unsupportive
management to save their jobs. If employers have
empathetic behaviour towards employees, employees may
Ethical Abuses 31
gather courage to speak truth because they perceive that
management would understand their situation.
Verbal Harassment/Abuse
Employees ought to keep away from the use of foul
words in and out of the office with people. When working
with clients, this is quite important as well. Customers are
known to get upset and, due to a poor product or service,
can result in verbal arguments. In such heated moments,
some employees may lose their cool and use foul language.
Such kind of behaviour is unethical behaviour or abuse.
Taking Credit for Others Hard Work
When reporting to the board, it is very normal for
executives to take credit for their team member's hard
work. The use of "I" needs to be reduced by employees but
embrace the use of "We”.
In such a hostile situation employees refrain themselves
form sharing ideas with the team members which is a
hinderance in performance of group as an effective team in
the organization. Such ineffective groups would lead
towards an ineffective organization.
Violence
As we discussed in the case of verbal abuse, when
communicating with colleagues and clients, staff should not
be aggressive. Customers may provoke, but instead of
turning angry, it is best to hold shut and walk away.
Violence can be verbal abuse but generally, it is considered
a physical fight.
Extended Breaks
Companies give workers lunch breaks and individuals
take advantage of these breaks to do other activities outside
of office work, such as going on interviews, visiting friends,
or even focusing on their side business. They are free to do
whatever these lunch breaks require.
Conflict of interest
A lot of workers have side business that they use to earn
extra income other than their regular wages and salaries.
This is positive and only very few employers are against
workers going past working hours to make extra earning.
But utilizing office resources including working hours for
personal business is conflict of interest. If employee side-
lines interest of the organization for personal profit may
also fall under the category of conflict of interest.
Sexual Harassment
Sexual abuse is an offense not confined strictly to the
workplace. In addition to facing repercussions in the
workplace, a person convicted of sexual assault may likely
be charged before a court of law.
In and outside the workplace, many firms maintain a
zero-tolerance rate for sexual harassment. These incidents
destroy the image of the organization. To protect the image
of the organization there is only one way to punish the
offenders and set examples for others.
Theft/Embezzlement
Sometimes workers are involved in diverting corporate
money into their bank accounts, embellishing project
quotes, invoices, etc. to mislead the company about how
much was expended on individual projects. Sometimes
workers may substitute high-quality goods with inferior
counterfeits that cause harm to reputation of the
organization. Committing such activities are ethical abuses.
Corruption
Dishonest or fraudulent conduct by those in power,
typically involving bribery is referred to as corruption. Such
type of behaviour shown by employees is not only ethical
abuse but illegal as well.
Ethical Abuses 33
How to Solve Unethical Issues at the Workplace
Organizations ought to have corporate ethics rules and
laws that are predefined. The new hires should be given
these rules and regulations along with their contract of
employment.
It would also serve to educate employees of the
guidelines by getting the rules written at strategic points in
the workplace. People appear to learn things they see every
day automatically.
There may be the following methods to control the
ethical abuses in the organization.
Grievance Management Fear of Punishment
Internal inquiry
Figure: Management of Ethical Abuse at the workplace

Grievance Management
The employer should make it simple for workers to
submit suggestions or grievances in the office in case of
violence, bullying, or any other immoral practices. With
online tools, management can create an online form to
receive a complaint in workplace in case of harassment or
any other unethical behaviours.
Negative enforcement/ Fear of Punishment
In addition to the rules, penalties for immoral behaviour
can also be imposed. That way, after seeing them, someone
tries to ignore the law, the fear of being punished will deter
him or her from going forward.
Fair internal inquiry
Accused should be given a fair chance to be heard. If
after a fair trial if the accused fails to prove his or her
innocence, then swift action should be taken against him or
her.
Regardless of who breaches the statute, there should be
quick corrective action by the corporation. Such practice in
industrial relations is known as the hot stove theory.
Legal vs Ethical abuses
In violation of any provision of any law, it is easy to
establish a case against the offender in comparison to in a
case of ethical abuse. Legal violations are well-defined in-
laws for different kinds of offenses there are different kinds
of punishment. Ethical abuses or violations are hard to
define.
Ethical Abuses 35
Figure: Legal vs Ethical Abuses/ Violations

In case of a legal violation, there are set the standard of
the court of inquiry while in case of ethical violation there is
no set standard for the procedure.
Legal norms are norms set down in governmental
regulations. Judicial principles are all the statutes and
regulations that attorneys point to. Judicial or legal
guidelines are helpful, and they allow persons to realize
what they should not do. With moral guidelines in effect,
regulatory authorities have the power to implement the
laws. When someone steals, for instance, the moral norm
stating 'one should not steal' is used to punish the offender.
On the other hand, ethical principles do not have a legal
justification. They are based on concepts of right and wrong
that are developed by humans over the period. For
example, the only moral requirement one must obey, as one
go-to park one’s car in a parking lot and there is only one
parking space remaining and we observe that another car is
trying to be parked in that space, one should give the space
instead of fighting for space. In such a situation if one tries
to forcefully acquire the space by driving quickly may end
up with an accident. In such a situation if an accident occurs
then it would become a legal matter otherwise it's just an
issue of morality.
Questions
Write short notes on the following.
1. Unpaid overtime
2. Nepotism
3. Verbal harassment
4. Embezzlement
5. Legal vs ethical abuses
Long Answers
1. Discuss various types of ethical abuses at the workplace
with suitable examples.
2. Do employees do ethical abuses? Discuss with examples.
3. Suggest various measures to control ethical abuses at the
workplace.

Chapter-4
Work Ethics, Code of Conduct &
Public Good
Wor k Eth ics, Code of Con duc t & Pu blic Goo d
There is a great saying that one becomes what one

thinks. This is a clear and important statement that is valid
for virtually all of us. Our actions, our emotions, and our
understanding of the result of our actions are our
responsibility. They have an effect not only on ourselves but
also on people who spend a substantial amount of time,
such as our parents, partner, children, or even colleagues.
That is why the idea of ethics is of such importance.
People are judged on their ethics, but ethics vary from one
group to another. Ethics is a common and vital set of ethical
rules that must remain as part of society. Ethics, in a way,
guarantee that our acts are not meant to hurt others. Some
forms of ethics are common. For example, murdering
anyone or stealing money is considered immoral and
unacceptable in any civil society.
Much when you need to abide by a certain code of
ethics in your social life, you still need to abide by certain
values in your professional life. This collection of rules is
known as work ethics. Let us take a closer look at the
meaning and significance of a work ethic.
Work Ethic
The definition of work ethic refers to a collection of
behavioural principles that establish a healthy working
environment. Good work ethic may contribute to equal
treatment of workers, which in turn motivates them to
develop a sense of commitment to the company. On the
other hand, office policies and the administration that does
not promote ethical and rational conduct are likely to make
workers unhappy and disinterested.
Ethical standards are expected as the organization's
evaluation season arrives. Assessing the productivity of
employees is a crucial aspect of every organization. To
ensure that the assessment is fair and free of coercion, it is
important to develop an assessment process that recognizes
the achievement of workers over the year.
Employees must be made aware of whether they are
doing the right things, and if they need any course
correction. A strong work ethic ensures that there are
adequate directives and correct work practices in place to
mentor the employees properly. These practices lead to fair
and equal treatment of all employees and a transparent
appraisal system.
In organizations where a strong work ethic is missing,
employees may find it difficult and uncomfortable to
survive and work for the long term. Let us take a detailed
look at the meaning and definition of work ethic to
understand it better.
Meaning of Work Ethic
We just learn about the purpose and scope of the work
ethic from the point of view of the company. Now, let's get
to know the employee's job ethic. An employee still has to
reciprocate the care and confidence that the company
spends in him or her by hiring him or her.
An honest worker is faithful and committed to the
interests of his employer by making the most of his efforts.
Genuine contributions and devotion to business priorities
are respected and compensated with remunerative and
hierarchical development by companies with a good work
ethic.
Work Ethics, Code of Conduct & Public Good 39
It would also not be incorrect to say that the building of
an ethical employee-employer partnership relies on both
the employer and employee. While employers need to be
objective and supportive of their evaluation and
performance appraisal procedures, employees also need to
show those attributes that highlight their good work ethic.
Employees at a workplace must show the following
attributes.
1. Dependability
2. Integrity
3. Honesty
4. Professionalism
5. Focus on goals
6. Dedication
7. Inherent values
8. Determination
Employees with a good work ethic should not be
hesitant in accepting responsibility for their actions and
confess frankly if they make a mistake or fall short of goals.
They should not be in the habit of playing the blame game,
and they should be completely focused on the strategies of
the organization.
Significance of Work Ethics
A strong work ethic has tremendous significance for
any modern business enterprise. There are a various benefit
to taking an ethical path at work
Optimum utilization
In a business with an ethical work climate, employees
are committed to the success of the enterprise. Under such a
situation, workers act appropriately with the facilities and
machinery of the company to achieve the best possible
result. This would improve the lifespan of the equipment
and reduce maintenance and running costs.
Higher Productivity
Focus on integrity and proper importance to the job
entrusted to them make it more effective for workers to
work. They are not only interested in completing their
average of eight hours a day and leaving the premises but
to excel in their jobs.
Employees would be self-driven to stick to the
deadlines and consistency of the assignments delegated to
them. They would be able to make additional attempts to
reach the project deadlines if necessary. Such a dedicated
strategy would improve the competitiveness and market
share of the company. Furthermore, the management of the
company will be confident that its employees would assist
them in whatever challenges come to them.
High Morale
Job ethic also tends to cultivate a balanced,
collaborative, and comfortable business atmosphere. As
workers are appreciated, supported, and inclusive, they
focus on being active contributors to the success of the
organization.
Such a work ethic fosters a spirit of bonding and joint
coordination in the organization. Team members don’t fight
for the credit, instead, they share credit. People begin to see
themselves as a cohesive power, focused on the wellbeing
of the team and not only on individual development. This
team spirit further strengthens the company's success in a
positive and long-term manner.
Brand value and public perception
An ethical work culture can continue to improve the
positive image of the business and the overall appeal of the
brand. When customers get to know a business that has an
honest employee with loyalty and professionalism, they
would immediately see it as a responsible brand.
The ethical hygiene of a company is also reflected in its
products and customer service as it becomes synonymous
with transparency, quality, and responsive consumer
support. Such companies gain a lot of goodwill by way of
mouth publicity and acquire customer loyalty.
Change Management
One of the most critical problems in the organization is
that employees do not want any kind of change. They do
not just stay limited to traditions but cannot think out-of-
the-box.
If employees are ethically strong then whenever
circumstances need adjustment or difficulty, they
proactively react to the altered circumstance and take action
to avoid any disturbance or decline in the efficiency of the
company. Without such attributes, employees leave the
organization when it needs them most.
Friction-less working
There is often a risk of conflicts and bitterness in
organizations where workers operate in solitude or rely
exclusively on their objectives.
On the other hand, work ethic fosters a family style of
working environment where everyone is focused on the
collective performance of the company. Employees trust the
company to take care of their interests and this leads to a
working environment where people respect each other and
are dedicated to their jobs.
And if any misunderstandings or conflicts occur, they
are addressed and settled internally without the
involvement of the management.
Higher Efficiency
The greatest value of work ethic is expressed in the
progress that an organization has accomplished. Ethical
businesses are wonderful places to operate. They take care
of the wishes and interests of their workers and provide
them with the chance to succeed at work. In addition, there
is potential for future development at such sites.
Employees often feel inspired and responsible for and
contribute to the success of such an enterprise. The
company is bound to expand exponentially in such a
harmonious setting.
Code of Ethics and Code of Conduct
With greed, dishonesty, discretion, decision-making
authority, and nepotism these days, it is important to direct
the acts and conduct of professionals in a reasonable
manner. The Code of Conduct and the Code of Ethics may
provide an ethical framework for the attitudes and
behaviour of modern-day professionals.
In this part of the chapter, we will look at what the Code
of Ethics and the Code of Conduct are and how they are
different.
Generally, codes of ethics are vague and non-specific,
intended to include a collection of beliefs or decision-
making approaches that allow workers to make objective
decisions on the most suitable course of action.
Conduct standards generally require little judgment;
one obeys or incurs a penalty, and the Code provides a
fairly clear set of expectations about which actions are
required, acceptable, or prohibited.
Definition
The Code of Ethics can be defined as a set of defined
guidelines that govern the actions of the civil servant in
particular and the public service in general.
The Code of Ethics is a written collection of rules issued
by an institution to its official to govern their actions in
compliance with the principle and ethical norm.
The Code of Ethics contains the standards of fairness,
dignity, impartiality, devotion to public service,
transparency, etc. However, there is no guarantee that
professionals will follow these guidelines.
Codes of ethics are the responsibilities that are required
to be followed by a practitioner. Ethics provides a
lubrication effect to an entity in which smooth operation is
assured.
Whereas the code of ethics is a collection of guidelines
based on the desired actions of the members of the
organization. Specifically, it defines the rules, laws,
guidelines, duties for each group or association in a manner
that coordinates the wellbeing of the stakeholders. The
Code of Ethics for professionals lays forth a simple
principle of what the organization or association demands
from its members.
The Committee on the Prevention of Corruption,
founded in 1964, is also known as the Santhanam
Committee. This was the first incident where the concept of
a code of ethics was proposed by any commission. The
Committee proposed that there should be uniform codes of
behaviour, those relating to ethics. If an employee breaks
these laws, he or she must be willing to take the penalty.
Elements of Code of Conducts
Compliance with all relevant laws: all codes of conduct
shall conform with the law of the land. And if it is not like
the rule, it would be impossible to enforce two different sets
of laws, one for regular citizens and the other for
professionals.
Non-ethical behaviour should be clearly described in
the law since it provides a professional clear view that what
is to be done and what is prohibited.
Conflict of interest: the laws may also contain clauses to
prevent conflict of interest. In most instances, public
prosecutors become private legal advisors as well. In that
case, it becomes important to define how any such position
should be carried out by a professional.
Restricted practices are those that should be prohibited
by a professional at the time of service. For example, a civil
servant cannot take any other financial aid from another
that affects his duty as a servant.
To do his or her job properly at some stage, it becomes
necessary to keep some secrets. They may be connected to
agency or law and order, etc. The professionals must also
remain secret in the course of their duties and must be
specified in the Code of Conduct.
Importance of Code and conduct
When a professional knows what he is doing, he cannot
help himself to guide him in making decisions on complex
ethical problems. Whenever he is in a dilemma, certain
codes will help.
These codes increase awareness of the basic actions
demanded of the employee.
These codes are very responsible for increasing
impartiality, honesty, and efficacy at the workplace.
The more a professional follow the rule, the more
accountable he or she will become. And these rule helps in
bringing transparency to the system.
Code of Ethics:
Compliance-Based Code of Ethics
For all companies, law governs issues such as hiring
and safety requirements. Compliance-based standards of
ethics not only provide criteria for actions but also allow for
punishments for infringements.
For both corporations, regulation governs topics such as
recruiting and safety requirements. Compliance-based
codes of ethics not only lay down rules for actions but also
lay down provisions for breaches.
Some businesses appoint an enforcement officer to
ensure that the objectives and values of the Code of Ethics
are followed. This person is responsible for keeping up to
date on revisions to the regulatory codes and for controlling
the actions of employees to promote compliance.
This form of code of ethics is focused on simple
guidelines and well-defined implications, rather than on
individual control of personal conduct. Thus, despite strict
obedience to the rule, some standards of conduct focused
on compliance do not foster an atmosphere of moral
obligation within the organization.
Value-Based Code of Ethics
The company's fundamental philosophy is addressed by
a value-based code of ethics. It may outline principles of
responsible conduct when they apply to the broader public
interest and the community. Value-based ethical codes can
require more self-regulation than compliance-based codes.
Some codes of ethics have a language that discusses
both enforcement and principles. For example, a chain of
grocery stores might set up a code of ethics to promote the
company's adherence to health and safety regulations above
and beyond financial benefit.
The food chain may also contain a declaration refusing
to enter into contracts with suppliers that use chemical
fertilizer in growing crops.
Code of Ethics Among Professionals
Various apex bodies or associations made a code of
ethics for concerned professionals.
Financial advisors licensed with the Securities and
Exchange Commission or the State Regulator shall be
bound by a code of ethics known as a fiduciary duty. This is
a legal necessity and a code of loyalty that requires them to
act in the best interest of their clients.
Certified accountants are also expected to meet similar
ethical principles, such as transparency, objectivity,
truthfulness, and the elimination of conflicts of interest,
according to the American Institute of Certified Public
Accountants (AICPA).
The Public/common good
The public or common good is an idea that emerged
more than two thousand years ago in the works of Plato,
Aristotle, and Cicero. More recently, the ethicist John Rawls
described the common good as "certain general conditions
that are...equally to everyone's advantage”.
The common good, then, is essential to make the social
structures, organizations, and societies in which we all rely
function in a way that helps all people.
Examples of common goods include an open and
sustainable universal health care system, an efficient public
protection system, harmony among the nations of the
world, a just legal and political system, and unpolluted
natural environment, and a stable economic system.
Since such structures, organizations and environments
have such a strong effect on the well-being of members of
society, it is the ethical responsibility of the government to
ensure the availability of public good to all the deserving
citizens without any biasness.
Figure: Public Good

Questions
1. Work ethics
2. Change Management
3. Code of conduct
Long Answers
1. What attributes an employee must show at the workplace.
Discuss in detail.
2. Discuss how does the ethical brand value of an
organization affects the business.
3. What do you understand by common good? What role
does ethics play in it?

Chapter-5
Ethics Analysis and Ethical Dilemma
Eth ics Ana lysis a nd Et hica l D ilemm a
The ethical dilemma is a challenge in the decision-

making process between two potential choices, none of
which is ethically permissible. While we face many ethical
and moral obstacles in our lives, most of them come up
with reasonably straightforward solutions. Ethical
dilemmas, on the other hand, are incredibly difficult
problems that cannot be readily overcome. It is also
important to be able to find an optimal solution in such
cases.
Any person can face an ethical dilemma in almost every
part of his or her life, including personal, social, and
professional life.
The greatest problem with an ethical dilemma is that it
does not provide an obvious solution that will conform to
the principles of ethics. Throughout the human experience,
humans have faced certain dilemmas, and thinkers have
tried and worked to find answers to them.
We can understand ethical dilemmas as in Mahabharat
what situation was being faced by Arjun. The ethical
dilemma is referred to in the Gita as a dialog between
Krishna and Arjuna. Arjuna worries that as they prepare for
war, he will lead the campaign, likely killing his own family
and friends, fighting for him, as well as against him.
Krishna helped Arjun in finding a solution to come out of
the dilemma.
The following approaches to solve an ethical dilemma
are used:
Ethics Analysis and Ethical Dilemma 49
Refute the paradox (dilemma): The situation must be
carefully analyzed. In some cases, the existence of the
dilemma can be logically solved.
Value theory approach: Choose the alternative that
offers the greater good or the lesser evil.
Find alternative solutions: In some cases, the problem
can be reconsidered, and new alternative solutions may
arise.
Examples
Some examples of ethical dilemma examples include:
 Taking credit for others’ work
 Offering a client, a worse product for your own profit
 Utilizing inside knowledge for your own profit
David Messick, now-retired professor of ethics at the
Kellogg School of Business at North-western University,
concluded that empiric findings prove that we favour our
own self-interest above the well-being of others.
The more we are prejudiced against our own self-
interest, the more inclined we are to rationalize every choice
we make and always demonize the actions of another
human if they concern us.
Professor LaRue Hosmer
Decision-Making Processes
Decision-making process in an ethical dilemma is an
attempt to mute prejudices that we must make choices more
rationally and to justify our thinking more clearly. This is
not true in the case of Ethics only. In a campaign or
marketing discussion, it is not enough merely to suggest
that your gut instinct tells you to make some new
marketing effort or organizational strategy.
Emotions are significant, but an organization is going
through the process of finding the right strategy is
marketing approaches. This is done to make better choices
during the decision making process. When decision is
made, the procedure helps others to better understand why
they are made, rather than just being told that the choice
came from the gut feelings of the team members.
It is a little surprising, then, when people say that ethics
cannot be taught, or that they are merely subjective
intuitions or personal characteristics that either one has, or
one doesn't have. There are, of course, intuitions in ethics,
just like there are intuitions in the strategy.
Of course, certain individuals have characteristics that
lend themselves well to ethical choices. Yet choices can be
better and better as we begin to extend the reasoning
mechanism to dilemmas.
Ethics has a personal dimension, but is ethics private? It
is ridiculous, in one way, to believe that it is. Ethics is about
how we handle other people, but how can it be considered
confidential to communicate with other people? Ethics is
often around a certain degree of public interaction where
we inquire how people should be handled. Ethics cannot be
individual. A follow-up response, though, allows one to
realize how large a circle we are concerned with when it
comes to ethics. Ethical behaviour is essential to a
relationship with a significant other individual.
The broader our circle—to mates, to the culture, to
industry, to the world, to humans, to the ecosystem—the
more questions emerge about how private or public our
actions are.
None of us will say, Adolf Hitler has his religious
values, and they're personal and private to him, so we
shouldn't be worried about killing six million Jews. This
would be an absurd moral stance. We should not encourage
someone to do whatever he or she wishes if those acts harm
others.
So, even though there are degrees of personal conduct
and private conduct, there are restrictions. Defining what
these boundaries are is a tough matter.
The six steps of Hosmer’s moral reasoning process
(“HMRP”) are as follows:
1. Identify the Moral Issue
2. Identify Additional Facts Helpful to Deciding
3. Identify the Alternatives Available to Apply to the
Problem
4. Identify the Personal Impacts to the Decision Maker
5. Apply Three Leading Contemporary Theories of
Business Ethics: Shareholder, Stakeholder, and Virtue
6. Conclude with a Decision.
Figure: Hosmer’s modal of reasoning process

A. Identify the Moral Problem
A fast and dirty approach to define the moral question
is to inquire who has been injured and whether they have
been substantially harmed. People are hurt all the time, of
course. It is one thing to lose; it is another thing to create an
ethical dilemma. Just because your favourite team loses a
game, or you lose a job or another company or another
individual wins a bid does not mean that there is an ethical
dilemma. It is one thing to lose; it is another thing to build is
an ethical problem. Just because our favourite team loses a
game, or we lose a job, or someone else wins a bid, does not
mean there is an ethical dilemma.
In identifying a moral issue, one is looking at a situation
where there has been harm to a vulnerable party who has
been unable to protect him or herself particularly well. For
instance, we can consider a case where there was a
reduction of well water for an agricultural plant to operate
in Mexico. Residents had historically been able to access
pure drinking water by digging sixty feet underground, but
with the reduction, they had to dig 450 feet deep. People
who are not able to dig that deep are compelled to drink
contaminated water. That constitutes a moral dilemma.
The moral problem may be stated in one sentence or
two. In any case, there may be twenty moral damages.
Picking one does not mean that it is the only one that has
been taken up in a specific situation, but this move gives a
focus for assessment.
B. Additional Facts (Recognising moral impacts)
Before reaching any conclusion, we need to identify
other questions like what the benefits and harm for us are
and what are benefits and harms for others. One of the best
things we can do when we make an ethical review is to
gather additional details so that we pick the right direction
to make better choices. As a result, this move becomes an
incentive to consider additional information that may be
useful to know.
One always needs to conclude based on adequate
information. This step is a chance to find three or four
additional facts that will be valuable to recognize when it
comes to making a moral decision. These details ought to be
important.
C. Available Alternatives
Step three is looking for additional options. Often, we
might think of an ethical question as either-or an option.
Either do the holy thing or face selling your soul. There are
frequently several choices in between.
When Maggie was found to be selling its noodles with
Monosodium Glutamate without mentioning it on the
packaging, there could be two choices that, it should exit
the market immediately or continue the business as it is by
mentioning warning of packaging. But company found out
solution as come clean with refreshed look of the brand
with the help of public relations and advertising campaigns.
D. Identify Personal Impacts
Personal effects are not what human beings are
impacted by a business action. That is exactly If the
organization feels that you invest too much money to cope
with an ethics issue, you will be a wasteful spender who
has no place in the difficult world of becoming a manager
and will either lose track of your job or be dismissed. On the
other hand, if you neglect the dilemma, things could go the
other way: you could become a villain in that situation who
could not solve the problem.
E. Apply Moral Frameworks
Professor Hosmer's Stage Five incorporates ten ethical
concepts based on thousands of years of theory. There are
the application of shareholder, Stakeholder, and Virtue/
Principles theory of ethics is used.
The owners are the principals, and the administrators
are the officers. To be sure, owners will be involved in
revenues. Shareholders can also have non-economic
directives.
Some corporations do all these things because if their
owners are satisfied with these goals, there is nothing
immoral about them. So, do not necessarily presume that
the only thing that matters about a company is profit; there
could be more.
Moreover, what is in the short-term interest of
shareholders and what is in the long-term interest can be
two separate things, even in terms of earning profits.
Finally, since companies are the creation of the state,
they can abide by the rules that regulate them.
F. Conclusion
Step six calls for a conclusion. This could be to pick an
alternative to justice in the Stakeholder interest. Maximizing
output in the short term may be preferred. It could be a
combination of several structures.
For example, a compromise focused on respect for
freedom and the security of the vulnerable must be devised.
Questions
1. Moral issues
2. Alternatives in decision making
3. The moral framework of business
Long Answers
1. Review the decision-making process suggested by
Professor LaRueHosmer.
2. What is Ethical Dilemma? Explain with a suitable
example.
3. Discuss the impact of the decision-making decision-
maker and others.

Chapter-6
Ethics in Practice
Eth ics i n Pr actice
Managers in both big and small companies face a

challenging ethical dilemma every day when they do their
work. However, management decisions are fundamentally
ethical, managers must understand the ethical aspects that
are part of their day-to-day job functions.
Managers should be able to take decision which is legal
and ethical as well. Most of the time code of ethics of the
organization helps the mangers in taking right decision.
These clear guidelines entail the managers what is right and
what is wrong.
Moreover, most management decisions and acts are
lawful, but there are situations where a decision may go
above legal limits and becomes unconstitutional. Given that
the legislation itself is right and these decisions are not
ethically questionable, in those cases, the decision to violate
the rule or to do something that disagrees with the code of
ethics or the collection of principles is immoral. In certain
cases, it is not easy to decide what the best thing is to do.
Ethical decision-making issues occur for managers and
leaders where decisions include a moral conflict, that is, a
moral condition in which an individual needs to choose
between at least two similarly bad choices, or when there
are several ethical factors, several which clash with each
other.
In certain situations, which are normal to industry, the
management must be able to think carefully and thoroughly
about the repercussions and ethical ramifications of the
decision to make the best possible decision in the light of
the limitations, implications, and ethical considerations.
If the decision itself cannot be reshaped as a scenario in
which both sides will benefit—that is, a win-win situation—
then the manager requires a decision-making framework to
support it. To help managers, with ethical-moral conflicts,
corporate ethicists Gerald Cavanagh and his colleagues
have developed a decision-making system that draws on
the theories of philosophers and ethicists and extends those
ideas to business decisions.
This methodology incorporates four methods of ethical
reasoning—rights and responsibilities, utilitarianism,
fairness, and caring ethics—in a system that guides
administrators and leaders through a rational process of
thought to figure out the ethical aspects of a complicated
and potentially contradictory circumstance.
Rights and Duties
Rights are legal claims or entitlements, often based on
legislation or other official documents, such as treaties and
international declarations that enable persons to follow
their own interests. Rights may be good acts that
individuals are entitled to do, but they often come from the
other direction, in the form of responsibilities or
responsibilities that go hand and hand with rights. For
example, in a democracy, one right is the freedom to vote
alongside that right lies the obligation to vote actually.
In certain nations, workers are guaranteed such
privileges, such as the right to secure workplace conditions
or to a minimum wage, and employers have obligations to
guarantee that certain conditions are fulfilled.
These protective rights are based on the laws and
regulations in effect. Other protections are based on
fundamental grounds and are treaties of international
conventions, such as the United Nations Agreement on
Human Rights and ILO recommendation.
Ethics in Practice 57
These rights include respect for individual dignity,
which allows families, organizations, and cultures to
prosper. Using Cavanagh's ethical decision-making method
to determine a legal conflict, one question that needs to be
addressed, applies to rights and duties: does this decision
uphold the rights and duties of the people concerned?
Utilitarianism
A second version of thinking through a philosophical
conflict includes the use of utilitarian theory or the
determination of the greatest good by the greatest number.
This type of cost-benefit analysis is a quite common
approach to strategy, however, as the framework implies,
an ethical judgment in a moral dispute cannot be an
adequate justification on its own.
In a utilitarian study, the drawbacks, and benefits of the
decision to the various parties who will be harmed by the
decision are measured, with certain weight allocated to the
different harms and benefits that determine their degree.
Most of the utilitarian analysis focuses on the advantage
of the community or collective above that of any individual,
unless the most significant damage is to the individual—for
example if the decision is catastrophic to the individual.
Putting the group, which can include the interest of an
organisation, above the individual eliminates the issue of
self-interest.
The second question in the ethical decision-making
process for administrators will then be as follows: who
would be affected by the decision and to what degree will
the different people affected by the decision be damaged or
benefited?
Justice
The concepts of justice are the third option that
managers should think about for ethical decisions. Right
decisions require justice, fairness, and impartiality on the
part of decision-makers, in particular about the overall
burdens and advantages that would accrue from the
decision.
The philosopher John Rawls addressed the criterion of
fairness in terms of what he calls distributive justice, which
invites decision-makers to decide on a veil of ignorance that
implies that decision-maker they do not know where they
will be in the system until the decision has been taken. This
veil-of-ignorance consideration forces managers to consider
the honesty of the judgment of every group to be affected.
In considering justice, then, the decision-makers must
question, how does this decision align with the canons of
justice?
Ethics of Care
In addition to evaluating moral disagreement from the
viewpoint discussed above, ethical administrators and
leaders will need to look at the effect of actions on the
network of associations that will be impacted. This view is
called the ethics of caring.
The ethic of caring implies that one's moral obligations
differ based on how closely one person is related to another.
That is, if a person is remarkably like another person, say a
family member, there would be more moral obligation to
ensure the well-being of a family member than to ensure
the well-being of an unrelated person.
In an organizational context, using a caring ethic,
greater attention should be paid to the effect of an action on
long-term workers who are more deeply connected to the
organization and its priorities than to its impact on newly
recruited employees.
Figure: Ethical Decision-Making Model of Gerald

Cavanagh
Role of Ethical Manager
As a leader, ethical manager has following roles.
1. Be sure all those who report to manager, read, and
understand the Code.
2. Exercise effective oversight and monitoring to ensure
consistency with the Code within area of responsibility.
3. Anticipate, avoid, and detect threats to compliance.
4. Report immediately and provide a remedy to any
breaches or deficiencies in enforcement, including
necessary corrective measures.
5. Consistently follow the Code and associated rules and
procedures.
6. Help the staff who raise questions or complaints in good
faith.
7. Ensure that none of the workers are retaliated for
whistleblowing in good faith.
Comparative Ethical Behaviour of Managers
Managers, according to Gerald Cavanagh, should use a
variety of applications of moral reasoning based on rights,
justice, utility and caring when dealing with a moral
conflict.
In order to achieve a good decision, administrators need
to take many considerations into account when weighing
decisions based on the values of rights, equity, utility, or
treatment. For example, they may determine whether there
are any overriding factors in the decision.
If a decision may lead to the death of a person in one
direction and the unemployment of a group of people in
another way, so life-death decisions could be the key
consideration. There are, however, no simple guidelines for
making such decisions, and a determination by the
decision-maker is required to decide which of the related
considerations should have the greatest weight.
Another question is whether one criterion is more
relevant than the others in a particular case. For instance, if
a decision were to override the rights of an entire group of
people, the consideration might override the fact that one or
two persons will not be treated equally when a decision is
taken.
Similarly, attention could be given to whether there are
incapacitating considerations (such as force or violence) that
might come into play in deciding—for example, preventing
a strike that might violate a person's right to strike but
avoid damage and harm if the strike was violent.
A decision can be called ethical if there is no intention to
make an immoral choice, if the negative outcome is merely
a by-product, and if the positive result is so good that it
overrides some bad outcome of the result.
Moral Development
The ethical decision-making process for managers
focuses on logic based on the values of rights, order, utility
and treatment. It presumes that administrative decision-
makers have the potential to make ethical choices based on
values. Sad to say, not everyone is guided by universal
values of ethical decision-making. Much literature on
human development shows that individuals develop their
cognitive thinking abilities over time and at various stages,
commonly referred to as pre-conventional, conventional,
and post-conventional.
A study by Lawrence Kohlberg and Carol Gilligan on
moral thinking in men and women reveals that moral
reasoning is going through parallel, lagging cognitive
growth, which must come first. At the pre-convention stage
of growth, rewards and punishments or self-interest are the
basis for ethical decision-making.
Most managers have progressed past the pre-
convention stage to the conventional stage of development.
In the early stages of conventional thinking, people use
their peer group as a reference point to decide what is right
and wrong.
At the latter stage of conventional reasoning, people
rely on the laws, legislation, and standards of society as the
basis for their ethical choices. It is only at the post-
conventional level of growth, where only about 20% of
adults reach, that rationale arises from the values.
Figure: Stages of Morale Development and their Sources
The reality that only about 20% of adults achieve the
post-conventional stage of growth illustrates the need for
ethical leaders and administrators who can justify not only
from the standards of society or their peer circle but also
from fundamental values such as those mentioned above so
that decisions can be taken with various stakeholders'
desires and priorities in mind.
Questions
1. Rights vs duties
2. Utilitarianism
3. Ethics of care
4. Post conventional Stage of moral development
Long Answers
1. Define the role of Ethical managers in business in detail.
2. What do you understand by comparative Ethical
Behaviour of Mangers? Discuss.
3. Discuss the various stages of moral development.

Chapter-7
Code of Ethics & Cost of Ethics
Code of Eth ics &Cos t of E th ics
Some multinational companies have created codes of

ethics internally to direct managers in coping with legal
situations and moral disputes. These codes of ethics are
commonly known as policies. These codes of ethics need to
be complemented by internal structures such as incentive
and database systems, promotion and recruiting practices,
recognition systems, and corporate culture and
communication systems that facilitate their application.
Competent senior management dedication to principles
and ethical behaviour is a critical aspect of ethical
leadership at the top of the organization. Ethical leadership
is important to management and workers at all levels of the
organization when dealing with tough ethical choices and
moral disputes.
Codes of conduct alone will not be adequate for
management to make good decisions unless they are
assisted by these other dimensions of the organization. In
addition to corporate or organizational codes of ethics,
many of which have been established internally by
organizations to express their own moral structures, a
variety of standards and standards have emerged
internationally to help employees learn about their ethical
obligations.
Any of them are very free and set down basic values,
based on internationally negotiated agreements ratified by
several countries, such as the United Nations Global
Compact with its 10 core principles or the OECD (The
Organisation for Economic Co-operation and Development)
Recommendations for International Businesses.
Others are more comprehensive and have been formed
by industry associations or multi-sectoral partnerships to
help direct business decision-making. Again, as with
organizational rules of ethics, these standards are valuable
guidelines but cannot be discussed in any particular
circumstance. As a result, codes need to be supported by
the management decision-making of the organization, its
philosophy, its incentive programmes, and the
communication that occurs on ethical principles within the
business.
Managers and Ethical Practices
Most managers find it difficult to talk about, and even
consider, ethical problems. Some treat it as difficulty that
management scholars James Waters and Frederick Bird
called the moral muteness of managers. Through evaluating
several corporate change programs, we may conclude that
managers share common strategies and common sets of
principles that could allow the organization to accomplish
its objectives more efficiently.
Creating a shared sense meaning, vision, and mission
that connects workers to the organization and strengthens
group. A second feature that ethical leadership should have
is to develop a system perspective that is connected to the
post-conventional phases of cognitive and moral thinking
discussed in previous chapter so that the importance of
helping other group members and similar institutions in the
larger environment appears.
Another theme is to prioritize business processes rather
than hierarchy and structure, which is focused on analysing
work itself and reflecting on the end results and means of
decision-making, not just on end results. Localized
decision-making, especially in the context of work
processes, offers the importance of accountability for
individual acts, and the use of information within the
Code of Ethics & Cost of Ethics 65
system is supported by principles of truth-telling, fairness
and honesty, the qualities of moral persons, as well as
transparency and access to the information required.
Such type of ethically oriented organizations, often
concentrates on the advancement of both workers and
organizations, valuing people (a core ethical principle) and
concentrating on learning and progress.
These interventions often promote discussion and
associated freedom of speech, with a willingness to pursue
common ground where differences of opinion occur.
Ethical leaders should also improve the ability of others and
themselves to take different viewpoints at the same time—
in other words, to step towards a post-conventional level of
thinking so that they can understand other points of view
and make ethical decisions.
The ultimate aspect that managers should think about in
their positions as ethical leaders is to build a sense of loyalty
and ownership among the members of the organization by
stressing the pledge of maintaining, imparting a sense of
urgency about the activities of the group, and promoting
participation rather than detachment among the members
of the organization.
Competitiveness
Any organisation, public or private, large, or small,
faces internal and external uncertainties which affect its
ability to achieve its objectives. The impact of uncertainty
on the objectives of the business is "risk."
Risk management, generally known as enterprise risk
management (ERM) in the corporate community, can allow
for the formal and clear analysis of all sources of complexity
in the decision-making process. The guiding philosophy of
ERM is that it must create profit for the enterprise. It is the
society, procedures, and systems that seek to take
advantage of new opportunities while managing the
adverse effects.
Corporations are faced with the challenge of controlling
their threats, risks and at the same time being successful
and competitive. Risk management is not a novel task but
could be underestimated for a variety of reasons. The
complexities and challenges of contemporary economies,
consumer preferences, policymakers, staff, and
shareholders present organizations with an interesting
series of inconsistencies.
Risk management can improve the ecosystem by
finding and capitalizing on value-creating opportunities
and preserving existing value. Effective risk managers use a
range of risk management tools.
The rapidly evolving world economy has generated a
growing variety of uncertainties that need to be controlled
to ensure the sustainability and performance of an
enterprise. Historically, risk assessment strategies have
been restricted to historically insurable threats such as
burning, earthquake, wind, storm, civil responsibility, and
other reasonably simple possible causes of damage.
Solutions related to the procurement of insurance have
been illustrated with an emphasis on the form of coverage,
the adequacy of the limits, and the cost of the transfer of
risk. Over the past thirty years, several large companies
have established a far more sophisticated approach to risk
management, encompassing conventional risk management
challenges, and incorporating additional problems
emerging from the changing internal and external worlds in
which they function.
It is now recognized that any part of the organizational
and financial performance of a business involves a possible
threat or risk that may adversely and substantially impact
the effectiveness and profitability of the enterprise. Danger
applies essentially to differences in results that could exist
in each case over a given period. If there is only one
possible outcome, then the risk is zero while if there are
various outcomes, risk can not be zero.
Risk can also be described as the probability that an
event may occur and adversely affect the achievement of
the goals and objectives of the Business. Business risk is a
danger that an incident or activity will negatively impact
the capability of a firm to meet its business objectives/
targets.
Risks may be broadly classified under the following
heads:
(a) Industry & Services Risks:
These risks can be broadly categorized as follows,
namely:
 Economic risks such as dependence on one product, one
process, one client, one industry, etc. in the short and long
term.
 Services risks
 Market structure
 Business dynamics
 Competition risks affecting tariffs prices, costs, revenues,
and customer preferences.
 Customer relations risks
 Reputational risk
(b) Management and Operations Risks:
These risks relate broadly to the company's organisation
and management such as planning, monitoring, and
reporting systems in the day-to-day management process
namely:
 Risks to Property
 Clear and well-defined work processes
 Changes in Technology/up-gradation
 R&D risks
 Agency Network Risks
 Personnel risks such as labour turnover risks involving
replacement risks, training risks, cost risks,
 Skill risks etc. There are also unrest risks due to strikes
and lockouts. These risks affect the company's business
and earnings.
 Environmental and Pollution Control regulations, etc.
 Locational benefits near metros, railway stations, ports,
cities, etc.
(c) Market Risks:
These risks relate to market conditions namely:
Raw material rates
Quantities, quality, suppliers, lead time, interest rates
risks, and forex risks namely, fluctuation risks and interest
rate risk in respect of foreign exchange transactions.
(d) Political Risks:
These risks relate to political uncertainties namely:
 Elections
 War risks
 Country/Area risks
 Insurance risks like fire, strikes, riots and civil
commotion, marine risks, cargo risks, etc.
 Fiscal/Monetary Policy Risks including Taxation risks.
(e) Credit Risks:
These risks relate to commercial operations namely:
 Creditworthiness risks
 Risks in settlement of dues by clients
 Provisions for doubtful and bad debts
(f) Liquidity Risks:
These are financial risk factors namely:
 Financial solvency and liquidity risks
 Borrowing limits, delays
 Cash/Reserve management risks
 Tax risks.
(g) Disaster Risks:
These risks relate to disasters from the following
factors:
 Natural risks like fires, floods, earthquakes, etc.
 Man-made risks arising under the Factories Act, Mines
Act, etc.
 Risk of failure of effective Disaster Management plans
formulated by the company.
(h) Systems Risks:
These risks relate to the company's systems namely:
 System capacities
 System reliability
 Obsolescence risks
 Data Integrity risks
This risk assessment allows a business to be
competitive in the market. Competitiveness is the "key”,
and everybody knows that it is the universe where only the
fittest survives. Competitiveness can be explained as a core
competency of the organization that means what one firm is
having and the competitors do not. To get this core
competency organizations should not adopt unethical ways.
Ethics and competitiveness go hand in hand. There is no
question about that. All individuals must face
circumstances where we have to choose growth or ethics,
and even though it's a straight-forward decision, some
people will choose growth over ethics. In such cases above
discussed risk can be mitigated in unethical ways as well.
Organization Size
The framework of the company is critical for the study
of business ethics. In a centralized organization, decision-
making power is consolidated in the hands of top-level
managers, and no authority is allocated to lower-level
managers.
Responsibility, both internal and external, lies in top
management. This system is best adapted to organizations
that make high-risk choices and whose lower-level
decision-making managers are not highly competent. It is
also relevant for organizations in which manufacturing
procedures are normal and productivity is of primary issue.
These organizations are typically highly hierarchical,
and the division of labour is usually very well established.
Each worker understands his or her position and what is
specifically expected, and each worker has a good idea of
how to execute delegated tasks. Centralized organizations
emphasize formal rules, protocols, and processes, backed
up by elaborate management mechanisms. Their codes of
ethics may define the techniques to be used in decision-
making.
Centralized corporate systems can lead to immoral
activities due to their top-down approach and the gap
between the individual and the decision-maker. If the
centralized organization is very hierarchical, certain
workers will operate according to "the letter of the law"
rather than the spirit.
In a decentralized organization, decision-making power
is transferred as far down the chain of command as
possible. These organizations have relatively few formal
guidelines and planning and regulation are typically
informal and confidential.
Instead, they are focused on increasing the flow of
information. Therefore, adaptability and early identification
to external change are some of the key attributes of
autonomous organizations. Increased versatility allows
managers to respond rapidly to changes in their ethical
climate.
The vulnerability of the decentralized organizations is
the difficulties they have in responding rapidly to
improvements in the policies and procedures developed by
the top management. Another disadvantage is that in
decentralized organizations there should be very good
supervision to not to give free rain to members of the
organization.
Profitability & Ethics
Recently, in his New York Times blog, Thomas
Friedman3 – the man who fired the imagination of world
business with his book The World is Flat – wrote: "We don't
just need a financial bailout; we need an ethical bailout. We
need to re-establish a basic equilibrium between our
markets, ethics and regulations."
"Ethics and profits do not go hand in hand" is an old
concept; today, in most corporate conferences,
businesspeople are implementing new advertisement and
promotional strategies that companies use to drive money
by taking into account human rights and commitments. In
order to obtain long-term gains and to stay on the market
for a long period of time, the rights of consumers, staff, and
the shareholder of the company must be considered.
3. Thomas Loren Friedman (/ˈfriːdmən/; born July 20, 1953) is an American

political commentator and author. He is a three-time Pulitzer Prize winner
who is a weekly columnist for The New York Times.
In industry, long-term profits and client relationships
are of the highest significance and, in order to achieve long-
term relationships, the business has to be ethical. Long-term
profit and sustained profit are dependent on ethical conduct
that adds goodwill to the organization.
Taking the Tata Group as an example of this. A few
years ago, Tata suffered a setback when a five-star property
in Mumbai was involved in a terrorist attack. The
government moved in and the militants were killed.
However, the property was destroyed by several thousand
crores.
The Chairman of Tata Group offered compensation to
all the people affected by the incident. Compensation was
offered not only to the guest but also to the vendors who
were outside the property and were injured or killed during
the attack. This is very good example of business ethics
where business considered the pain of the people. In return
that hotel gained its glory back and earning profit now.
Similarly, for WIPRO group the Chairman of the Board,
Azim Premji shared his opinions about tax. He angered
many other fellow capitalists when he suggested that
wealthy people should pay more taxes in reaction to a
budget. Not stopping there, he has justified his views in a
number of interviews. These examples show that ethics and
profit can go hand in hand.
Cost of Ethics
Operating in an ethical fashion may cause extra costs for
a company compared with other stores and businesses that
may not do business in the same way.
In the below illustration it is clearly visible that some
kind of behaviour which is legal as well ethical whereas
some are unethical and illegal as well. In between some
behaviour belong to grey areas. But it is also clear in
illustration that for following ethical as well as legal
practice which is Owning and running legal software only
will attract lot of expenses depending on the fee of license in
comparison to using backup copies. Though selling backup
copies of the software may put the person behind the bars.
Whereas setting period for licensed software and then
compel the used to pay on recurring basis is unethical but is
not illegal as developer of the software may set terms and
condition accordingly. Sometimes to avoid such cost users
adopt unethical ways to use the software.
Figure: Illustration of Ethical and Legal practices

Transparency is an integral aspect of the process.
Transparency ensures the enterprise is available to people
to see how it handles its relationship with vendors and
produce the products. Policies often ought to be clear in this
regard. The option would be for a company to ignore
ethical actions. However, this would soon lead to a shatter
market image, and customers would turn to rival who are
acting more ethically. Operating in the 'best manner' is also
not only acceptable for legal purposes, but also a sound
business practice.
Ethical cost of Corruption
Corruption is an unethical behaviour for business these
days. Cost of corruption is more than the financial cost. It is
also social, political in nature.
Financial Cost: Corruption has a direct effect on the
prosperity of countries, diverting money to 'private' rather
than to the greater good. It also creates a parallel economy,
deterring global investment (according to Transparency
International, a loss of one index point leads to a loss of
0.5% of GDP of foreign investment) and promoting capital
flight.
Social Cost: It also destroys confidence, not just in
institutions but also in individuals. It induces frustration,
apathy, discourages creative spirit, accentuates
socioeconomic inequities, and promotes organized crime.
Political Cost: Corruption remains one of the biggest
threats to equality and the rule of law. Corrupt business
induces corrupt politics in nation which negatively affect
the business which follow ethical business practices.
Environmental Cost: Corrupt business take advantages
of the system and do manufacturing in a manner which
pollutes the environment. This saves some cost for the
individual organization, but price is paid by whole society
and humanity for longer period.
Human Cost: It harms human existence and causes a
divide between human beings and their ultimate objective.
Social Return on Investment (SROI)
SROI is method to measure return of Investment
especially in case of social benefits. SROI monitors progress
in ways that are important to individuals or organizations
who observe or contribute to it and assign monetary values
that reflect societal, environmental, and economic
outcomes.
Therefore, this valuation creates a cost-benefit ratio or
an expenditure ratio (inputs). For example, a ratio of 3:1
means that every $1 delivers $3 of social benefit.
SROI is like ROI but with a double bottom line: the
financial effect and the social impact of the non-profit work.
SROI can be understood like if we do not do anything
for 100 people and public service has to spend 7 crores but
we could do this with 2 crores, then if we decided to not to
do anything, we are losing the opportunity to save 5 crores
of society. Thus,
SROI = Tangible Profit + Intangible value to the
community
In following figure process of SROI has been explained.
First, we need to establish the scope and identify the
stakeholders. In next step we need to estimate the
outcomes. In third stage we need to find out ways to
measure the outcomes. In next step we need to determine
the impact of investment on the business and society. In
fifth and crucial step we calculated the SROI and in last step
we report the social benefits and return on investment.
Figure: Stages of SROI Process

SROI helps in ethically conducting business and helps
in protecting the organization’s goodwill in the society. The
business may promote them selves as every 1 invested in
the project is saving societies 2 by managing waste properly.
SROI can be calculated as following.
Questions
Write short notes on following
1. Operations risk
2. Organizational structure and Ethics
3. Ethical profit
4. Liquidity risk of business
5. Transparency
6. Social cost of ethics
7. Environmental cost of ethics
Long Answers
1. Discuss competitiveness in business. How a business can
compete with rivals in ethical manner.
2. What are the various risks that a business has to face and
how these risks can be dealt with ethical practices?
3. How can a business remain profitable while following
ethical practices? Discuss.
4. Elucidate cost of Ethics in business in detail.
5. If any organization is indulged in corrupt business
practices, what cost does it bear for it.
6. Discuss Social Rerun on Investment method to measure
Cost of Ethics in business.

Chapter-8
Business and Environmental Issues
B usiness a nd Envir onm enta l I ssues
Environmental ethics is formally defined as the study of

human interaction with nature. It is, in a business sense, is
concerned with the responsibility of a company to protect
the environment in which it operates. Public perception of
environmental harm caused by human activity has
contributed to the need for government legislation that
directly impacts the ability of corporations to carry out their
operations. A primary area of focus in environmental
business ethics is the corporate response to governmental
regulation.
Figure: Balance between Business and Environment

Environmental responsibilities of business
Business cannot sustain without the help of society.
Various factors of production like natural resources and
human resources are procured from the society itself. Thus,
it is the responsibility of the business to take care of the
society and environment where the business is sustaining.
Many businesses are based on natural resources as raw
material. These businesses convert finished products with
the help of these raw materials and during this conversion
lot of green gases and waste comes out as by-product.
Service sector also contributes to leaving high carbon
footprints by using wasting electricity, using,
transportation, office waste, office equipment, etc. managers
should consider these costs while doing management
accounting for carbon.
Figure: Business and its relationship with the

environment
Its the social responsibility of businesses to take care of
hazardous material before disposal. If possible, waste
material should be recycled. Conservation of biodiversity
and the environment is the prime responsibility of the
business these days.
Business and Environmental Issues 79
Significance of Environmental business ethics
Cost is a problem for many small companies. One study
shows that there was no environmental management
scheme for most of the small companies. Nevertheless, most
business owners want to decrease their environmental
impact, but "resource constraints" as well as other variables
such as lack of funding or guidance were held back.
Competitive stress is just another obstacle. If one’s rivals
manufacture low-cost products without consideration for
environmental sustainability, and one relies on the highest
ethical standards, will not survive in the market.
Though there are various benefits of following
environmental ethics other just than profit.
Businesses may enjoy a good brand image, so customers
will buy company’s products even though they are a little
more costly than competing ones. There are many
companies these days which are advertising their products
as eco-friendly. Customers are also much aware about the
environment and the products which are made without
harming the environment. They are also aware that eco-
friendly production attracts more costs. For protecting
environment customer are now ready to bear this
additional cost in comparison to purchasing cheaper cost
products which are made by harming the environment.
If we appeal to our own ideals and portray the
organization as a great place to work for both ethical and
financial purposes, we will also be able to recruit better
workers. Surveys shows that youth are more inspired by
values than money.
Human Choices
Human beings have made decisions throughout history
that have contributed to the degradation of habitats, the
pollution of water supplies and the use of fossil fuel-
powered vehicles to pollute the environment. Awareness of
the damage in the latter part of the 20th century led society
to place pressure on the government to enforce laws forcing
companies to protect valuable natural resources. Many
customers have been prompted by environmental
consciousness to lead environmentally sustainable lives,
impacting business realities across the globe.
Business Realities
Acceptance of environmental ethics, transparency is
illustrated by the development of corporate environmental
policy. An instance is Marriott International's
environmental strategy: "Both in our hotels and beyond, we
seek to understand and act on the direct and indirect
environmental impacts of our business operations."
Businesses operating worldwide, regardless of scale, must
make such a policy, as part of their business model to
protect the natural resources they use to do business and
make a profit.
Tata group is following the below policies to protect the
environment.
 Establish sound environmental objectives and targets and
a process of reviewing them.
 Comply with all applicable legal/ regulatory and other
environmental requirements.
 Reduce the emission levels of vehicles in full compliance
with the regulatory norms and proactively work with the
industry, Government, other related industries, and
agencies to bring in international best practices.
 Use of environmentally sustainable technologies and
practices for prevention of pollution and the continual
improvement in environmental performance.
 Conserve natural resources and energy by minimizing
their consumption and wastage.
 Minimise waste generation, enhance recovery and
recycling of material and develop Eco Friendly waste
disposal practices.
 Building awareness of our workforce, customers, and
vendors on environmental issues.
Sustainability of Business
To adapt to sustainability requirements, small
businesses are exposed to rising demand from customers
and government agencies. Sustainability relates to
ecosystems' ability to stay healthy and active.
Energy conservation is one of the best ways to have a
constructive solution to sustainability concerns. Simply by
using energy-efficient appliances and light bulbs,
organizations can reap considerable savings in energy costs
while still making a practical contribution to reducing
environmental stress. Research from Environmental
Protection studies show that by using energy-efficient
equipment, companies may save ten percent to thirty
percent on energy costs.
New Opportunities
The development of new opportunities based on
restoring existing environmental damage and creating new
technology to enable people to conduct their business
without more harm to the environment is a positive side of
environmental business ethics. Environmental technologies
will provide a path to profitability for small businesses for
the near future without letting them harm the environment.
Carbon management Accounting
Carbon management accounting is a practice that is not
popular among the common people and industries but is an
emerging trend in world economies. This accounting is
simply a specialized area of management accounting
focuses on cost of usage of energy, water, carbon-based
resources, and disposal of waste.
The focus of carbon management accounting is not
financial or quantitative only, but it includes social
responsibility and the public image of the organization.
This accounting is used to identify, analyze, manage, and
hopefully reduce environmental costs in a way that
provides mutual benefit to the company and the
environment.
Current practices of corporates to reduce the carbon
footprints
These days managers are using innovative ideas to
reduce their carbon footprints. Uday Kotak, CEO of Kotak
Mahindra Bank says that,”4.3 lakh plastic bottles saved per
annum. Glass water jars and disposable paper cups in
meeting rooms at Kotak Mahindra Bank Mumbai offices.
Working to make it national. Environment is precious.
Infosys Nagpur campus’ net consumption from
electricity grid or outside water supply is zero, and it sends
no waste to a landfill. This initiative helps in reducing the
carbon footprints as well as a good image of organization in
the society.
Tata sustainability group have investigated that in India
an individual leaves average of 1.2 tones carbon dioxide
while in the UK same is 5.4 tones.
Carbon credit
A carbon credit is a permit or limit under which any
organization or nation can perform industrial activities. If
any organization uses this credit responsibly, they can do
the business within the prescribed carbon credit and can
save the surplus carbon credit. This surplus carbon credit is
being traded in the international market. Business who
exhausts their carbon credit and still want to perform the
business must purchase the carbon credit form the
organizations who have the remaining carbon credit as
surplus. This practice helps in generating revenue for the
organizations using environment friendly technologies to
reduce their carbon footprint. This practice will induce the
purchasers of carbon credit to adopt environmentally
friendly technologies to reduce their cost which is involved
in purchasing of carbon credit.
Though carbon credit trading is not extremely popular
in the market especially in India. There are distinct
exchanges that provide the facility for trading of the carbon
credits, including European Climate Exchange, NASDAQ
OMX Commodities Europe, and European Energy
Exchange.
A reduction in emission makes it worthy for an
organization to get credit in the form of a certified emission
reduction (CER) certificate. This is a tradable certificate in
India. Income with carbon credit attracts the tax of 10%
which was initially 30%. Income from carbon credit is like
incentive to the organizations for saving the environment.
Everyone is talking about the environment but very few
are seriously working in this area. Businesses have social
obligation to protect the environment as industries are main
source of contributing in greenhouse gases, global warming
and carbon footprints. Carbon management accounting is a
specialized area of accounting that keeps the records for the
input of the carbon in the organization and output of the
carbon in the environment. This accounting also keeps a
record of the cost of reducing the carbon footprints and its
benefits to the organization.
Figure 1: Process of the carbon credit transaction

Income from trading of carbon accounting is taxable in
India. Though the taxes have been reduced to make it more
lucrative this income of the organization should be tax-free.
The government should also support creating a carbon
trading market in India as well.
Plastic is a big threat to the environment as greenhouse
gases are. Carbon credit should be given to the entities for
motivating them to reduce reuse and recycle plastic in their
organization premises.
Important Issues to Consider
As now that we've discussed what environmental ethics
entails and how we are connected to it as a business. We
should discuss what can we do in our industry to bring
environmental ethics into practice?
1. Full Cost Accounting
The primary concept of environmental ethics is that
nature has intrinsic worth and should not only be viewed as
a resource to be used. But the vision is not matched by
conventional accounting. It only calculates direct monetary
costs, without accounting for factors such as emissions and
environmental waste, often referred to in economic theory
as "negative externalities"
we will need to account for those externalities to be
compliant with environmental ethics. One approach is
called total cost accounting, or sometimes full cost
accounting for the environment. By calculating the services
production process uses to control the emission, the waste
and emissions it produces, and other social and
environmental impacts, complete cost accounting seeks to
capture the true costs of a business. It's by no means an
'easy fix,' but it will be worth the time it takes.
2. Energy Efficiency
We need to examine our office, supermarket, factory or
another workplace where we can use energy-saving
measures. For example:
 Using energy-efficient lighting
 Heating and cooling systems properly controlled by
thermostats
 Usinginsulated windows and doors to stop all that
expensive cooling/heating from escaping out.
 Using computer equipment operating efficiently
 Using auto on-off switches in the office
These are small ideas that can help in reducing the cost
of production as well as protect the environment as well.
3. Energy Sources
We may analyze the sources of energy, as well as look at
energy consumption. These days, there are plenty of
alternatives to fossil fuels, and we might turn to an
electricity provider that produces renewable energy for
example solar energy.
The Indian government had an initial 20 GW capacity
target for 2022, which was reached four years ahead of
schedule. By 2022, the target was raised to 100 GW of solar
capacity (including 40 GW of rooftop solar) in 2015,
targeting an investment of US$ 100 billion. India has set up
nearly 42 solar parks to make land available to solar plant
developers.
The Supply Chain
They often concentrate on their own direct contributions
when companies look at their environmental impact. But
environmental ethics requires a more holistic approach, as
we've seen.
We may examine our all forward and backward
integration and find out these points
 How are those components built?
 How are they transported?
 How were the original materials obtained?
 What does the entire process look like from the mining of
the raw materials through to the finished item reaching
the consumer?
Look at each step of the process in the value chain and
define at each point the full effect on the environment, and
then look for opportunities for change. If a supplier doesn’t
want to comply with the best environmental practices, look
for one that will. This is another item that will take time but
has big payoffs.
5. Packaging
Earth Day this year focuses on ending plastic waste in a
specific way. Most of the plastic in the world ends up in the
oceans, where it breaks up into small parts, destroying
marine life. The ocean today comprises 51 trillion
microplastic particles, 500 times more than the number of
stars in our galaxy. For instance, Americans throw away an
estimated 100 billion plastic grocery bags per year, with
each bag being used for just 12 minutes and taking years to
decompose. Most of this is due to excessive packaging or
storage.
We can cut out unnecessary packaging of your
products. Plastic packaging can be replaced with eco-
friendly materials that will decompose quickly or, ideally,
durable containers that can be reused.
6. Animal Welfare
The primary assumption of environmental ethics, that
nature has inherent meaning, often refers to animals. Other
animals for our consumption are not placed on earth; they
have a right to equal treatment. Some individuals may
choose to prevent any and all uses of animal products,
while others may want to insist on humane treatment of
animals.
Considering environmental ethics means taking into
account the effect on other species of your business
activities and determining what measures to put in place to
minimize or maximize the impact. When you have
measured the effect, determine where to draw the line and
what standards of animal protection to expect from your
own company and your suppliers.7. Pollution
8. Transportation
Transportation is a significant source of emissions and
other harmful environmental consequences, so investigate
how our business moves people and goods. We must
decide whether we eliminate the need for transport (e.g. by
switching to a local supplier) or turn to more
environmentally sustainable transport (e.g. by rail instead
of air)?
As a business, we can consider ways to encourage
workers to use environmentally friendly alternatives for
transport as well. Some companies, for example, offer
incentives for their workers to drive to work by public
transport instead of by car, or to share a ride instead of
driving alone.
By having more meetings via videoconference instead
of flying people to different locations, we can also make
savings (both environmental and monetary). And it can
avoid emissions from the commute by encouraging people
to work from home.
9. Resource Usage
We have already addressed about packaging, but a lot
of other resources are used by businesses. So, evaluate the
procedures to see where changes can be made. For instance:
 Reduce
 Reuse
 Recycle
Rapid urbanization has made the disposal of solid waste
a serious issue today. Perception is that it has always been
the responsibility the local government bodies to manage
the waste. They want the authorities to keep their area
clean.
This was the reason the 3 R model of waste
management is being popular among people. This model
help the people as well as authorities to manage the solid
waste in cities.
The same concept of the 3 R model of waste
management can be used in organizations as well, as
organizations are miniature of society.
These three 'R' terms are a vital aspect of sustainable
living, as they help to minimize the amount of waste we
have to throw away.
Reduce, Reuse, Recycle-It's easy!
 Decrease the amount of waste you are making.
 Before replacing them, reuse things as soon as you
can.
 Wherever possible, recycle objects.
Figure: 3 R’s Model of waste management
10. Putting It Into Practice

All the issues that we've been talking about are
important, but we can't do it on our own. We will need to
have the workers on board to be effective, to make sure
they recognize the value of environmental ethics and know
what they need to do to help it.
That means having a clear environmental policy for the
business, including. Then, with staff training, we need to
endorse that and enhance the dedication by continually
stressing the importance of environmental ethics.
The following figure shows that a business can run and
sustain by adopting business practices that are environment
friendly without sacrificing the profit significantly.
Figure: Green Practices of Tata Motors, Pant Nagar

Plant
Questions
1. Ecosystem
2. Ecology of commerce
3. Human Choices
4. Carbon footprints
5. 3 R Model of waste management
Long Answers
1. What are the environmental responsibilities of a business?
Discuss in detail considering the present business scenario
and pollution.
2. Discuss the significance of environmental business ethics
in detail.
3. Discuss Carbon Management Accounting. What is its role
in Environmental Business Ethics?

Chapter-9
Ethic in Functional Area: Marketing
Eth ic in F unct ional Ar ea:Mar keting
In this chapter, we will discuss the definition, nature,

and scope, identify issues concerned with ethical practices
in marketing which is a significant functional area of
business management.
According to World Fair Trade Organization,4 some
ethical practices or principles for fair trade or business are
like
Figure: Ethical Practices Suggested by World Fair Trade

Organization
1. Principle One: Creating Opportunities for Economically
Disadvantaged Producers
2. Principle Two: Transparency and Accountability
3. Principle Three: Fair Trading Practices
4. Principle Four: Fair Payment/ Fair Prices/ Fair Wages
5. Principle Five: Ensuring no Child Labour and Forced
Labour
6. Principle Six: Commitment to Non-Discrimination,
Gender Equity and Women’s Economic Empowerment,
and Freedom of Association
4. WHO WE ARE | World Fair Trade Organization (wfto.com)

7. Principle Seven: Ensuring Good Working Conditions
8. Principle Eight: Providing Capacity Building
9. Principle Nine: Promoting Fair Trade
10. Principle Ten: Respect for the Environment
In a business enterprise, marketing is a crucial
functional field that offers a visible interaction not only with
clients but also with other partners, such as the public,
investors, regulatory authorities, channel representatives,
trade organizations, and others.
Ethical marketing refers to the function of management
by which firms advertise their goods and services by
focusing not just on how consumers will be benefited from
the products, but also how the product will benefit society
as well.
Marketing professionals must understand that in
designing, promoting, and conducting efficient and
effective transactions that are part of the broader economy,
they not only represent their organizations but also function
as guardians of society.
Marketers should embrace the highest ethical practices
of marketing in this position and show their commitment to
stakeholders. It is therefore important that marketing ethics
should be perceived from the viewpoint of all the
stakeholders.
Defining the ethics in marketing
Ethics is a set of standards of right practices that form
the actions that persons or organizations make. Ethics is the
principle of human actions that encourages persons to
distinguish between good or evil, and right or wrong.
Practicing marketing ethics involves applying fair
principles, or moral rights and wrongs, purposely to
marketing strategy in the company. For advertisers,
Ethic in Functional Area: Marketing 93
workplace ethics refers to laws, norms and values that
control the actions of members of the organization.
Therefore, ethical marketing can be defined as
"practices that emphasize transparent, trustworthy, and
responsible personal and organizational marketing policies
and actions that exhibit integrity as well as fairness to
consumers and other stakeholders (Murphy, Laczniak,
Bowie and Klein, 2005)'.
The modern marketing concept defined by the
American Marketing Association (2004) states that
"marketing is an organizational function and a set of
processes for creating' communicating and delivering value
to customers and for managing customer relationships in
ways that benefit the organization and its stakeholders".
This principle stresses the importance of offering value and
the obligation of advertisers to be able to build positive
partnerships that offer incentives to all related stakeholders.
It can be said as the first marketing definition to provide
empathy with customers outside the company and clients.
Marketing ethics thus focuses on values and guidelines that
dictate appropriate marketing activity, as specified by
different stakeholders and the agency responsible for
marketing operations.
Many of the basic principles have been codified as laws
and regulations to help marketers conform to society's
expectations of conduct. But marketing ethics goes beyond
legal and regulatory issues. Ethical marketing practices and
principles are core building blocks in establishing trust,
which help build long-term marketing relationships.
Significance of Marketing Ethics
Because of shared values based on honesty, a good
conscience, and bias-free dealing, the relationship between
a client and an organization is established. One of the
biggest intangible assets of an organization is the image in
the market.
Reputation is not a characteristic or condition in the
organization's hands but rather resides in the common
minds of separate stakeholders of the organization. It is
linked in the minds of core stakeholders in the form of the
corporate logo, name, and mental connections. It is difficult
to measure the worth of a good reputation, but its
significance should not be dismissed.
The perception about brand reputation will be
influenced by a single unpleasant event suddenly and for
years afterward, impacting profits and consumer
relationships. Protecting the credibility of a company is also
a vital priority. One of the ways that companies can prevent
ethical lapses and corruption is to stick to the ethical
principles and policies of the organization.
In addition, clients create more favourable views
towards the business, its goods, and its services when an
entity operates ethically. The business mechanism becomes
less effective, sometimes even disrupted, if marketing
activities differ from norms that culture finds acceptable.
Failure to employ ethical marketing strategies can lead
to disappointed consumers, poor advertising, lack of
confidence, loss of revenue, or even legal action. Most
companies are also particularly receptive to their clients'
wishes and views and search at opportunities to protect
their long-term interests.
Both companies face major challenges from staff and
administrators every day due to professional violations and
criminal behaviour. Marketers also invent programs that
sound legitimate but are so ethically flawed that they lead
to controversies and legal issues. Overbilling customers,
dishonest strategies of sales, bribery, antitrust and price-
fixing are some of the dangers of marketing ethical abuses.
Organizations need to fix these challenges as quickly as
possible instead of denying, covering up, as if no one is ever
going to hear about the legal lapses. Organizations need to
formulate mechanisms and develop appropriate
infrastructure to discover, reveal, expose, and deal with
certain incidents as they arise.
It receives a lot of bad attention if these problems stay
unanswered or hit the threshold of civil action, which not
only destroys the brand's reputation but also draws the
company to extreme scrutiny.
Scope of Marketing Ethics
Marketing ethics requires not only an effort to make
rational choices but also to prevent the unforeseen results of
marketing operations. This needs significant stakeholders
and their related concerns to be addressed (Fry and
Polonsky, 2004). The major element in the effective
execution of marketing campaigns is the market orientation
(Homburg, Krohmer, and Workman, 2004).
Yet addressing the needs and expectations of all
stakeholders has not always been synonymous with a good
campaign plan (Miller and Lewis, 1991). There is increasing
awareness that companies must reflect not just on their
clients, but also on the substantial populations and
associations that keep the corporation responsible for their
actions.
A newly evolving marketing concept is that all social
and economic mechanisms exist, providing a network of
partnerships to provide all partners with expertise and
information (Vargo and Lusch, 2004).
Stakeholders recognize persons, associations who can
impact or be influenced directly or indirectly by the actions
of an organization (Freeman, 1984). Stakeholders in
marketing can be referred as both internal and external.
Different agencies, the board of directors, staff, and others
involved comprise internal stakeholders.
Competitors, advertisement firms, manufacturers,
authorities, and others, such as public interest
organizations, are outside stakeholders (Miller and Lewis,
1991). The different associations should be known, and their
desires should be acknowledged.
The challenge of evaluating the impact on all related
stakeholders of marketing transactions includes the
recognition of stakeholders in the trade process (Fry and
Polonsky, 2004).
There is a need for marketers to build more of a
stakeholder orientation rather than a limited consumer
orientation focused on these trends.
To consider and meet all stakeholder needs, stakeholder
orientation in marketing extends beyond markets, rivals,
and channel participants. As a result, businesses are already
under pressure to show policies that take a holistic view of
stakeholder priorities and their interest (Maignan, Ferrell,
and Ferrell, 2005).
Key Ethical Issues in Marketing:
If clients assume that they can get more benefit from a
product or service than they receive, marketing tactics are
misleading. When dealing with any aspect of the marketing
mix, deception, which may take the form of
misrepresentation, omission, or deceptive practice, may
occur.
If clients assume that they can get more benefit from a
product or service than they receive, marketing tactics are
misleading. When dealing with any aspect of the marketing
mix, deceit, which may take the form of misrepresentation,
omission, or deceptive practice, may occur.
Product-related concerns: Product related issues that
often affect the quality of the goods and services supplied.
Among the complaints most voiced are those regarding
dangerous goods, that are of the low building or material
quality, that do not have what is advertised, or that go out
of style or become outdated until they need to be replaced.
A company that markets bad or dangerous goods of low
quality is likely to develop a reputation for poor products
or services. In comparison, product statements or legal
action can be held in jeopardy.
However, often regular improvements in product
characteristics or results, such as those that sometimes
happens in the electronics industry, render previous
product models redundant. These updates may be
misinterpreted as expected obsolescence.
Figure: Ethical Issues in Marketing

Pricing Related Issues: Pricing strategies lead clients to
assume that in a good or service, the price they pay for any
unit of value is cheaper than it is. The deceit may take the
form of making inaccurate price estimates, giving
inaccurate implied sale rates, omitting substantial selling
criteria, or only making incredibly low-price discounts
available while other goods are already bought.
Promotion Related Issues: Promotion activities are
misleading where the salesman purposely misrepresents
how a product is built or works, fails to reveal pyramid
sales details.
It is often misleading to make the false or greatly
inflated product or service statements. That constitutes
misleading packaging if packets are purposely mislabelled
in terms of material, height, weight, or use of details. It is
often called fraud to market dangerous or faulty goods
without revealing the risks, not performing promised
services, and not meeting warranty obligations.
Distribution/Place Relevant Issues: In the distribution
process, ethical problems can also exist. Since the most
common way to measure marketing managers and sales
workers is sales results, there are performance pressures
that may lead to ethical dilemmas.
For instance, forcing vendors to purchase more than
they need and promoting products as temptations that
would result in higher commissions. It is therefore unethical
to exercise control to force vendors to limit the exhibitions
or display space of competitors or other malpractices like
not honoring delivery commitments etc.
Marketing Research Related Issues: For the effective
marketing of goods or services, knowledge obtained from
marketing research may be significant. However, customers
may perceive the attempts of organizations to collect data
from them as violating their privacy. Customers may feel
being targeted to gather their personal information.
Recently we observed that a popular web-based
application “Whatapp” asked to accept a policy so that they
could gather some of the personal information about the
users but maybe perceived that “Whatapp” is trying to
infringe their privacy. In such situation company was
compelled to come out and explain the situation that they
are not going to read their personal chats, but this policy
was just to gather some information related to business
accounts of the application.
Questions
1. Fairtrade
2. Unethical pricing
3. Unethical promotion
Long Answers
1. Discuss how ethics can play a significant role in the area
of Marketing.
2. What is the scope of marketing Ethics? Discuss in detail.
3. Examine various Ethical issues in Marketing.
References
1. American Marketing Association. "What Are The
Definitions of Marketing and marketing research?"
available at http://www.marketingpower.com/
content4620.php, accessed December 8, 2004.
2. Ferrell, O.C. 2004. "Business Ethics and Customer
Stakeholders." Academy of Management Executive, Vol.
18, No. 2, 126-129.
3. Ferrell, O.C. and L. Ferrell. 2005. "Ethics and Marketing
Education." Marketing Education Review.
4. Freeman, R.E. 1984. Strategic Management: A
Stakeholder Approach. Boston: ethical Managerial
Practices laPitman.
5. Fry, M. and M.J. Polonsky. 2004. "Examining the
Unintended Consequences of Marketing," Journal of
Business Research, Vol. 57, 1303-1306.
6. Homburg, C., H. Krohmer, and J.P. Workman. 2004. "A
Strategy Implementation Perspective of Market
Orientation, "Jouma/ofBusiness Research, Vol. 57, 1331-
1340.
7. Maignan, 1., O.C. Ferrell, and L. Ferrell. 2005. "A
Stakeholder Model for Implementing Social
Responsibility in Marketing." European Journal/ of
Marketing, forthcoming.
8. Maignan, 1., O.C. Ferrell, and L. Ferrell. 2004.
"Corporate Social Responsibility and Marketing: An
Integrative Framework." Journal of the Academy of
Marketing Science, 32 (1): 3-19.
9. Miller, R.L. and W.F. Lewis. 1991. "A Stakeholder
Approach to Marketing Management Using the Value
Exchange Models," European Journal of Marketing, vol.
25, No. 8, 55-68.

Chapter-10
Ethic in Functional Area: Finance
Eth ic in F unct ional Ar ea: Fin ance
The financial market has shown us numerous

investigations and news stories about professionals who
have defrauded clients, employers, and co-workers. Greed
is certainly a strong feeling, but often dishonest conduct is
exhibited because of a lack of knowledge of ethical
standards.
Ethics and finance are two different things. Finance at
the basic level is just about making profits, the means of
doing what truly does not matter. Regardless of how it is
created, appreciation from others depends on how much
profit is made by someone.
People in the finance industry are considered to be
inherently less responsible than those elsewhere. 'Within
this finance paradigm," Dobson observes, A rational agent
is essentially one that ad infinitum wants personal financial
advantage. In essence, it is to be individualistic,
materialistic, and aggressive to be rational in finance.
A company is a game played by people, as in all games
the goal is to win, and winning is calculated purely in terms
of material resources. To win in all the situation by hook or
crook sometimes leads people towards wrong directions
where people think about personal gain only. We cannot
blame everyone for the misconduct in financial sector but
due to the nature of work and involvement of money
people need to be more aware of following ethics during
their work.
The financial system, at its heart, is about trust. The
term credit is derived from the Latin wordcredere,' which
means 'to believe.' Billions and trillions of financial
transactions that take place every day are all founded on
trust. People working in the finance sector have a position
of trust because they must manage the hard-earned money
of the people. Apart from that employers of such employees
working in the financial sector trust them to perform all the
transactions carefully and correctly.
Their everyday business includes dealing for other
people's money or doing other activities that influence
public investment choices, and if they are unethical, their
customers and the public are at high risk of getting robbed.
The ethics in finance is narrowly limited to the
mathematical role of optimizing shareholder capital. Ethics
viewed from the stakeholder perspective is the opportunity
of the immediate and remote stakeholders as much as it is
the obligation of the firms towards them.
Ethical dilemmas and ethical violations in finance can
be attributed to an inconsistency. However, a section of
economists inspired by the capitalist philosophy perceived
the goal of economics to increase financial growth by
increased demand and production of goods and services.
Ideologic supporters claim that the release of financial
systems will guarantee economic prosperity through a
stable capital market environment that encourages high
levels of savings, consumption, wages, efficiency,
international capital inflows, and, as a result, welfare along
with corruption.
It was suggested by experts, that governments of
nations should open their financial markets to the world
Ethic in Functional Area: Finance 103
economy with the least control of the movement of money.
However, the guidelines were met with serious opposition
from different schools of ethical thought.
Significance of Ethics in Finance
Ethics are important because finances make people do
some strange things. Bookkeeping is a vital part of financial
practices. Various methods are used for bookkeeping one of
them is making a count with traditional methods or modern
methods. In modern methods, the account can be made
with the help of computers. The spreadsheet in Microsoft
Excel is commonly used everywhere to deal with financial
data. The spreadsheet does not have a conscience, and the
goal of working with spreadsheets is to make numbers add
up in a way that is pleasing to the organizations and its
constituents. Unfortunately, people Can manipulate the
data in spreadsheet for their personal gain or profit.
We have observed many cases where organization show
your balance sheet which looks fairly good to the
stakeholders and outside public but later, we found that
they manipulated the numbers in the balance sheet in
contrast to what was the actual situation.
Satyam scam was a good example to justify the
significance of ethics and finance. Satyam scam was about
corporate governance and fraudulent auditing practices
allegedly in connivance with auditors and chartered
accountants. The company misrepresented its accounts both
to its board, stock exchanges, regulators, investors, and all
other stakeholders. It was a fraud, which misled the market
and other stakeholders by lying about the company’s
financial health. Even basic facts such as revenues,
operating profits, interest liabilities, and cash balances were
grossly inflated to show the company in good health. In this
case then-chairman Ramalingam Rajuwere sentenced to 7
years Rigorous Imprisonment.
Figure: Satyam Scam Infographics5

Ethics plays an important role in finance and sources of
ethical behaviour in finance and accounting can be from the
following.
 Code of Conduct for Accountants and Auditors
 Code of Conduct for Merchant Bankers
 Code of Conduct for Insurance Agent
 Code of Conduct for Bankers
 Code of Conduct for Brokers and Members
 Code of Conduct for CFO
5. https://images.hindustantimes.com/Images/popup/2015/4/gfx_satyam3.jpg
Ethical Issues in Finance
Ethical issues in the financial sector impact everybody,
and even though one is not working in the field, maybe
affected as a customer as everyone has to deal with money.
Ethical problems often emerge, not because individuals are
immoral or greedy, but because the way they interpret the
situation is based on their ethical import.
There may be the following types of ethical issues in the
financial market.
Stock Market Malpractices
Many of the most prominent ethics breaches in finance
concern in stock dealing is stakeholder interest vs
stockholder interest. Generally, stockholder’s outsider for
the organization hey that is why they give preference to the
stakeholders of their businesses. There may be other ethical
issues in the stock market.
a. Insider Trading:
Insider trading is another significant ethical problem
that has been found in capital markets. It applies to the
trade of a company's shares in order to take advantage of
'inside' information about a company that is not available to
the open market. Such trade is inspired by the prospect of
generating exceptional profits with the aid of intelligence
that has not yet been made available.
b. Pump and Dump:
Many scammers are involved in "pump and dump"
scams, where they "pump" the public with inaccurate
details to inflate the stock. As stocks increase based on this
speculation, their stocks are then sold by selling the shares.
Investors who were trusting and buying into fake rumors
are left with stock of less valuation because of aggressive
selling of shares. Such practices are not only illegal but
immoral as well.
Figure: Pumping and Dumping strategy

c. Short Selling
Most investors have learned of a "buy low, sell high"
trading plan. However, to make a meaningful return on the
stock, this order can be reversed. Short sellers then sell at a
high premium and then buy back the shares at a cheaper
price.
d. Unethical behaviour of Brokers
Brokers are authorized people of any stock market who
sell and purchase the shares. Thus, their behaviour should
be of high integrity. Some behaviour of brokers will be
considered unethical like:
i. Insufficient explanation
ii. Discreet silence
iii. Not offering alternatives
iv. Misrepresentation
Issues in accounting
Accounting ethics is concerned with how to make good
and fair decisions in the planning, presentation, and
dissemination of financial reports. The following figure
shows there may be various unethical practices in
accounting.
Figure: Ethical issues in Accounting practices
If we talk about financial accounting, there may be the

following types of malpractices.
a. Fraudulent Financial Reporting
Many of the accounting controversies over the past two
decades have concentrated on false financial statements.
Fraudulent financial reporting is a misstatement of the
financial records by the administration of the company.
Although the benefits of false financial statements can
raise the company's stock price in the short term, there are
almost always negative effects in the long run. This short-
term emphasis is often referred to as "myopic financial
management”.
b. Misappropriation of Assets
At the individual employee level, the most prevalent
ethics problem of accounting is the misappropriation of
money. Misappropriation of funds is the utilization of
company properties for any reason other than business
interests. Misappropriation of assets, otherwise known as
fraud, can occur at almost any stage of the organization and
to almost any degree.
c. Disclosure Violations
While deliberately disclosing transactions in a way that
does not in the form of commonly agreed accounting rules
is known to be dishonest or fraudulent financial reporting,
failure to reveal facts to customers could affect their
opinions about investments in the business.
Window dressing
The whole idea of window dressing is dishonest
because it is deceptive. It robs the outcomes of the future to
make the present look better.
Window dressing is a strategy used by businesses and
accounting analysts to manipulate financial accounts and
records to show more positive outcomes over a period.
While window dressing is unlawful or fraudulent, it is
rather misleading and is typically done to mislead
investors.
Businesses in general and financial markets are full of
cases of loss of confidence and loyalty in both public and
private relations. Fraudulent financial dealings, power
peddling and collusion, non-maintaining traders and
consumer trading records, robbing customers of trading
income, illegal transfers, stock trading, manipulation of
customer funds for personal gain, mispricing, corruption,
and malpractices in banking are examples of ethical issues
in the financial market.
Code of Ethics in Finance
 Act with honesty and integrity avoiding conflicts of
interest in a personal and professional relationship.
 To provide information, which is full, accurate, fair,
objective, timely, and understandable.
 To promote ethical behaviour among other associates
 Respect the confidentiality of info acquired in course of
business except authorized.
 Adhere to and promote this Code of Ethics.
Questions
1. Insider trading
2. Pump and dump
3. Issues in accounting
4. Code of Ethics in Finance
Long Answers
1. Discuss how does ethics can play a significant role in the
area of Finance.
2. What is the scope of Financial Ethics? Discuss in detail.
3. Examine various Ethical issues in Financial practices.
4. What do you understand by window dressing? Give an
illustration to justify the answer.
5. References
6. 1. Bowie, Norman E. (1991). "Challenging the
Egoistic Paradigm."Business Ethics Quarterly.1-4.
7. 2. Bowie, Norman E., and Freeman, Edward R.,
eds. (1992). Ethics and Agency Theory: An
Introduction. New York: Oxford University Press.
8. 3. De George, Richard T. (1992) -"Agency
Theory and the Ethics of Agency. In Norman E.
Bowie and Edward R. Freeman, eds. Ethics and
Agency Theory: An Introduction. New York: Oxford
University Press.
9. 4. Dempsey, Mike. (1999). "An Agenda for
Window-Dressing or Radical Change?
http://panopticon.csustan.edu/cpa99/html/demps
y.html.
10. 5. Dobson, John. (1993). " The Role of Ethics in
Finance.'" Financial Analysis Journal November-
December: 57-61.
11. 6. Duska, Ronald R. (1992). "Why Be a Loyal
Agent? A Systematic Ethical Analysis: In Ethics and
Agency Theory: An Introduction. Norman E. Bowie
and Edward R' Freeman, eds., New York: Oxford
University Press.
12. 7. Dr. DuvvuriSubbarao, (Governor of the
Reserve Bank of India), Keynote address at the
Conference on "Ethics and the World of Finance',
organized by Sri SathyaSai University, Prasanthi
Nilayam, Andhra Pradesh, 28 August 2009.
13. 8. Nadler, Paul S. (1989). "Ethics and the Financial/
Community." Secured Lenders January-
February.http: //www.helium.com/items/1387999-
the-importance-of-financial-managementethics

Chapter-11
Ethic in Functional Area: Human
Resource Management
Eth ic in F unct ional Ar ea: Hum a nResour ce Ma nagem e nt
Human resource management is a management

function that ensures optimum utilization of human capital
present in the organization. Human Resources
Management is at the core of all the problems that impact
the capacity of the employee to function, thus leading to
overall organizational profitability.
Ethical dilemma in human resource management is
considered a complex issue that involves personal
professional and organizational consideration. any
organization which does not have concrete value-based
culture, ethics are side-lined during such type of dilemmas.
Human resource managers are responsible for
recruiting, selecting, orientation, performance assessment,
training and development, industrial relation, and health
and safety issues. They not only ensure greater use of the
workers within the organization but are also responsible for
developing a safe working community. Ethics as a set of
moral values is also one of the main issues of human
resource management.
Academics in business ethics have put a high emphasis
on workers and the working relationship. They concentrate
on workers' rights and the procedural fairness of hiring
practices. The nature of relationships between employees
and employers can vary greatly. On one hand, the
relationship can be casual for short period on another hand
This employee and employer relationship can be for a
longer tenure.
Traditionally, many businesses treated workers as a cost
center concerning business and sought to reduce costs by
strict labour arrangements and the provision of a bare
minimum of health and safety requirements. Ethical human
resource management takes the view that workers are far
from cost and are instead a specific value-added aspect to
company operations. They need to be respected and
handled with great care and consideration.
Ethical judgments lead to compliance with moral
principles or standards of behaviour. Defining appropriate
conduct is not straightforward. The challenge lies in
keeping a fair equilibrium between the common good and
personal rights, between the valid business interests of the
company, and the sense of integrity and worth of the
worker.
As an HR specialist, one may assume that choices and
actions are acceptable if nothing is done, but the final call is
not for the individual to make. Ethics is both a business and
a social issue, which may quickly be a legal and a criminal
issue as well.
Significance of Ethics in HRM
The rewards of ethical human resource management
include increased dedication on the part of workers, which
could lead to a decline in workforce turnover, prospects for
greater innovation as employees are respected and
increased Employee engagement.
Employee engagement leads to improved productivity,
creativity, and positive word-of-mouth publicity for the
company as an employer.
Ethical lapse or infringement on the part of the Human
Resources or Employees will result in tremendous losses for
the organization. Energy levels at work decline, rumors
Ethic in Functional Area: Human Resource Management 113
spread, absenteeism, turnover excels, consumers lose
confidence, and profits sink to the point of extinction.
Due to the nature of the position, the HR department
has more responsibility to work most ethically. HR people
need to make fast choices as to whether they can endorse
'what's right' or 'turn their backs.' In the decision-making
process, people typically get hurt economically, but we
cannot disregard the physical and psychological impacts.
Strong integrity and sound corporate legal decisions
build value. It is the people of the HR department who, on
their shoulders, have the position of ethical guardian and
monitor for today's business. They are the ones most
enthusiastic about helping and improving workers.
Key Ethical Issues in HRM
Ethics is a human-centric concept. The nature of Human
Resource Management is Human-centric as well. Thus, it
become crucial to be ethical while dealing with the human
resources. There are various issues in present business
scenario related to ethics in human resource management.
Figure: Ethical Issues in Human Resource Management

Cash and Compensation Plans
There are legal concerns relating to compensation,
executive perquisites, annual bonus programs, etc. The HR
manager is also under pressure to increase the base wage
band. There is intensified pressure on the HR department to
provide more benefits to the top management. Further legal
problems emerge in HR where long-term salary and
benefits programs are designed in conjunction with the
CEO or external consultant. When agreeing on payment,
there is an incentive to favour the interests of the top
management in contrast with those of other staff and
stakeholders. Another dilemma can occur when top
management asks to HR department to cut the labour cost.
Race, gender, and Disability (Discrimination)
In many companies until recently, workers have been
differentiated based on ethnicity, gender, origin, and
disability. Now there are various of regulation and the
administrative system that has standardized employee
conduct against each other. It has been observed that in
some organization’s employees are discriminated against
based on their nature of the job. In most the cases
discrimination is being done in an indirect manner where
discrimination doesn't look illegal but does not mean that
it's not immoral.
Employment Issues
Human resource professionals face huge dilemmas in
recruiting staff. One problem derives from the pressure to
recruit someone who has been recommended by a peer, a
family member, or a senior executive.
Another question occurs when managers have already
recruited someone, and he/she is later discovered to have
sent false documents of qualification. There may be two
cases, all of which are important. In the first example, the
individual was educated, trained, and the job was
important. In the second example, a person has been highly
regarded for his/her work within a short period, or he/she
has a special combination of skills with the right kind of
attitude. In both the conditions managers must decide that
should they let the person work or take any action against
him/her.
Performance Appraisal
Ethics should be the basis of performance evaluation.
Highly ethical performance management includes an
objective assessment of performance and action should be
taken to increase the productivity of workers.
However, HR managers often face the challenge of
awarding higher rates to workers who do not deserve them;
depending on certain irrelevant reasons, for example, the
proximity with top executives. However, some workers,
despite their outstanding results on the grounds of reasons
such as caste, faith or not being faithful to the appraiser, are
at low wages.
Safety and Health
factory and some industrial setups are hazardous to
work. now there are various rules and regulations which
ensure the proper safety of the workers. It is the ethical
responsibility of the managers to ensure the safety of
workers at the workplace. Legal and ethical dilemmas with
HR management emerge when the management refuses
justice to the victims or uses unsafe measures to get work
done.
Privacy Issues
Any person working for any agency is an entity and has
a personal side of his or her life that should be valued and
not messed with. The employee wants the company to
protect his/her personal life. This personal life can include
such things as his faith, political, and social values, etc.
However, such circumstances can occur where the
management mandates snooping activities. For example,
mail screening is one of the activities used to monitor the
activities of an individual who is suspected to be engaging
in activities that are not of greater value to the company.
Restructuring and layoffs
Restructuring an important step when an organization
does not perform well. restructuring job cuts which are not
unethical if it is practiced without any biasness. If the
restructuring company requires closing of the plant, the
process by which the plant is chosen, how the news is to be
communicated and the time frame for completing the
layoffs is ethically important.
Ethical Practices for HR Managers
It is the duty of HR practitioners to ensure that the
highest levels of ethical and personal behaviour are upheld.
They must urge their employers to make the equal and
egalitarian treatment of all workers a primary concern.
HR practitioners are committed to making their clients
successful in terms of monetary gain, as well as to fostering
effective employment strategies that can further promote
effective individual results.
They should give workers and the public a sense of faith
in the actions and motives of their employers.
They must be committed to their management and
follow their goals in ways that are compatible with the
public interest.
They should protect the classified information.
Overall, HR practitioners need to build a safe and
secure working climate. In most countries, there are basic
requirements that must be followed with respect to health
and welfare of workers. It is also possible to go above the
bare minimum and set up a health promotion policy for the
workplace. Along with this HR managers should ensure
that there is not any kind of discrimination in the
organization.
Questions
1. Ethical compensation plans
2. Discrimination at workplace
3. Safety issues at the workplace
4. Employee welfare and Business Ethics
Long Answers
area of Human Resource Management.
2. What is the scope of Ethical HRM? Discuss in detail.
3. Examine various Ethical issues in HR practices.
4. Does a decision to cut the cost of safety management to
decrease the cost of production so that organization
remains competitive is justified?

Chapter-12
Ethic in Functional Area: Information
Technology
Eth ic in F unct ional Ar ea:I nf or m at ion T echn olo gy
Businesses today are driven by technology. There is a

great rivalry in this sector and so, like most businesses or
business functions, ethics is also important here. Especially
when ethics itself is just a tool to construct and does not
know ethics or morality!
Every day, we have revolutionary goods and services
that declare their presence in the market and obsoletion of
outdated goods and services. It is this technology and
creativity that contributes to ethical problems if rivalry to
keep ahead of innovation is enormous. Issues such as data
manipulation, privacy abuse, data manipulation, and
surveillance at the workplace are common and important.
These are the practices which business adopt with the help
of information technology to manipulate the customers and
market.
In science, we are arguing about ethics in two contexts;
one is whether the speed of technical advancement
favours humankind; the other is seriously inspiring
individuals while choking others for the same. Another
Ethical problem with Technology is, it radically displaces
people at work.
In the first example, we are obligated to worry about the
speed at which technology is advancing. There are also
ramifications here, such as cyber protection or malware,
trojans, spam that violate people's privacy, or the fact that
technology encourages consumerism.
These days data is saved in computers and servers.
With the introduction of internet technologies, the planet
has been interconnected and data can be viewed directly by
Ethic in Functional Area: Information Technology 119
those who are otherwise unauthorized to do the same. It is
one of the drawbacks of creativity. People store their data in
servers in good faith, but some unethical hackers steal their
data from servers and use it for their own profit.
New goods are finding their way and leaving the old
ones out of date. Technological progress and innovation are
at the core of consumerism, which is bad for the economy
and the world in general. The latest economic crisis is an
especially strong example of this. Some argue that in this
process we make new devices which are advanced in
comparison to the older ones but due to this advancement
people dump older devices for newer ones. E-waste is a
problem that is closely related to this concept.
Increasingly, technical gadgets and devices contribute to
environmental destruction. Digital displays, keyboards, the
ink used in printers are some of the ways in which
electronics pollute the environment. They all contain toxins
that cannot be quickly decomposed.
The interaction between technology and machines is
another central topic in technology that brings ethics to
bear. Most scientists claim that the earth will come to an
end with a battle between humans and technology.
Software, they claim, would pass beyond the reach of those
who have made it.
There is no question that automation has displaced
workers at work and made some others obsolete. On the
other side, several people were brought to strength, while
others were seriously handicapped. This is particularly true
in third-world countries. New industrial systems
outsourced, either eliminating or abusing the workers in the
name of jobs, by making them cheaper.
Technology has also made inroads into the field of
medicine and life care. New cloning techniques, genetic
modifications, or other lifesaving drugs need continuous
monitoring and surveillance. Bioethics has thus emerged as
ethics in the field of medical technology.
Whereas we cannot talk of controlling technology and
innovation, the better way is to adapt and change. The role
of ethics in technology is of managing rather than
controlling the same. Continuous monitoring is required to
keep track of the latest innovations and technological
changes and for ensuring fair practices.
Ethical issues in the field of Information Technology
In the field of information technology, there may be four
areas where ethical issues may arise.
1. Privacy
2. Accuracy
3. Intellectual property
4. Access
Figure: Ethical Issues in the field of Information

Technology
Privacy
These days data is considered as valuable as any other
precious asset for organizations. Value of data is
determined based on how sensitive and significant
information it gives to the users of the data.
In the era of smartphones, most of us store our data on
various servers knowingly or unknowingly. Sometimes,
consent is taken from the customers and sometimes data is
collected anonymously. These practices give rise to ethical
issues.
Unethical hacking is another major concern for
customers of the services where they must provide their
data to the service providers. If hackers get access to the
data of customers, they sell it to some other rival of the
organization or to people who are involved in some illegal
activities.
Human beings respect their dignity and the security of
their sphere of life. They enjoy some sort of influence over
who knows what about them. They definitely may not want
their confidential details to be available to anyone at any
moment.
However, new developments in information
technologies have compromised privacy and limited the
amount of monitoring of sensitive data, and opened up the
possibility of a multitude of harmful effects as a result of
access to personal data.
Accuracy
These issues are involved with the authenticity, fidelity,
and accuracy of the information that is collected and
processed. Accuracy is the legitimacy, and authenticity for
which information is presented. In consideration of the
extensive availability of information on persons and
organizations used in information systems, careful
precautions must be taken to avoid mistakes.
Difficult questions remain as incorrect knowledge is
exchanged between computer systems (Ellis and Griffith,
2001). According to (Straub and Nance, 1990), legal
responsibility is linked to knowledge, some questions may
arise.
Who is to be made responsible for the mistakes?
What group is responsible for inaccurate or incorrect
knowledge leading to the destruction of another?
Thus, not presenting accurate information of hiding the
errors at unethical practice in the field of Information
technology.
Property
Property issues involve the ownership and value of the
information. One of the fields that have had a profound
impact on emerging technology is the domain of intellectual
property. Digital developments have contributed to a spike
in new intellectual property lawsuits which have made it
even more difficult to protect intellectual property.
Intellectual property is characterized as "property (as an
idea, an invention or a process) derived from the work of
the mind or the intellect." This may include works such as
song lyrics, a computer program, or even a sculpture.
Intellectual property rules are written to secure
intellectual properties. In other words, simply coming up
with a song in your mind is not safe, so it can be protected if
you write it down.
Intellectual property rights are vital because it offers
people an opportunity to be innovative. Innovators with
brilliant ideas would be more likely to follow their ideas if
they think that they and others will be benefited from the
ideas.
Intellectual theft is a major ethical concern for people
who work hard to create something new. People don’t even
think about the theft of intellectual property when they just
download any movie or song from the internet.
Accessibility
Accessibility concerns revolve around who should have
access to information and whether they should have to pay
for that access. Accessibility concerns the right or privilege
to obtain data or information from another source. What
details does one have the freedom to access from
government or company entity data systems? What data or
information does an organization own? The idea of access is
overly broad and general today. The term has evolved with
its meaning. Access meant being connected to the World
Wide Web.
Protecting Privacy Codes and Policies
An organization’s guidelines concerning protecting the
privacy of customers, clients, and employees can be as
follows.
Opt-out model.
The model of informed consent permits the company to
collect personal information until the customer specifically
requests that the data not be collected.
Opt-in model
Under this model, consent means that organizations are
prohibited from collecting any personal information unless
the customer specifically authorizes it.
International Aspects of Privacy
Privacy issues that international organizations and
governments face when information covers countries and
jurisdictions. Data collected from any geographical area
should be stored in that region only. This concept is also
known as data localization.
Apart from the experts should find out the ways to trace
and detect the theft of intellectual property. The
government should make more strict rules to deal with
such types of thefts.
Questions
1. Digitalization and privacy issues
2. Intellectual property
3. Access Issues
Long Answers
area of Human Resource Management.
2. What is the scope of Ethics in Information Technology
being used in business? Discuss in detail.
3. Examine various Ethical issues in HR practices.
4. Discuss Code of Ethics to protect the privacy of
customers.

Chapter-13
Corruption and Ethics
Cor r upti on a n dEt hics
Corruption is characterized as private entities or

enterprises that exploit public services for private influence
and/or political advantage. They do so by abusing elected
authorities whose actions vary from the formal codes of
ethics of the country.
Transparency International (the global coalition against
corruption) defines corruption as, “the abuse of entrusted
power for private gain”.
Ethics and Corruption
Our new view of corporate ethics points out that
upholding culturally recognized principles is not
necessarily an acceptable decision. What may be acceptable
at sometimes of history, such as bigotry or misogyny, has
been intolerable with the continued growth of humanity.
Figure: Corruption Perceptions Index, 20196 (Source:

Transparency International)
6. 2019 - CPI - Transparency.org

The problem occurs when we observe that culture is
being shifted but the business practices do not. Such type of
behaviour might be acceptable sometimes in history but in
current situation behaviour is considered immoral and
unethical. Such as gift-giving, which has developed into
bribery—a type of corruption.
According to analysts and businesspeople, the global
Corruption Perceptions Index (CPI) lists countries and
regions according to their alleged rate of public sector
corruption. Launched in 1995, and with equivalent data
back in 2012, the CPI has been generally credited with
putting corruption on the foreign policy agenda. Following
figure shows that the countries where there is more poverty
are more indulgent in bribery in comparison to richer
countries. This behaviour shows hey that people get to
indulge in unethical activities like corruption when they
come from who are economic backgrounds and get power
and authority eventually. In such circumstances they try to
exploit their position for their own good.
Figure: Best and worst nation for corruption CPI, 20197

(Source: Transparency International)
7. 2019 - CPI - Transparency.org

Corruption and Ethics 127
Paying bribes is relatively common in many countries,
and bribery mostly takes the form of grease fees, which are
minor rewards meant to expedite decisions and
transactions. In our country, for example, paying for grease
will help get the get services faster—at home or work.
Transparency International monitors illegal conduct,
such as bribery and misappropriation, in the public sector
in 180 countries by surveying international companies
specializing in the public sector. The Corruption
Perceptions Index (CPI) rating is given to each region.
New Zealand, Denmark, Singapore, Finland, and
Sweden have the lowest levels of corruption, while the
highest levels of corruption are seen in most African
nations, Venezuela, Yemen, Syria, South Sudan, Somalia.
In India, some famous corruption cases are Bofors
Scandal, the Coalgate Scam, Telgi Scam, 2 G Spectrum
Scam, Satyam Computer Scandal, Commonwealth Games
Scandal, Punjab National Bank Scam.
Ethics and corruption
Views on corruption areal most negative among people.
Many of us believe that as consumerism is increasing,
corruption is increasing as well. Professor Bibek Debroy
and LaveeshBhandari say in their book Corruption in India:
DNA and RNA that public officials in India could be
cornering as much as 921 billion (USD 13 billion) or 5% of
GDP by corruption.
A study conducted between 2004 and 2005 showed that
India's driver licensing procedure was a heavily skewed
bureaucratic mechanism and provide a license to drivers
despite their poor driving skill by encouraging the use of
agents.8
In government hospitals, corruption be the non-
availability/duplication of drugs, admissions,
appointments with physicians and access to diagnostic
facilities.
There have been many instances of collusion involving
officials of the Income Tax Department of India for
preferential tax treatment and relaxed prosecution in return
for bribery.
These are just a few examples of the case of corruption.
Though we cannot blame each one for such kind of
misconduct, such few cases shatter the trust of the common
public. Poorer people are twice as likely to pay bribes for
basic services, such as education, than wealthier people.
Gift giving in the world of global business is used to
build or pay respects to a partnership. Bribery, on the other
hand, is more generally regarded as a process in which a
person will get profit and the organization will be left with
little to no benefit. It is typically paid concerning winning a
business contract. Offering a gift is more likely to be rooted
in tradition and not associated with winning a single piece
of business. But these days many are adopting this practice
to give and take a bribe.
Bribery, typically in the form of a cash bribe, has
reached such a high proportion in some countries that even
locals show their disgust at corruption as effects on the
everyday lives of businessmen and citizens.
The trend of using connections to promote commercial
interests continues in every country in the world. However,
8. Bertrand, Marianne et al. Obtaining a Driver's License in India: An

Experimental Approach to Studying Corruption, The Quarterly Journal of
Economics (Nov 2007, No. 122,4)
the degree and way it is institutionalized vary from culture
to culture.
In western countries, relations are perceived informally
and often also with derogatory connotations. In the United
States and other related nations, professionals tend to say
that they have gained success on their own merits and
without any connections.
Gift giving is not routine in the many countries even
during the special festivals, even then, giving a gift is a
humble gesture. Businesses based in some countries give
modest gifts or cards to their clients to thank them for their
business support. Some sectors have set specific legal rules
that cap the worth of gifts, for example, gift up to a cap of
500.
On the other hand, the societies of Asia, Latin America
and the Middle East appreciate connections and gift given
by others. Connections are known to be necessary for
performance. In Asia, gift giving is so profoundly rooted in
culture, especially in Japan and China, that it is formalized
and organized.
Giving gifts in Japan has been an established tradition in
society for centuries and is still taken seriously. Unique
rules for giving gifts depend on the name of the giver or
receiver, the length of the business arrangement and the
amount of gifts exchanged. The Japanese can offer gifts for
business as well as express feelings such as gratitude and
regret. Great consideration is thus taken both to the
appropriateness of the gift and to its aesthetic beauty.
There are still institutional gift-giving occasions in Japan
today, especially oseibo (year-end) and ochugen
(midsummer). On these occasions it is must for Japanese
companies to give gift to their client. In the first half of
December, Oseibo's presents are presented as a gesture of
thanks for previous favours and loyalty. This is a good
opportunity to thank clients for their business. Ochugen
typically happens in Tokyo in mid-July and several other
regions in mid-August. Originally it is an occasion to give
condolences to the relatives of those who died in the first
half of the year, Ochugen came two weeks before Obon, a
holiday to remember the deceased.
Businesses operating in Japan at these times routinely
exchange oseibo and ochugen gifts.
Despite many guidelines and code of conduct, gift
giving in Japan has rarely gone over to bribery. This level of
corruption became more evident in the 1980s as
transparency was perceived as standard practice in
international business.
Asians tend to have a somewhat different definition of
transparency than most Westerners do. In the 1980s and
1990s, many Japanese CEOs quit to apologize and assume
responsibility for the actions of their businesses, even
though they did not directly participate in offending
activities.
In an attempt to protect the company's honour, this has
been an established management procedure. Although
Japanese CEOs do not step down as easily as in the past, the
principle of honour remains a significant business element.
This something like old Seppuku tradition where General of
defeated army used to kill themselves to save them form
shame.
Over the last two decades, several countries have
imposed restrictions on the forms and value of gifts while at
the same time restricting bribery in any way whatsoever. In
the United States, businesses are required to comply with
the Foreign Corrupt Practices Act, a federal law that
expressly forbids any form of bribery.
This act is applicable even to transactions with foreign
companies that are either listed on an American stock
exchange or conduct business with the U.S. government.
In India, there is similar legislation names as Prevention
of Corruption Act, 1988, which was passed by the
Parliament of India to combat corruption in government
agencies and public sector business in India.
There are still multinational companies involved in
questionable corporate gift giving; they face penalties and
punishments when caught. Yet for the most part,
companies are already doing business as usual by using
gifts to bribe. Changing the cultural traditions of offering
gifts is an ongoing task that will require time, political
consideration, and more accountability in the awarding of
multinational business contracts.
Companies and their managers routinely attempt to
align ethical norms with corporate goals. Although
corruption is now commonly regarded as immoral,
companies sometimes lose business to firms who might not
be following this ethical concept.
Although the media publish reports about businesses
who have broken this ethical conduct, the corruption of
several other corporations lies undetected. Educational
institutes and policymakers are gradually making attempts
to prevent companies and experts from making and
accepting bribes. There are still countless overt gestures, out
of which some would argue are nevertheless unethical. For
example, one person is about to get an order form a
purchase officer of an organization. This officer gets to
know that this person’s cousin is Income Tax Officer. Now
this purchase officer wants from this person to pursue this
cousin to ask for a favour form that Income Tax officer to
get the contract. In such condition these kinds of favours are
not less than bribes and may fall under the definition of
corruption. This is a Gray area of global business ethics.
Interestingly, the professional's reaction to this
circumstance can depend on his or her culture. Cultures
that have specific rules for right and wrong conduct may
see this case differently from a culture in which favours are
part of common procedure.
An organization may declare above, unethical conduct,
but workers may still do what they believe is best for their
work. Cultures that have a higher tolerance for complexity,
can find it easier to negotiate the Gray areas of ethics—
when they are not so obvious.
Most people believe that bribery in some way only
raises the cost of doing business—costs that are either borne
by the corporation or ultimately passed on to the purchaser
or the user in some form.
Ways to deal with corruption
Though it is hard to deal with corruption and bribery
there may be some ways to stop the corruption.
First step towards this process is to understand the
conflict of interest. Every member should know about the
conflict of interest. Its not enough to just know about the
conflict of interest. These should be proper way to resolve
the conflict of interest if it arises.
Political parties take funds form people and
organizations. It is an ethical way to run a political party as
these organization do not have any other source of income.
But it is alleged that political parties extort for these
political funds. Apart of this issue many businessmen give
huge funds to these party and in return as for illicit favours.
Thus, there should be strict control over such political
funding.
Electoral integrity refers to international standards and
global norms governing the appropriate conduct of
elections. This concept is again related to politics and
corruption. Business cannot ignore politics as it is
significant part of external environment of any business. If
there will be strict control over electoral integrity
candidates with good character will be our leaders. If top
leadership remains corruption free, there will be fair
chances that citizens will not be corrupt as well.
Another way is to regulate the lobbying practices which
establish connections between people. As we have
discussed that taking favour is a form of bribe or
corruption. Such lobbying induces favouritism or
preferential treatment. Citizen should be made aware about
the ethical behaviour, corruption, and its long-term
consequences. Huge penalties and fear of imprisonment can
reinforce check and balances in fair business practices.
Figure: Ways to deal with corruption

Tata group is known for its dedication to follow ethics
and best practices. The policy of this group is known as
Tata code of Conduct (TCOC). Following illustration shows
the policies of the group against corruption and accepting
gifts.
Figure: Corporate Policies on Gifts, Bribery, and

Corruption (Source: Tata Motors)
Questions
1. Corruption perception index
2. Transparency International Organization
3. Bribery
4. Gifts and ethical issues
Long Answers
1. Define Corruption. Discuss various ethical issues that
arise due to corruption.
2. Discuss how does corruption harm a business in the long
run.
3. Suggest various ways to deal with corruption in business.
4. Examine whether the gift can be considered as a bribe
considering various cultural aspects.

Chapter-14
Gender Issues: Gender Ethics,
Harassment and Discrimination
Gen der I ssues:Gen der Eth ics, Har assm ent…
Today we live in a patriarchal society and observe that

pay equity between men and women persists with women
earning less than men. This often happens in blue-collar or
top-level jobs. Gender inequality can be much more
troublesome as old prejudices still remain and women are
judged by a set of criteria distinct from men. More women
have recently advanced up the ladder, but the glass ceiling
also prohibits them from accessing the jobs such as Chief
Financial Officer and Chief Executive Officer.
Caryl Rivers, co-author of a recent book on gender bias
entitled The Latest Soft War on Women, identifies 13
hidden aspects in which women are already viewed
unfairly at work. The list contains many that demonstrate
sexism in determining the value of women in the
workplace, including:
 Women are more likely to get lower initial offers,
 Women are less likely to get credit in group project,
 When women show anger, they are often judged as too
emotional,
 If women are assertive, it can be seen as aggressive,
 When women are successful, people do not stomach it
easily,
 Women are often interrupted or ignored at meetings.
Such type of practices falls under the category of
indirect discrimination according to International Labour
Organization. Supervisors and executive managers who
have separate expectations for men and women run the risk
of utilizing 50% of the available workforce.
Gender Issues: Gender Ethics, Harassment… 137
Gender inequality affects both women and men and has
a direct influence on their everyday lives. Historically,
gender equity policies have been largely contextualized as a
"women's issue" – as women have been the motivating force
behind gender equality campaigns and challenges.
The White Ribbon Campaign is the largest campaign in
the world to include men in the fight against violence
against women. Men wearing a white ribbon say they will
never participate, tolerate or stay quiet on abuse against
women. They also pledge to raise issue of violence against
women and to work within all means possible to end it.
This shows that regardless the gender many people want to
end such type of gender based discrimination.
Gender Ethics
According to Merriam Webster's Dictionary of Ethics,
"discipline dealing with good and evil and moral duty" is a
useful but not satisfactory concept by nature. The challenge
is that the boundary of ethics and its meanings may differ
from time to time. According to Meint (2014), the codes of
ethics are usually not black or white, but rather grey.
Furthermore, according to De Jager (2002), ethics are
difficult to describe since they can be analyzed from more
than one perspective. Moreover, the problem with the
moral review is that it makes everyone into a judge and a
jury, each believes what is nice or awful behavior-according
to their point of view to life.
An ethical practice at workplace should be bias-free and
non-discriminant between male and female employees. It is
also be kept in mind that no one should be harassed while
performing his or her duty to help the organization achieve
its objectives.
Gender Discrimination
It is reported that women who have a child are less
likely to be hired, and even if they are selected, they are
offered less when compared to childless women or men.
People have a prejudgment that especially mothers are
inclined to be less dedicated. Beemer (2016) points out that
federal laws are responsible for protecting women from
unequal payment in the workplace. However, it is reported
that women only retain 2/3 of what their male co-workers
make in insurance, retail, and real estate business.
This is shocking because sales marketing is considered a
classic field in which success depends on talent and results
rather than the political relationship in the workplace.
Women are less likely to get amenities or help from
supporting staff, which deters them from performing better.
(Madden, as cited in Harvard Business Review, n.a., 2013).
Another study shows that important responsibilities are
usually appointed to men instead of women for no other
apparent reason than gender, and men control bigger
budgets and more staff when compared to women (Silva, as
cited in Harvard Business Review, n.a., 2013).
Women are seen as vulnerable and helpless by default
in the workplace by their managers. Hence, they receive
less criticism than their male co-workers even they get more
positive reinforcement.
There is a strong possibility that managers have lower
expectations from women employees because of their
genders (King, as cited in Harvard Business Review, n.a.,
2013). Recent research has revealed that these types of
unethical behaviour have a detrimental effect on female
retention rates (Stone, as cited in Harvard Business Review,
n.a., 2013). It has been recently revealed that if a woman
quits her job that it is probably connected with workplace
problems.
Harassment
Harassment is usually any inappropriate, disrespectful,
or biased behaviour in the workplace that no person should
have to experience. Such behaviour must not establish an
unpleasant, disruptive, aggressive, or hostile working
atmosphere for either the victim who is the object of the
unwanted conduct or the staff who are witnessing it.
Harassment may also be seen as a repetitive or
persistent behaviour that is unwelcomed by the victim and
that the subject knows (or should know) is irritating or
insulting.
Sexual harassment at workplace is inappropriate
activity of a sexual nature that denies or restricts the right of
the harassed to engage in or profit from the programs of the
institution.
Sexual harassment at work is an inappropriate
behaviour that impacts a person's work on the basis of
gender. These involve unwanted advances, demands for
sexual desires, and other verbal or physical behaviour of a
sexual nature.
There may be various types of misconduct concerned
with sexual harassment at workplace like,
 Unwelcome touching, hugging.
 Using sexually explicit pictures, screen savers or posters.
 Unwanted invitations to go out.
 Intrusive questions about an employee
 Sending sexually explicit emails or SMS messages
 Behaviour which would also be an offense under the
criminal law, such as physical assault, indecent exposure,
sexual assault, stalking etc.
 Telling sexual or dirty jokes.
 Sabotaging the victim’s work
 Asking for immoral favours
There are some behaviour which cannot be considered
as harassment like
a. There is a broad variety of contradictory actions that can
offend others, but not necessarily others. In this type,
remarks on clothes, compliment on enhanced looks, and
even jokes that most people find fair.
b. A bad performance report should not be viewed as
harassment, particularly if the harassed is the opposite
gender. However, such input should be given in a fair and
corrective manner and should not be used as a means of
retaliation.
c. In the context of the workplace, the heads of
departments/units have a duty to make the tough
decisions that include moving staff or adjusting job
assignments. Such decisions should not be seen as
constituting abuse.
Following illustration shows that how organizations are
concerned about harassment at workplace. Many
organizations provide clear policies to control any kind of
unethical behaviour related to discrimination and
harassment.
If any employee is accused of such kind of behaviour,
must face internal inquiry where he or she gets the
opportunity to defend him or herself. In case accused is
found guilty many consequences may take place like,
demotion, transfer, or termination according to severity of
the issue.
Figure: Corporate Policies on Discrimination and

Harassment (Source: Tata Motors)
Questions
1. Gender ethics
2. Discrimination
3. Hostile working conditions
4. Biasness
Long Answers
1. What do you understand by gender discrimination?
Discuss in detail.
2. Discuss harassment at the workplace. What can be
various measures to deal with the harassment at the
workplace.

Chapter-15
Case Studies
Case St udi es
Case Study No. 1

Indian culture is unique. It believes in universalism. For
an Indian the whole world is a family of his own. Our
culture asks us to behave with others as we behave with our
family members. Our culture has love and respect for all
cultures Learning, here, starts from birth and continues till
death. We are always open to learn from others. Our values
of tolerance and learning from others have insulated our
culture intact. The institution of Indian family is also
unparallel Family is formed based on sacrifice. Normally,
father is an earning member and mother is to manage the
family expenditure with that earning. Father and mother
sacrifice their all comforts for growth and development of
their children. In poor families, parents may remain hungry
and make all-out effort to properly real their children.
When parents become old, their sons and daughters must
take their care as they had done in their childhood. Parents
are treated as deities and are virtually worshipped by their
sons, daughters in law as also by their grandsons and
granddaughters. With most women taking up outside jobs,
the parents look after their grandsons and granddaughters.
Parents are to be obeyed always. If someone disobeys his
parents, he is likely to be expelled from the community and
the close relatives.
Dr. Mishra is working as a in charge Medical Officer at a
Primary Health Centre situated at a block of Unnao district.
He is in UPPMS and holds a degree of MD in Medicine. He
has inherited a grand house from his father who died four
years back. His mother is alive. Dr. Mishra is a married man
and has his wife and two children. His house is. located in a
private colony of Lucknow city. The colony is occupied by
middle class people belonging to different castes,
communities, religions, and states despite all variations,
people meet together on various festivals. Dr. Mishra being
a good physician keeps himself available for people of the
colony round the clock. He has earned a good name as a
doctor.
When people live together, at occasions, they happen to
have infighting also. It was four years back that some
neighbour of Dr. Mishra had a fight with his father
subsequently, his father died, and his mother attributed
cause the death to that quarrel. From that time on ward,
there was no relationship between the two families, even
they stopped speaking to each other. Thereafter, Dr.
Mishra's mother asked him not to attend to any medical
emergency of that family to which Dr. Mishra gave his
acceptance.
It was around 2.30 a.m. in December 2009 when a phone
call from that family came to Dr. Mishra that one member
of their family has suddenly become unconscious and that
no doctor is becoming available and that he is requested to
kindly attend to the patient. His mother, wife and children
make up and he informed about the phone call. His mother
demanded that he should not go there at any cost. Dr.
Mishra took his car out and went to attend the patient
disobeying his mother's instructions. Not only this, when
the patient showed no improvement, he took him to
medical university and returned from the university at
about 10.00 a.m. His mother got angry and did not touch
food for one day in protest. Dr. Mishra became late for his
own duty.
Questions
1. What are the characteristics of Indian culture as given in this
case of which of them can be integrated in modern business?
Case Studies 145
2. Was Dr. Mishra's mother right in not allowing his son to
attend patient? Give your agreement or disagreement with
justification.
Case Study No. 2
ITC Limited is one of leading companies of India. ITC
ensures that its corporate system should be managed to
meet shareholder’s aspirations and social expectations. Its
corporate governance model is based on two core principles
i.e., the management should have executive freedom to
ensure growth of the company and that freedom should be
based on effective accountability. To implement this policy
ITC adopted the policy of trusteeship, transparency,
empowerment, and accountability. The company believes
that the practice of such adaptation lead to the right
corporate culture.
The structure of the company carries out the task of
strategic supervision as trustee of shareholders in a manner
that impart objectivity and services accountability from the
management. The Board of Director of the company has
constituted five committees of the board for audit, the
compensation, the investor service, the nomination, and
safety committee. ITC's remuneration policy is based on
attaining and retaining high calibre talent. There was
investor grievance committee to redress the problems of
shareholder, investors etc. The nomination committee is
primarily concerned with making recommendations to the
board regarding top level succession and appointments.
The legal and safety committee ensures compliance with
statutory requirements and safety standards. It compares
with four non-executive directors.
By possessing such structure ITC's corporate
governance policy reinforce and realize the company's
belief in ethical corporate citizenship both within the
organization as well as in external relationship.
Questions
1. How has ITC evolved it ethical policy of corporate
governance?
2. What are the ways in which organizations can ensure
objectivity and accountability in their functioning?
3. Has ITC been able to meet the expectations of all its
stakeholders through its corporate governance policy?
Case Study No. 3
ITC Limited is one of leading companies of India. ITC
ensures that its corporate system should be managed to
meet shareholder’s aspirations and social expectations. Its
corporate governance model is based on two core principles
i.e., the management should have executive freedom to
ensure growth of the company and that freedom should be
based on effective accountability. To implement this policy
ITC adopted the policy of trusteeship, transparency,
empowerment, and accountability. The company believes
that the practice of such adaptation lead to the right
corporate culture.
The structure of the company carries out the task of
strategic supervision as trustee of shareholders in a manner
that impart objectivity and services accountability from the
management. The Board of Director of the company has
constituted five committees of the board for audit, the
compensation, the investor service, the nomination, and
safety committee. ITC's remuneration policy is based on
attaining and retaining high calibre talent. There was
investor grievance committee to redress the problems of
shareholder, investors etc. The nomination committee is
primarily concerned with making recommendations to the
board regarding top level succession and appointments.
The legal and safety committee ensures compliance with
Case Studies 147
statutory requirements and safety standards. It compares
with four non-executive directors.
By possessing such structure ITC's corporate
governance policy reinforce and realize the company's
belief in ethical corporate citizenship both within the
organization as well as in external relationship.
Questions
1. How has ITC evolved it ethical policy of corporate
governance?
2. What are the ways in which organizations can ensure
objectivity and accountability in their functioning?
3. Has ITC been able to meet the expectations of all its
stakeholders through its corporate governance policy?
Case Study 4
The Bhopal Gas Tragedy is the world's worst industrial
catastrophe occurred on the night of December 2-3, 1984 at
the Union Carbide India Limited (UCIL) pesticide plant in
Bhopal, India. UCIL was the Indian subsidiary of Union
Carbide Corporation. In 1994, Supreme Court of India
allowed UCC the sale of 50.9 percent of its assets in India.
The Bhopal plant was sold to McLeod Russel (India) Ltd.
Union Carbide Corporation (UCC), is now a subsidiary of
Dow Chemical Company. Around midnight on December
2-3, 1984, there was a leak of methyl isocyanate (MIC) gas
and other substances from the plant, resulting in the
exposure of several thousands of people. Over two decades
since the tragedy, certain civil and criminal cases remain
pending in the United States District Court, Manhattan and
the District Court of Bhopal, India, against Union Carbide
with an Indian arrest warrant also pending against Warren
Anderson, CEO of Union Carbide at the time of the disaster.
Greenpeace asserts that as the Union Carbide CEO,
Anderson knew about a 1982 safety audit of the company's
identical plant in the US. In June 2010, seven ex-employees,
including the former chairman of UCIL, were convicted in
Bhopal of causing death by negligence and sentenced to
two years imprisonment and a fine of about $2000 each, the
maximum punishment allowed by law.
The Chairman and CEO of Union Carbide, Warren
Anderson, had been arrested and released on bail by the
Madhya Pradesh Police in Bhopal on December 7, 1984. The
arrest, which took place at the airport, assured Anderson
would meet no harm by the Bhopal community. Anderson
was taken to Union Carbide's house after which he was
released six hours later on $2100 bail and flown out on a
government plane. It is claimed by the then Deputy Chief of
Mission of the US embassy in New Delhi, that
communications between the Government of India and
himself relating to the release of Warren Anderson to return
to the US went through the erstwhile foreign secretary. The
Dow Chemical Company purchased Union Carbide in 2001
for $10.3 billion in stock and debt. Dow has publicly stated
several times that the Union Carbide settlement payments
have already fulfilled Dow's financial responsibility for the
disaster. However, Dow did not purchase UCC's Indian
subsidiary, Union Carbide India. That was sold in 1994 and
renamed Eveready Industries India Limited. The
acquisition has gained criticism from the International
Campaign for Justice in Bhopal, as it is apparently contrary
to established merger law in that Dow denies any
responsibility for Carbide's Bhopal liabilities. According to
the Bhopal Medical Appeal, Carbide remains liable for the
environmental devastation as environmental damage was
not included in the 1989 settlement, despite ongoing
contamination issues. In August 2010 one of the assistants
of Barak Obama mailed Montek Singh Ahluwalia, the
Deputy Chairman of Planning Commission to go slow on
Case Studies 149
Dow chemical case if India wants US help to get World
Bank Loan. Lack of political willpower has led to a
stalemate on the issue of cleaning up the plant and its
environs of hundreds of tons of toxic waste, which has been
left untouched. Environmentalists have warned that the
waste is a potential minefield in the heart of the city, and
the resulting contamination may lead to decades of slow
poisoning, and diseases affecting the nervous system, liver,
and kidneys in humans.
Questions
1. Can Warren Anderson's behaviour be called as socially
responsible?
2. What were his responsibilities towards the society as a CEO?
Case Study 5
Anna is the office manager for a Grocery Distribution
warehouse in Ft. Myers, Fla. Anna’s facility is part of a large
Atlanta-based conglomerate that wholesales and distributes
gourmet specialty food products throughout the
southeaster United States. Anna’s been at Grocery
Distribution for four years, starting as an
administrative assistant in the sales department. She
was promoted to office manager 18 months ago and reports
directly to the district manager, Justin. Anna likes her job.
She enjoys her co-workers and hopes to make a long-term
career at Grocery Distribution. As a single parent of two
young daughters, she was delighted with the salary
increase that came with her promotion. Justin is a new
district manager for the Ft. Myers facility. He has made
some changes in the structure of the organization, which,
for the most part, have been well received by the staff.
Janet is the receptionist. She works at the front desk,
greeting visitors, scheduling appointments, and taking care
of the mail. Anna is Janet’s supervisor. Janet recently went
through a difficult divorce, and now that she lives alone,
Anna knows that Janet struggles to make ends meet on her
receptionist’s salary. Outside of work, Janet is active in
community theatre. At Janet’s most recent opening night,
Anna and several other Grocery Distribution employees
were in the front row of the theatre cheering on Janet’s
starring performance. Janet had some rough patches during
the divorce, when she was understandably distracted, but
overall, Anna is pleased with Janet’s work. Janet has
received positive performance appraisals.
Justin does not like Janet. He claims that she is careless
and makes far too many mistakes, and with her casual
attire, she does not “look good” at the front desk. “Besides,”
he says, “she’s not really that interested in her job. That
community theatre thing takes way too much of her time.”
When Janet asked to take the morning off the day after her
opening night, Justin commented that now she is
undependable and insisted that Anna talk to Janet about it,
even though Janet seldom misses work and her absence that
morning was easily covered by other staff.
Friday morning, Anna is called into Justin’s office. It has
been a busy week because Justin is getting ready to leave
for a two-week vacation. Several projects must be
completed or offloaded to other staff before he leaves. It
was decided that Anna would take care of some of Justin’s
projects while he is gone, and she is confident things will go
well in his absence.
While Anna is gathering up her papers at the end of the
meeting, Justin says, “There is just one more thing, Anna.
While I am gone, I want you to document Janet’s poor
performance and write up an appraisal on her. Have the
paperwork on my desk and ready for me to sign when I get
back, and then you can terminate her. I want her out of here
within the next 30 days.”
Case Studies 151
Anna is stunned. She knows Justin dislikes Janet, but
she is not sure how she can document Janet’s “poor”
performance because she believes Janet is a good employee.
Any time she has talked to Janet about Justin’s concerns,
Janet has tried to improve. Janet knows Justin does not like
her, and she has made it clear to Anna that if Justin has any
problems with her work, she wants to know immediately so
she can correct the problem. “I don’t want to lose my job,”
she is told Anna.
Anna wonders what to do. Grocery Distribution has a
published Code of Ethics, and there is an HR department at
headquarters in Atlanta, but there is no HR representative
at Anna’s facility in Ft. Myers.
Questions
What would you recommend to Anna? What consequences
may occur as the result of her actions?
Case Study 6
John is the facility manager for Harrell Construction, a
privately owned construction company. The company
employs 35 people and is owned by Alan Harrell and his
wife, Mary. John has been at Harrell Construction for four
years. It has been a good spot for John after a series of short-
term construction jobs that either went nowhere or ended
when the small companies he worked for were out-
maneuverer by larger organizations and closed.
As the facility manager, John runs the shop and
manages all of Harrell’s equipment. He inventories
equipment and supplies, schedules equipment for various
jobs, checks equipment back in, and makes sure it is
repaired and ready for use for the next job. John runs a tight
ship. The facility is organized and clean, and his attention to
detail has cut time loss from malfunctioning or unavailable
equipment to nearly zero.
Alan has been pleased with John’s work, and over the
course of John’s employment, Alan and John have become
good friends. They do not socialize outside of work, but
they often eat lunch together and on occasional afternoons,
you will find them out on the golf course. “John’s a good
man,” Alan says, “The shop has never been in better shape,
and his records are meticulous. I finally know what I own
and where it is.”
“The Harrells are great people to work for,” John says.
“Mary doesn’t come around the office much, but we see her
at the company picnic in the summer and at the annual
holiday party. They put on quite a bash for employees. It’s
always a family event. Their two teenage boys always come
to the events, and everyone’s family is welcome. My wife
and kids love it. We always have a good time.”
“Besides that, the compensation is fair. The Harrells are
right in line with what everybody else pays,” John adds.
“The benefits are good, too. Don’t know what I would have
done without the health insurance when my wife went
through chemo two years ago. I plan to stay with Harrell
Construction long term if I can. I’ve got two kids headed for
college and retirement to think about, and this is a good
place with a future.”
Things are not always as perfect as they seem, though.
Yesterday at lunch Alan confided to John that he and Mary
were getting a divorce. “She’s never had any interest in this
business,” Alan said. “She has never helped out in the shop,
even in the early years, when we were really struggling. But
she has got a sharp lawyer, and I know she’s going to claim
half the company.”
“I need you to help me out, John,” said Alan. “The
company’s biggest asset is our equipment. Mary does not
know what we have got, and with the equipment out on
different job sites, nobody ever sees all of it except you. I
Case Studies 153
want you to get out those inventory sheets and make some
of those high-priced lifts disappear. I am worriedthere will
not be anything left after her lawyers get done with me. I’d
hate to think we’d have to close down and leave everybody
out of a job.”
Questions
As is common with many small, privately owned
organizations, there is no formal HR department at Harrell
Construction, and Alan Harrell has always made the decisions.
What is John going to do?
Case Study 7
Robert sells shipping supplies for a warehouse supply
wholesaler in Denver. He has been with Warehouse Supply
for almost a year, hired fresh out of Collegiate U with a
degree in marketing. Robert says it is his dream job. He
always wanted to be in sales, and he loves the organized
chaos of a warehouse as trucks and freight move in and out.
He has a real understanding of warehousing, learned while
he was working summers and part time as an order picker
in a club store warehouse. He worked there until his junior
year at Collegiate, when he had the accident on Highway 17
that left him a paraplegic. After the accident, he spent
months in rehabilitation and had to take some time off from
school. Then, because he was in a wheelchair, he could not
go back to his job as order picker in the warehouse. He still
got his marketing degree, though. It just took him a little
longer.
“I really like sales,” Robert says, “It gets me out and
about, and I enjoy working with the customers. I was afraid
my wheelchair would put people off, and I would be stuck
behind a desk for the rest of my life. I would hate that. I am
thankful that I have the accessible van and can drive my
own route. I know I am a little slower than some of the
guys, but I think I’ve earned their respect, and I like the
challenge. I don’t always make the numbers, but people
need to know that there is a lot more that a paraplegic can
do than what he can’t do.”
Unfortunately, sales have been down for Warehouse
Supply for the last two quarters. When consumers buy less
merchandise like toys, clothes, gadgets, etc., there are fewer
shipments in and out of warehouses and less demand for
warehouse supplies. Like most other sales organizations,
Warehouse Supply compensates its sales staff with
commission and bonuses in addition to base salary. Besides
the sales staff, management-level employees also receive
bonuses based on sales numbers. When sales shrink,
everybody feels the pinch.
Marty is the sales manager for Robert’s district. When
Marty interviewed Robert for the job, he was impressed
with Robert’s knowledge of warehousing, his enthusiasm
for sales and his outgoing personality. He had never hired
anyone in a wheelchair before, but he thought, “What the
heck, I think this guy can do the job, and we should give
him a try.” Robert learned fast, and once the customers got
used to the idea of a guy in a wheelchair in the warehouse,
things seemed to be fine, although Marty had to admit that
Robert’s sales numbers were never outstanding. Most
months, Robert’s sales are at or near the bottom of the pack.
“He’s just a little slower,” Marty said. “By the time he gets
that van parked and gets his chair in and out, he just can’t
get around to as many customers in a day as the other guys.
But he does all right, and he makes a lot of calls from the
office. Cannot say he is not on top of his customer’s needs.
He takes good care of them.”
With sales down, Marty is getting pressure from Frank
Bishoff, Warehouse Supply’s vice president of sales at the
home office in Phoenix, Ariz. Frank is always a little edgy
Case Studies 155
when bonuses are due, but this time he is really on Marty.
He called again this morning. “Hey Marty, what’s going on
out there? All I see is inventory stacking.
up and your sales numbers going down! I know
everybody is sliding a little in this economy, but your
second quarter numbers are terrible. You have got to move
some product and move it now! I am getting pressure from
the guys upstairs. You know that everybody’s bonus is
riding on this, and we are nearly at the end of the quarter. I
will be in Denver at the end of the month. We are taking a
closer look at your numbers and your people. You’d better
tell anybody who is not up to speed that it has got to
change—or they are going to be gone. Whatever it takes,
Marty, get those numbers in now!”
Marty has three weeks before Frank comes to Denver.
“Heck, if they’ll just take it easy until the next quarter, we’d
be fine,” thinks Marty. “I know our numbers are a little flat
right now, but we’ll have big orders next quarter, when
Quality Retail buys for their anniversary sale. I just wish we
had those numbers now, then Frank and his cronies would
leave us alone. I think I’ll give Robert a call. Quality Retail is
his account. If he’d just write up their anniversary sale
orders today and get them in the system, we’d all be off the
hook. Why not? Frank said whatever it takes. We can
always back the numbers out at the end of the quarter if
need be, and Robert can square up the account with Quality
later. Besides, he might just save his own job.
Why should I take the heat alone? It is time he knew
Frank has always thought it was a lousy idea to hire a guy
in a wheelchair. Maybe Robert does belong in a desk job.”
Warehouse Supply’s HR department is located at the
home office in Phoenix, and Marty has never had anything
to do with HR. A representative from Phoenix comes to
Denver occasionally to do some training—usually sexual
harassment—and Marty knows there is an employee
handbook, but he is never read it beyond the statement he
signed concerning employment-at-will. Considering the
pressure, he is under from Frank, he believes the focus for
sales at Warehouse Supply is on making the numbers and
not much else.
“There’s no harm in getting the orders in early,” Marty
muses. “Besides, we can always back the numbers out later
if we need to. And this way everyone gets their bonuses.
Isn’t that what they really want anyway?”
Questions
Is there an ethical issue here? If so, what is the issue and how
should it be addressed?
Case Study 8
After 25 years, Art is finally ready to retire and take it
easy. Art teaches accounting and general business courses
at Youngstown Community College. The business
department at Youngstown offers business administration
classes transferable to State University as well as
professional and technical programs that culminate in a
certificate after one year of study or an associate degree
after two years of study. Youngstown has a dual enrolment
agreement with State, and as a result, many business
students at Youngstown are also enrolled at State.
Art teaches several of the business transfer classes at
Youngtown, but his real love is the non-transfer
professional accounting program. He was part of the faculty
that created the program, and over the years he has taught
hundreds of accounting students and helped them obtain
internships and find employment in the community. Art’s
golfing buddy sometimes jokes that every bookkeeper in
town has been through Art’s accounting classes.
Case Studies 157
Besides the regular accounting classes and internships,
Youngstown maintains an accounting lab where students
can get tutoring help if needed. The current lab tutor is
David, who was hired two years ago when Dianne retired
after nearly 10 years as the accounting tutor. David is a
former student of Art’s and holds an associate degree from
Youngstown and a bachelor’s from State. The lab job is part-
time, which works out perfectly for David, leaving him
plenty of time to pursue his MBA in accounting at State.
David wants to teach accounting at Youngstown when he
completes his MBA.
As a tutor, David has brought the accounting lab to life.
He relates well with students, is an excellent tutor, and the
faculty sees him as a valuable member of the department. In
the two years he has worked in the lab, David has become
good friends with Evan, the business department dean.
They frequently have lunch together and even socialize
with their wives outside of work. Last summer the families
went camping together over the 4th of July, and this year
they expect to do the same.
Evan is chair of the committee to find Art’s replacement.
The committee consists of Evan, two additional faculty
members, an administrator from another department and
Mary, the department chair for business and accounting.
On Monday morning, Mary met with Evan to plan out the
recruitment process.
“I know HR requires us to do a job search,” said Evan,
“but even so, there’s no reason why we can’t move David
into Art’s position. He relates well with our students,
knows all the ins and outs of the college, and is well liked
by the faculty.”
Mary is surprised at Evan’s suggestion. “David is a nice
guy, and we all like him,” she said, “but he’s not qualified.
This position requires a master’s degree, and he’s only got a
bachelor’s.”
“He doesn’t need a master’s degree to teach in the
professional/technical program,” said Evan. “He’s perfectly
qualified for that, and we have plenty of other faculty that
can teach the transfer program. David is in school anyway.
He’ll get his MBA next year, and until then, wewill just
schedule him for the professional/technical program, and
we will fit the other classes into other faculty members’
schedules.”
“This is not how we normally replace faculty,” said
Mary. She was particularly disturbed that Evan’s attitude
indicated it was a done deal.
“It’s no problem,” said Evan. “Recruitment is just an HR
exercise anyway. I’ll have the paperwork ready for your
signature by tomorrow.”
The paperwork marked “confidential,” was in Mary’s
mailbox the following morning. It contained all the
documents necessary for HR to launch a full-scale
recruiting plan, including a new job description written by
Evan. Instead of the customary broad-based job description
for a faculty member qualified to teach university-
transferable and non-transfer classes, Mary found a job
description that described David exactly.
“This is a set-up,” Mary mumbled to herself. She knows
that even with five members on the hiring committee and
the required selection process, the actual hiring decision is
left to the dean. “It looks like David’s got the job no matter
what. What good is Youngstown’s ethics committee when
the deans have the power to do as they please anyway?”
Questions
What should Mary do in this situation?
Case Studies 159
Case Study 9
Once the rumour mill in the business department at
Youngstown Community College got wind that the dean,
Evan Comstock, wanted to move David into the faculty
position vacated by Art’s retirement, it was all anyone
could talk about. No one was surprised at Evan’s intention
because he had taken David under his wing two years ago
when David was hired as the tutor in the accounting lab.
Evan and David had become good friends since, and there
had been previous instances of favouritism that left
everyone feeling uneasy, but this was too much.
The problem was that Art’s position required an MBA
in accounting, and David had only a bachelor’s degree.
Although David was enrolled in an MBA program at State
University, he would not be finished for at least another
year. Until then, he would only be qualified to teach
professional and technical accounting courses and none of
the classes that transfer to State. The rest of the accounting
faculty would have to pick up the slack until David finished
his MBA. It would increase everyone’s workload and create
a scheduling nightmare. While everyone liked David and
agreed he was a great tutor, there was a lot of grumbling.
They did not have to grumble for long. Evan had
rewritten Art’s job description to ensure that David would
qualify. When the new, watered-down job description
landed on Vice President Schilling’s desk, he called Evan
immediately. Schilling was never one to mince words.
“Evan, what are you thinking over there?” he shouted, and
that was the end of Evan’s plan for David.
The position still had to be filled, so HR conducted the
recruitment process, and a selection committee was formed
consisting of Evan, the department chair, two additional
faculty members and an administrator from another
department. The recruitment process generated several
good applicants, and the committee finally narrowed down
the pool to five well-qualified candidates to interview.
Everyone on the committee thought the interviews went
well, but, of course, Evan did not like any of the candidates.
There was much discussion and second interviews with two
candidates until Evan reluctantly agreed to hire Lana.
Lana had several years of part-time teaching experience
and had been a practicing CPA for several years. She had
the required MBA and was eager to transition out of
accounting and into full-time teaching. She was scheduled
to start in the fall because she was currently living in a
small town 200 miles south of Youngstown. She
immediately started shopping for a house in the
Youngstown community and planned to move her family
during the summer break.
Fall term enrolment was up in the accounting program
and classes were full. It seemed Lana was off to a good
start. She fit in well with faculty members and hadpositive
student evaluations. Everyone seemed pleased, except
Evan. He claimed Lana’s high student appraisals were
because students knew she was “an easy A” and not from
good teaching. He changed her winter term class schedule,
giving her night classes followed by early morning classes
the next day. He seldom visited other instructors’ classes
but monitored Lana’s lectures constantly. Lana told Mary,
the department chair, that his frequent visits to her classes
made her nervous and were disruptive. He would come
into her class in the middle of a lecture, ask inappropriate
questions and then walk out before class was over. It
happened so often that even students were getting
annoyed. After class, Evan would send Lana an e-mail
criticizing her teaching, but when she asked to talk to him
about it, he would never schedule an appointment. Some
days he would stop by her office just to ask her what she
Case Studies 161
was doing, or he would stop by when she was not
scheduled to be there and the next day, he would ask her
where she had been.
During tax season, Lana worked part-time for a CPA
firm, as did most of the other accounting instructors. This
raised even more ire from Evan. He told her she was off
campus too much and asked her to give him a weekly
schedule every Monday morning so he would know where
she was. No other faculty was required to turn in a
schedule. At the end of winter term, Evan set up
appointments to meet with students who had not done well
in Lana’s classes. He asked them to critique her teaching.
“Why doesn’t he talk to my ‘A’ students?” Lana asked
Mary. “I think he’s trying to drum me out of here,” she said
tearfully. “I feel so guilty for my family. They changed their
lives so we could move to Youngstown and I could have
this career. Some days, he has me so on edge I just want to
quit. You know I cannot win. Even if
I tough it out, I am on trial service for two more years.
He can decide to dump me at any time, and there is nothing
I can do about it. Some faculty say he is just waiting for
David to finish his MBA. I do not know what to do. If he
lets me go, what do I say to my family?”
Questions
Is there an ethical issue here? If so, what is the issue and how
should it be addressed? What is the responsibility of HR in this
issue? What should Mary do?
Case Reference
Myrna L. Gusdorf, Ethics in Human Resource Management,
Society for Human Resource Management.

About the Book
In this book, we tried to cover all the aspects of business
ethics. We tried to connect concepts and theories of ethics
with business practices. Concepts of Business Ethics has
been explained with the suitable examples and illustration.
This book deals with the Definition and nature of ethics,
causes of unethical behaviour, ethical abuses, work ethics,
ethical dilemma, ethics for managers, code of ethics, cost of
ethics, ethics in functional areas like HRM, Marketing,
Finance, Information Technology, Corruption, Gender
issues.
The approach of the book is student-friendly and covers
the syllabus of B. Com (Hons.), B. Com, BBA, and MBA
courses of many universities. I hope this book will be
helpful for the students and business professionals and help
them taking the right decision in business and social life.
Key features:
 Book presents the material in a simple and lucid style
for easy to understand.
 Flow diagrams and figures are used to exhibit the
concepts.
 Case studies have been provided in this book.
About the Author

Prof (Dr.) Bimal Jaiswal is a Professor in the
Department of Applied Economics, Faculty of Commerce,
University of Lucknow, Lucknow. Dr. Jaiswal has teaching
and research experience of 20 years. He has contributed
papers in many reputed research journals and has
participated in many National and International level
seminars. Besides being an ardent reader, he is also an
Case Studies 163
active member of Commerce, Accounting, and
Management Associations at the national level.
Dr. Deepak Verma obtained a Ph.D. degree in
Management (Discrimination) and a master’s degree (MBA)
in Human Resource Management and Industrial Relations
through the University of Lucknow. He also possesses a
master’s degree in commerce (M. Com). He has qualified
for the UGC National Eligibility Test (NET). He has
adequate industrial experience of working in a premier
multinational corporation (MNC) of India. During his
industrial employment, he has dealt with many issues
related to human resource management especially
contractual workers. Currently, he is working as a subject
expert in UG/PG programmes of the University of
Lucknow and affiliated colleges. He has published various
research papers in international journals on the various
topics of human resource management and industrial
relations.


GOVERNANCE AND BUSINESS ETHICS

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GOVERNANCE AND BUSINESS ETHICS

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GOVERNANCE AND

Prof. Bimal Jaiswal

Dr. Deepak Verma

New Royal Book Company

First Published : 2021

Published by Imran Mirza and Mirza Furqan Beg for

Laser Typeset by : Kaushal Yadav, Lucknow

S.No. CHAPTER PAGE

Ethics can be explained as a moral principle that

2. Organisational behaviour V.G. Kondalkar, New Age international Publisher

When did ethics begin and how did it originate?

Figure: Types of values

Figure: Structure of Corporate Governance

Generally, it is expected from all organizations to be

Causes of Unethical Behaviours

Figure: Causes of Unethical Behaviour

Figure: Types of Unethical Behaviour

An atmosphere ripe for ethical abuse in the company is

Grievance Management Fear of Punishment

Figure: Management of Ethical Abuse at the workplace

Figure: Legal vs Ethical Abuses/ Violations

There is a great saying that one becomes what one

Figure: Public Good

The ethical dilemma is a challenge in the decision-

Figure: Hosmer’s modal of reasoning process

Managers in both big and small companies face a

Figure: Ethical Decision-Making Model of Gerald

Some multinational companies have created codes of

3. Thomas Loren Friedman (/ˈfriːdmən/; born July 20, 1953) is an American

Figure: Illustration of Ethical and Legal practices

Figure: Stages of SROI Process

Environmental ethics is formally defined as the study of

Figure: Balance between Business and Environment

Figure: Business and its relationship with the

Figure 1: Process of the carbon credit transaction

Figure: 3 R’s Model of waste management

10. Putting It Into Practice

Figure: Green Practices of Tata Motors, Pant Nagar

In this chapter, we will discuss the definition, nature,

Figure: Ethical Practices Suggested by World Fair Trade

4. WHO WE ARE | World Fair Trade Organization (wfto.com)

Figure: Ethical Issues in Marketing

The financial market has shown us numerous

Figure: Satyam Scam Infographics5

Figure: Pumping and Dumping strategy

Figure: Ethical issues in Accounting practices

If we talk about financial accounting, there may be the

Human resource management is a management

Figure: Ethical Issues in Human Resource Management

Businesses today are driven by technology. There is a

Figure: Ethical Issues in the field of Information

Corruption is characterized as private entities or

Figure: Corruption Perceptions Index, 20196 (Source:

6. 2019 - CPI - Transparency.org

Figure: Best and worst nation for corruption CPI, 20197

7. 2019 - CPI - Transparency.org

8. Bertrand, Marianne et al. Obtaining a Driver's License in India: An

Figure: Ways to deal with corruption

Figure: Corporate Policies on Gifts, Bribery, and

Today we live in a patriarchal society and observe that

Figure: Corporate Policies on Discrimination and

Case Study No. 1

About the Author

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