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Managerial Ethics,

Governance and
Leadership
Dr M Manjunath Shettigar

Business Ethics
Business ethics(also called
managerial/corporateethics) is a form of
appliedethicsthat examinesethicalprinciples and
moral or ethicalproblems that arise in
abusinessenvironment.
It applies to all aspects ofbusinessconduct and is
relevant to the conduct of individuals and entire
organizations.

Ethics & Religion

Ethics
At its simplest,ethicsis a system of moral principles.
They affect how people make decisions and lead their
lives.
Ethicsis concerned with what is good for individuals
and society and is also described as moral philosophy.

Ethics
Ethics defines the elements essential to human wellbeing and proposes principles to be used as guidelines
for generating an ethical culture.
Ethics also refers to the specific values, standards,
rules, and agreements people/organizations adopt or
people/organizations should adopt for conducting their
lives.

Ethics, Morality, Religion and Law


Ethical
Moral
Legal
Religious

How children think


If it's mine it's mine,
if I like it is mine,
if I can take it from you it is mine,
if I am playing with something ALL of the pieces are
mine,
if I think it is mine it is,
if I saw it first it's mine,
if I had it then put it down it is still mine,
if you had it then you put it down it is now mine,
if it looks like the one I have at home it is mine,
if it is broken it is yours.

Ethical/Moral standards
Lawrence Kohlbergs theory of
stages of Moral reasoning

Heinzs Dilemma
Heinz Steals the Drug
"In Europe, a woman was near death from a special kind of cancer. There was
one drug that the doctors thought might save her. It was a form of radium that a
druggist in the same town had recently discovered. The drug was expensive to
make, but the druggist was charging ten times what the drug cost him to make.
He paid $200 for the radium and charged $2,000 for a small dose of the drug.
The sick woman's husband, Heinz, went to everyone he knew to borrow the
money, but he could only get together about $ 1,000 which is half of what it
cost. He told the druggist that his wife was dying and asked him to sell it
cheaper or let him pay later. But the druggist said: "No, I discovered the drug
and I'm going to make money from it." So Heinz got desperate and broke into
the man's store to steal the drug-for his wife. Should the husband have done
that?" (Kohlberg, 1963).

Heinzs Dilemma
Kohlberg was not interested so much in the answer to
the question of whether Heinz was wrong or right, but in
thereasoningfor each participant's decision. The
responses were then classified into various stages of
reasoning in his theory of moral development.

Ethics
Ethics is a branch of Philosophy
Ethics is also called Moral Philosophy
It is about what is right and what is wrong, what is good
and what is bad, what fair and what is unfair, what is
just and what is unjust

Ethics
Ethics is a conception of right or wrong conduct. Ethics
tells us when our behavior is moral and when it is immoral.
It deals with the moral choices that we make in the
course of performing our duties with regard to the other
members of society.
They are important not only in business and politics but
in every human endeavour.
The concepts of equity and justice are implicit in ethics.
Fair and equitable treatment to all is its primary aim.

ETHICS IN BUSINESS
Business ethics is one of the important branches of applied ethics.
Business ethics is the application of general ethical ideas to business.
It refers to the moral principles and standards and a code of conduct
that businessmen and businesses are expected to follow while dealing
with others.
Business ethics refers to a code of conduct which businessmen are
expected to follow while dealing with others. It comprises of the
principles and standards that guide behaviour in the conduct of
business.
It reflects the philosophy of business, one of whose aims is to determine
the fundamental purposes of a company.

ETHICS IN BUSINESS
Businesses must balance their desire to maximise profits against the
needs of stakeholders.
The significant issues in business ethics include ethical management
of an enterprise in relation to its stakeholders in particular and social &
natural environment in general.
The responsibility towards society is a moral obligation arising out of
business ethics, which in turn is steeped in the philosophy of business.
It is also concerned with adherence to sound ethical principles in the
conduct of all functional operations Finance, HR, Marketing and
Operations

Dimensions of business/corporate
ethics
It is about fairness to all stakeholders
It is about transparency
It is about raising the level of trust and confidence of
stakeholders in the way the company is run
It is about understanding and discharging societal
responsibility
It is about long term thinking sustainability
It is about overcoming greed, insecurity, and lack of
confidence
It is about following the law of the land

Why ethics is necessary and


important in business ?
1. Company reputation and goodwill
2. Attracting and retaining talent
3. Investor loyalty
4. Customer satisfaction
5. Regulatory compliance & credibility
6. Corporate social responsibility

Ethics
The termethicsis derived from the Greek word ethos,
meaning custom or character.
In philosophy, ethicalbehavior is that which is good.
The field ofethicsor moral philosophy involves
developing, defending, and recommending concepts of
right and wrong behavior.

Oxymoron/Oxymora
- a set of words that carry opposite meaning
1) Clearly misunderstood
2) Exact Estimate
3) Small Crowd
4) Act Naturally
5) Found Missing
6) Fully Empty
7) Pretty ugly
8) Seriously funny
9) Only choice
10) Original copies
&
the Mother of all
11) Happily Married

Types of ethics
Deontological ethics
Teleological ethics
Egoism
Utilitarianism
Relativism
Virtue ethics
Justice

Deontology(orDeontologicalEth
ics)
Deontology(orDeontologicalEthics) is an approach to
Ethics that focuses on the rightness or wrongness of actions
themselves, as opposed to the rightness or wrongness of
the consequences of those actions (Consequentialism) or to
the character and habits of the actor (Virtue Ethics).
Deon = duty. Logos = science
Akin to the philosophy of karma do your duty without
thinking about the rewards (consequences)
Based on Kants concept of Categorical Imperative (as
distinguished from hypothetical imperative)

Teleology
Teleology(from the Greektelos, meaning goal or end)
describes an ethical perspective which contends that
the rightness or wrongness of actions is based solely on
the goodness or badness of their consequences.
In a strict teleological interpretation, actions are morally
neutral when considered apart from their consequences.
Ethical egoism and Utilitarianism are examples of
teleological theories.

Egoism
EGOISM: Egoism is derived from the Latin word 'ego'
meaning 'I'.
The theory of egoism holds that the good is based on the
pursuit of self-interest.
This model takes into account harms, benefits and rights for
a persons own welfare.
Under this model an action is morally correct if it increases
benefits for the individual in a way that does not intentionally
hurt others, and if these benefits are believed to
counterbalance any unintentional harms that follow or occur

Utilitarianism
Utilitarianism prescribes that the moral worth of an action is solely
determined by its contribution to overall utility, that is, its
contribution to the happiness and satisfaction of the greatest
member.
Utilitarianism can be described by the phrase, the greatest good for
the greatest number.
The utilitarian principle states, an action is right from ethical point
of view if and only if the sum total of utilities produced by that act
are greater than the sum total of utilities produced by any other act
that can be performed at that point of time by any person.
The utilitarian approach prescribes ethical standards for managers in
the areas of organisational goals, i.e., maximisation of profits; and
having efficiency which denotes optimum utilization of scarce
resource.

Utilitarianism
Jeremy Bentham is considered the founder of traditional
utilitarianism. He propagates an objective basis for
making value judgements that would provide common
acceptable norm for determining social policy and social
legislation.
J S Mill is another thinker who contributed to this ethical
perspective

Relativism
Theory of Relativism promotes the idea that some elements or aspects
of experience or culture are relative to (i.e., dependent on) other
elements or aspects.
It holds that there are no absolute truths in ethics and that what is
morally right or wrong varies from person to person or from society to
society.
This perspective stresses on the importance of being non-judgemental
and accepting others and their actions as they are
For example,

- killing animals for sport (like bull fighting) could be right in one
culture and wrong in another.
- Non-vegetarianism

Virtue theory
Virtue theory is more concerned with answering the question of how to
live a good life or how to be a good person. Virtue theory aims to offer an
account of the characteristics one must have to be considered virtuous.
Virtue theory of ethics is a very old concept existing since the time of
Aristotle (384BC), and there are a variety of theories that fall under the
category of virtue theory.
According to Aristotle, role of ethics is to enable us to lead a successful
and good life. This in Aristotle's view is possible only for virtuous people.
In his words virtue is a character trait that manifests itself in habitual
action.
Thus, we can define virtue as a trait of character, that is essential for
leading a successful life. Virtues should contribute to the idea of a good
life. They are not merely means to happiness but are constituents of it.

Virtue Ethics(orVirtueTheory) is an approach


toEthicsthat emphasizes an individual's character as
the key element ofethical thinking, rather than rules
about the acts themselves (Deontology) or their
consequences (Consequentialism).
Virtue ethicsis person rather than action based: it
looks at thevirtueor moral character of the person
carrying out an action, rather than atethicalduties and
rules, or the consequences of particular actions.

Character ethic for All of Us !


We will respect others' right to live and work
We will respect others' ways of living (including food habits), without being
judgemental
We will not resort to violence to sort out our differences. Instead, we will engage in
debate and discussion by democratic means
For us humanity and itswellbeingcounts more than anything else,including religion
and caste
We will profess and practice the principle of gender equity
We will strive to imbibe the spirit of scientific temper and rational thinking
We will develop qualities of responsible citizenship
We will respect the constitution and its democratic tenets
We commit ourselves to build an inclusive society that works for all of us
We will rise above all our differences, divisions and deviations, and will build a
progressive and prosperous commonwealth of India

Lets celebrate our plurality and our oneness!

JUSTICE THEORY

Justice approach is also known as fairness approach.


Greek philosophers have contributed to the idea that all
equals should be treated equally. Justice does not
depend on consequences; it depends on the principle of
equality.
The key to a well-ordered society is the creation of
institutions that enable individuals with conflicting ends
to interact in mutually beneficial ways.
The focus here is on social justice.

JUSTICE THEORY
The contemporary American Philosopher John Rawls objection to utilitarianism is
that it does not give adequate attention to the way in which utility is distributed
among different individuals.
As an alternative to the utilitarian idea of society with highest welfare, Rawls
proposes a society that recognizes its members as free and equal person who
attempt to advance their own interests and come into conflict with others
pursuing their self interests.
The key to a well-ordered society is the creation of institutions that enable
individuals with conflicting ends to interact in mutually beneficial ways. The
focus here is on social justice.
Rawls promotes Play It Safe. He argues that a rational person should choose
the alternative in which the worst possible outcome is still better than the worst
possible outcome of any other alternative.

Some additional theoretical


perspectives
Stockholder theory
Stakeholder theory
Social contract theory
See Fernando BECG pp

Approaches to ethics
Ethical relativism
Ethical absolutism
see ACCA

Approaches to ethics
Ethics in relation to action
Ethics in relation to consequences
see ACCA

Approaches to ethics
Descriptive ethics
Meta ethics
Normative ethics
Stanwick & stanwick pp 4

Influences on Ethics
Cultural factors influencing ethics & CSR
1. Individual and
2. Situational
1. Individual

Age & gender


National & cultural beliefs
Education and employment
Psychological factors
Locus of control
Personal integrity
Moral imagination

Influences on Ethics
Cultural factors influencing ethics & CSR
2. Situational
Issue related factors
Moral intensity
Moral framing

Context related factors

System of reward
Authority
Bureaucracy
Work roles
Organizational field
Organizational culture
National and cultural context

For & Against Business Ethics


Business ethics Velasquez pp 38 to 46

Stages of Ethical Consciousness in


Business
Law of the jungle
Anything for profit
Profit maximizing in the short run
Profit maximizing in the long run
Stakeholder concept
Corporate citizenship