Business Ethics & Corporate

Governance
Class of 2009
By Dr. P K Banerjea
 Business Ethics & Corporate
Governance
Course Code: MGT 619

Class 0f: 2006 Semester: IV

Sessions: 33 Credit 3 Units

By Prof. P K Banerjea
Role Of Business in
Society
 Role Of Business in Society
Business meets the societal needs. Hence society
and business needs each other.
While business is expected to generate wealth
and opportunity, society is expected to provide an
environment conducive to growth of business
One and only social responsibility of Business is
to increase profits so long as it stays within the
rules of the game, which is to say, engages in
open and free competition without deception &
fraud
Milton
Friedman
 TASKS OF BUSINESS IN
SOCIETY
Financial Task: With the advent of Public Limited
companies statutory audit is mandatory
Economic & Production Task: This relates to
production of goods & services that meet societal
needs and thereby create wealth. Tendency to
create monopoly thru M & A, cartels , and other
manipulations to ensure better returns to the
share holders. Good ethical companies normally
refrain from doing so
Maintenance Tasks: Activities that help shape the
society; educational, health care, religious &
other welfare activities
 Tasks of Business in Society

Continued
One such example is Technology grants awarded by
Microsoft every year to non profit organisations such as
American Heart Association, Red Cross etc.Even Nobel
Prizes awarded by Alfred Nobel could be classified as
encouragement to Scientists, Doctors, Economists and
peace promoters
Adaptive Tasks: The task by which a society responds to
change is referred as adaptive functions
The Management or Political Tasks: The corporations are
expected to
a) Support or promote Human Rights
b) Not to suppress Freedom of Expression, rights to
form associations etc.
 Role of Business in
Society
continued
Exploitation of labor, environmental
destruction, trampling of human rights are
done by some companies to maximise
profit, with or without connivance of with
government (those which are dictatorial).
Shells operation in Niger Delta in Nigeria
is am example of environmental & human
exploitation connected with oil exploration.
The recent cases of painting of rocks
(Natural Heritage) by Coke & Pepsi is
another example.
 Role of Business in
Society
continued
Environmental Tasks: Degradation of environment is one bad
effect of industrial development. Most of the countries have
legislation for safeguarding the environment such as Air, Water
Pollution Control Acts and Noise Pollution Act in many advanced
countries. But without corporations own regulatory action it is
impossible to enforce such acts.
COALITION FOR ENVIROMENTALLY RESPONSIBLE ECONOMIES
(CERES) is one exemplary partnership embraced by large
American companies like COKE, GM American Airlines etc.
CERES principles addresses issues like informing public about
hazardous materials, reduction in risk of buying unsafe products,
restoring environment etc
A 10 Points charter or Code of Environmental Conduct encourages
corporate to commit to conditional improvements in activities that
prevent degradation of the environment
 Role of Business in
Society
continued
Code of Ethics & Compliance Guidelines of
UNOCOL

We are committed to meeting the highest ethical

standards in all our operations, whether at home
or abroad. This includes treating everyone fairly
and with respect, maintaining a safe and healthy
workplace, and improving the quality of life,
wherever we do our business in a way that
engenders pride in our employees and respect
from the world community
 Role of Business in
Society
continued
Core Values of UNOCOL one of the
largest independent oil and gas
exploration & production companies
in the world are
1. Honesty
2. Integrity
3. Excellence
4. Trust
 Role of Business in
Society
continued
Approach of Clutterbuck
Institutional & oriented Approach

1. Set a Clear Goal

2. Publish A Code of Ethics
3. Use Reward & Punishment Mechanism
4. Use Ethics in Recruitment Criterion
5. Reinforce Policies Thru Training & Development
6. Provide Negotiation of Concerns
7. Establish Openness & Transparency into
Decision making Process
8. Provide Feedback
 Role of Business in Society
continued

Drummond & Carmichaels Approach

Personalised Development Approach
Acknowledge the Personal Dimension of Ethical Behavior
Monitor Symptoms of Ethics related Stress
Analyse Feelings about Venture & Its Activities---Link
Analysis to Diagnose Problems
Draw Up Personal & Corporate Ethics checklist
Set Up Systems of Justice & Reinforce these thru
Contracts & Ethics Statement
Communicate Ethics Position
Explain your Ground Rules to Others
 Role of Business in
Society
continued
Important Aspects To Be Considered

Ensure Proper Systems for Corporate Values &

Ethics
Clear Understanding of Questions Related to
Compliances
Serving The Community By Looking Into The
Needs of The Economically & Socially
Disadvantaged
Bringing Environment Friendly Products
 Guiding Principles of Proctor &
Gamble
We show respect for all Individuals
The interests of the company and
that of the individuals are
inseparable
We are strategically focused in our
wok
Leadership & Entrepreneurship
 Introduction to Leadership

The true leaders serves. Serves People.

Serves their best interests, and in so doing
will not always be popular, may not always
impress. But because true leaders are
motivated loving concern rather than a
desire for personal glory, they are willing to
pay the price.
Eugene B Habeckar
The other side of Leadership
 Introduction to Leadership
Cntd..
Waste no time arguing what a good man
should be. BE ONE
Marcus Aurelius

Courage not complacency- is our need

today. Leadership not Salesmanship
John F Kennedy
 Four Competencies of
Leadership
An Institution is a lengthened Shadow of
one person Voltaire
This statement highlights the critical role of
leadership. Leadership deals with people,
so the new person centric approach has
important role of a leader. The
understanding of transpersonal
psychology and the ability to attain
voluntary control of ones inner state of
mind are important to work effectively
with people; as people are always involved
in leadership.
 Four Competencies of Leadership
Contd..
The first leadership competency is
management of attention thru' a set of
intentions or a vision, not in a mystical or
a religious sense, but in the sense of
outcome, goal or direction.
The second leadership competency is
management of meaning. For leaders to
make their dreams apparent to others
and to align people with those dreams,
leaders must communicate dreams.
 Four Competencies of Leadership
Contd.
The third leadership competency is
management of trust, which is essential to all
organisations, be it a political party, or social
set up. The main determinant is reliability
(Bennis calls it constancy)
The fourth leadership competency is
management of self, knowing ones skills and
using them effectively. Management of self is
critical, without it, leader can not know their
own flaws; this will make it difficult for them to
improve him/herself.
 Leadership As Seen by Various
Thinkers
Leaders are those who know what to do next,
know why that is important, and know what
appropriate resources to bring to bear on the
problems at hand. Then, through effective
communications they influence others to follow .
By Berry Bowater
Leadership is not something that you learn once
and for all. It is an ever evolving pattern of skills,
talents, and ideas that grow and change as you
do

By Sheila Murray Bentel

 Leadership As Seen by Various
Thinkers
The nature of Leadership has changed dramatically
over the years; in this new business environment, the
power comes from recognizing these patterns of
change. Leadership was synonymous with authority,
you had the power, you had the corner office and you
had the title and perks that go with it. But it is
becoming more and more evident that leadership is
not a title; it is a set of behavior. A fancy title is not
only an opportunity, it is also an obligation to engage
in certain behaviorsTraditionally, senior
executives are expected to have all answers to the
problems the organization is faced with. Senior
executives no longer have all the answers, this is the
crisis. And the paradox is that the answers exists in
the organization itself, it is just drawing them out.
Deepak Sethi
CEO, Organic Leadership LLC
 Leadership As Seen by Various
Thinkers
Leaders are those who know what to do next,
know why that is important, and know what
appropriate resources to bring to bear on the
problems at hand. Then, through effective
communications they influence others to follow .
By Berry Bowater
Leadership is not something that you learn once
and for all. It is an ever evolving pattern of skills,
talents, and ideas that grow and change as you
do
By Sheila Murray Bentel
 Leadership As Seen by Various
Thinkers
Failing organisations are usually over managed and under led .
-Warren G Bennis
(Leadership Inspirational Quotes & Insights for Leaders)

A Leader is one who knows the way, and shows the way
- John Maxwell
Leadership is interpersonal influence, exercised in situations and
directed through the communication process, towards the
attainment of goals
Tannebaum
( Leadership and Organization Behavior Science Approach )
Qualities of Leadership
students perspective
 Common Leadership
Qualities
Motivating
Initiation
Inspiring
Goal Oriented
Good Listener
Lead By Example
Good Communicator
Planner
 Common Leadership
Qualities
Planner
Avid & Quick Learner
Rule Breaker
Delegates
Good Negotiator
Commander
Visionary
Creative
 Common Leadership
Qualities
Emotional Stability
Knowledge of Human Relations
Empathy
Objectivity
Personal Motivation
Communication Skill
Teaching Ability
 Common Leadership
Qualities
Social Skills
Technical Competence
Physical & Nervous Energy
Persuasiveness
Creativity & Vision
Inspirational Ability
Imaginative Mind
Courageous Outlook
 Attributes of a Leader
Standard Bearers:
Establish an ethical framework within an
organization. These demand a commitment
to live and defend the climate and culture
that one wants to permeate in ones
organization. What one set as an example
will soon become the rule as unlike skills or
knowledge, ethical behavior is learned more
by observing than by listening. Being a
standard bearer creates trust and openness
in ones employees who in turn fulfill one's
vision
 Attributes of a Leader
DEVELOPERS: Help others learn through
teaching, training, and coaching. This
creates an exciting place to work and
learn. Never miss an opportunity to teach
or learn something new yourself. Coaching
suggests some one who cares enough to
get involved by encouraging and
developing others who are less
experienced. Employees who work for
developers know that they can take risks,
learn by making mistakes and winning in
the ends
 Attributes of a Leader
INTEGRATORS:
Orchestrate the many activities that take
place through out an organization by
providing a view of the future and the
ability to obtain it. Since integrators have
sixth sense about where problems are
likely to occur, they can be available to
help during critical times; they know their
employees do their best when they are left
to work within a vision based frame work.
 Douglas Mc Arthurs Principle
of Leadership
Do I heckle my subordinates or strengthen &
encourage them?
Do I use moral courage in getting rid of
subordinates who have proven themselves beyond
doubt to be unfit?
Have I done all in my power by encouragement,
incentives and spur to salvage the weak and
erring?
Do I know by NAME and CHARACTER, a maximum
number of subordinates for whom I am
responsible? Do I know them intimately?
Am I thoroughly familiar with technique,
necessities, objectives and administration of my
job?
 Douglas Mc Arthurs Principle
of Leadership
Do I loose my temper on individuals?
Do I act in such a way that my subordinates WANT to follow
me?
Do I delegate jobs that should be mine?
Do I arrogate everything to myself and delegate nothing?
Do I develop my subordinates by placing on each one as
much responsibilities as he can stand?
Am I interested in the personal welfare of each of my
subordinates, as if he were a member of my family?
Have I the calmness of my voice and manner to inspire
confidence, or am I inclined to irascibility and excitability?
Douglas Mc Arthurs Principle
of Leadership
Am I a constant example to my
subordinates in character, dress,
deportment and courtesy?
Am I inclined to be nice to my superior and
mean to my subordinates?
Is my door open to my subordinates? Do I
think more of position than job?
Do I correct subordinates in front of
others?
Leadership Theories
 Profile of An
Entrepreneur
1. Problem Solver
2. Calculated Risk Taker
3. Innovator
4. Delegate Tasks
5. Handle Rejection Well
6. Take Help From Support System
7. Ability to Handle Stress
Why Small Business Fail?
Procrastination
Ignoring competition
Ineffective Marketing
Ignoring Customers Needs
Incompetent Employees
Lack of Versatility
Poor Location
Cash Flow Problem
Why Small Business Fail?
A closed Mind
Inadequate Planning
Lack of Foresight
Pennywise pound foolish Attitude
Lack of Application of Technology
Unsatisfied Employees
Siphoning of Money for Other
Activities
 Introduction to
Entrepreneurship
Entrepreneurship is the process of
creating something different with
value of devoting necessary time and
effort, assuming the accompanying
financial ,psychic, and social risks,
and receiving the resultants rewards
of monetary and personal
satisfaction and independence
 Introduction to
Entrepreneurship
Benefits & Opportunities of Entrepreneurship
1. To control Ones destiny
2. The opportunity to reach full potential
3. Opportunity to unlimited profit
4. Opportunity to make contribution to society &
get recognition for the same
5. To play positive role in Economic Development
in the Region/Nation
6. It allows one to take risk/s
 What is
Entrepreneurship?
The word entrepreneurship came from
French language which means between
taker or go between It involves
i) Taking initiative
ii) Organizing and reorganizing resources
and situation to to create wealth by
meeting societal needs
iii) Acceptance of Risks and failures
 What is
Entrepreneurship?
Economists say s/he brings resources,
labors, materials, and other assets to do
value additions.
Psychologists think s/he driven, by a force to
attain something, to experiment, to
accomplish, and perhaps escape authority
To one of set of Businessmen s/he is a
threat, to another section an ally, a source
of supply, a customer or some one good to
invest in.
 Entrepreneurial
Characteristics
1. Desire for Responsibilities
2. Preference for Moderate Risks
3. Confidence in Personal Success
4. Desire for immediate Feedback
5. High Level of Energy
6. Future Orientation
7. Skilled in Organization
8. Feeling of Achievement More Important
than Money
 Managerial Vs
Entrepreneurial
Decision Making

Strategic Orientation
Group Perception Individual Perception
Commitment to Opportunity
I) Slow to action Opportunity Need for action
ii) Long time for single action Short Decision Window
iii) Stop Review of action taken Will to take Risks
Commitment to Resources
i) Using committed resource Own efforts; limitations
ii) Look for Rewards Look for Milestones
Management Structure
i) Organized Personal Discretion
ii) Hierarchical Flat Organization
iii) Formal Informal