GEETHO01X

Organizational Ethics
 Lesson Objectives
At the end of this lecture, you are expected to:

1. Learn organizational ethics and its levels.

2. Understand the Corporate Code of Ethics – its
elements and types and the users of it.
3. Identify the importance of leadership in an
organization.
4. Know the roles and responsibilities in ethics
management and the managerial approaches in
the organization.

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GEETH01X – Business Ethics
 Topics
Ethical Corporate Behavior

Corporate Code of Ethics

Development of Ethical Corporate Behavior

Business Values

Ethical Leadership

Ethical Issues in Organization

Advantages of Ethics Management Program

Guidelines for Managing Ethics in Organization

Roles and Responsibilities in Ethics Management

Managerial Concerns

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GEETH01X – Business Ethics
Organizational Ethics
Ethics
Organization
is described as an attempt or
is a collection of individuals with a endeavor by individuals, to
common mission. understand what is ‘right’ or
‘wrong’. Ethics is concerned with
the critical analysis of situations.

The organizational design follows a set of core principles or

concepts in that attempt to develop ethical corporate behavior

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PSYCH01X – Introduction to Psychology
Ethical Corporate Behavior
Organizational
ethical issues
can be
handled at
Corporate mission
three levels.
These levels
are: Constituency relations
Policies and practices
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GEETH01X – Business Ethics
Corporate mission

Refers to the objectives of an organization that are used to define its

ethical responsibilities

Reflects the ambitions and expectations of the employees

Employees should be integrated in a good manner to achieve the

corporate mission

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GEETH01X – Business Ethics
Constituency relations

Define the responsibilities of the elements of an organization.

The elements of an organization may be employees, customers,

suppliers, shareholders and the general public.

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GEETH01X – Business Ethics
Policies and practices
• Organizational ethics can also be used to evaluate the policies and
practices of the organizations. Public commitment to ethical
principles can give way to business and administrative practices.

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GEETH01X – Business Ethics
 Four types of
Organizations
• Exploitative: Organizations with low economic and
ethical concerns.
• Manipulative: Organizations with high economic
performance concerns and low ethical concerns.
• Holistic: Organizations with high ethical concerns and
low economic concerns.
• Balanced: Organizations have high ethical and economic
concerns.

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GEETH01X – Business Ethics
Corporate Code of Ethics

Corporate ethical codes can be defined as the standards and beliefs of an

organization. These can be used to adjust the thinking and attitude of the
individuals in the organization.

Ethics codes of organizations are different from the rules of ethics. Ethical
rules are the requirements according to which an individual acts.

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GEETH01X – Business Ethics
 •According to Snoeyenbos and Jewell:
1. Implementing the corporate ethical code;
2. Introducing an ethics committee; and
3. Introducing a management training
programme that includes ethics training.

Three Elements
to implement Organizations can handle the issue of ethics by
ethical incorporating the code of business conduct in the
behavior in the corporate structure. These business codes can be used to
advise, guide, and regulate the behavior of individuals in
organization organizations.
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GEETH01X – Business Ethics
Types of Codes of Ethics
1. Principle-Based –designed to enable the employee to make ethical
decisions base on appropriate values e.g., “treat people fairly” or “don’t
be dishonest”

2. Policy-Based – guideline as to how to act in specific ethical dilemma

situation (reducing the need for thinking)
a. Conflicts of interest
b. Disseminating proprietary information
c. Receiving and giving political gifts
d. Equal opportunities
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GEETH01X – Business Ethics
 Development of Ethical
Corporate Behavior
•The approaches o business ethics can be classified into the
following areas:

• Identifying practical issues and assigning responsibilities.

• Analyzing existing practices and framing a code of
conduct.
• Raising fundamental philosophical problems

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GEETH01X – Business Ethics
 Benchmarking
• One of the trends or perspectives that can be used by the
management for the purpose of organizational
development.
• It can be defined as a process of comparing the works and
service methods against the best practices and best
outcomes.
• It focuses on identifying changes that can result in higher-
quality output by incorporating different organizational
behavior techniques.

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GEETH01X – Business Ethics
 Internal benchmarking –is carried out between
closely related divisions or similar plants of the
organization.

Functional benchmarking – is used to compare

Three types of performance parameters of similar business
units of different organizations.
benchmarking
Competitive benchmarking – uses customer
requirements as a parameter for comparing the
performance of the organization against other
companies that are the best in the industry.

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GEETH01X – Business Ethics
Users of the Code of Ethics

For School: For Business:

o Administrators o Employees
o Teachers o Customers
o Students o Suppliers
o Employees o Owners and Other Providers of
Capital
o Government
o Society in General

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PSYCH01X – Introduction to Psychology
Business Values

A business value refers to a set of beliefs pursued by an organization.

Business values like ‘customer satisfaction’, ‘enthusiastic teamwork’
and
‘state-of-the-art provision for production’ are some of the commonly
pursued values by several organizations.

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GEETH01X – Business Ethics
Most common Persistent progress: It refers to an eagerness
and enthusiasm on the part of the
values that organization to keep its functioning as an ever
efficient and up-to date working endeavor
facilitate in towards progress.

improving
Customer satisfaction: It refers to making the
profits and the customers feel important and responding to
their needs, interests and, if need be,
image of the providing solutions to their problems in case
organization: of any documentation processes regarding
the purchase of the organization’s product.

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GEETH01X – Business Ethics
Personnel development: When it comes to development,
organizations can benefit more by developing the skills of their
employees.

Innovation: It refers to the enthusiasm to take on new challenges

and responsibilities on the part of the employees and a desire to
diversify and try out new ventures on the part of the organization.

Optimal use of resources: It refers to making sincere efforts to

enhance overall business performance by maximum utilization of
the organization’s current resources.

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GEETH01X – Business Ethics
 Ethical Leadership
LEADER – is an integral part of an
organization, because it is the
leader who helps the organization
to achieve the goals and
objectives.

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GEETH01X – Business Ethics
 A LEADER…
• acts a friend to the employee he is leading
• recognizes the potentialities of the individuals and transforms them into
realities
• wins the confidence of the employees of an organization
• unites the people as a team and builds up team spirit
• maintains discipline among his group and develops a sense of
responsibility among them
• builds up a high morale among the employees of the organization
• motivates his group in order to achieve the goals and objectives of an
organization
• maintains the ethical standards among the employees of an organization
• acts a link between the work groups and the forces outside the
organization

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GEETH01X – Business Ethics
Two groups of the organization:

Managers: are the individuals in the

organization who are responsible for Workers: Workers are the individuals
directing the activities of others. who are working under the control of the
managers or leaders.

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GEETH01X – Business Ethics
 Ethical Issues in Organizations
Identifying Identifying the conflict issues in the organization and trying to avoid them.

Deciding Deciding different methods to motivate employees.

Managing Managing fairness in employee performance appraisals.

Protecting Protecting secret information of the organization.

Identifying the areas of interest of customers, employees, suppliers,

Identifying
owners and the staff.

Taking Taking action against the reports of complaints in the organization.

Handling Handling different problems of employees.

Taking Taking corrective action against employees.

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GEETH01X – Business Ethics
 Ethics management can provide the necessary
operating values and behavior to the organizations.

These programs are used to align the operating values

Advantages and behavior.

Ethics management programs are used to schedule

of Ethics different ethical requirements.

Management These programs are used to make organizations aware

of ethical issues.

Program These programs provide structural mechanisms to

handle ethical problems

They also provide some guidelines to decision-making.

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GEETH01X – Business Ethics
Guidelines for Managing Ethics in Organizations

Identify ethics management Use ethics programs to Avoid ethical dilemma. Combine ethics management
as a process. manage behavior in with other management
organizations. practices.

Develop ethics management Value maintenance.

programs using cross-
functional teams.

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GEETH01X – Business Ethics
 1. The chief executive officer of the organization must
support the ethics management program.

Roles and
Responsibilities 2. A committee or group should be developed in the
organization to control the development and operation
in Ethics of the ethics management programs.

Management
3. A committee or group should be developed which
should be responsible for training the employees on the
policies and procedures of the ethics management
program and should resolve any ethical dilemmas that
may arise. This committee can contain senior officers.

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GEETH01X – Business Ethics
 4. A person in the organization should be
designated as ombudsperson who has the
responsibility of investigating or resolving
complaints from the employees of the
Roles and organization against the ethics
management program.
Responsibilities
in Ethics
Management 5. Each person of the organization is
responsible for the implementation of the
ethics management program.

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GEETH01X – Business Ethics
 Managerial Concerns
•Three Managerial Approaches
• Stockholder theory – holds that managers are agents of
the stockholders, and their only ethical responsibility is to
increase the profits of the business without violating the
law or engaging in fraudulent practices (legal and economic
approach).

• Social contract theory – states that companies have ethical

responsibilities to all members of society, which allow
corporations to exist based on a social contract.

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GEETH01X – Business Ethics
 • Stakeholder theory – maintains
that managers have an ethical
responsibility to manage a firm
for the benefit of all its
stakeholders, which are all
individuals and groups that have
a stake in or claim on a company.

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GEETH01X – Business Ethics
Reference/s:
• Sergote, Jessie F., 2019, Essentials of Business Ethics, Unlimited Books
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GEETH01X – Business Ethics