Business Ethics and Corporate

Governance - Introduction
Business Ethics - Meaning
• Business ethics refers to implementing appropriate business policies
and practices with regards to arguably controversial subjects.
• Some issues that come up in a discussion of ethics include corporate
governance, insider trading, bribery, discrimination, social
responsibility, and fiduciary responsibilities.
• The law usually sets the tone for business ethics, providing a basic
guideline that businesses can choose to follow to gain public approval.
• Business ethics are meant to ensure a certain level of trust between
consumers and corporations, guaranteeing the public fair and equal
treatment.
Ethics- originated from a Greek word
ETHOS(meaning custom)
Views
- Churchill – application of values to complex problem
- Mackenzie – study of what is right or good in human conduct.
Foundation-
• Rationality
• Least Harm
• Consistency
• Impartiality
• Openness
Importance
• spirit of a community- collective effort
• helps in resolving dilemmas
• develop a sense of professional responsibility with ethical sensitivity
• helps in developing ethical decision-making skill
• Enhances the knowledge of relevant standards
• Sharpen the ethical decision-making skills
3 C’s Of Ethics
Golden Rule
Nature of Ethics
• Ethics is a normative science: It is mainly concerned with what ought to be done rather
than what is the case. It differs from positive science. A positive science is concerned
with facts and explains them by their causes, but ethics deals with values. It evaluates
standard or norms by which we can judge human action to be right or wrong. Logic
and Aesthetics are also considered as normative sciences.
• Self – imposed
• Morality
• Discipline
• Not a religion- individual motive -The nature of ethics also cannot be associated with
the influence of religion. Ethics is like a common rule which is applicable to everybody
irrespective of his/her religion.
• It is not a science- its relative
Personal Ethics Professional Ethics
Managerial Ethics
Managerial ethics is a set of principles and rules dictated by
upper management that define what is right and what is wrong in
an organization. It is the guideline that helps direct a lower
manager's decisions in the scope of his or her job when a
conflict of values is presented.
Personal Ethics

• Personal ethics are ethical principles that a person uses when making decisions and behaving in both personal and
professional settings. These ethics influence various aspects of a person’s life and help individuals develop their work ethic,
personal and professional goals, and values. Individuals use their ethics to determine between right and wrong and
influence how someone behaves in challenging situations. Each person’s code of ethics varies, but many people share
common ethics such as honesty and respect.

Why are personal ethics important?

• Allow leaders to more effectively lead their teams:
• Instill a sense of trust and support in leaders: Individuals who follow a sound ethical code are easier to believe in and are
more likely to establish credibility among others.
• Give individuals a solid basis of which to determine the most appropriate action in any given situation:
• Improve the decision-making process
• Set a standard of behavior: In the workplace and in life, ethics help establish an appropriate standard of behavior for
individuals.
• Support motivation: Individuals with strong ethics are often easily self-motivated and willing to go the extra mile to
accomplish a task or goal on time and in the correct manner.
Scope of Business Ethics
What is an Independent Director?

• An independent director is a member of the board of directors who

(1) do not have a material relationship with the company,
(2) is not part of the company’s executive team, and
(3) is not involved with the day-to-day operations of the company.
• To be able to list on certain exchanges, there are requirements for the
number of independent directors on the board.
• A material relationship is a relationship that can interfere with the
exercise of a director’s independent judgment.
Role and Duties of Independent Directors
• Safeguarding the Interest
• Analysing the performance
• Meditating
• Not Disclosing
• Actively Participating
• Keeping themselves updated
• Conflict Management
Board of Directors
• A board of directors (B of D) is an elected group of individuals that
represent shareholders. The board is a governing body that typically
meets at regular intervals to set policies for corporate management
and oversight. Every public company must have a board of directors.
• DUTIES:-
• Fiduciary responsibility
• Mission and Vision
• Oversight
• Annual Meeting
Thank you