The Ultimate Guide to Business Ethics Definition - Trending topics and information

The Ultimate Guide to Business Ethics

Business Ethics Definition

welcome back to the human resource management ah in this lecture we will be touching upon a very very important topic that is very close to my heart and that is business ethics ah again usual sources places where i have taken this information from there is a book by ah gilmore and williams who are the editors of this book i have refer to an article in this book by christy and christy the article is called ethics and human resource management um i have refer to business ethics book called ah business ethics third edition south asia edition by crane and matten which is the standard textbook for business ethics easily available in the market ah and of course our favorite gro gomez mejia balkin and cardy the basic human resources book let us get straight to the point business ethics and the law various terms come up when we talk about ethics we we talk about morality we talk about ethics we talk about the law what is the difference between ethics and the law the law is the definition of the minimum acceptable standards of behavior okay so ah law is an application of ethics law is what is acceptable in the society that we live in that if not followed can be punishable um applicable standards of behavior  business ethics is primarily concerned with those issues not covered by the law or where there is no definite consensus on whether something is right or wrong business ethics begins where the law ends when we talk about the law everything is clear cut this is right this is not right this is lawful this is not lawful when we talk about business ethics business ethics is refers to those behaviors that may or may not be considered un lawful and there are no clear-cut definitions but these behaviors are unethical behaviors are those behaviors which are definitely uncomfortable for a large section of the society these are behaviors that people around us indulge in but they can be considered as uncomfortable they may not be unlawful but they are definitely uncomfortable for us ah you know as we say sometimes that ah ma your nose ends where mine begins which means please do not do something that can hurt me you know i have a right to my own personal bubble i have ah ma ah when we talk about ethics ah we talk about not disturbing another human beings comfort zone it is a very difficult topic we talk about it a lot but few understand it i also do not understand it fully but ah i will try to share with you what i know about business ethics.

Some definitions defining morality ethics and ethical theory morality is concerned with the norms values and beliefs embedded in social processes which defined right and wrong for an individual or a community what does the society consider as right what does the society consider as wrong and you will say i am the society yes you are we are all contributing to the society and we all attempt to change things that the society considers is right but we as people feel uncomfortable we as individuals feel uncomfortable about morality is what a larger chunk of the society feels is right or wrong appropriate or inappropriate ethics is worried about the investigation of profound quality and the use of motivation to explain explicit rules and principles that determine right and wrong for a given situation so ethics is an application of morality ethics is an attempt to define morality in terms of why something is right or wrong we we study why the society via large number of people consider something to be as right or wrong and that is called ethics and the reasons then help us take bridge the gap between morality and the law the law is very clear-cut and ethics serves as a bridge between morality and what how morality can be implemented now these rules that we elucidate from the from from morals are called ethical theories how do we take a decision as to what is right and what is wrong and and ah you know what are the steps we follow what is the reasoning we give all of this constitutes ethical theories we will talk about them in just a few minutes relationship between morality ethics and ethical theory morality ethics rationalizes morality ethics helps us understand reasons why something is right or wrong why the society considers something is right or wrong so ethics rationalizes morality to produce ethical theory that can be applied to given situations and that in turn translates into rules and laws and these can generate potential solutions to ethical problems okay why is business ethics important again very general topic but i think we should talk about it a little bit ah business is exerting a lot of power and control on ah our daily lives ah people have money people have power people have connections so you know the the ah the number of people who use your product or service ah usually or tends to determine i would not say usually but tends to determine ah what is considered a right and wrong and how it is implemented business has the potential to provide a major contribution to our societies in terms of producing the products and services that we want providing employment taxes

So business is important and how the business runs is what we decide you know we decide whether the business is running ah well or not how many people are getting affected and all that constitutes business ethics malpractices in business have the potential to inflict enormous harm on individuals communities and the environment you will say why am i learning this in a class on human resources we are learning all these things because as hr managers as potential hr managers we needs to know we need to be able to understand how what our company is doing is going to affect the people who are going to be associated with the company as stakeholders we will talk about the stakeholder theory in the next class but ah right now you know we need to what how whatever we are doing is going to influence the environment that our organization functions in many people do not follow the law when people are not ethical when they are doing things that the society that hurt the society then a lot of people you know they can in they can inflict a lot of damage on the environment they are a part of and that can be detrimental to humanity at large sometimes ah the demands being placed on business to be ethical by various stakeholders are constantly becoming more complex and challenging we are more aware of what is right what is wrong what can and cannot be done what should and should not be done so as human resources managers it is very important for us to know what the society expects from our organization people are more aware they know what organizations can and cannot do should and should not do we as hr managers need to bridge the gap between the environment.

The decision-makers in our organization and let them know that if we want to survive in the society in this environment we need to take care of certain things we need to ensure that we do not hurt the comfort zones of the very people we are here for okay few business people have received formal business ethics or training so it is very important that we study ethics here in this class and ethical violations continue to occur in businesses sometimes voluntarily intentionally sometimes unintentionally so it is very very important various ways in which different ah sized companies view business ethics this table is very interesting so i thought i would share it with you ah please pass your screens for a minute and see what is there in this table ah wa wa we have divided the organizations based on their size and or crane and matten the authors have divided the organizations based on their size and what they do so large corporations small businesses civil society organizations and public sector organizations the main priorities of large corporations in dealing with business ethics are financial integrity money matters very very important employee and customer issues so they are looking at these things ah on the other hand small businesses are only concerned with employee issues because in order to stabilize that they do not have too many complications with their financial.

Matters at the same time civil society organizations have a responsibility have are accountable to their clients to deliver the mission that they exist for so they are looking into that also that is a big ethical issue that they face ah integrity of tactics they are they exist for the community so they needs to do things right and they are accountable they need to be legitimate why because a lot of people are counting on them to do what they are there for and public sector organizations have to follow the law ah they need to take care of corruption there could be conflicts of interest procedural issues and they also have to be accountable to the community they function in and to their clients and other stakeholders much more than other organizations now approach to managing ethics in large corporations ah ah they have formal public relations or they have a systems-based procedure for dealing with managing ethics or dealing with ethics.

in small businesses it is trust based you call somebody and tell them please do not do this make sure you do the right thing so it is more of informal one kind of ah procedure of managing ethics ah civil society organizations again ah we we appeal to the ah ah ah to the emotions to ah ah ma to the values value systems of the people involved in the organizations and in public sector organizations the procedure is very formal and bureaucratic then in large organizations ah the people who are responsible ah for maintaining ethical standards and ah ah or the people who we are accountable to are ah the shareholders and other stakeholders sorry the people who we are accountable to our stakeholders in small businesses the owners are responsible for and you know ah accountable for  maintaining ethical standards in civil society organizations it is donors and clients and in public sector organizations the accountability is to the general public and higher level government organizations are responsible for maintaining the ethics main constraints that large organizations face or large corporations face are first is shareholder orientation what do shareholders want do they want money do they want the end product to be to be ah big or do they want everything to be done right and we will come to this how or what business later and because of their sheer size the complexity of managing ethical standards becomes very high small businesses they may have the lack of ah resources and they may not be able to focus so much attention on business ethics because of the ah a lack of resources because they are so busy stabilizing they may not know a lot of things civil society organizations again training is a big issue and in public sector organizations we get so complacent i shouldn't say we in a lot of ah you know ah ba when i say we i mean everybody ah there may be a lack of transparency in order to maintain confidentiality so you know it is it is a very dicey game it is a very challenging and ah as hard as one may try ah sometimes mistakes are made inadvertently but we need to be as careful as possible okay ethical impacts of globalization on different stakeholder groups as far as ethics are concerned ah various stakeholders are shareholders so they become very aware and they may be liable to risks employees again you know what kind of jobs are given to them how they managed those jobs etcetera consumers ah ah the goods that they consume that can ah you know and how they consume their goods where are these goods made ah etcetera so ah i mean we do not care we just want to have something i will give you the example of a very ah well-known case of ikea carpets ikea is a swedish ah organization and they have businesses all over the world and at one point of time they were accused of ah sourcing carpets from places where ah or sourcing carpets from ah ma workshops where children were put to make those carpets so there were they were accused of encouraging child labor by buying carpets from these people now ikea such a huge organization and they were flabbergasted they do not want to do anything unethical so they went and they investigated and they eventually came up with a system called rug mark and ah rug mark is ah assurance of of no child labor.

You can read up on this rug mark r u g m a r k and rug mark if end if you see a rug mark ah a stamp on any carpet you can be assured that this carpet was made in a workshop where no children were employed in making this carpet so but then it such a large organization people want these beautiful carpets they do not know where it is coming from somebody sitting somewhere sources it to somebody who wants to get the job done for various reasons and many times we do not even know who you know where what is happening at the back and and that is exactly what happened with ikea and of course as soon as they were alerted to it they took steps to prevent this from happening but anyway so this is one example of globalization and how consumer products can affect what ah you know can can ah ah ma oh make us vulnerable to ah to unethical practices okay suppliers and competitors ah suppliers in developing countries face regulation from mnc’s through supply chain management again you know we we are competing with various people so there is always competition and that put us a lot of pressure on us to perform and that can open a lot of doors to to to unethical practices civil society again ah ngo’s etcetera people’s awareness is rising there are people there are groups out there that are ensuring that the people are doing what is right and that puts up a lot of pressure on us to do things the way they need to be done government and regulation laws are being amended every day and we are trying to make sure we stay within the confines of the law and still make a profit so this is what globalization is going to different groups of ah stakeholder corporations and business ethics again a corporations are regarded as artificial persons by the law so anything that the corporation does is liable to legal ah questioning.

if as a corporation we are doing something we needs to be aware of how our actions are impacting others around us and that is why it is very important to study business ethics and to be to to be alert to be aware of our environment and how you know we can end up hurting our environmental okay ah various things that i want to bring to your notice here again you know i will just i will just make you aware of the small concepts this is not a class on business ethics this is a class on human resources but i think these terms will help you understand ethical issues when we address them in the next lecture ethical absolutism deals with universal principle some of us are very rigid on what we think is right or wrong so you know some of us are absolutists now being an absolutist which means we we ah ba ah we have very strict notions of what is right what is wrong what should be done what should not be done and and such people are excellent enforcers of rules and laws any high ah risk activity can be entrusted to people who are ethical absolutists because these people will not let even one thing go astray so these people are make very good ah auditors for example you know you you are you are very sure of of ah of what should be considered as right or wrong um ethical relativism on the other hand is a little more open little more flexible and according to to the ethical relativistic thinking relativistic thinking feel that ah things are right and moralities context dependent and subjective and everybody does things right from their own perspective so if you look at it things from somebody else's perspective you may agree to what they are saying so you know one should not judge everything based on a single set of standards

That is what relative relativism is all about you know you you look at things contextually and look for a rationale for the decisions that people make and pluralism is we all coexist so live and let live and ah pluralism is okay i mean you are right where you are and right where i am i do not have to agree to you you do not have to agree to me we are all coexisting i do not need to know the reason for you to ah ah ah to be making your decisions i do not need to know why you made a particular decision i ah may or may not agree with that but but we coexist and you let me be and i will let you be so that is pluralism some theories in business ethics we have a egoism and we have utilitarianism and we have rights and justice now three theories or three of the theories that can determine how business decisions are made are egoism where a person puts his or her individual desires and interests before everyone else's the benefit coming to me is more important than the benefit going to anyone else if i get what i need from this situation it is okay if i do not get it then it is a wrong okay and we try and maximize desires or self-interest that is egoism ah huhumm.. and its a consequentialist ethic the end result is more important for me what i get in the end is much more important for me than how i get it if i get what i want all is okay all is well that ends well that is the con consequentialist ethic it is a plus minus game so if the profit is more than the loss whatever i have done is is all right utilitarianism is again a consequentialist ah ethic or consequentialist way of making decisions where we say if in the end whatever has come has given us better things or the utility of whatever we have done is higher for a larger number of people then it is okay so collective welfare takes precedence over individual welfare and over the duty

The process or how things were done if collectively things are being ah ah ah are are being considered okay if they are benefiting a larger number of people then it is okay so that is what utilitarianism says you know ah that is a consequentialist ethic again towards the end everything should be okay for most people rights and justice are more about not crossing your line not infringing upon another person’s zone ah it deals with respect for human being’s ah and it is a non-consequentialist ethic it does not matter whether whatever you are doing benefits you know several people if it inconveniences people if how you do it has inconvenienced some people then it is not right everybody has a right to their own space to their own way of doing things to their own thinking and if we infringed upon that then even if the end result ends up benefiting them it is not right so this ah va this is these are some of the ways in which we make decisions okay example of a utilitarian analysis in the case of child labor um ah i just show you how people make decisions action one is doing the deal right so ah say you you have ah a case of child labor where ah a person has to decide between making a deal with a dealer who sources carpets from a workshop where children are employed to make up its now let us see there are two options here either you do the deal you get those carpets from the dealer

You do not get the carpets from that dealer okay so this is doing the deal or not doing the deal making the deal or not doing the deal pleasure we had we are dealing with utilitarian analysis how do we assess things this is a nice dilemma that is presented here in the book the pleasure that comes to the product and the stakeholders here are the product manager say let us let us ah i will i am sorry i will remove the word thai here from here i will remove this word from here it should be just dealer so any dealer could be a thai dealer could be an indian dealer it does not matter what is important here is what is being dealt with here um we could have the product manager who has to buy a certain number of carpets and ah please focus on the slide now so and we have the dealer who thinks ah ba ah who needs to get the deal the parents are who is the direct contact or who is the the go-between the the liaison between the product manager and the family of the or the um ah source of these carpets and ah we have the parents of the children we have children themselves and maybe a grandmother at home so let us. consider this situation now the product manager says that if i do the deal if i make the deal if i buy these carpets i will get a good deal for the business um and if i get a good deal for the business i could get a personal bonus the pain i will face is bad conscience my god the employee small children ah i will feel uncomfortable you know there could be a possible risk for company reputation if the company is sued for child labor by by human rights ah organizations so that could be detrimental um ah the dealer says okay i am getting the money so it is a good deal so it is all pleasure there is no pain involved the parents say that it is necessary to do the deal to secure the families income again they also feel bad about having their children work because the prospects for children are limited the children feel good about being needed being grown-up they get the approval of the parents people say oh you are doing a fantastic job you are doing such good work so they feel great but it is physical hard labor and they have no chance of school education and they realize it later when they grow up grandmothers very happy if the deal is done the families able to look after her needs so everybody is okay and let us hope this is a nice grandmother so she will feel bad about the children not doing the i mean children not getting the education now if the deal is not done if the dealer if the product manager decides not to source carpets from this factory the pleasure is that there is less legal risk there is good conscience but on the other hand pain will be loss of a good deal he may lose out on his bonuses he may need to find another place not doing the deal for the dealer will be loss of good deal he will have to search for a new customer he may or may not find somebody his children may go hungry at the end of the day parents will have to search for other sources of income their children know how to make carpets but they are not able to sell the carpets because they cannot make the carpets without the help of these children and ah for whatever reason if the carpet is not sold they will have to wait to eat children not doing the deal pleasure is no hard work..

They have time to play and go to school and grow up beautifully but the pain is the they are they may be potentially forced to do other more painful work that may not be as productive and for the grandmother there could be loss of economic support so when we look at this chart as uncomfortable as it sounds ah it is a ah when you look at the way this has been analyzed you will see that it is important for this family to go ahead and do the deal based on this plus minus cost benefit analysis the the ah deal will be done so it is it is you know just just look at this just compare these things it is such a tight situation this is the situation that ethics put us in you know our standards are willingness to look after the interests of the ah or our keenness to to ah take the interests of ah people around us into account puts us in this kite kind of a tight bind where we have to decide what is good and what is bad when you look at this using my god i have been thinking about child labor and this and that but then i do not know maybe from the perspective of the family ah this is good maybe from the perspective of the of the family involved there is a choice between the devil and the deep sea let us say the dealer have find something else but this family may end up suffering a lot more by not letting their children work so what do we do how do we decide are we in a position to give them alternative sources of employment or income if we are then we go ahead and forget about the deal but if we are not able to do that then what do you do so we feel uncomfortable both ways and this is one way in which we do a cost benefit analysis as employees as human beings as people as corporations and then decide what we want to do and what we do not want to do now i wanted to share this dilemma with you so it would get you thinking about how this whole ah sticky concept of business ethics work works in the next lecture we will deal with the application of whatever we have studied in this lecture in human resources management specifically in the context of of of us being managers in the human resources department so thank you for listening...