1. BUSINESS
ENVIRONMENT
BUSINESS ETHICS

2. BUSINESS ETHICS
 Definitions:
 The term ‘ethics’ is generally used to refer to
the rules or principles that define right and
wrong conduct.
 In Webster’s Dictionary, ethics is defined as
“the discipline dealing with what is good & bad
and with moral duty and obligation.”

3. BUSINESS ETHICS
 “Business ethics is concerned with truth and
justice and has a variety of aspects such as the
expectations of society, fair competition,
advertising, public relations, social
responsibilities, consumer autonomy, and
corporate behavior in the home country as well
as abroad.”
-Clarence D. Walton

4. BUSINESS ETHICS
 Theodore and James Weber suggested three ways for
applying and integrating ethical concepts with daily
actions
 1) Establishing a company policy regarding ethical
behavior or developing a code of ethics
 (2) Appointing an ethics committee to resolve ethical
issues, and
 (3) Teaching ethics in management development
programs

5. Types of Managerial Ethics
 Archie B. Carroll, an eminent researcher in the area
of social responsibility, identified three types of
management, depending on the extent to which their
decisions were ethical or moral:
 Moral management
 Amoral management
 Immoral management

6. Types of Managerial Ethics
 Moral management strives to follow ethical principles and
doctrines. Moral managers strive to succeed without
violating ethical standards. They seek to succeed while
remaining within the bounds of fairness and justice. Such
managers undertake activities which ensure that even
though they engage in legal and ethical behavior, they
continue to make a profit.

7. Amoral management
 This approach is neither immoral nor moral. It
simply ignores ethical considerations. Amoral
management is broadly categorized into two
types.
 Intentional and
 Unintentional.

8. Immoral management
 Immoral management not only ignores ethical concerns, it also
actively opposes ethical behavior. Organizations with immoral
management are characterized by:
 Total concern for company profits only.
 Stress on profits and company success at any cost. Lack of
empathy – managers are hardly bothered about others’ desire to
be treated fairly.
 Laws are regarded as hurdles to be removed or eliminated.
 Strong inclination to minimize expenditure.
 The basic principle governing immoral management is: “Can we
make money with this action, decision, or behavior?” Thus, in
immoral management, ethical considerations are
immaterial.

9. Types of Managerial Ethics

10. Factors that Influence Ethical
Behavior

11. Stages of Moral Development

12. Implications of six stages
 The following conclusions can be drawn from the
study of the six stages of moral development of
managers:
 Individuals move up these stages in a sequential
manner.
 The moral development of an individual may
stop at any stage.
 Most managers are at Stage 4 of moral
development.

13. Best Practices in Ethics and
Compliance
 Risk Assessment—create priorities; words
and actions always consistent
 Value-based, compliance-supported
materials and activities
 On-going, highly interactive, work group-
based education and training
 Everyone held accountable—rewards and
punishment are made transparent

14. The Ethical Organization
1. Clear Set of Values
2. Open and Effective Communication of
Values
3. Leaders Exhibit the Values
4. Values embodied in policies and procedures
5. Open dialogue about value decisions
6. Accountability: everyone held to these values
7. Consistency: words and actions in sync

15. Ethical Guidelines for
Managers
 Obeying the law
 Tell the truth
 Uphold human dignity
 Adhere to the golden rule
 Allow room for participation
 Always act when you have responsibility
 Build a ethical culture by example setting

16. Ethics committee
 Ethics committees perform the following functions:
 Organizing regular meetings to discuss ethical
issues.
 Communicating the code to all members of the
organization.
 Identifying possible violations of the code.
 Enforcing the code.
 Rewarding ethical behavior and punishing those
who violate the organization’s code of ethics.
 Reviewing and updating the code of ethics.
 Reporting the activities of the committee to the
board of directors.

17. Ethics audits
 Ethics audits involve the systematic
assessment of the adherence of employees
to the ethical policies of the organization.
They aid in better understanding of the
policies and also identify the deviations in
conduct that require corrective action.

18. Benefits of Managing Ethics
in the Workplace
 Attention to business ethics has substantially
improved society.
 Ethics programs help avoid criminal acts “of
omission” and can lower fines.
 Ethics programs cultivate strong teamwork and
productivity.
 Ethics programs promote a strong public image.