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Jayashree Sadri and Sorab Sadri
BUSINESS ETHICS
AND
VALUE CENTERED MANAGEMENT
Professor Jayashree Sadri
and
Dr Sorab Sadri
Jayashree Sadri and Sorab Sadri
THE BACKDROP
 Research Findings: International
A study conducted by the Sloan School of Management
(USA) confirmed the fact that only those companies will
remain as effective players in the global market which have
placed a great importance and which practice Value Based
Management
Such a powerful statement needs to be examined in detail
to understand what it implies for Indian Industry and
business.
Jayashree Sadri and Sorab Sadri
VALUES AND ETHICS DEFINED
 VALUES:
They are a set of beliefs held by a person or a group of
persons or an organization and which the organization or
group stands for, is known by, and form the basis of its
subsequent actions.
 ETHICS
Ethics are a pattern of moral behavior of a person, a group
of persons or an organization which are in consonance
with some assumed, explicit, stated or unstated beliefs.
Jayashree Sadri and Sorab Sadri
ETYMOLOGICAL ROOTS
 Ethics comes from the Greek word
ethos.
 Morality comes from the Latin word mores.
 Both signify “from a culture”.
 Hence culture specificity is germane to the
understanding of what is ethical and what is
not.
Jayashree Sadri and Sorab Sadri
Stock Market Crash 1987
THE THREE PRIMARY REASONS OF THE STOCK MARKET
CRASH WERE IDENTIFIED AS:
 Ham handed economic policies on the technical side.
 Poor communication between the banks (lenders) and the
industries (borrowers) both of whom were speculating
without adequate reserves.
 Low level of business ethics in the financial sector which
created disharmony and lack of trust between the various
markets: Sydney, London, New York, Frankfurt, Hong Kong
etc.
Jayashree Sadri and Sorab Sadri
THEREFORE
A SERIOUS STUDY OF ETHICS IS CRUCIAL
FOR UNDERSTANDING BUSINESS AND
INDUSTRY
Jayashree Sadri and Sorab Sadri
IMPLICATIONS OF ETHICS FOR BUSINESS
Business Ethics promotes and encourages the
following at all levels.
 DEPENDABILITY
 TRUST RELATIONSHIPS
 QUALITY ASSURANCE
 CONSISTENCY
 MARKETABILITY
Jayashree Sadri and Sorab Sadri
IMPLICATION LEVELS OF THE FIVE TRAITS
 At the level of the PERSON
 At the level of the PROCESS
 At the level of the PRODUCT
Business Ethics must thus be seen as
operating at all three levels.
Jayashree Sadri and Sorab Sadri
HOW DOES THE BUSINESS OR INDUSTRY
BENEFIT FROM THIS?
It enables the company to gain a
competitive edge in the market place by
converting the customer into a client and
also by creating a brand image that
reflects excellence and promotes
sustainability.
Jayashree Sadri and Sorab Sadri
BUSINESS ETHICS DEFINED
Ethics is a branch of moral philosophy which
prescribes a code of conduct, which, in turn,
acts as a guide to action
When this code or behavioral norm relates to
how industries must function and how
businesses must be run it is called Business
Ethics.
Jayashree Sadri and Sorab Sadri
MANAGERIAL ETHICS DEFINED
Management is that part of an organization which is charged
with the responsibility of meeting the goals of the organization.
Management is a dedicated team of persons who are
concerned with decision making and decision executing.
In the process of decision making and decision executing the
manager often encounters a dilemma which has an ethical
connotation.
The study and science of how the managers act or should act in
the face of an ethical dilemma is known as Managerial Ethics.
Jayashree Sadri and Sorab Sadri
PHILOSOPHICAL CANVAS OF
ETHICS
 All truth is relative and the only absolute truth
is the larger immensity (nature, God etc.) that
engulfs us.
 This immensity is too much for our mind to
comprehend.
 So we function within the ambit of our
bounded rationality (limited knowledge and
comprehension).
Jayashree Sadri and Sorab Sadri
SPECIFICITY OF ETHICS
Man is a microcosm of a larger reality and acts
according to his own innate logic.
Ethics is therefore:
person specific
context specific
culture specific
Ethical Modes of Conduct are Three Folds.
Jayashree Sadri and Sorab Sadri
BEHAVIORAL MODES IN THE FACE OF AN
ETHICAL DILEMMA
 Consequential Mode (Teleological)
 Non Consequential Mode (Deontological)
 Acceptance Mode (Praxis)
Jayashree Sadri and Sorab Sadri
CONSEQUENTIAL MODE(Teleological )
The manager gets into such a mode when he asks
himself the question:
 What is in it for me?
 Will it benefit to all or most?
Jayashree Sadri and Sorab Sadri
NON CONSEQUENTIAL MODE(Deontological)
The manager gets himself into such a mode when
he acts on the basis of:
 Some actions are right or wrong irrespective of
the consequences or the personalities involved
 When a moral issue is at stake, the minority
opinion is enough to carry the day or make a
difference.
Jayashree Sadri and Sorab Sadri
ACCEPTANCE MODE(Praxis)
The manager gets himself into such a mode when
his decision making is conditioned by an
affirmative answer to:
 Can the decision be discussed openly and freely
within reasonable limits and within reasonable
open circles?
 Will the decision be in line with what others think
and will it meet the peer ground?
Jayashree Sadri and Sorab Sadri
RESEARCH FINDINGS & IMPLICATIONS
 82% of the top managers studied and interviewed by
the authors in India operated in the Acceptance mode
when confronted with an ethical dilemma.
 Implication: The top level manager was not always a
leader who stood for values and blazed a trail for
others to follow. Rather he was someone who wanted
to play safe, hurt nobody in power, ruffle no feathers
and thereby continue to enjoy his position of
authority.
Jayashree Sadri and Sorab Sadri
History demonstrates and research supports the
fact that :
 Mangers operating in the Consequential
Mode are usually opportunists and
carpetbaggers. Very often they do well
in life since they take calculated
risks.
Jayashree Sadri and Sorab Sadri
Contd..
 Managers operating in the acceptance
Mode are usually insecure, seek peer
approval and promote mediocrity. Very
often they live behind a façade and
become “yes men”.
 The more insecure and unscrupulous
ones play organizational politics and form
a the guile and deceit brigade.
Jayashree Sadri and Sorab Sadri
Contd…
 Managers operating in the Non
Consequential Mode are the trailblazers,
history makers and true leaders. Most
often they are the ones who make the
difference. They are easily misunderstood
and often targeted both by the mediocrity
and those who rise high through bending
rules, sucking up, compromising dignity
and playing their political cards well.
Jayashree Sadri and Sorab Sadri
WHY DO SENIOR LEVEL MANAGERS WHO ARE
FINANCIALLY SECURE, ACT UNETHICALLY
Five possible reasons revealed by research conducted
between 1994 and 1997 in the UK.
 Unclear or weak individual and internalized values.
 Solely Bottom line driven concern
 Belief that anything is right so long as others believe it to
be right.
 Inherently exploitative nature for meeting personal goals
and ambitions.
 Feeling of insecurity
Jayashree Sadri and Sorab Sadri
WHY DO SENIOR LEVEL MANAGERS WHO ARE
FINANCIALLY SECURE, ACT UNETHICALLY
Similar research in USA showed
organizations tend to reward behavior that
violate ethical norms.
However most societies value ethics and
imbibe mortality in its citizen
Jayashree Sadri and Sorab Sadri
FINDINGS OF STUDY IN INDIA
 To our surprise the findings in India matched those in
both UK as well as in USA. There was one more
major combination of factors.
The standing army of unemployed
professionals, unscrupulous employers and
no state social security system usually made
people unable to take a principled stand.
Jayashree Sadri and Sorab Sadri
REASONS FOR CONFLICT
SOCIETAL NORMS
 Be open and honest
 Follow the rules at all costs
 Take the responsibility
 Be a team leader
ORGANISATIONAL
COUNTER-NORMS
 Be secretive and deceitful
 Get the job done anyhow
 Pass the buck
 Take credit and move up
Jayashree Sadri and Sorab Sadri
ETHICAL CODES AND ETHICS AUDIT
 CODE OF ETHICS:
It is a set of documents describing what an
organization stands for and the general rules of
conduct expected from all employees irrespective
of rank
Jayashree Sadri and Sorab Sadri
Code of Ethics…
 Code of ethics evolves from business ethics. It
helps in identifying the business aims, directions
and values.
 An ethics code describes the general value
system or ethical rules that are supposed to
guide employees in their everyday behavior in
the organization.
Jayashree Sadri and Sorab Sadri
Precautions in Evolving a Code
 The codes would have a positive impact if they
satisfy the following criteria:
a) They are distributed to every employee
b) They are firmly supported by the top management.
c) They refer to specific practices and ethical
dilemmas likely to be encountered by target
employees
d) They are evenly enforced with rewards for
compliance and strict penalties for
noncompliance.
Jayashree Sadri and Sorab Sadri
Ethics Audit
 An Ethics Audit is a practice of regular
assessment of employee behavior so as to
identify incidents of dubious (questionable)
behavior. Here two systems can operate:
either there is an Ethics Manager to whom
anyone can complain about anyone or where
everyone is his brothers’ keeper and is duty
bound to complain, correct, guide anyone
who may be seen as falling out of line with
corporate norms of conduct.
Jayashree Sadri and Sorab Sadri
A FINAL QUESTION TO THE LEARNED
READERSHIP
 Is it just good business sense for managements
to be ethical ?
OR
 Is it good for managements to be ethical and also
be seen to be acting ethically anyway?
Jayashree Sadri and Sorab Sadri
Your answer may reflect where
you stand ideologically.
THANK YOU

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Business ethics and value centered management

  • 1. Jayashree Sadri and Sorab Sadri BUSINESS ETHICS AND VALUE CENTERED MANAGEMENT Professor Jayashree Sadri and Dr Sorab Sadri
  • 2. Jayashree Sadri and Sorab Sadri THE BACKDROP  Research Findings: International A study conducted by the Sloan School of Management (USA) confirmed the fact that only those companies will remain as effective players in the global market which have placed a great importance and which practice Value Based Management Such a powerful statement needs to be examined in detail to understand what it implies for Indian Industry and business.
  • 3. Jayashree Sadri and Sorab Sadri VALUES AND ETHICS DEFINED  VALUES: They are a set of beliefs held by a person or a group of persons or an organization and which the organization or group stands for, is known by, and form the basis of its subsequent actions.  ETHICS Ethics are a pattern of moral behavior of a person, a group of persons or an organization which are in consonance with some assumed, explicit, stated or unstated beliefs.
  • 4. Jayashree Sadri and Sorab Sadri ETYMOLOGICAL ROOTS  Ethics comes from the Greek word ethos.  Morality comes from the Latin word mores.  Both signify “from a culture”.  Hence culture specificity is germane to the understanding of what is ethical and what is not.
  • 5. Jayashree Sadri and Sorab Sadri Stock Market Crash 1987 THE THREE PRIMARY REASONS OF THE STOCK MARKET CRASH WERE IDENTIFIED AS:  Ham handed economic policies on the technical side.  Poor communication between the banks (lenders) and the industries (borrowers) both of whom were speculating without adequate reserves.  Low level of business ethics in the financial sector which created disharmony and lack of trust between the various markets: Sydney, London, New York, Frankfurt, Hong Kong etc.
  • 6. Jayashree Sadri and Sorab Sadri THEREFORE A SERIOUS STUDY OF ETHICS IS CRUCIAL FOR UNDERSTANDING BUSINESS AND INDUSTRY
  • 7. Jayashree Sadri and Sorab Sadri IMPLICATIONS OF ETHICS FOR BUSINESS Business Ethics promotes and encourages the following at all levels.  DEPENDABILITY  TRUST RELATIONSHIPS  QUALITY ASSURANCE  CONSISTENCY  MARKETABILITY
  • 8. Jayashree Sadri and Sorab Sadri IMPLICATION LEVELS OF THE FIVE TRAITS  At the level of the PERSON  At the level of the PROCESS  At the level of the PRODUCT Business Ethics must thus be seen as operating at all three levels.
  • 9. Jayashree Sadri and Sorab Sadri HOW DOES THE BUSINESS OR INDUSTRY BENEFIT FROM THIS? It enables the company to gain a competitive edge in the market place by converting the customer into a client and also by creating a brand image that reflects excellence and promotes sustainability.
  • 10. Jayashree Sadri and Sorab Sadri BUSINESS ETHICS DEFINED Ethics is a branch of moral philosophy which prescribes a code of conduct, which, in turn, acts as a guide to action When this code or behavioral norm relates to how industries must function and how businesses must be run it is called Business Ethics.
  • 11. Jayashree Sadri and Sorab Sadri MANAGERIAL ETHICS DEFINED Management is that part of an organization which is charged with the responsibility of meeting the goals of the organization. Management is a dedicated team of persons who are concerned with decision making and decision executing. In the process of decision making and decision executing the manager often encounters a dilemma which has an ethical connotation. The study and science of how the managers act or should act in the face of an ethical dilemma is known as Managerial Ethics.
  • 12. Jayashree Sadri and Sorab Sadri PHILOSOPHICAL CANVAS OF ETHICS  All truth is relative and the only absolute truth is the larger immensity (nature, God etc.) that engulfs us.  This immensity is too much for our mind to comprehend.  So we function within the ambit of our bounded rationality (limited knowledge and comprehension).
  • 13. Jayashree Sadri and Sorab Sadri SPECIFICITY OF ETHICS Man is a microcosm of a larger reality and acts according to his own innate logic. Ethics is therefore: person specific context specific culture specific Ethical Modes of Conduct are Three Folds.
  • 14. Jayashree Sadri and Sorab Sadri BEHAVIORAL MODES IN THE FACE OF AN ETHICAL DILEMMA  Consequential Mode (Teleological)  Non Consequential Mode (Deontological)  Acceptance Mode (Praxis)
  • 15. Jayashree Sadri and Sorab Sadri CONSEQUENTIAL MODE(Teleological ) The manager gets into such a mode when he asks himself the question:  What is in it for me?  Will it benefit to all or most?
  • 16. Jayashree Sadri and Sorab Sadri NON CONSEQUENTIAL MODE(Deontological) The manager gets himself into such a mode when he acts on the basis of:  Some actions are right or wrong irrespective of the consequences or the personalities involved  When a moral issue is at stake, the minority opinion is enough to carry the day or make a difference.
  • 17. Jayashree Sadri and Sorab Sadri ACCEPTANCE MODE(Praxis) The manager gets himself into such a mode when his decision making is conditioned by an affirmative answer to:  Can the decision be discussed openly and freely within reasonable limits and within reasonable open circles?  Will the decision be in line with what others think and will it meet the peer ground?
  • 18. Jayashree Sadri and Sorab Sadri RESEARCH FINDINGS & IMPLICATIONS  82% of the top managers studied and interviewed by the authors in India operated in the Acceptance mode when confronted with an ethical dilemma.  Implication: The top level manager was not always a leader who stood for values and blazed a trail for others to follow. Rather he was someone who wanted to play safe, hurt nobody in power, ruffle no feathers and thereby continue to enjoy his position of authority.
  • 19. Jayashree Sadri and Sorab Sadri History demonstrates and research supports the fact that :  Mangers operating in the Consequential Mode are usually opportunists and carpetbaggers. Very often they do well in life since they take calculated risks.
  • 20. Jayashree Sadri and Sorab Sadri Contd..  Managers operating in the acceptance Mode are usually insecure, seek peer approval and promote mediocrity. Very often they live behind a façade and become “yes men”.  The more insecure and unscrupulous ones play organizational politics and form a the guile and deceit brigade.
  • 21. Jayashree Sadri and Sorab Sadri Contd…  Managers operating in the Non Consequential Mode are the trailblazers, history makers and true leaders. Most often they are the ones who make the difference. They are easily misunderstood and often targeted both by the mediocrity and those who rise high through bending rules, sucking up, compromising dignity and playing their political cards well.
  • 22. Jayashree Sadri and Sorab Sadri WHY DO SENIOR LEVEL MANAGERS WHO ARE FINANCIALLY SECURE, ACT UNETHICALLY Five possible reasons revealed by research conducted between 1994 and 1997 in the UK.  Unclear or weak individual and internalized values.  Solely Bottom line driven concern  Belief that anything is right so long as others believe it to be right.  Inherently exploitative nature for meeting personal goals and ambitions.  Feeling of insecurity
  • 23. Jayashree Sadri and Sorab Sadri WHY DO SENIOR LEVEL MANAGERS WHO ARE FINANCIALLY SECURE, ACT UNETHICALLY Similar research in USA showed organizations tend to reward behavior that violate ethical norms. However most societies value ethics and imbibe mortality in its citizen
  • 24. Jayashree Sadri and Sorab Sadri FINDINGS OF STUDY IN INDIA  To our surprise the findings in India matched those in both UK as well as in USA. There was one more major combination of factors. The standing army of unemployed professionals, unscrupulous employers and no state social security system usually made people unable to take a principled stand.
  • 25. Jayashree Sadri and Sorab Sadri REASONS FOR CONFLICT SOCIETAL NORMS  Be open and honest  Follow the rules at all costs  Take the responsibility  Be a team leader ORGANISATIONAL COUNTER-NORMS  Be secretive and deceitful  Get the job done anyhow  Pass the buck  Take credit and move up
  • 26. Jayashree Sadri and Sorab Sadri ETHICAL CODES AND ETHICS AUDIT  CODE OF ETHICS: It is a set of documents describing what an organization stands for and the general rules of conduct expected from all employees irrespective of rank
  • 27. Jayashree Sadri and Sorab Sadri Code of Ethics…  Code of ethics evolves from business ethics. It helps in identifying the business aims, directions and values.  An ethics code describes the general value system or ethical rules that are supposed to guide employees in their everyday behavior in the organization.
  • 28. Jayashree Sadri and Sorab Sadri Precautions in Evolving a Code  The codes would have a positive impact if they satisfy the following criteria: a) They are distributed to every employee b) They are firmly supported by the top management. c) They refer to specific practices and ethical dilemmas likely to be encountered by target employees d) They are evenly enforced with rewards for compliance and strict penalties for noncompliance.
  • 29. Jayashree Sadri and Sorab Sadri Ethics Audit  An Ethics Audit is a practice of regular assessment of employee behavior so as to identify incidents of dubious (questionable) behavior. Here two systems can operate: either there is an Ethics Manager to whom anyone can complain about anyone or where everyone is his brothers’ keeper and is duty bound to complain, correct, guide anyone who may be seen as falling out of line with corporate norms of conduct.
  • 30. Jayashree Sadri and Sorab Sadri A FINAL QUESTION TO THE LEARNED READERSHIP  Is it just good business sense for managements to be ethical ? OR  Is it good for managements to be ethical and also be seen to be acting ethically anyway?
  • 31. Jayashree Sadri and Sorab Sadri Your answer may reflect where you stand ideologically. THANK YOU