MODULE 1

INTRODUCTION
Our acts or responses to a situation practically reflect our feelings, thinking and judgment based on our moral principles and values. The ultimate aim of ethical behaviour and practice is to feel satisfied (and not necessarily justified) about ones conduct and behaviour or action and its outcome. Acting in keeping with ones ethics involves making an effort to know the possible consequences of ones action and, then, to be sure that the action is to his or her satisfaction.

ETHICS
Ethics is a system of moral principles and attitude that guides our actions to be morally correct, fair and just. Ethics is about enforceable morality, justice and fairness of conduct, actions and governance by individuals, institutions, companies, organizations, societies and governments. However, ethics are not the law unto itself nor are they instruments parallel to the laws of the land.

MORALITY
Morality and morality of actions are the yardsticks of ethics. Morality is the subject matter that ethics investigates through a process of moral reasoning. Moral standards include those norms that we believe are morally right or wrong as well as the value we place on subject matters that are morally good or bad.

CHARACTERISTICS OF MORAL STANDARDS

Morality and morality of actions are the yardsticks of ethics. Morality is the subject matter that ethics investigates through a process of moral reasoning. Moral standards include those norms that we believe are morally right or wrong as well as the value we place on subject matters that are morally good or bad.

MORAL REASONING FOR ETHICS

Moral reasoning tries to logically place or project facts and figures that help one to judge human behaviour, institutional activities, policies, programmes, etc. as to whether they are in accordance to, or in violation of, acceptable moral standards. Distinct features of Moral or ethical reasoning:
identifying what constitutes moral standards; examining facts and figures concerning the policy, behaviour and actions under the specific situation; and arriving at a moral judgment on the basis of rightness or wrongness of policy, behaviour or actions.

Cont
To decide if an action or policy is ethical, one has to exercise moral reasoning by examining the factual information with regard to morality of the action or policy by analyzing:
a) b) c) d) the utility of the decision, rights and duties of the individuals concerned with the decision; if justice is being meted out by the decision; the amount of care being shown to those who are related and valued in the subject matter; and the consistency of the decision with the past and present.

MORAL RESPONSIBILITY
Moral responsibility means owning responsibility for doing something knowingly and deliberately that had caused harm or injury to others. Establishing moral responsibility has the connotation of law or rules, in addition to its ethical implications. If any one under the circumstances acted out of (a) ignorance or (b) inability, he or she may be excused of moral responsibility. However, one cannot deliberately stay ignorant and claim innocence for a wrongdoing be it as a person or company.

A tentative flow sheet for Ethical Judgement

BUSINESS ETHICS
"Business Ethics" can be defined as the critical, structured examination of how people & institutions should behave in the world of commerce. In particular, it involves examining appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions of individuals or firms affects others.

CONT
Business Ethics can be defined as written and unwritten codes of principles and values that govern decisions and actions within a company. In the business world, the organization's culture sets standards for determining the difference between good and bad decision making and behavior.

BUSINESS ETHICS
A branch of philosophical ethics Reflect: In what ways do the practices and decisions made within business promote or undermine human well-being?

How ought we to live?

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WHY STUDY BUSINESS ETHICS?

Is it a discipline of sentimentality and personal opinion? Whos to say what is right and what is wrong? Is there a place for ethics in business? FAMOUS CLICH The business of business is business

The flow of ethical governance process in a company

WHAT ARE VALUES?

Those beliefs or standards that incline us to act or to choose in one way rather than another. A companys core values are those beliefs and principles that provide the ultimate guide in the companys decision-making.

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If you stand for nothing. You fall for anything.

Its not doing things right, but doing the right things.

 You have been given a cheque for Rs. 100000 to do whatever you like with it. What would you do with it?
Share with the class what you would do with it.

Conclusion:

What you spend the money on has everything to do with what you value

What things did you do during the past week.

What you choose to do with your time also has everything to do with what you values.

COMPANIES CITED TO STUDY VALUES

IBM Johnson & Johnson Hewlett Packard Procter and Gamble Wal-Mart Merck Motorola Sony General Electric
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CORPORATE CULTURE
Another way of saying a corporation has a set of identifiable values. But there is no right set of core values.

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WAYS OF THINKING
The field of ethics is usually broken down into three different ways of thinking about ethics: descriptive, normative and analytic.

DESCRIPTIVE ETHICS
The category of descriptive ethics is the easiest to understand - it simply involves describing how people behave and/or what sorts of moral standards they claim to follow.

Descriptive ethics (non-normative)

analysis of role of ethics in the social world analysis of human "worldviews," narratives, customs, rites, and so on; the cultural carriers of moral notions and claims
heavily dependent on the social science

CONT
In short, descriptive ethics asks these two questions: 1. What do people claim as their moral norms? 2. How do people actually behave when it comes to moral problems?

Here are some examples of statements from Descriptive Ethics: 1. Most Indian think that racism is wrong. 2. Among certain cultures, there is no stigma attached to homosexuality. Stanley Milgram's study found a great discrepancy between what people claimed and what they actually did.

NORMATIVE ETHICS
The category of normative ethics is also relatively easy to understand - it involves creating or evaluating moral standards. Thus, it is an attempt to figure out what people should do or whether their current moral behavior is reasonable.

CONT
In short, normative ethics addresses questions like the following: What should be our moral obligations? What is Right and what is Wrong? What should be our moral values? What is Good and what is Evil? Here are some examples of statements from Normative Ethics: 1. Do unto others as you would have them do unto you. (Golden Rule) 2. That which God wills is the Good.

METAEHICS
Metaethics involves reasoning about the presuppositions behind the moral systems developed under the category of normative ethics. Whenever a moral system is created, it is based upon certain premises about reality, human nature, values, etc. Metaethics is all about questioning the validity of those premises and arguing that perhaps we don't really know what we are talking about after all.

CONT
Analytic ethics asks quite a lot of questions, including: How are moral judgments even possible? Why be moral at all? Do moral values exist objectively or only subjectively? Are moral values relative to something, like culture or individuals? Can morality exist independently of religion? Do people have a free will which would make moral judgments possible?

Metathics (non-normative)
analysis of concepts such as "ought" "right" and "wrong", "good" and "bad", duty, responsibility, etc. analysis about how people come to, reason about, and justify their normative ethics.
heavily dependent on Analytic Philosophy

CASE OF COLLAPSED MINE

WHAT IS NOT BUSINESS ETHICS?

Ethics is different from religion Ethics is not synonyms with law Ethical standards are different from cultural traits Ethics is different from feelings Ethics is not a science in the strictest sense of the term Ethics is not just a collection of values

CODE OF CONDUCT AMD ETHICS FOR MANAGERS

Integrity Impartiality Responsiveness to the public interest Accountability Honesty Transparency

DECISION MAKING SITUATIONS

FACTORS INFLUENCING BUSINESS DECISION MAKING

Economic Point of view Legal Point of view Moral Point of view How these point of view may be integrated to form an approach to business decision making that can aid people facing difficult ethical situations.

JOHNSON & JOHNSONS

An example of an integrated approach is provided by J & J s response to the Tylenol crisis. Under the leadership of CEO James Burke, the company quickly cleared all bottles of Extra Strength Tylenol capsules off store shelves in the Chicago area. A decision was made to be completely candid with the medical community, the media, and the public. Accordingly, the company issued warnings to physicians and hospitals around the world, briefed the press fully, and provided a toll free number for answering consumer inquiries.

ETHICAL THEORIES
Teleological (Utilitarian or consequentialist) Deontological theory (Duty Based) Relativism : Subjective and Cultural Divine Command theory Character based theory Social contract theory

TELEOLOGICAL
Actions are justified on teleological theories by virtue of the end they achieve, rather than some feature of the actions themselves. According to utilitarianism, our obligation in any situation is to perform the action that will result in the greatest possible balance of good over evil.

CONT
CREATORS OF CLASSICAL UTILITARIANISM: Jeremy Banthem, John Stuart Mill JEREMY BANTHEMS VERSION - Principle of utility - Hedonistic calculus - Objections

CONT
MILLS VERSION - Greatest happiness principle - Treatment of Pleasure - Objections

FORMS OF UTILITARIANISM
Consequentialism Hedonism Maximalism Univarsalism

ACT AND RULE UTILITARIANISM

An action is right if and only if it produces the greatest balance of pleasure over pain for everyone. An action is right if and only if it conforms to a set of rules the general acceptance of which would produce the greatest balance of pleasure over pain for everyone.

DEONTOLOGICAL THEORY
Deontologists maintain that actions are morally right or wrong independent of their consequences. Creator: German Philosopher Immanuel Kant Action is right if it has a certain form i.e. nature of reason

RELATIVISM
Subjective Cultural

Relativism
No universal norms of right and wrong One person can say X is right, another can say X is wrong, and both can be right

Subjective relativism
Each person decides right and wrong for herself Whats right for you may not be right for me Pros: Well-meaning and intelligent people disagree on moral issues Ethical debates are disagreeable and pointless Cons: Blurs distinction between what you think is right and what you want to do Makes no moral distinction between the actions of different people not the same as tolerance Decisions may not be based on reason Not a workable ethical theory

Cont...
Pros: Different contexts demand different guidelines It is arrogant for one society to judge another Morality is reflected in actual behavior

Cont
Cons: Because two societies do have different moral views doesnt mean they ought to Doesnt explain how moral guidelines are determined Doesnt explain how guidelines evolve Provides no way out for cultures in conflict Because many practices are acceptable does not mean any cultural practice is (many/any fallacy) Societies do, in fact, share certain core values Only indirectly based on reason Not a workable ethical theory

Divine Command Theory

Good actions: those aligned with Gods will Bad actions: those contrary to Gods will Holy books reveal Gods will. Use holy books as moral decision-making guides. Pros: We owe obedience to our Creator. God is all-good and all-knowing. God is the ultimate authority.

Cont
Cons: Different holy books disagree Society is multicultural, secular Some moral problems not addressed in scripture Based on obedience, not reason

Duty-Based
Kant-only good without qualification is a good will, or the desire to do the right thing. Kant-morality is grounded in duty or obligation that people have to each other Rejects happiness or desirable consequences Rational capacity distinguishes human and reveals our duty to others Every person has the same moral worth Every person is an end in himself and not a means to an end Criticism-no conflict resolution

Rule Deontology
deon is Greek for duty A principle determines the basis for moral obligations Categorical Imperatives 1. Act on a rule that can be universally binding on all people 2. Act on the rule that ensures that all people will be treated as ends in themselves (easier to apply) Based on universality and impartiality

Cont
Pros Rational Universal moral guidelines All persons are moral equals Workable ethical theory Cons Sometimes no rule adequately characterizes an action. There is no way to resolve a conflict between rules. Kantianism allows no exceptions to moral laws.

Consequence-Based (Utilitarianism)
Jeremy Bentham and John Stuart Mill Goal: produce desirable outcomes Consequences are a standard for evaluation Morality has nothing to do with intent An action is good if it benefits someone An action is bad if it harms someone Utility: tendency of an object to produce happiness or prevent unhappiness for an individual or a community Happiness = advantage = benefit = good = pleasure Unhappiness = disadvantage = cost = evil = pain Principle of Utility: An action is right (or wrong) to the extent that it increases (or decreases) the total happiness of the affected parties.

Two flavors: Act Utilitarianism and Rule Utilitarianism

Act utilitarianism applies Principle of Utility to individual actions Rule utilitarianism applies Principle of Utility to moral rules

Character-Based
Virtue ethics of Plato and Aristotle Focus on criteria of character development acquisition of good character traits from habit No formal rules NOT what should I do? BUT what kind of a person should I be? Criticisms no conflict resolution no examination of consequences

APPLY THEORIES DISCUSSED

An airplane manufacturer has spent a great deal of money in developing a new airplane. The company badly needs cash because it is financially overextended. If it does not get some large orders soon, it will have to close down part of its operation. Doing that will put several thousand workers out of jobs. The result will be disastrous not only for the workers, but also for the town in which they live. The president of the company has been trying to interest the government of a foreign country in a large purchase. He learns that one of the key governmental ministers in charge of making the final decision is heavily in debt because of gambling. He quietly contacts that minister and offers him Rs. 10 lakhs in cash if he awards the contract for five planes to his firm.

CONT
The money is paid and the contract is awarded. The president argues that his action is justifiable because the business, the workers jobs and the town were all saved, the minister was able to pay his debts and the foreign country received the planes it needed. The good produced, he agues, is greater than any harm done by the payment to the minister. Is he correct?

ADDITION AS PER T1

The Theory of Justice

The theory of justice revolves around the fundamental principles to guarantee a just and morally acceptable decision. It implies that the actions are guided by fairness, equity and impartiality.

CONT
Distributive Justice Retributive Justice Compensatory Justice

Cont
Distributive justice says that equals should be treated equally and unequal should be treated unequally, and there should be consistency in the treatment. Distributive justice is commonly called for in business in areas like employee gradation and promotion, wage policy, eligibility for different types of perks, dealers commission, dividend distribution, etc. with a view to ensuring equality, uniformity and consistency in operations.

Cont
Retributive justice demands that a just action should be taken either as penalty or reward in a manner that deserves the cause for which the penalty or reward is being meted out. It generally deals, in practice, with the conditions under which it is just to punish a person for a wrongdoing.

Cont
Compensatory justice is that which deals with the justice of restoration for being wrongfully harmed by somebody else. It demands that a person who has done wrong should restore or equally compensate for what has been lost or harmed.

Others types of justice

Justice of equality states that every person working in a group should be given equal shares of the groups benefits and burdens. It applies to society, business and families. Justice based on contribution states that benefits and burdens should be distributed in proportion to what each individual contributes to the cause or action. Justice based on needs and abilities states that the burden of work should be distributed as per peoples ability, and benefits should be distributed as per peoples needs.

The Ethics of Care

The ethics of care refers to necessity of showing extra care and consideration to protect someone else from the adverse effect of ones choice that can make someone vulnerable in a particular situation. Ethics of care necessitates examining contextual details of the situation in order to safeguard and promote specific interests of those involved because they are interdependent for accomplishing their specific interests as long as the interests are moral and legal.

CONT
Each of us lives and exists in an environment of care and concern in the society, and we should preserve and nurture these environments and relationships; Each of us should exercise care for those with whom we are socially and otherwise related by attending to their needs, wellbeing and desires as seen from their own personal perspective, and by responding positively to the same so as to preserve the values of those relationships; Ethics of care is more than just following the moral principles discussed earlier; it involves attending and positively responding to the wellbeing and welfare of those persons with whom we share close and valuable relationships.

Ethics of Virtues
Ethics of virtue complement and add to utilitarianism, rights, justice and care by looking not at the actions people are required to perform, but at the character they are required to have. A moral virtue is an acquired quality that is praised and valued as a part of a persons character. It is indicative of good moral character. Some important ethics-related-virtues that make for a good individual or a successful manager are courage, prudence, wisdom, justice, fairness, temperance and intelligence.

STEPS IN MORAL JUDGEMENT

CASE EXCERCISE
You are the senior Software consultant in your firms think tank which consists of ten people with various specialities. Because of you and your group, the company was an industrial leader for the years. The company wanted to diversify by opening one more company in the gulf. Your boss has already decided the individuals in the think tank. However, your boss is asking you to select a person from your group of thinkers to head the new think tank at Gulf.

CONT
The person best qualified is your immediate assistant Gopal. Gopal is highly educated, experienced and he has trained three teams earlier in the companys most successful software projects. If he is sent to Gulf a big vaccum would be there and it is difficult to replace him. At the same time, boss is interested to put his niece Sharmila, who is a sharp graduate of the Local university but she was not in the think tank and was also trying to push you around. If you recommend Gopal, which vaccum and still have problems from Sharmila or recommend Sharmila to Gulf making the boss happy and getting rid of her.

CASE EXCERCISE
You are manufacturer of software products in India by name Shrishti Softech. Your company has got an Indian agent in Phoenix at USA who could find a software market in the Mexican market where cash under the table Mordita (a little bit) is past of doing business. This payoff practice is ingrained in the Mexican culture that a business cannot open Mexican operation without going along. You have already observed many companies that did not pay and failed to enter the Mexican market.

Cont
You have also observed that those paid tended to enter the market and do fairly well in it. Yu have many options a. With your agent you can operate, you also have the satisfaction of not involving yourself in Mordita, whereas your agent can manage. b. If you can manage yourself without your agent, you save commission. c. Also you can continue to raise your stature with IT companies in Mexico and encourage them to lobby the government to open the market d. You can pay the bribe yourself or through your agent or not pay anything and wind up the Mexican market.

CASE
Assume that you are the personnel director for a manufacturing firm that is undergoing a major change in direction. The change involves the hiring of young, energetic workers and you have some difficult decisions to make. The firm is building two new technologically advanced plants and it will close four of its old plants out of five. Rattan is a fifty six year old production worker who has been with your firm for ten years. In your opinion, he is not fit being retained, but he is not old enough to be sent out with any retirement benefits.

Cont
You must decide whether to place Rattan in the only remaining old plant the company has left or fire him.

CASE
You are general superintendent of High sky construction company. You learnt a few weeks ago that an attempt was under way to unionize the companys construction crews. A disgruntled carpenter, Hari, was spearheading the organizing attempt. You recently saw Hari even talking to a known professional organizer. You believe unionization will bring with it demands for higher wages and for costly work rules. And high sky is already on the verge of bankruptcy. The company president, a hardnosed businessman, has just told you to stop the unionizing attempt, even if you have to invent a reason to fire Hari.

Cont
The problem is that you think you understand why Hari has turned against the company and you sympathise with him. A few months ago, you had a superintendents job and you knew he was better qualified. Your friend did not turn up, and you had intended to offer the job to Hari. But if you do so now, it will seem like a bribe to get his cooperation. Besides, he might tell you to take the job and shove it.

CASE
You run a construction company and your company is bidding on a Rs. 2 cr public housing project. A local electrical sub contractor submitted a bid that you know is 20% too low; It could put the sub contractor out of business. In fact the bid was Rs. 50000 below those of the other four contractors. But accepting it will improve your chance of winning the contract for a big housing project.

Cont
You are asking yourself the same question over and over again: is it fair to allow someone to drive himself into possible bankruptcy when he does not know it but you do? You can accept either the low bid and almost assure that your company will get the Rs. 2 cr contract or you can throw out the bid and submit a realistic overall bid on the contract.