INTRODUCTION TO

BUSINESS ETHICS
=================
 Ethics
• Ethics was considered as irrelevant by corporate
loyalists
• Now it is seen as critical for success of business
• Factors forcing towards Ethical practices
– Consumer Movement
– Awareness in stakeholders – They are not
indifferent to unethical practices like
• Financial Irregularities,
• Tax evasion,
• Kick-backs,
• Poor Quality products
• Hazardous working conditions
• Non-compliance with environmental issues
 Ethics
• New Norms are
– Integrity,
– Transparency
– Open communication
• They result in long run in economic gains
like market capitalization
 Ethics
• Ethics from
– Latin word Ethicus &
– Greek word Ethikos
• Meaning character or manners
• Ethics is a science of Moral, Moral principles &
recognized rules of conduct
• Ethics deals with right or wrong behaviour of individual
• Ethics deals with values relating to human conduct with
respect to
– Right or wrong of actions
– Good or bad motives of actions
• Actions can be good or bad, right or wrong, Moral
or immoral
– These are judgments
• Now-a-days ethical guidelines are often transferred
into law or regulations
 Ethical Concepts

Some of the concepts that are frequently used

when discussing the subject of ethics are:
 Ethical Subjectivism
 Ethical relativism
 Consequnetialism
 Ethics of virtue
 Ethical dilemmas in business
 ETHICAL CONCEPTS
• Ethical Subjectivism
– What is ethically right or wrong is entirely
personal matter
– Principles chosen by a person may be unethical
• Ethical Relativism
– There is no universal set of principle to judge
morality
– Each society has its rules
– It is possible that ethical practices are based
on false beliefs, illogical reasoning
• Consequentialism
– It is a concept of value and maximization of
that value
 ETHICAL CONCEPTS
• Ethics of virtue
– Emphasized role of individual traits
– Virtues are like Courage, Tolerance,
Generosity, Honesty
– Virtuous acts are not done out of self-
interest or to maximize pleasure
• In business it is a conflict between
Economic performance and Social
Performance
• To resolve this conflict it is important to have
people with ethical behavior
 NEED FOR BUSINESS ETHICS

• It exists and operates within society; so

it should contribute towards its welfare
• To survive it needs loyal customers
• To survive it should perform social
responsibility
• As business grows public takes more
interest.
• It needs to create proper image of
organization in public mind. This leads to
taking up more social responsibilities
 Ethical Dilemmas in Business
• For an organization, social performance implies
– various obligations such as
• protecting employment and pollution control
• Since considerable expenses may be involved in
discharging these obligations, organizations often
find it convenient to ignore them
• BUSINESS ETHICS
– Concerns itself with what is right and wrong at
the workplace
– Strike balance between social obligations and
economic objectives
 NATURE OF BUSINESS ETHICS
• Two types of ethical problems
– Overt
• Deals with bribery, theft, collusion, etc.
• They are clear and reprehensible
– Covert
• Complex, clear and have deft ethical
solution.
• Covert problems like Corporate
acquisition, Marketing, Personal policies.
 NATURE OF BUSINESS ETHICS
• Ethical decision comprises of following virtues –
– Right – Morally correct
– Equitable – Just & equal
– Good – Highest good for all concerned
– Proper – Appropriate and acceptable
– Fair – Honesty
– Just – Action
• Ethics depends upon Moral standards
• Moral standards depend upon Value System &
• Value System depends upon individual background
• Background differs according to experiences
 CHARACTERISTICS OF ETHICAL
DECISIONS IN BUSINES
• Many alternatives
• Wide ramification
• Ambiguous consequences for unethical
decisions
• Voluntary human actions
• It is unethical to make a loss as it means that
business can not discharge its social
responsibilities
 Different Views of Ethics
• The Unitarian View of Ethics – If Business wants to
exists, survive and grow Morality and ethics can not be
separated from business operation.
It emphasizes to concentrate on society
• The Separatist View of Ethics – by Adam Smith, Milton
Morality and Ethics has no role in the business
If morality and ethics are given an opportunity, Social
values would dominate over business values and may ruin
efficiency of business
• The Integrated View of Ethics – by Talcot Parson
Ethics and Business should be combined
They are inter-related and guided by external factors
like Government, Market System, Law & Society
 ETHICAL THEORIES
• Ethical theories are divided in three subject
areas-
– Metaethics
– Normative ethics
– Applied ethics
• Metaethics
– It is a study of the origin and meaning of
ethical concepts
 Normative Ethics
• Guides human conduct.
• Sets moral standards helping to determine what is
right & what is wrong.
• Example is Golden Rule that is
We should treat others the way we want others to
treat us.
Golden Rule lays down one single principle to adjudge
right or wrong.
• If moral principle is to be accepted it must be –
– Prescriptive – emphasizing that a proposed action
is obligatory.
– Universal – applicable to any person
– Overriding – should be primary consideration in
action assessment.
– Public – presupposes social interaction.
– Practical – achievable by average person in
ordinary circumstances.
 Normative Ethics
• Three theories to resolve normative question,
‘How one should act in particular situation’
1. Teleological Ethical Theory – thinking rationally about
ends.
Also called as consequentialist theories.
• Action is considered normally correct, if consequences
are more favorable than unfavorable.
• The drawback is that consequences are required to be
quantified and quantitative terms like good depend on
perception by a person.
• Three definitions of good by consequentialist
• Egoism – consequences are more Favorable than
unfavorable to person performing action then action is
morally right.
• Utilitarianism- morally right, if more Favorable to
everyone.
• Altruism – morally right if more Favorable to everyone
except the individual
 Normative Ethics
• Deontological Ethical Theory focuses on
certain fundamental duties that we have as
human being.
• Duties are clarified under 3 headings-
Duties to god
Duties to oneself
Duties to others
• Virtue ethics – virtues are qualities and
character individual considers to be good.
The theory is concerned with attaining these
qualities and
Hence calls for character development.
 Ethical Theories
• Applied Ethics – deals with specific, often
controversial moral issues.
• Moral standards based on ethical theories are
reference point for judging the moral value of
decision.
 Business Relations & Ethics
• Importance of trust in business relation –
Smooth operation calls for healthy relationship with
all stakeholders
• Healthy relationships are based on trust.
• Trust comprises of 3 elements
Dependability
Predictability
Faith
• Trust reduces risk
 Trust & Ethics
Impact of Unethical Behaviour on Trust in Business Relation
• Trust plays important role in relations with supplier,
customer and employee
• Supplier relation- trust is built on honoring
commitments.
• Customer relation – trust is built on sales person being
dependable, honest, competent and customer oriented.
• Employee relations- trust reduces friction among
employees.
Factors promoting trust in organization are-
• Open communication
• Sharing of critical / important information
• Encouraging participation in decision making.
• Sharing perception and feelings
• Fair and consistent treatment
 Ethics and Stakeholder Theory
• States that primary purpose of any organisation is to
maximize the stakeholder value.
• Accordingly ethical organisation is one
That recognizes its responsibilities towards stakeholders and
considers their interest while taking decisions
• To decide the kind of responsibilities Company has towards
stakeholders
Hosmer proposed five managerial responsibilities
• Ethical, Conceptual, Technical, Functional and
Operational
• Ethical responsibilities include distribution of benefits and
Allocation of cost that is considered
Right, proper and just by stakeholder
Typical Problems in
Business Ethics
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 BUSINESS ETHICS & ENVIRONMENT
• Environmental Ethics examines moral basis of environmental
responsibilities.
• Environmental Responsibilities are to be weighed against
responsibilities to stakeholders and benefits to society.
Environmental issues -
• Toxic Waste
• Contamination of ground water
• Oil spills
• Use of fluro carbons
• Air Pollution
• Burning of fossil fuel
• Noise Pollution
• Destroying of forest and seashore
 Environmental Responsibilities
Three approaches concerning environmental responsibilities
• Anthropocentrism approach –focuses on the utility that
human being can derive by protecting the environment
• Anxiological approach – states that it is moral responsibility to
protect animals
• Eco-centric approach – a radical approach stating that
environment has to be influenced by activities which aim at
preserving the inherent nature and environment not by moral
consideration which is derived from human interest
Successful foundation for Environmental Ethics should fulfill two
tasks –
• Explain how human beings have degraded environment
• How human beings can protect the environment
 ENVIRONMENTAL ISSUES
• As business expands, environmental issues start
gaining importance
• Most of the times chemical industries create
maximum pollution
European legislation has proposed more than 120 acts
based on
• Promoting the benefits of pollution prevention
• Customizing legislation to meet requirements of
members
• Developing and enforcing ‘Polluters pay policy’
aiming at imposing fines on defaulters
 ENVIRONMENTAL ISSUES
• In India, there is a policy for environment;
• but no court can enforce it.
A report has stated the cost of environmental degradation is
• 4.5 % of GDP
Air Pollution –
• Delhi is one of the most polluted cities in the world
• Respiratory diseases are 12 times national average
• Premature deaths occurring each year due to air pollution is
highest in our country
Two types of air Pollution
• Vehicular emission
• Unrelated Industrial Smoke
 ENVIRONMENTAL ISSUES
Energy consumption and Carbon emission –
• 60 % of energy needs are met by commercial energy
and
• 40 % are met by Non – conventional and renewable
fuels
• Carbon emission has grown nine times in last four
decades
• Low quality coal with high carbon content is the
primary reason
• Coal India Limited coordinated a program for
Conservation of coal and
• Improving end – use technology
 ENVIRONMENTAL ISSUES
• Air pollution by other gases –Bhopal disaster
Disaster occur mainly due to
• Lack of environmental and safety regulations
• Inadequate investment in safety equipments
• Inadequate maintenance of safety equipments
• Poor communication facilities
• Lack of regards to safety awareness programme
• Casual attitude of concerned persons
 GREENING
• When a company adopts an anti-pollution environment policy,
it is said to be ‘Going Green’.
Reasons for Green initiative -
• Economic benefits from increased efficiency
• Competitive advantage through innovation
• Public Image
GREEN INITIATIVES –
• Environmentally friendly technological innovation
• Green tourism
• Green Community
• Environmental campaigning
• Environmental counselling
Environmental issues are many times handled by Safety/ R&D /
Maintenance departments
 ETHICAL ISSUES IN MARKETING
MANAGEMENT
• Marketing is the most visible of a company’s
policies.
• Marketing concepts are becoming
synonymous with consumer orientation
• ETHICAL ISSUES IN MM – Code of ethics is
required to frame marketing policies at every
level for employees to follow uniform
standards
• Marketers should be fair and just
 Ethics and Marketing
• Definition of marketing – a management process which
identifies, anticipates and supplies customer
requirements efficiently and profitably.
• Ethical issues in marketing strategy – marketing strategies are
required to achieve
higher standards of ethics as it is in public scrutiny.
• Issue involved is
stance adapted by company towards its competitors. Wiping
out the competitors will reduce choice to customers and their
confidence in buyer seller relationship.
• Issues in Marketing Mix – marketing mix includes McCarthy’s
4 P’s – Product Price Promotion Place
• Marketing mix also includes the service aspect of People,
Physical evidence and Process.
 Ethics and Marketing Mix
Product –– Product has an identity and personality of its own like
cigarettes, alcohol
• Updating of consumer product is one more issue.
• Product should be safe and fit for intended use
• Disclose the risks associated with product’s use if any
• Any changed feature that might have effect on buying
decision should be informed
Price – Higher than normal price should not be charged for a
product with high demand.
• No undercutting or Price fixation
• Disclose full price associated with any product
 Ethics and Marketing Mix
Place – by place marketers refer to the sum of location
Through which the product moves from the supplier to customer.
Part at which customer is able to access the information.
Also includes process of distribution and type of delivery service.
• No manipulation about availability of product for exploitation
• No use of coercion in the marketing channel
Promotion – is subjected to closed scrutiny.
• Advertisements which are offensive, misleading not in accordance
with law are not allowed
• Attacking competitors’ product is not allowed
• Spreading unfounded and damaging rumors about competitor is
not allowed.
• Communication about offered product should not be deceptive
People, Physical evidence and Process – Service aspects
 Ethical issues in Information Acquisition
• How much of a sensitive information a
customer shares with a firm is a powerful
signal of their assessment of the firm.
• Do not collect information which is not related
to your business
• Do not collect data indirectly
• Tell your plans about using data to
respondents and use data only for those plans
• Act as per respondent’s direction
 Ethics and Marketing Research
The research profession in business has to
ensure certain rights to the society
• Right to be informed of critical research
results
• Issue involving rights to the researcher
• Protection against improper solicitation of
proposals
• Misrepresentation of findings
• Ethical behaviour of respondents
 Ethics and Marketing Research
Five entities affected by Market research process –
• Society – has right to be informed
• Respondents - has right to be informed, to choose, to
anonymity and confidentiality, privacy and safety
• Client – has right to anonymity, confidentiality, quality
research, avoiding unnecessary research, protection against
misleading presentation of data, protection against abuse of
position
• Researcher – Has right to expect ethical subject behaviour,
protection against improper solicitation of proposals
The issues are excessive requests or reneging on promises,
availability of funds
• The Research Profession – Issues are appropriate use of
marketing research techniques, use of accepted research
procedures, ethical behaviour
 Ethics and Consumer Protection
• Although consumer is regarded as king, there are
many problems in realizing such state of condition
• Most of the consumers are not aware of their rights
and most of those who are aware are not ready to
fight to execute their rights
• Consumer has been exploited systematically in all
walks of life
• So consumer needs protection which can come from
three different parties
– The business
– The government
– The consumer himself
 Consumer Rights
• Right against exploitation by unfair trade practices
• Right to protection of health and safety from goods
and services the consumers buy or offered free
• Right to be informed about quality and performance
standards, ingredients, operational requirements,
freshness, possible adverse side effects and other
relevant facts of the product or service that
consumer buys
• Right to be heard of grievance and get redressed
• Right to physical environment that will protect and
enhance the quality of life
 ETHICAL ISSUES IN HRM
• Manner in which Organizations deal with its
employees is an indication of its ethical
characteristics.
• Employees should be given their due reward.
• Ethics in HR deals with all the issues in
relationship between the employees and
business.
• Usually, permanent employees are more loyal as
they have job security, a sense of belongingness
and expect support at the time of difficulty.
 Employment Contract
• Legal document governing relationship between
employee and employer.
• Concentrates on exchange of salary for work
• General assumption is that
– Business has obligation to continue providing work
to its employees as long as it is viable for the
business
• This policy may not fulfill obligations towards other
stakeholders
• Employees too have responsibility towards employer.
 Internal Stakeholders – Employees
• To listen to and where possible act on employees’
suggestions, ideas, requests and complaints
• To engage in negotiations when conflict arises
• To avoid discriminatory practices and guarantee
equal treatment and opportunity regardless of
gender, age, race and religion
• To protect employees from avoidable injury and
illness at the workplace
• To encourage and assist employees in developing
skills and knowledge that are required for
accomplishing the tasks
 Responsibilities towards Employees
• To listen to and where possible act on employees’
suggestions, ideas, requests and complaints
• To engage in negotiations when conflict arises
• To avoid discriminatory practices and guarantee
equal treatment and opportunity regardless of
gender, age, race and religion
• To protect employees from avoidable injury and
illness at the workplace
• To encourage and assist employees in developing
skills and knowledge that are required for
accomplishing the tasks
 HIRING
• Right principle is to select one who is perceived to have ability to
contribute most to the long-term owners’ value.
• Ethical selection is honest, fair, non-coercive, legal and conveys clearly
requirements & benefits to all candidates
• Unethical selection Wrong candidates Dissatisfaction
Unethical practices are –
Discrimination based on age, gender, religion, nationality
• It can be ethical only if criterion for selection is
Functional qualities / abilities required to do the job
• By discrimination pool of talent is limited
• Referrals – beneficial for business but unethical
• Discrimination over qualification, age, selection on credentials and test
• Age criterion is unreliable measure of ability to contribute towards
maximizing owners’ value; hence unethical
• Credentials may not always reflect an applicants functional ability
• Test that challenges applicants right to privacy are considered unethical
 HIRING

Ethical Practice is
• Equality of Opportunity
– Rules should apply equally to all
– No applicant should be rejected for reasons
beyond the rules laid down for hiring
– Reservation is termed as Reverse Discrimination
 REMUNERATION
• Considered ethical when it is just and equitable.
• Remuneration is monetary reward, plus fringe benefits, perks,
recognition and promotion
• Lack of equitable remuneration  Demotivation
• Ethical remuneration is rewarding any action that contributes
to long-term owners’ value.
• Employee’s needs, his effort, ability, seniority and loyalty are
of no importance in deciding remuneration unless they play a
role in achieving results
• Needs can be attended by remedial measures other than
standard remuneration
• Seniority or Experience does not necessarily mean Expertise
• Loyalty is not longevity but Productive commitment for
contribution
• To be rewarded qualities like efforts, talent and ability should
be transformed into results contributing long-term owners’
value
 Ethics and Working Conditions
• Should deal with the issues like
– Forced Labor
– Child labor
– Working Hours and Compensation
– Health and Safety
– Abuse; Discrimination
– Compliance with Applicable Laws
 ETHICS IN RETRENCHMENT
• At times of recession, business reduces its size
and overhead cost by reducing man-power
• Firing – Employers include “at will” clause in
employment contract.
• Firing affects reputation of business
• Reputation is affected particularly when firing
is discriminatory, unfair or vindictive
• Ethical issue in lay-offs or retrenchment is who
should be fired first
 Issues with Management

Management – On one hand it is like employees

and
• on other hand it is entrusted with the duty of
safeguarding the welfare of the organization.
• Role of management involves balancing
multiple claims of different stakeholders
 Issues with Shareholders
Shareholders – Most organizations aim at maximizing
shareholders value.
Shareholders are considered owners and members of the
organization.
Shareholders’ Responsibilities –
• Maintaining good relationship with top management
• Exercising their voting rights
Responsibilities of the organization towards shareholders –
• Managing company efficiently to secure fair and competitive
returns on owners investment
• Disclosing relevant information to shareholders
• Conserving, protecting and increasing the shareholders assets
• Respecting the shareholders request, suggestions, complaints
and formal resolutions
Ethical Issues in Mergers and Acquisitions

Mergers and acquisitions help company

• To develop a competitive advantage and
• Thereby increase shareholder value.
But takeovers harm the interest of stakeholders
• Like employee,
• Suppliers and
• Customers.
 Mergers and Acquisitions
• Takeovers are criticized by employees whose
personal interests are harmed.
• To avoid this, company should have clear target
• This helps in bringing realistic expectation to the
stakeholders
Takeovers are looked upon as involving breach of trust
by
• Isolating contracts with other stakeholders.
• Suppliers or employees lose security of their work.
 Mergers and Acquisitions

While going in for takeovers or mergers

• Each group must agree to respect certain
contracts or promises
• Management should not encourage
expectation which it may not be in a position
to fulfill
• If impractical obligations are abandoned after
acquisition, then the change is not unethical.
 Mergers and Acquisitions
While acquiring a company consider
• Intensity of expectations of stakeholders
• What is the replacement for such expectations
• Economic impact of rejection of expectation
• Impact on future stakeholders of such rejection of
expectation
While fulfilling inappropriate commitments
A clear message should be given about their
inappropriateness
To avoid more unrealistic expectations in future.
 Mergers and Acquisitions
• Takeovers which take place to satisfy management
ambitions or just to follow trend are unethical.
• In such cases resource misallocation takes place by
divesting resources
• Hostile Takeovers – These elicit opposition from the
boards or the employees of the target company.
• Reasons for opposition may be
• a) Protecting their own interest
• b) Disagreement over price
• One criticism for hostile takeovers is it does not
consider the interest of Target Company.
 Insider Trading
Insider Trading refers to
• Trading on price sensitive information
• By people who are closely connected with the firm.
• The information is not disclosed to other market
participants.
• Insider Trading / Dealing is considered unethical
• As it violates equality of opportunity.
• Insider Trading that is performed with the full
support & knowledge of shareholders is not
unethical
 Ethical Responsibilities to External Stakeholders
External Stakeholders – Consumers, Suppliers, Creditors,
Competitors and Community
Consumers – Responsibilities of corporate towards Consumers
are 5 Rs i. e.
Right Quality Right Quantity Right Time
Right Place Right Price
Some more responsibilities are
• Producing goods according to specific needs of consumers
and their purchasing power
• Providing prompt and adequate service
• Improving standard of living by providing goods and services
of high quality
• Treating customers fairly in all business transactions
• Ensuring health and safety of customers
 External Stakeholders
Suppliers –Play pivotal role as the material they supply
determine the final product quality and price.
• When dealing with suppliers, organizations must –
• Seek fairness and truthfulness in all activities, including
pricing and licensing
• Ensure that business activities are free from coercion and
unnecessary litigation
• Foster long-term stability in the supplier relationship in return
foe value, quality, competitiveness and reliability
• Share information with suppliers and integrate them in the
planning processes
• Pay suppliers on time and in accordance with agreed terms of
trade
• Seek, encourage and prefer suppliers and sub-contractor
whose employment practices respect human dignity
 External Stakeholders
Creditors – Organizations often delay payment.
It is the responsibility of the organization to make timely
payment of goods and services that have been provided
Competitors – Competitive practices adapted by firms can
sometimes be questionable.
Responsibilities towards competitors are –
• Foster open market for trade and investment
• Promote competitive behavior that is socially and
environmentally beneficial and demonstrate mutual respect
among competitors
• Refrain from either seeking or participating in questionable
payments or favors to secure competitive advantage
• Respect both tangible and intellectual property rights
• Refuse to acquire commercial information by dishonest and
unethical means such as industrial espionage
 External Stakeholders
Community – Responsibilities towards community are –
• Respect human rights and democratic institutions
• Supporting public policies and practices that promote human
development through harmonious relations between business
and other segments of the society
• Collaborating with such activities that aim at improving the
standard of health, education, workplace safety and economic
well-being
• Promoting and stimulating sustainable development and
playing a leading role in preserving and enhancing the
physical environment and conserving the earth’s resources
• Supporting peace, security, diversity and social integration;
respecting the integrity of local culture
• Encouraging charitable donations, educational and cultural
contributions and employee participation in community and
civic affairs.
 Corporate
Social Responsibility
^^^^^^^^^^^^^^^^^^
 Corporate Social Responsibility
• The phrase Corporate Social Responsibility was coined in 1953
with the publication of Bowen's Social Responsibility of
Businessmen
• The term "CSR" came in to common use in the early 1970s
• CSR is coming out of the purview of ‘doing social good’ and is
fast becoming a ‘business necessity
• With well informed and educated general people it has become
threat to the corporate and CSR is the solution to it.
• Corporate Social Responsibility is the continuing commitment by
business
– to behave ethically and
– contribute to economic development while
– improving the quality of life of the workforce and their
families as well as of the local community and society at
large”.
 CSR
• Companies are now expected to perform well in
non-financial areas such as human rights, business
ethics, environmental policies, corporate
contributions, community development, corporate
governance, and workplace issues
• CSR is the deliberate inclusion of public interest
into corporate decision-making, and the honouring
of a Triple Bottom Line:
– People, Planet, Profit
• CSR-focused businesses would proactively promote
the public interest by encouraging community
growth and development, and voluntarily
eliminating practices that harm the public sphere,
regardless of legality
 Approaches to CSR
• An approach for CSR that is becoming more
widely accepted is community-based development
approach.
– In this approach, corporations work with local
communities to better themselves
• A more common approach of CSR is philanthropy
– This includes monetary donations and aid given to local
organizations and impoverished communities in
developing countries
• Another approach to CSR is to incorporate the
CSR strategy directly into the business strategy
of an organization
 Approaches to CSR
• Creating Shared Value or CSV
– The shared value model is based on the idea
that corporate success and social welfare are
interdependent
– A business needs a healthy, educated
workforce, sustainable resources and adept
government to compete effectively
– For society to thrive, profitable and
competitive businesses must be developed and
supported to create income, wealth, tax
revenues, and opportunities for philanthropy
 Benefits of CSR
• It creates a positive image
• It creates short term employment
opportunities by taking various projects
• It cultivates a sense of loyalty and
trust amongst the employees
• It improves operational efficiency of
the company and is often accompanied
by increases in quality and productivity
 Implementation of CSR
• There can be few key steps to
implement CSR successfully
– Better communication between top
management and organization
– Appoint for CSR position.
– Good relationship with customer, supplier,
stakeholder.
– Annual CSR audit.
– Feedback process
 CSR
• CSR is not new to India
• Companies like TATA and BIRLA have
been imbibing the case for social good in
their operations for decades long
before CSR become a popular cause
 CSR in India
• For the Indian company whatever the CSR
activities are happening they are cantered around
– Education
– rural upliftment and
– helping the physically challenged
• Some of the CSR initiatives the major IT
companies have undertaken are
– Education for all
– Community development
– Children of a lesser GOD No more
 Current Issues
Covered Under CSR
• Major thrust areas are
– Education Health
– Environment Livelihood promotion
– Women empowerment
• Apart from above priority areas that should be covered
under CSR initiatives are
– Sanitation Microfinance
– HIV/AIDS Child care
– Slum improvement Disaster management
– Agriculture Development
– Rehabilitation & Resettlement
 CHALLENGES TO CSR
INITIATIVES IN INDIA
• Lack of community participation in CSR activities
• Need to build local capacities
• Issues of transparency
• Non-availability of well organised non-
governmental organisations
• Visibility factor
• Narrow perception towards CSR initiatives
• Non-availability of clear CSR guidelines
• Lack of consensus on implementing CSR issues
Complexity of Ethical Issues

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 ETHICAL DILEMMAS AT WORK PLACE

• Business runs on decisions by choosing between

alternatives
• But in many cases choice is difficult resulting in
ethical Dilemma
• Ethical dilemma involves range of actions and their
consequences
• Problem arises due to involvement of value judgment
• So prioritize values and violate least possible
 Ethical Dilemmas
Frequently occurring Ethical Dilemmas at Workplace –
• To do right thing or go in line with company policy
• Whether to spend more time on quality job
• Use short-cut for quick job or follow procedures
• Help colleague who is being harassed or ignore it
• To hide a mistake or admit and rectify
Ethical Dilemmas in Business relate to
• Power, Trust and Authority
• Secrecy, Confidentiality and Loyalty
 Ethical Dilemmas
Power, Trust and Authority – Managers enjoy these because of
their position in the organization.
• They are expected to use power and authority in equitable
manner so trust is not destroyed.
• The decisions should be fair and impartial.
Secrecy, Confidentiality and Loyalty – In organizations we have to
know “who is entitled to know what “
• In professions like medical, legal, consultants, maintaining
confidentiality is essential for building trust with customers.
• Even business has right to protect information whose
disclosure to competitors would threaten their survival.
 Ethical Decision-making
• Is the problem / dilemma really what it appears to be
• Is the action that you are considering is legal? Ethical?
• Understand the position of those who are opposing you.
Check for the reasonability
• Whom does the decision benefit/ harm? How much? How
long?
• Would you be allowing everyone to do what you are
considering now?
• Have you sought the opinion of others who are more
knowledgeable and would be more objective?
• Would your action be embarrassing to you if it were made
known to your family, friends, co-workers or superiors?
 Factors Ethical Decision-making
• Magnitude of consequence – magnitude of impact of
decision on employees
• Probability of effect
• Social agreement /acceptance
• Time interval
• Proximity – of the persons affected
• Concentration of effect – Decision that affect large
number of people
• Final decision on ethical issue should be in line with
greatest social benefit
 Resolving Dilemmas
Manager – Generally adopt different ethical standards
while performing different tasks.
• They provide rationalization for their behavior.
• According to Gellerman four major rationalizations
are
– Actions are within reasonable ethical and legal limits
– Actions are aimed at best interest of individual or firm
– Actions will not be disclosed, so no danger to him or his
firm
– He will be protected by is company
• Resolving dilemma needs skill and experience
 Resolving Dilemmas
Questions to be asked by managers to take ethical decisions
• How would you define the problem if you are on the other side
of the fence
• To whom and to what do you give your loyalty as a person
• What is your intention in making this decision
• Whom would your decision or action injure
• Before making a decision, can you discuss the problem with
affected parties
• Are you confident that your decision will be valid for a long-
period of time
• Could you discuss without qualm your decision with higher-
ups, family and society
• What is symbolic potential of your action if understood, if
misunderstood
• Under what circumstances would you allow exception to stand
 Resolving Dilemmas

• Employees – In many organizations, the

absence of commonly held beliefs and values
can give rise to ethical dilemma.
• As a result employees have to decide
themselves, what is acceptable behavior
• Training Employees to deal with ethical
Dilemmas –
• Step-by-step process known as BELIEVE is one
way of resolving ethical dilemma
 BELIEVE
• B – Background – of the case
• E – Estimate – the ethical dilemma present
• L – List – the possible solutions to the problem
• I – Impact – Consider the likely impact of each of the
possible solutions
• E – Eliminate the totally unacceptable solution
• V – Values – Assess which values of the company are
held or violated by each solution
• E – Evaluate – Considering their likely impact and the
values that will be upheld or violated
• This approach enables organizations to achieve a
uniform approach to problem solving.
 Ethical Leadership

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 Ethical Leadership
• Leadership is ability
– To influence other people
– Shape their attitudes and behavior
To achieve goals
• Rightness of goal is ethical issue
• Ethical Leadership is for moulding the people for right goals
• Three qualities of Ethical Leadership are
– Character
– Knowledge
– Action
 Leadership
• Leadership is critical factor in determining overall
effectiveness
• Organizations have to be quick to respond, adapt
and innovate
• This happens only through people who bring to
work all knowledge & creative potential
• But people may not make them necessarily
available at work
• How they are applied depends on leadership
 Power of a Leader
• Managers become effective leader because of
power conferred upon them by their followers
• Leaders do not use any official authority
• Leader’s power over his followers is personal
which we call as Moral authority
• Moral authority does not flow from
temptations (rewards) or threats (punishment)
• Leaders have to earn respect
 Responsibilities of a Leader
• To achieve a Task
• Motivating people to put in best efforts by showing path
for growth
Let people know
– Why they are doing what they are doing (objectives)
– How they are doing (feedback)
– Helping them to do better (training)
• Ensure that group functions as a cohesive unit as a team
• Achievement of task is most important
• If that is not met, then growth of individual and
cohesiveness becomes irrelevant
 Qualities for Ethical Leader
• Leaders must have integrity
• Integrity is consistency between thought, speech
and action
• Leaders act as head of family
• Leadership needs character to inspire confidence
and command respect
• Six pillars of character
– Trustworthiness Respect
– Responsibility Caring
– Justice and fairness Civic values
 Attributes of Effective Leader
• Effective Leaders
– Mean what they say and know what they say
– Become available for consultation and advice
– Become available for support and help at times of
difficulty
– Treats sub-ordinates as worthy individuals
– Come across as genuine and authentic
– Show concern, compassion and forbearance
 Attributes of Effective Leader
• Effective Leaders do not
– Try to bluff
– Ridicule or insult either the person or his knowledge
– Hesitate to point out errors or deficiencies of sub-
ordinates
– Carry prejudices, encourage cliques, or play favorites
– Disown responsibility
– Panic in difficult situations
 Wisdom-based Leadership
• Guiding ethic for global business is wisdom
leadership – where wisdom is
– more than the sum of our knowledge, intelligence,
experience, and innovative thinking.
• True wisdom is
– the “deep understanding, keen discernment, and
sound judgment”
– that draws from a level of self-insight, personal
and organizational values, and cultural broad-
mindedness.
Four contexts for wisdom leadership
1. Paternal-mechanistic
• From this view, business is “survival of the fittest,” and
competition is a win-lose game
• Business leaders adopt the military model of command-and-
control to serve the overall goals for efficiency and productivity
• This context offers the wisdom of:
– Honouring the experience and wisdom of "those who have paved the
way before us.”
– Using resources efficiently
• However, it has two limitations:
– Discounting the inherent capability and motivation of people to do
good and be good
– Believing that life (including people and nature) can and should be
used and controlled for achieving one's own (self-centred) goals.
 Wisdom Leadership
2. Humanistic
• From this view, the purpose of business and leadership
is still wealth-creation, but with a win-win mentality
• With this “enlightened self-interest” supplants “selfish-
interest.”
• The leader's job is to help employees become self-
actualized “intra-preneurs” who invest both their
emotions and their minds, for their own sake and the
organization’s
• People are considered a resource to be managed
sensitively.
• “Win-win" problem-solving is prominent in this context.
 Wisdom Leadership - Humanistic
• Inherent in this context is the wisdom to fulfil the potential of the
paternal-mechanistic context by:
– Recognizing the essential goodness and work ethic of people.
– Providing opportunities for individuals to actualize their potential,
which includes self-actualisation as well as work abilities and
aspirations.
• However, it too has two limitations:
– Focusing on needs, where motivation occurs when something is
perceived as missing
– Focusing on individualism, where the "win-win" solutions are to
promote individual interests,
– And do not necessarily include the interest of the organization as a
whole, and other stakeholders such as society and nature
 Wisdom Leadership
3. Holistic
• From this view, the goal of business and leadership evolves
beyond "wealth-creation for shareholders" to "wealth-
creation for the optimal benefit of all stakeholders“
• Leadership "control" lies more in having a common
purpose and value-system rather than the “command-
convince” or even “participative empowerment”
leadership styles
• This view recognizes that people are, in fact, the principal
assets of wealth-creation, especially in the knowledge-
intensive, learning organizations
• The holistic context is increasing in strength through
initiatives such as "corporate social responsibility."
 Wisdom Leadership - Holistic
• Inherent in this context is the wisdom to fulfil the potential of the
humanistic worldview by:
– Recognizing the interconnectivity of people, nature, and business
enterprises.
– Emphasizing the holistic nature of values and principles from which to
operate harmoniously and creatively

• But again, it has two limitations:

– Basing motivation primarily on self-oriented achievement, even while it
might benefit the larger whole
– Focusing personal and business goals only on having a better "in-this-
world” life, rather than taking into consideration the spiritual life that is
both "in this world and transcends it."
 Wisdom Leadership
4. Spiritual-based
• Sees people as spiritual in nature, with a particular spiritual
purpose in life, along with “gifts” to help fulfil that purpose
• Leadership in this context focuses on assisting people to
fulfil their life purpose while integrating that with the
organization’s “life purpose”
• The emerging spiritual-based context for business
leadership provides its own particular wisdom:
– Focusing first on a relationship with a transcendental Source of
consciousness
– Basing motivation primarily on selfless service – intending first and
foremost to give and benefit the larger whole, with the skill and
conscious attention to do this in a sustainable Manner
Wisdom Leadership - Spiritual-based
 Ethical Leadership
• The science of Yogas also suggests four margas
or paths to attain ultimate objective of bliss
• Dnyan Yoga – Path of knowledge (Rational)
• Bhakti Yoga – Path of devotion (Emotional)
• Karma Yoga – Path of action (Action)
• Raj Yoga – Path of comprehension or concepts
• In the same way manager can attain managerial
goals all by himself or leading his men
 Four Yogas or Paths
DNYAN BHAKTI KARMA RAJ

Based on Analysis Emotion Activity Vision

Concern Data Relationship Doing Mission

Asks What Who How Why

Orientation Intellectual Devotional Practical Idealistic