Business Ethics and Corporate

Governance
BBA-VI
 Business Ethics
• Business ethics refers to implementing appropriate
business policies and practices with regard to arguably
controversial subjects.
• The law usually sets the tone for business ethics,
providing a basic guideline that businesses can choose
to follow to gain public approval.
• Business ethics studies appropriate business policies
and practices regarding potentially controversial
subjects, including corporate governance, insider
trading, bribery, discrimination, corporate
social responsibility, fiduciary responsibilities, and
much more.
 Principles of Business Ethics

• Leadership: The conscious effort to adopt, integrate,

and emulate the other 11 principles to guide decisions
and behavior in all aspects of professional and personal
life.
• Accountability: Holding yourself and others responsible
for their actions. Commitment to following ethical
practices and ensuring others follow ethics guidelines.
• Integrity: Incorporates other principles—honesty,
trustworthiness, and reliability. Someone with integrity
consistently does the right thing and strives to hold
themselves to a higher standard.
• Respect for others: To foster ethical behavior and environments
in the workplace, respecting others is a critical component.
Everyone deserves dignity, privacy, equality, opportunity,
compassion, and empathy.
• Honesty: Truth in all matters is key to fostering an ethical
climate. Partial truths, omissions, and under or overstating
don't help a business improve its performance. Bad news
should be communicated and received in the same manner as
good news so that solutions can be developed.
• Respect for laws: Ethical leadership should include enforcing all
local, state, and federal laws. If there is a legal grey area, leaders
should err on the side of legality rather than exploiting a gap.
• Responsibility: Promote ownership within an organization,
allow employees to be responsible for their work, and be
accountable for yours.
• Transparency: Stakeholders are people with an interest in a
business, such as shareholders, employees, the community a
firm operates in, and the family members of the employees.
• Compassion: Employees, the community surrounding a
business, business partners, and customers should all be
treated with concern for their well-being.
• Fairness: Everyone should have the same opportunities and be
treated the same. If a practice or behavior would make you feel
uncomfortable or place personal or corporate benefit in front of
equality, common courtesy, and respect, it is likely not fair.
• Loyalty: Leadership should demonstrate confidentially
and commitment to their employees and the company.
Inspiring loyalty in employees and management ensures
that they are committed to best practices.
• Environmental concern: In a world where resources are
limited, ecosystems have been damaged by past
practices, and the climate is changing, it is of utmost
importance to be aware of and concerned about the
environmental impacts a business has. All employees
should be encouraged to discover and report solutions
for practices that can add to damages already done.
Relevance of Business Ethics in Business
• There are several reasons business ethics are
essential for success in modern business. Most
importantly, defined ethics programs establish a
code of conduct that drives employee behavior—
from executives to middle management to the
newest and youngest employees. When all
employees make ethical decisions, the company
establishes a reputation for ethical behavior. Its
reputation grows, and it begins to experience the
benefits a moral establishment reaps:
• Brand recognition and growth
• Increased ability to negotiate
• Increased trust in products and services
• Customer retention and growth
• Attracts talent
• Attracts investors

When combined, all these factors affect a business' revenues.

Those that fail set ethical standards and enforce them are
doomed to eventually find themselves alongside Enron, Arthur
Andersen, Wells Fargo, Lehman Brothers, Bernie Madoff, and
many others.
 Importance of Business Ethics
• Prevents Malpractices
Business ethics is the means of enabling good
conduct in the business organization. It aims to
prevent unethical trade activities used by many
business organizations, such as black marketing,
unnatural pricing hikes, adulteration, cheating in
weights and measures, selling low-quality and
dangerous items, fostering fake commitment,
abusive use of natural resources, etc.
• Builds Confidence
Customers need to feel quite confident when choosing which
products to buy, and they trust a company when they receive
what they had hoped for. Due to the fact that ethical business
enterprises treat their customers fairly when it comes to
product quality, utility, dependability, quantity, price, and
other factors, it is easier to make decisions.
• Survival and Growth of Business
The cornerstone for a business’s survival and growth is
corporate ethics. Because customers have complete faith in
businesses that uphold business ethics, customer retention
may be kept high.
• Protection of Consumers’ Rights
It safeguards consumer rights such as the right to
information, the right to make a choice, the right to
compensation, the right to safe and healthy products,
the right to be heard, the right to remedy, etc.
• Develops Good Relationships with Society
• Corporate ethics adhere to the notions of treating
customers and the community at large fairly. This
promotes the growth of positive and cordial ties
between the organization and society.
• Good Public Image
Business ethics improve the organization’s reputation. The
general public and society will fully embrace the company if it
adheres to all ethical standards. The business community and
businessmen who adhere to the required business ethics and
refrain from unethical behavior are always supported by
society.
• Protects Employees and Other Stakeholders
One of the importance of business ethics is that it protects
the interests of employees and other stakeholders of
organizations. Business ethics are necessary to safeguard the
interests of stakeholders such as the government,
shareholders, competitors, dealers, suppliers, and customers.
 Ethical issues in Business
1. Discrimination and harassment
• Two of the most significant ethical issues that HR
professionals and managers face are discrimination and
harassment. The consequences of discrimination and
harassment in the workplace can negatively impact the
finances and reputation of the organisation.
Few examples are:
Equal pay
Race
Religion
Sex and gender
2. Workplace health and safety
• All employees have a right to a safe working
environment and work conditions. Some of the most
common employee safety considerations include:
• Fall protection
• Hazard communication
• Respiratory protection
• Machine guarding:
• General electrical regulations
3. Whistle-blowing or social media rants
• Using social media has become widespread,
making employees' online conduct a critical
consideration in their employment status. The
consequences of punishing employees for
inappropriate social media posts remains an
ethical issue, and the implications of a
negative social media post may influence the
treatment of the employee.
4. Ethics in accounting practices
• Laws require organisations to maintain accurate
bookkeeping practices. Unethical accounting practices
are a serious issue, especially for publicly traded
companies.
5. Corporate espionage and nondisclosure
• Many organisations are at risk that current and former
employees may steal information, such as client data, for
use by competitors. Stealing an organisation's
intellectual property or illegally distributing private client
information constitutes corporate espionage.
6. Technology and privacy practices
• Developments in an organisation's technological security
capabilities may pose privacy concerns for both employees
and clients. You can monitor employees' activity on their
work computers and devices provided by the company.
7 Nepotism or favouritism
• As a hiring manager or HR professional, you may want to
employ an acquaintance or family member because of your
connection to them. Even if you adhere to recruitment
policies to ensure a fair process, some employees may still
consider this as nepotism or favouritism.
8. Environmental responsibility
• Many organisations are increasing corporate social
responsibility activities. You can help create policies
that ensure the organisation you work for acts in a
responsible way towards employees, the
community and the environment. If you work for a
large company in the oil or farming sectors, you
have a more significant corporate social
responsibility because of the organisation's
significant impact on the environment.
Ethics Vs Morality