what are business ethics?

Business ethics are a set of principles that determine what is right, wrong, and appropriate in
the workplace. A company’s business ethics influence conduct for every employee, including
interpersonal relationships within the company as well as business relationships with external
customers. The purpose of business ethics is to ensure a consistent moral attitude within the
company, from executive-level management to new hires. It makes sure everyone is
respected and treated with fairness and honesty.

Principles of business ethics

These are five fundamentals most businesses value:

 Trustworthiness: Trust is being dependable to clients, supervisors, and other

employees. This means performing a task you were assigned to or agreed to complete,
practicing discretion on company information, and being punctual to meetings and
other work events.
 Honesty: This principle includes telling the truth, being transparent, and taking
ownership of your words, work and actions. If you are part of a team project, you make
sure all your team members receive credit for their work. Should you make a mistake,
own up to it as soon as possible and do what you can to make things right.
 Integrity: Both trustworthiness and honesty factor into integrity. If you are a person of
integrity, you always try to do the right thing in any given situation, even when it is not
advantageous to you. You put the good of your team and the company as a whole
above your own desires.
 Loyalty: This principle involves promoting a positive image of your employer and
organization, especially to clients, coworkers, family, and friends outside the company
and on social media.
 Respect: Your conduct should reflect both respect for yourself and your coworkers.
Respect for yourself is reflected in the way you present yourself and communicate.
You show respect for team members’ individual opinions, even if they differ from
yours. You think before you speak, allowing time to gather your thoughts so you can
make your case in a way that maintains a reverence for others.

Importance of business ethics in the workplace

There are tangible and intangible benefits to being ethical in your workplace, including:

 Improved employee retention: Strong business ethics often encourage managers to

show appreciation for an employee’s hard work. As a result, team members may be
more loyal to the company and strive to be more productive.
 Stronger collaboration: Team members who practice business ethics have respect for
one another and work well together. This camaraderie not only fosters a pleasant work
environment but also helps with team collaboration and productivity.
 More effective leadership: When a manager follows business ethics, they’re more
likely to treat employees well. As a result, teams are more inclined to follow their lead.
This minimizes discipline issues and teams’ trust in managers and supervisors when
tough decisions need to be made.
  Increased professional value: When you have a positive attitude toward your work
and those you work with, you can increase the quality of your work. It also increases
your value to your team and the company as a whole.

Need for Business Ethics:

Business ethics is important for the following reasons:
1. Business organisations are economic and social institutions that serve customers’ needs by
supplying them right goods at the right place, time and price. This is possible if the
institutions engage in ethical practices.

2. Business ethics help in long-run survival of the firms. Unethical practices like paying low
wages to workers, providing poor working conditions, lack of health and safety measures for
employees, selling smuggled or adulterated goods, tax evasion etc. can increase short-run
profits but endanger their long-run survival. It is important, therefore, for firms to suffer
short-term losses but fulfill ethical social obligations to secure their long-term future.

3. Business houses operate in the social environment and use resources provided by the
society. They are, therefore, morally and socially committed to look after the interests of
society by adopting ethical business practices.

4. Ethical business activities improve company’s image and give it edge over competitors to
promote sales and profits.

5. Legal framework of a country also enforces ethical practices. Under Consumer Protection
Act, for example, consumers can complain against unethical business practices. Labour laws
protect the interests of workers against unethical practices. Legal framework of the country,
therefore, promotes ethical business behaviour. Business houses want to avoid Government
intervention and, therefore, follow ethical practices.

How to maintain business ethics

The primary means by which a company communicates its ethical principles is through a
“code of conduct” document, which establishes the ethical standards of the company and its
employees. You’re likely to be given a copy of this document upon employment and can
review it when determining the best way to maintain business ethics in your workplace. 

There are many ways you can have an ethical work environment, including:

1. Report conflicts of interest

2. Take care of company property
3. Use discretion with sensitive information
4. Practice integrity
 5. Keep a high attendance
6. Respect coworkers and other office personnel
7. Follow dress code
8. Discuss issues with management
9. Seek further ethics training

1. Report conflicts of interest

Many organizations have a policy regarding receiving gifts from clients or other external
parties. Some may even have rules about part-time work, freelance opportunities and other
side jobs. In all cases, these rules are meant to ensure employees operate within the
limitations of conflicts of interest, which can impact an employee’s integrity.

2. Take care of company property

You’re likely to use tools, technology, equipment and supplies provided by your employer.
These items are typically reserved for work use only. Follow any rules related to the use and
maintenance of these items to ensure you are using company property respectfully.

3. Use discretion with sensitive information

Some workplaces and roles may interact with sensitive data or materials, which requires
employees to practice discretion through a careful organization, the use of passwords and
other security measures. Consult your code of conduct to understand the stipulations of
discussing and handling sensitive information in the workplace.

4. Practice integrity

Hold your work to a high standard of fairness, honesty and quality. You should be transparent
in how well you’re doing and areas you may be able to improve. Own up to your mistakes,
and work to correct them as soon as possible. Keep your team and supervisors informed of
mistakes and progress to ensure everyone is updated.

5. Keep a high attendance

Your workplace may have an attendance and tardiness policy to hold employees accountable
for going to work and being on time. Showing up for work when you are expected
demonstrates respect for your colleagues as well as your employer. 

You may request time off per your company’s policy. If you are unexpectedly prevented
from being at work by illness, accident, or some other cause, let your manager or supervisor
know as soon as possible. Your manager or supervisor can then make sure your work is
handled by someone else in your absence. If you will be late, give your manager advance
notice, if possible.

6. Respect coworkers and other office personnel

You can communicate respect for your colleagues by treating them professionally and as you
would like to be treated. Workplaces typically abide by anti-harassment laws established by
the federal government. Review these behavior limitations or discuss the policies with your
employer or human resources department should you have questions.

7. Follow dress code

The way you dress can impact the work atmosphere and the way people relate to you. Make
sure your clothing choice follows the company’s dress code to ensure professionalism with
coworkers and external parties as well as safety and comfort while on the job.

8. Discuss issues with management

There may be times when you face an ethical dilemma at work, and this particular type of
issue may not be covered adequately in the employee handbook or your training. For
situations like this, you can consider discussing the issue with your supervisor, the human
resources department or, if the company has one, an ethics officer. Working with someone
familiar with the company’s ethical standards can help you resolve these situations
appropriately.

9. Seek further ethics training

Should you need more guidance on ethical behavior at work, your company may offer further
training via seminars or online courses. These can help reinforce the points made in the
company’s handbook. If you are required to take ethics training annually, be sure to do so.
Over time, these points will become familiar and will shape your business conduct.

ethical and unethical behavior

Unethical behavior can be defined as actions that are against social norms or acts that are
considered unacceptable to the public. 
Ethical behavior is the complete opposite of unethical behavior. Ethical behavior follows the
majority of social norms and such actions are acceptable to the public.

Examples of Ethical Behaviors in The Workplace 

Examples of ethical behaviors in the workplace includes; obeying the company's rules,
effective communication, taking responsibility, accountability, professionalism, trust and
mutual respect for your colleagues at work. These examples of ethical behaviors ensures
maximum productivity output at work. And could be pivotal for career growth.

 Obey The Company’s Rules & Regulation

 At the start of an employee contract, companies may need the employee to sign various
documents, including the company rules and regulation agreement form. Also, the employee
may be given a handbook that may serve as a guide.

Some common rules are tardiness, inappropriate dressing, and language, etc. Due to the
excitement of getting a new job, some employees do not properly read these rules and may
end up deferring them in the future.
Therefore, it is important that new employees properly read these rules & regulations in other
not to defer them.

 Communicate Effectively

Effective communication is very important to avoid misunderstandings when dealing with

issues in the workplace. Communicating effectively may mean different things to people at
different points in time.

Let us consider the hypothetical situation of an employee trying to relay information to a

French-speaking customer. The best way to communicate effectively with the customer is to
have an employee who can speak French relay the information. 

Effective communication may also have an employee breaking one of the rules and
regulations of the company without getting penalized for it. An employee reaching out to HR
that they will be coming in late due to some unforeseen circumstances may be spared for
coming late if the situation is properly communicated. 

 Develop Professional Relationships

Good professional relationships are not only a thing that fosters teamwork among employees,
but also help with individual career development for employees. Developing professional
relationships with coworkers or other professionals outside the workplace will also directly or
indirectly improve productivity. 

Professional relationships between low-level and high-level employees will make it easier for
ideas to be shared and knowledge to be passed to junior employees. That way, the company
can confidently have an intern work on a tough project to meet a pending deadline due to the
guidance from older employees.

Salespeople, for one, need to build external professional relationships with professionals from
other organizations—especially those who are potential clients. These relationships will help
create a contact person in another organization in case they need to sell a product to them.

 Take Responsibility

 It is important for employees to always take responsibility for decisions made both
individually and in a team. This is, in fact, a leadership trait that every employee who is
looking to take up a managerial position in the future should exhibit.

Understandably, employees may want to save their job and are therefore scared of taking
responsibility for a particular event. However, they shouldn't let this fear take them.out of the
team.

For example, the communications team came up with a marketing strategy for the company
and it failed. The team members are to jointly take responsibility for this failure, not
individuals coming out that they weren't part of the decision making process.

If the strategy has gone the other way round, they wouldn't have said the same.
  Professionalism/Standards

There are professional standards that everything an employee does in the workplace. The use
of informal words in a formal workplace is highly unprofessional. 

These standards should be held high and applied to every part of an employee's activity in the
workplace. This should include the way they speak, kind of work they deliver and their
relationship with coworkers and customers.

 Be Accountable

 Accountability is also a very good trait of an employee. One of the things that may short
change a talented and responsible is the lack of accountability. 

Lack of accountability may result in your boss thinking you have an "I don't care attitude" to
the company's project or worst take you as a liar and may lead to job loss in the long run. For
example, at the beginning of each year, a certain amount of money is allocated to each
department.

The manager is meant to oversee how this money is spent. If at the end of the year, the
manager can not make an account of how the money was spent, he may then be suspected of
stealing company funds.

 Uphold Trust

An employee should not do anything that may make his or her employee withdraw trust. As
an employee of a company, your employee trusts you to get work done perfectly on time.

Things like missing deadlines regularly or delivering work that needs to be revised over and
over again will deny you a promotion. It may even leave the employer not giving you tasks to
complete in the future—a nightmare for freelancers.

 Show Initiative without being told

Is the company running behind deadline and you feel you can stay a few extra hours after
work to finish up? Do it.

You are a freelance designer and your client wants a particular poster designed but doesn't
have a copywriter to write the content. If you can write the contents, do so. Don't delay a
client's work because of a few contents.

 Respect Your Colleagues

It doesn't matter whether you are dealing with the intern, a junior, janitor, etc. they should all
be treated with respect. As a manager, treating your team members with respect will help
improve their productivity.
Giving constructive criticism and saying kind words to them even when they are not able to
deliver perfectly will help them strive to do better in the future.

 Work Smarter

 Don't just work hard, work smarter. The reason why you see an employee promoted to the
post of manager after just 2 years and a hardworking employee who has been with the
company for 10 years failed to get a promotion is smart work.

Assume that these 2 employees are data scientists who collect data and analyze them. A
smarter employee will use the Formplus data collection tool to collect data and receive real-
time data analytics, while a hard-working employee will print paper-based forms and do the
hard work of sharing it to respondents.

Unethical Workplace Behaviors

 Lies

Lying is a trait that is detested in and outside the workplace. It kills trust, affects relationships
and may even put people in trouble.

There are different situations where employees lie in the workplace—with just one lie
opening the floor for many others. It could be a sales manager lying about the number of
clients they were able to get in a month or an employee calling in sick just to attend another
job interview. 

A lot of employees start lying from their CV, by adding experiences they didn't acquire, and
the skills they don't have. Employees need to understand that lying about work may
eventually get them in trouble and needs to stop before they lose their job. 

However, we notice that employees lie due to fear of their employer—an employee will call
in sick to go for interviews because companies frown against employees interviewing at
another company. HR should put up a more friendly culture that will encourage people to
progress in their careers taking up other jobs and even support them throughout the process.

 Taking Credit for Others Hard Work

It is very common for managers to take credit for their team member's hard work when
reporting to the management. A team member may have brought an idea that helped the sales
team improve their sales by 200%.

However, when giving a report, the manager doesn't mention the team member's name but
claims the idea as his. Employees need to reduce the use of "I", but embrace the use of " We".

By taking credit for another person's work, you will be denying the person a promotion,
bonus or commendation for a job well done. This will discourage the person from sharing
ideas that will benefit the company in the future. 

 Verbal Harassment/Abuse
Employees need to stay away from using foul language on coworkers in and out of the
workplace. This is very important when dealing with customers.

Customers are known to get angry and may result in verbal abuse due to a bad product or
service. They may even get insult you when they are at fault.

As a customer care representative, salesperson or any other employee, it is beth important

that you don't use abusive words on customers no matter how provoked.

 Violence

Similar to verbal harassment, employees should not be violent when dealing with coworkers
and customers. Customers may likely provoke you, but it is better to keep shut and walk
away rather than turn violent.

 Non-Office Related Work

 A lot of employees have side hustles which they use to supplement salaries. This is very
good and only very few companies are against employees working to make money outside
work hours.

However, some employees still do non-office related work during office hours. Employees
who have side hustles should try doing them on weekends or employing other people to
handle some of the business logistics to avoid eating into office hours to get the work done.

 Extended Breaks

Companies give lunch breaks to employees and people take advantage of these breaks to do
other things outside office work like, go for interviews, meet with friends or even work on
their side hustles. They are free to do whatever they want these lunch breaks. 

Employees, however, take advantage of these lunch breaks and extend them beyond time. 

 Theft/Embezzlement

Some employees are known for diverting company funds into their bank accounts—padding
project quotations, invoices, etc. to deceive the company on how much was spent on
particular projects.

This act is detrimental to the company because employees who steal sometimes replace
quality products with counterfeits which are cheaper but causes damage in the future.

 Sexual Harassment

Sexual harassment is an offense that is not limited to the workplace alone. An employee
accused of sexual harassment will not only face consequences in the workplace but also tried
at a court of law.
Many companies have a zero-tolerance rate for sexual harassment in and outside the
workplace. This may tarnish the company's reputation and the only way to curb is to make an
example of defaulters.

 Corrupt Practices

Some common causes of corruption can be seen during the employment process of an
organization. They invite so many people to send their CVs and come for interviews but only
people with the same political affiliation with them get the job.

This is also common with companies that ask for contractors to bid for a project but the
employees will only give them to their friends who may not even bid at all.

Get started with our workplace harassment form template to receive feedback from
employees

Management/Employers Unethical Behaviors 

Workplace ethics is not for employees alone. Employers are also bound to workplace ethics
and may also be tried for unethical behavior.

 Sex for Job/Promotion

It is common for managers, employers and major decision-makers to use their position in the
workplace to influence the hiring decision in exchange for sex. 

 Late Night Out/Unpaid Overtime

Some employers take advantage of desperate job seekers and the competitive job market to
use employees' leisure time as they wish. They do so with the mentality that they are doing
employees a favor by employing them, not knowing that the favor is mutual.

Employees who are scared of queries or job loss are not able to protest the infringement into
their private time by the employer.

 Verbal Harassment

It is common among employers to verbally harass employees when they make little mistakes.
This will reduce employee morale and productivity.

Employers should always say kind words to their employees. 

 Undue Pressure

Deadlines are a great way to make sure the work gets done on time. However, when
employees are placed under undue pressure, they end up trading quality for on-time delivery.

An example of undue pressure will be giving an employee a 1-day deadline for a project that
would normally take a week.
  Nepotism

This is a common type of corruption that happens in the workplace. An employee who has
been working hard for years while influencing company growth may get sidelined for a
promotion because of another employee who is a family friend, family or friend of the
employer. Things like this are what reduces employee morale or even push talented
employees from drop a resignation.

 Unfriendly Work Environment

One of the things that can mar productivity is an unfriendly working environment. This may
come as a combination of abusive bosses, lack of commendation, nepotism, etc. An
unfriendly environment is an environment that combines various unethical behaviors into
one.

 Unrealistic Expectations

Creatives usually have it worse when it comes to having unrealistic expectations from
employees. 

What Are the Causes of Unethical Behavior in the Workplace?

False Communications
False communications fall into various categories. They include falsification of auditor‘s or
controller‘s report or any form of manipulation that does not tell the whole truth. These
include cheating on tax returns or inappropriate depreciation schedule and wrong expenses
(Brennan Jr., Valtz, Shallenberger & Stanton, 1961, 164). Feeding the public with wrong
report of the organization‘s business performance to make the organization look good is
another common practice. In 2001, Enron gave wrong information about their loss because
Ken Lay, the CEO of Enron, was advised by some trusted Enron executives to report only
$1.2 billion of the $7 billion in losses because it was felt that the amount could be explained
reasonably without doing more damage to the falling stock price of the company (Collins,
2007, 3). Similar to this was the case of Manville Corporation.
Collusion
Collusion, especially with competitors, to fix prices, is an unfair business practice today.
This could be considered stealing from customers. However, there are differences of opinion
on whether or not price fixing is stealing from customers (Brennan Jr., Valtz, Shallenberger
& Stanton, 1961, 174).
 
Gifts and Kickbacks
Some organizations do not allow their employees to receive gifts from clients during normal
course of business. Those who do, generally provide guide lines on limitations as to the
amount an employee can receive as gift. Sometimes a buyer may request for kickbacks or
entertainment which, if not provided, may lead to the loss of the customer. An employee
 frequently receives pressure from the management to behave unethically or to obtain
profitable business at any cost, which may include the use of any possible dirty tricks. The
employees who desire to be retained or promoted have no choice but to dance to the tune of
the management. This is because there were cases of those who refused to behave
unethically the way management instructed and were fired or nearly fired (Brennan Jr.,
Valtz, Shallenberger & Stanton, 1961, 165).
Conflict of Interest
Conflict of interest occurs when ones private interest interferes or appears to interfere in any
way with the interest of the organization. According to Sliglitz, it can be argued that there is
no conflict of interest because, based on Adam Smith‘s view, the individuals, when pursuing
their own self- interest are actually pursuing the general interest of society (Sliglitz, 2003,
2). Some examples of conflicts of interest are:
 
-  diverting from the organization for personal benefit, a business opportunity,
-  using the organization‘s assets for personal benefit,
-  accepting any valuable thing from the organization‘s customers or suppliers, and
-  having a financial interest in an organization‘s competitor.
 
Unethical practices in the Health Care Sector
There are three common unethical practices in the Health Care Sector. The first is refusing
to provide health care services to the patients who have no medical insurance. Some Health
Centers do not admit patients who have no insurance unless they can provide evidence that
they have the ability to pay for the health service. The second unethical practice in the health
care sector is over treating patients to boost income. The third is doing surgery at surgical
centers instead of the hospital so that the doctors do not have to ―pull call at any hospital‖
 
Insider Trading
Insider trading is an unethical behavior which occurs when a person who has access to
confidential information uses or shares the information for securities trading purposes or any
other purpose except the conduct of regular company business. The confidential information
of the company are not to be used for achieving personal gain neither are they to be
disseminated directly or indirectly, to friends, family members and other outsiders who may
in turn trade on or misuse the information.
Discrimination and Harassment
Discrimination involves not providing equal opportunity in employment on merit but on
other basis such as race, sex, national origin, age, religion, or any other basis not related to
 the job. Harassment is a derogatory comment or unwelcome sexual advances (FS Networks,
Inc., 2004,
Wrong Doing
A large number of people, including top management, are involved in wrong doing both in
the public and in the private sectors. The managers of E.E. Hutton, for example, were found
guilty of 2000 mail and wire fraud. Similarly, the supervisors of a defense contractor were
accused of falsifying time cards (Gellerman, 1986, 85).
 

What Is a Code of Ethics?

A code of ethics is a guide of principles designed to help professionals conduct business

honestly and with integrity. A code of ethics document may outline the mission and values of
the business or organization, how professionals are supposed to approach problems, the
ethical principles based on the organization's core values, and the standards to which the
professional is held.

A code of ethics also referred to as an "ethical code," may encompass areas such as business
ethics, a code of professional practice and an employee code of conduct.

KEY TAKEAWAYS

 A code of ethics sets out an organization's ethical guidelines and best practices to
follow for honesty, integrity, and professionalism.
 For members of an organization, violating the code of ethics can result in sanction
including termination.
 In some industries, including banking and finance, specific laws govern business
conduct. In others, a code of ethics may be voluntarily adopted.

Code of Ethics
 
While a code of ethics is often not required, many firms and organizations choose to adopt
one.

Compliance-Based Code of Ethics

For all businesses, laws regulate issues such as hiring and safety standards. Compliance-
based codes of ethics not only set guidelines for conduct but also determine penalties for
violations.

In some industries, including banking, specific laws govern business conduct. These
industries formulate compliance-based codes of ethics to enforce laws and regulations.
Employees usually undergo formal training to learn the rules of conduct. Because
noncompliance can create legal issues for the company as a whole, individual workers within
a firm may face penalties for failing to follow guidelines.
To ensure that the aims and principles of the code of ethics are followed, some companies
appoint a compliance officer. This individual is tasked with keeping up to date on changes in
regulation codes and monitoring employee conduct to encourage conformity.

This type of code of ethics is based on clear-cut rules and well-defined consequences rather
than individual monitoring of personal behavior. Despite strict adherence to the law, some
compliance-based codes of conduct do not thus promote a climate of moral responsibility
within the company.

Value-Based Code of Ethics

A value-based code of ethics addresses a company's core value system. It may outline
standards of responsible conduct as they relate to the larger public good and the environment.
Value-based ethical codes may require a greater degree of self-regulation than compliance-
based codes.

Some codes of conduct contain language that addresses both compliance and values. For
example, a grocery store chain might create a code of conduct that espouses the company's
commitment to health and safety regulations above financial gain. That grocery chain might
also include a statement about refusing to contract with suppliers that feed hormones to
livestock or raise animals in inhumane living conditions.

Code of Ethics Among Professionals

Financial advisers registered with the Securities and Exchange Commission or a state
regulator are bound by a code of ethics known as fiduciary duty. This is a legal requirement
and also a code of loyalty that requires them to act in the best interest of their clients.

Certified public accountants, who are not typically considered to be a fiduciary to their
clients, still are expected to follow similar ethical standards, such as integrity, objectivity,
truthfulness, and avoidance of conflicts of interest, according to the American Institute of
Certified Public Accountants (AICPA).

Example of a Code of Ethics

Many firms and organizations have adopted a code of ethics. One good example comes from
the CFA Institue (CFAI), the grantor of the Chartered Financial Analyst (CFA) designation
and creator of the CFA exams. CFA charterholders are among the most respected and
globally recognized financial professionals. According to the CFAI's website, Members of
CFA Institute, including CFA charterholders, and candidates for the CFA designation must
adhere to the following code of ethics (found here):

 Act with integrity, competence, diligence, respect and in an ethical manner with the
public, clients, prospective clients, employers, employees, colleagues in the
investment profession, and other participants in the global capital markets.
 Place the integrity of the investment profession and the interests of clients above their
own personal interests.
 Use reasonable care and exercise independent professional judgment when
conducting investment analysis, making investment recommendations, taking
investment actions, and engaging in other professional activities.
 Practice and encourage others to practice in a professional and ethical manner that
will reflect credit on themselves and the profession.
  Promote the integrity and viability of the global capital markets for the ultimate
benefit of society.
 Maintain and improve their professional competence and strive to maintain and
improve the competence of other investment professionals

Meaning of Management Ethics:

‘Management Ethics’ is related to social responsiveness of a firm. It is “the discipline dealing
with what is good and bad, or right and wrong, or with moral duty and obligation. It is a
standard of behaviour that guides individual managers in their works”.

“It is the set of moral principles that governs the actions of an individual or a group.”

Business ethics is application of ethical principles to business relationships and activities.

When managers assume social responsibility, it is believed they will do it ethically, that is,
they know what is right and wrong.

Ethical Activities:
Amongst a host of ethical activities that managers can perform, a study conducted by
Barry Posner and Warren Schmidt highlights the following ethical activities observed
by managers:
1. The foremost goal of managers is to make their organizations effective.

2. Profit maximisation and stakeholders’ interests were not the central goals of the managers
studied.

3. Attending to customers was seen as important.

4. Integrity was the characteristic most highly rated by managers at all levels.

5. Pressure to conform to organisational standards was seen as high.

6. Spouses are important in helping their mates grapple with ethical dilemmas.

7. Most managers seek the advice of others in handling ethical dilemmas.

Types of Management Ethics:

Three types of management ethics or standards of conduct are identified by Archie B.
Carroll:
1. Immoral management:
It implies lack of ethical practices followed by managers. Managers want to maximise profits
even if it is at the cost of legal standards or concern for employees.
2. Moral management:
According to moral management ethics, managers aim to maximise profits within the
confines of ethical values and principles. They conform to professional and legal standards of
conduct. The guiding principle in moral management ethics is “Is this action, decision, or
behaviour fair to us and all parties involved?”

3. Amoral management:
This type of management ethics lies between moral and immoral management ethics.
Managers respond to personal and legal ethics only if they are required to do so; otherwise
there is lack of ethical perception and awareness.

There are two types of amoral management:

(a) Intentional:
Managers deliberately avoid ethical practices in business decisions because they think ethics
should be followed in non-business activities.

(b) Unintentional:
Managers do not deliberately avoid ethical practices but unintentionally they make decisions
whose moral implications are not taken into consideration.

Guidelines for Ethical Behaviour:

Though every individual and group has a set of ethical values, the following guidelines
are prescribed by James O’Toole in this regard:
1. Obey the law:
Obeying legal practices of the country is conforming to ethical values.

2. Tell the truth:

Disclosing fair accounting results to concerned parties and telling the truth is ethical
behaviour of managers.

3. Respect for people:
Ethics requires managers to respect people who contact them.

4. The golden rule:

The golden business principle is ‘Treat others as you would want to be treated’. This will
always result in ethical behaviour.

5. Above all, do no harm:

Even if law does not prohibit use of chemicals in producing certain products, managers
should avoid them if they are environment pollutants.
6. Practice participation – not paternalism:
Managers should not decide on their own what is good or bad for the stakeholders. They
should assess their needs, analyse them in the light of business needs and integrate the two by
allowing the stakeholders to participate in the decision-making processes.

7. Act when you have responsibility:

Actions which cannot be delegated and have to be taken by managers only (given their
competence and skill) must be responsibly taken by them for the benefit of the organisation
and the stakeholders.

Approaches to Management Ethics:

There are three approaches to management ethics:
1. Utilitarian approach:
In this approach, managers analyse the effects of decisions on people affected by these
decisions. The action rather than the motive behind the action is the focus of this approach.
Positive and negative results are weighed and managerial actions are justified if positive
effects outweigh the negative effects. Pollution standards and analysing the impact of
pollution on society is management ethics code under utilitarian approach.

2. Moral rights approach:

In this approach, managers follow ethical code which takes care of fundamental and moral
rights of human beings; the right to speech, right to life and safety, right to express feelings
etc. In the context of business organisations, managers disclose information in the annual
reports necessary for welfare of the people concerned. The nature, timing and validity of
information is taken into account while reporting information in the annual reports.

3. Social justice approach:

According to this approach, managers’ actions are fair, impartial and equitable to all
individuals and groups. Employees are not distinguished on the basis of caste, religion, race
or gender though distinction on the basis of abilities or production is justified. For example,
all employees, males or females with same skills should be treated at par but it is justified to
treat employees who produce more differently from those who produce less.

Barriers to Management Ethics:

James A. Waters describe three “organisational blocks” of management ethics:
1. Chain of command:
If employees know that superiors are not following ethical behaviour, they hesitate in
reporting the matter up the hierarchy for the fear of being misunderstood and penalized. The
chain of command is, thus, a barrier to reporting unethical activities of superiors.
2. Group membership:
Informal groups lead to group code of ethics. Group members are strongly bonded by their
loyalty and respect for each other and unethical behaviour of any member of the group is
generally ignored by the rest.

3. Ambiguous priorities:
When policies are unclear and ambiguous, employees’ behaviour cannot be guided in a
unified direction. It is difficult to understand what is ethical and what is unethical.

Solutions to Barriers:
The following measures can improve the climate for ethical behaviour:
1. Organisational objectives and policies should be clear so that every member works towards
these goals ethically.

2. The behaviour of top managers is followed by others in the organisation. Ethical actions of
top managers promote ethical behaviour throughout the organisation.

3. Imposing penalties and threats for not conforming to ethical behaviour can reduce
unethical activities in the organisation. Formal procedures of lodging complaints help
subordinates report unethical behaviour of superiors to the concerned committees.

4. Educational institutions also offer courses and training in business ethics to develop
conscientious managers who observe ethical behaviour.

Values:
Values are a set of principles that people cherish. They enhance the quality of individual and
collective life. They involve personal and community discipline and sacrifice of immediate
gratification needs. Quality of life is a product of physical, social, environmental, mental and
spiritual health and wholeness. Values refer to intrinsic worth or goodness.

They are the beliefs that guide an individual’s actions. They represent a person’s belief about
what is right or wrong. Values lay standards against which behaviour is judged. They
determine the overall personality of an individual and the organization he is working for. His
family, peer group, educational institutions, environment and the work place develop values
in him. Values apply to individuals and institutions, both business and non-business.

Values and Behaviour:

Values remain embedded in our minds since childhood. As children, we are taught what is
good, bad, right or wrong by parents, educational institutions and social groups. These values
become part of our behaviour and personality when we grow up and are transmitted to future
generations, thus, creating a healthy society.

In the business world, every person, whether manager or non-manager, whose behaviour is
value-based shapes the culture of the organisation. Organisation is a group of people
responsible for its formation, survival and growth. How good an organisation is depends
upon how good are the people managing it.

Good people are those whose actions and behaviour are based on a sound value system and
ethical principles. Value system is a combination of all values that an individual should have.
Values lay foundation for organisational success.

They develop the attitudes, perceptions and motives that shape the behaviour of people
working in the organisation. This develops a sound organisation culture that promotes image
of the organisation in the society. Values in individuals develop a value-based organisation,
society, nation and the world as a whole.

Values in Business Management:

There are many ways in which the basic human values – truth, righteousness, peace, love and
non-violence can be practiced in the day-to-day conduct of business. There are different
aspects of management such as marketing, finance, industrial relations, etc., but the most
important aspect is “man-management.” Each country has its own historical and cultural
background and Indian managers should not mechanically copy practices from abroad but
should keep in mind the Indian milieu and our national ethos.

Values of Managers:
Management is a systematic way of doing work in any field. Its task is to make people
capable of joint performance, to make their weaknesses irrelevant and convert them into
strengths. It strikes harmony in working equilibrium, in thoughts and actions, goals and
achievements, plans and performance, products and markets.

Lack of management will cause disorder, confusion, wastage, delay, destruction and even
depression. Successful management means managing men, money and material in the best
possible way according to circumstances and environment.

Most of the Indian enterprises today face conflicts, tensions, low efficiency and productivity,
absence of motivation, lack of work culture, etc. This is perhaps due to the reason that
managers are moving away from the concept of values and ethics.
The lure for maximizing profits is deviating them from the value-based managerial
behaviour. There is need for managers to develop a set of values and beliefs that will help
them attain the ultimate goals of profits, survival and growth.

They need to develop the following values:

1. Optimum utilization of resources:
The first lesson in the management science is to choose wisely and utilize optimally the
scarce resources to succeed in business venture.

2. Attitude towards work:

Managers have to develop visionary perspective in their work. They have to develop a sense
of larger vision in their work for the common good.

3. Work commitment:
Managers have to work with dedication. Dedicated work means ‘work for the sake of work’.
Though results are important, performance should not always be based on expected benefits.
They should focus on the quality of performance. The best means for effective work
performance is to become the work itself. Attaining the state of nishkama karma is the right
attitude to work because it prevents ego and the mind from thinking about future gains or
losses.

Managers should renounce egoism and promote team work, dignity, sharing, cooperation,
harmony, trust, sacrificing lower needs for higher goals, seeing others in you and yourself in
others etc. The work must be done with detachment. De-personified intelligence is best suited
for those who sincerely believe in the supremacy of organisational goals as compared to
narrow personal success and achievement.

Value based managers do the following to discharge their duties well:

a. Cultivate sound philosophy of life.

b. Identify with inner core of self-sufficiency.

c. Strive for excellence through ‘Work is Worship’.

d. Build internal integrated force to face contrary impulses and emotions.

e. Pursue ethico-moral righteousness.

4. Vision:
Managers must have a long-term vision. The visionary manager must be practical, dynamic
and capable of translating dreams into reality. This dynamism and strength of a true leader
flows from an inspired and spontaneous motivation to help others.

Vision includes the following:

(a) Forming a vision and planning the strategy to realize such vision.

(b) Cultivating the art of leadership.

(c) Establishing institutional excellence and building an innovative organization.

(d) Developing human resources.

(e) Team building and teamwork.

(f) Delegation, motivation and communication.

(g) Reviewing performance and taking corrective steps whenever called for.

The management gurus like Lord Krishna, Swami Vivekananda and Peter F. Drucker
assert that managers should develop the following values:
1. Move from the state of inertia to the state of righteous action.

2. Move from the state of faithlessness to the state of faith and self-confidence.

3. Their actions should benefit not only them but the society at large.

4. Move from unethical actions to ethical actions.

5. Move from untruth to truth.

6. ‘No doer of good ever ends in misery’. Good actions always produce good results and evil
actions produce evil results.

7. Take the best from the western models of efficiency, dynamism and excellence and tune
them to Indian conditions.