Week#2

Instructor: Sidra Zubair

Date: 22/2/2024
Ethics in the Business
World
• Ethics has risen to the top of the business
agenda because the risks associated with
inappropriate behavior have increased, both
in their likelihood and in their potential
negative impact.
Globalization
• Uncertain Economic Conditions
Employee
Misconduct
 • Corporate social responsibility (CSR) is the
concept that an organization should act
ethically by taking responsibility for the impact
of its actions on the environment, the
community, and the welfare of its employees.
Corporate
Social • Setting CSR goals encourages an organization
Responsibility to achieve higher moral and ethical standards.

• Each organization must decide if CSR is a

priority and, if so, what its specific CSR goals
are.
 • Gaining the goodwill of the community
• Creating an organization that operates
consistently
• Fostering good business practices
CSR Goals • Protecting the organization and its
employees from legal action
• Avoiding unfavorable publicity
Improving Corporate
Ethics
 • A well-implemented ethics and compliance
program and a strong ethical culture can, in
turn, lead to less pressure on employees to
misbehave and a decrease in observed
misconduct.
Improving • It also creates an environment in which
Corporate employees are more comfortable reporting
instances of misconduct, partly because there
Ethics is less fear of potential retaliation by
management against reporters (for example,
reduced hours, transfer to less desirable jobs,
and delays in promotions).
 • A corporate ethics officer (also called a
corporate compliance officer) provides an
organization with vision and leadership in the
1. Appointing area of business conduct. This individual
a Corporate “aligns the practices of a workplace with the
stated ethics and beliefs of that workplace,
Ethics Officer holding people accountable to ethical
standards.
 • The board of directors is responsible for the careful and
responsible management of an organization.

• Board members are expected to conduct themselves

according to the highest standards for personal and
2. Ethical professional integrity, while setting the standard for
company-wide ethical conduct and ensuring compliance
Standards with laws and regulations.
Set by
• Board members must create an environment in which
BODs employees feel they can seek advice about appropriate
business conduct, raise issues, and report misconduct
through appropriate channels.

• Board of Directors are responsible to set high values of

ethical standards
 • A code of ethics is a statement that highlights
an organization’s key ethical issues and
identifies the overarching values and
principles that are important to the
organization and its decision making.
3. Establishing a
Corporate Code • Codes of ethics frequently include a set of
formal, written statements about the purpose
of Ethics of an organization, its values, and the
principles that should guide its employees’
actions.
 • An organization’s code of ethics applies to its
directors, officers, and employees, and it
should focus employees on areas of ethical
risk relating to their role in the organization,
To whom it offer guidance to help them recognize and
deal with ethical issues, and provide
may apply? mechanisms for reporting unethical conduct
and fostering a culture of honesty and
accountability within the organization.

• An effective code of ethics helps ensure that

employees abide by the law, follow necessary
regulations, and behave in an ethical manner.
 • A code of ethics cannot gain company-wide
acceptance unless it is developed with
employee participation and fully endorsed by the
organization’s leadership.
How to access • It must also be easily accessible by employees,
Code of shareholders, business partners, and the public.
• The code of ethics must continually be applied
Ethics and to a company’s decision making and emphasized
apply? as an important part of its culture.
• Breaches in the code of ethics must be identified
and dealt with appropriately so the code’s
relevance is not undermined.
 • In a social audit, an organization reviews
how well it is meeting its ethical and
social responsibility goals, and
4.Conductin communicates its new goals for the
upcoming year. This information is shared
g Social with employees, shareholders, investors,
Audits market analysts, customers, suppliers,
government agencies, and the communities
in which the organization operates.
 • For example, each year Intel prepares its
“Corporate Responsibility Report,”
which summarizes the firm’s progress
toward meeting its ethical and CSR goals. In
2011,
Example Intel focused on goals in three primary areas:
A. Environment
B. Corporate Governance
C. Social
 • The ancient Greek philosophers believed that personal
convictions about right and wrong behavior could be improved
through education.
• Thus, an organization’s code of ethics must be promoted and

5. Requiring continually communicated within the organization, from top to

bottom. Organizations can do this by showing employees
examples of how to apply the code of ethics in real life.
Employees to • One approach is through a comprehensive ethics education
Take program that encourages employees to act responsibly and
ethically.

Trainings • Formal ethics training not only makes employees more aware
of a company’s code of ethics and how to apply it, but also
demonstrates that the company intends to operate in an ethical
manner.
• The existence of formal training programs can also reduce a
company’s liability in the event of legal action.
 • Motorola, designer of wireless network
equipment, cell phones, and smartphones, is
committed to a strong corporate ethics
Example training program to ensure that its employees
conduct its business with integrity.
 • Managers can help employees to meet performance
expectations by monitoring employee
behavior and providing feedback; increasingly,
managers are including ethical conduct as
6. Including part of an employee’s performance appraisal.
Ethical Criteria • Operating effectively in a multicultural environment;
accepting personal accountability for meeting
in Employee business needs; continually developing others and
themselves; and operating openly and honestly with
Appraisals suppliers, customers, and other employees.
• These factors are considered along with the more
traditional criteria used in performance appraisals
Creating an
Ethical
Environment
It is managers responsibility to
create an ethical environment
Including Ethical
Considerations in
Decision Making
 A problem statement is a clear, concise description of the
issue that needs to be
addressed.
A good problem statement answers the following questions:
• What do people observe that causes them to think there is a
problem?
Develop a • Who is directly affected by the problem?

Problem • Is anyone else affected?

• How often does the problem occur?
Statement • What is the impact of the problem?
• How serious is the problem?
• Development of a problem statement is the
most critical step in the decision-making process. Without a
clear statement of the problem or the decision to be made, it
is useless to proceed.
 • Good problem statement: Our product supply
organization is continually running out of stock
of finished products, creating an out-of-stock
situation on over 15 percent of our customer
orders, resulting in over $300,000 in lost
sales per month.
• Poor problem statement: We need to
Examples implement a new inventory control system.
(This is a possible solution, not a problem
statement.)
• Poor problem statement: We have a problem
with finished product inventory.
(This is not specific enough.)
 • During this stage of decision making, it is ideal
to enlist the help of others, including
stakeholders, to identify several alternative
solutions to the problem. Brainstorming
with others will increase your chances of
identifying a broad range of alternatives and
Identify determining the best solution
Alternatives • During any brainstorming process, try not to be
critical of ideas, as any negative criticism will
tend to shut down the discussion, and the flow of
ideas will dry up. Simply write down the ideas
as they are suggested.
 • Once a set of alternatives has been identified, the group
must evaluate them based on numerous criteria, such as
effectiveness at addressing the issue, the extent of risk
associated with each alternative, cost, and time to
implement.
Evaluate • An alternative that sounds attractive but that is not
feasible will not help solve the problem.
and Choose • As part of the evaluation process, weigh various laws,
the guidelines, and principles that may apply. You certainly
do not want to violate a law that can lead to a fine or
Alternative imprisonment for yourself or others.
• Do any corporate policies or guidelines apply?
• Does the organizational code of ethics offer guidance?
• Do any of your own personal principles apply?
• Philosophers have developed many
approaches to aid in ethical
decision making.
Four of the most common
approaches
 • The virtue ethics approach to decision
making focuses on how you should behave
and think about relationships if you are
concerned with your daily life in a
Virtue community.
• It does not define a formula for ethical
Ethics decision making, but suggests that when
Approach faced with a complex ethical dilemma,
people do either what they are most
comfortable doing or what they think a
person they admire would do.
 • The utilitarian approach to ethical decision
making states that you should choose the
action or policy that has the best overall
consequences for all people who are directly
Utilitarian or indirectly affected.
Approach • The goal is to find the single greatest good
by balancing the interests of all affected
parties
 • The fairness approach focuses on how fairly
actions and policies distribute benefits and
burdens among people affected by the
Fairness decision.
Approach • The guiding principle of this approach is to
treat all people the same.
 • The common good approach to decision
making is based on a vision of society as a
community whose members work together to
achieve a common set of values and goals.
• Decisions and policies that use this approach
Common attempt to implement social systems,
Good institutions, and environments that everyone
depends on and that benefit all people.
Approach • Examples include an effective education
system, a safe and efficient transportation
system, and accessible and affordable health
care.
 • Once an alternative is selected, it should be
implemented in an efficient, effective, and
timely manner. This is often much easier said
than done, because people tend to resist
change.
• Why are we doing this?
Implement • What is wrong with the current way we do
things?
the Decision • What are the benefits of the new way for you?
A transition plan must be defined to explain to
people how they will move from the
old way of doing things to the new way. It is
essential that the transition be seen as relatively
easy and pain free.
 • After the solution to the problem has been
implemented, monitor the results to see if the
desired effect was achieved, and observe its
Evaluate the impact on the organization and the various
stakeholders. Were the success criteria fully
Results met?
• Were there any unintended consequences?
 • The growth of the Internet, the ability to capture and store vast amounts of personal
data, and greater reliance on information systems in all aspects of life have increased
Ethics in IT the risk that information technology will be used unethically.
 • Many employees have their email and Internet access monitored while
at work, as employers struggle to balance their need to manage
important
• Company assets and work time with employees’ desire for privacy and
self direction.
• Millions of people have downloaded music and movies at no charge
and in apparent violation of copyright laws at tremendous expense to
the owners of those copyrights.
• Organizations contact millions of people worldwide through
Examples unsolicited email (spam) as an extremely low-cost marketing approach.
• Hackers break into databases of financial and retail institutions to steal
customer information, then use it to commit identity theft—opening
new accounts and charging purchases to unsuspecting victims.
• Students around the world have been caught downloading material
from the
• Web and plagiarizing content for their term papers.
• Web sites plant cookies or spyware on visitors’ hard drives to track
their online purchases and activities.