Recent challenges in ethics

Recent challenges in ethics 

Ethical Framework 

• Beneficence – doing good; helping 

• Non-maleficence – avoiding harm 

• Autonomy – client’s input and role 

• Fidelity – consistent with what promised 

• Justice -- welfare of client vs. others (e.g. duty to warn); equitable use of resources – having a basis to proportion them 

Ethical Decision-Making 

• It is often not what is ethical vs. unethical, but the comparative ethicality of the options 

• This involves weighing which principles are best dealt with through one option or another 

• What are the likely positive vs. negative outcomes of choosing a given course of action? 

Decision table or chart 

Electronic records 

• As of 23 January 2012 US major healthcare information privacy breaches are 19 million records in 385 major HIPAA - reported incidents (each affecting 500 or more) since Sept. 2009 (2 ¼ years) 

• Minn. Attorney General Lori Swanson has announced a lawsuit against Accretive Health Inc., a debt collection agency, or its role in a breach impacting 20,000 patients at North Memorial Health Care & Fairview Health Services. Data was on an un-encrypted laptop stolen from a parked rental car. 

• It is recommended that all devices be encrypted, even those which are not supposed to be used to transport data, since people get careless 

 AMA Policy: Professionalism in the use of social media 

• Refrain from posting patient information 

• Privacy settings; monitor internet presence 

• Appropriate boundaries with patient interactions on internet 

• Separate personal & professional content on line; 

• Confront or report unprofessional conduct on line 

• Can undermine reputation & public trust 

Ethics of Accounting Information 

– Creative accounting, earnings management, misleading financial analysis. 

– Insider trading, securities fraud, bucket shops, forex scams: concerns (criminal) manipulation of the financial markets.

 – Executive compensation: concerns excessive payments made to corporate CEO's and top management. 

Ethics of Human Resource Mgt. 

–Discrimination issues include discrimination on the bases of age (ageism), gender, race, religion, disabilities, weight and attractiveness, affirmative action, sexual harassment. 

– Issues arising from the traditional view of relationships between employers and employees, also known as At-will employment. 

–Issues surrounding the representation of employees and the democratization of the workplace: union busting, strike breaking. 

–Issues affecting the privacy of the employee: workplace surveillance, drug testing. –Issues affecting the privacy of the employer: whistle-blowing. 

–Issues relating to the fairness of the employment contract and the balance of power between employer and employee: slavery, indentured servitude, employment law. 

–Occupational safety and health. 

Ethics of Sales and Marketing 

– Pricing: price fixing, price discrimination, price skimming. 

– Anti-competitive practices: these include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains. 

– Specific marketing strategies: greenwash, bait and switch, shill, viral marketing, spam (electronic), pyramid scheme, planned obsolescence. 

• Content of advertisements: attack ads, subliminal messages, sex in advertising, products regarded as immoral or harmful 

• Children and marketing: marketing in schools. 

• Black markets, grey markets. 

Ethics of Production 

– Defective, addictive and inherently dangerous products and services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing, bungee jumping). 

– Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading. 

Ethics of Production 

–Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health. 

–Product testing ethics: animal rights and animal testing, use of economically disadvantaged groups (such as students) as test objects. 

Ethics of Intellectual Property, Knowledge and Skills 

– Patent infringement, copyright infringement, trademark infringement. 

– Misuse of the intellectual property systems to stifle competition: patent misuse, copyright misuse, patent troll, submarine patent. 

– Even the notion of intellectual property itself has been criticized on ethical ground. 

International Business Ethics 

• The search for universal values as a basis for international commercial behavior. 

• Comparison of business ethical traditions in different countries. 

• Comparison of business ethical traditions from various religious perspectives. 

• Ethical issues arising out of international business transactions; e.g. bioprospecting and biopiracy in the pharmaceutical industry; the fair trade movement; transfer pricing. 

• Issues such as globalization and cultural imperialism. 

• Varying global standards - e.g. the use of child labor.

• The way in which multinationals take advantage of international differences, such as outsourcing production (e.g. clothes) and services (e.g. call centres) to low-wage countries. 

• The permissibility of international commerce with pariah states. 

General business ethics 

• This part of business ethics overlaps with the philosophy of business, one of the aims of which is to determine the fundamental purposes of a company. If a company's main purpose is to maximize the returns to its shareholders, then it should be seen as unethical for a company to consider the interests and rights of anyone else. 

• Corporate social responsibility or CSR: an umbrella term under which the ethical rights and duties existing between companies and society is debated. 

• Issues regarding the moral rights and duties between a company and its shareholders: fiduciary responsibility, stakeholder concept v. shareholder concept. 

• Ethical issues concerning relations between different companies: e.g. hostile take-overs, industrial espionage. 

• Leadership issues: corporate governance. 

• Political contributions made by corporations. 

• Law reform, such as the ethical debate over introducing a crime of corporate manslaughter. 

• The misuse of corporate ethics policies as marketing instruments. 

 Acculturation Model of Ethical Decision-making 

Marginalization 

Style: Lower focus on professional ethics Lower focus on personal ethics 

Risks: Greatest risk of harm Lack appreciation for ethics Motivated by self-interest Less concern for patients 

Separation

Style: Lower focus on professional ethics Higher focus on personal ethics 

Risks: Compassion overrides good professional judgment Fail to recognize the unique role 

Assimilation 

Style: Higher focus on professional ethics Lower focus on personal ethics 

Risks: Developing overly legalistic stance Rigidly conforming to individual rules while missing broader issues 

Integration 

Style: High focus on professional ethics High focus on personal ethics 

Reward: Implement values in context of professional roles Reaching for the ethical ceiling Aspirational ethics 

Ethics officers 

• Ethics officers (sometimes called "compliance" or "business conduct officers") have been appointed formally by organizations since the mid-1980s. 

• led to the creation of the Defense Industry Initiative (DII) 

• In 1991, the Ethics & Compliance Officer Association (ECOA) 

Professional codes of conduct in accounting 

American Institute of Certified Public Accountants (AICPA) 

• Responsibilities: In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.. 

• The Public Interest: members should act in a way that will honor the public interest. 

• Integrity: members should perform all professional responsibilities with the highest sense of integrity. 

• Objectivity and Independence: a member should maintain objectivity and be free of conflicts of interest in discharging services. 

• Due care: a member should discharge professional responsibility to the best of the member’s ability. • Scope and nature of services: members should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided. 

Professional codes of conduct in finance 

Association for Investment Management and Research (AIMR) 

Members of the Association shall: 

1) Act with integrity, competence, dignity, and in an ethical manner when dealing with the public, clients, prospects, employers, employees, and fellow members. 

2) Practice and encourage others to practice in a professional and ethical manner that will reflect credit on members and their profession. 

3) Strive to maintain and improve their competence and the competence of others in the profession. 4) Use reasonable care and exercise independent professional judgment. 

Professional codes of conduct in marketing 

American Marketing Association (AMA) 

Members of the AMA have embraced the following topics: 

• Marketers must accept responsibility for the consequences of their activities and make every effort to ensure that their decisions, recommendations, and actions function to identify, serve, and satisfy all relevant publics. 

• Marketers shall uphold and advance the integrity, honor, and dignity of the marketing profession. 

• Participants in a marketing exchange should be able to expect that products services offered are safe, communications about offered products and services are not deceptive, all obligations in an exchange are discharged in good faith, and appropriate internal methods exist for equitable redress of grievances concerning purchases. 

• Marketers should not demand, encourage or apply coercion to obtain unethical behavior in their relationships with others. 

Professional codes of conduct in information technology 

Association for Computing Machinery (ACM) 

General imperatives for ACM members include: 

• contributing to society and human well-being, 

• avoid harm to others, 

• be honest and trustworthy, 

• be fair and take action not to discriminate, 

• honor property rights, 

• honor copyrights and patents, 

• give proper credit for intellectual property, 

• respect privacy of others, and 

• honor confidentiality. 

Why ethical problems occur in business 

Principle-Based Ethics 

Autonomy 

Beneficence 

Nonmaleficence 

Fidelity 

Justice

Respect for Autonomy 

• Does not mean promoting autonomy (individuation or separation) 

• Means respecting the autonomous decision making ability of the patient 

Autonomy 

It encompasses freedom of thought and action. Individuals are at liberty to behave as they chose. 

- Determining goals in therapy 

- Making life decisions (e.g., marriage, divorce) 

- Scheduling appointments and terminating treatment 

Beneficence 

• The principle of benefiting others and accepting the responsibility to do good underlies the profession. 

- Providing the best treatment possible 

- Competency 

- Referring when needed 

Basis of foundational standard 2.01 

“Psychologists provide services, teach, and conduct research with populations and in areas only within the boundaries of their competence."

Nonmaleficence 

The principle is doing no harm. 

- Demonstrating competence 

- Maintaining appropriate boundaries 

- Not using an experimental technique as the first line of treatment 

- Providing benefits, risks, and costs 

Nonmaleficence Foundational Standard 3.04 

“Psychologists take reasonable steps to avoid harming their clients/patients, students, supervisees, research participants, organizational clients, and others with whom they work, and to minimize harm when it is foreseeable and unavoidable.” 

Fidelity 

This principle refers to being faithful to commitments. Fidelity includes promise keeping, trustworthiness, and loyalty. 

- Avoiding conflicts of interests that could compromise therapy 

- Keeping information confidential 

- Adhering to therapeutic contract (e.g., session length, time, phone contacts, etc.) 

Fidelity 

Foundational Standard 4.01 

“Psychologists have a primary obligation and take reasonable precautions to protect confidential information.” 

Justice 

Justice primarily refers to treating people fairly and equally. 

In their work-related activities, psychologists do not engage in unfair discrimination based on age, gender, gender identity, race, ethnicity, culture, national origin, religion, sexual orientation, disability, socioeconomic status, or any basis proscribed by law. (3.01)

Ethics in Finance

Ethics in Finance 

Financial and management accounting 

• Financial Accounting is defined as reporting of the financial position and performance of a firm through financial statements issued to external users on a periodic basis. 

• Management or Cost Accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. 

 Financial Management 

• Financial management encompasses resource management and finance operations. 

• Resource management is the efficient and effective deployment of an organization's resources such as financial resources, inventory, human skills, production resources, or information technology when needed. 

• Financial operations is providing financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support 

 Ethical issues in Finance 

• Ethics in finance can be developed around three broad themes: 

        ▪ In financial markets 

        ▪ In financial services industry (including banking and insurance) 

        ▪ By financial people in organizations 

• Financial Transactions is the process by which the flow of money through an organization is handled 

• The Accounting Function keeps track of all financial transactions by documenting the money coming in and money going out 

• The Auditing Function is the certification of an organization’s financial statements or books as being accurate by an impartial third-party professional 

GAAP - Generally accepted accounting principles 

• The generally accepted accounting principles that govern the accounting profession – not a set of laws and established legal precedents, but rather a set of standard operating procedures within the profession 

• A set of accurate financial statements that present an organization as financial stable, operationally efficient, and positioned for strong future growth can do a great deal to enhance the reputation and goodwill of an organization 

Frauds in the financial sector 

Legal authorities define fraud as a crime that “involves the use of dishonest or deceitful conduct in order to obtain some unjust advantage over someone else”. 

Frauds include: 

• Financial services sector, i.e., credit card fraud, cheque fraud and other types 

• Insurance fraud 

• Telecommunication-related fraud 

• Securities-related fraud 

• Computer-related fraud 

• Unauthorized extension of credit facilities; 

• Pledging of spurious goods; 

• Hypothecating goods to more than one bank; 

• Inflating the value of goods; 

• Removing goods with the connivance or negligence of bank employees; 

• Pledging of goods belonging to a third party; 

• Accepting obsolete and inadequate stocks; 

• Frauds in deposit accounts are opening of bogus accounts, forging signatures of introducers, and collecting through such stolen accounts or forged cheques or bank drafts. 

• Frauds are also committed in the area of granting overdraft facility in the current accounts of customers • Credit card fraud 

• Phishing 

Frauds in insurance sector 

We can identify three types of fraud in the insurance industry: 

1. Internal fraud against the insurer perpetrated by an employee; 

2. Policy holder/claims fraud committed against the insurer, in the purchase and/or execution of an insurance product by obtaining wrongful coverage or payment; and 

3. Intermediary fraud committed against the insurer or policy holders by intermediaries – independent broker/agent. 

Frauds in insurance process 

• The possibility of fraud is prevalent during any one of the three stages in the insurance process: 

a. Policy Proposal stage; 

b. Policy Contract stage; and 

c. Claim Process stage. 

• Frauds are also seen in the non-life insurance sector 

Combating insurance fraud 

1. Collection of proper evidence 

2. Need for regulation 

3. Regulation of allied services 

4. Need for judicial co-operation 

5. Insurers should aim at conviction

6. Need for transparency and fair play 

7. Insurers’ coalition 

8. Building consumers’ awareness 

9. Rewards for whistle-blowers 

10. Effective legislation and judicial action 

 Measures against bank frauds 

• Prevention of Money Laundering Act, 2002 

          ▪ Reporting of Cash and Suspicious Transactions 

       ▪ Types of Reports: Cash Transaction Reports (CTR), Suspicious Transaction Report (STR), Counterfeit Currency Report (CCR) 

          ▪ Reporting to RBI 

          ▪ Other guidelines are also given under the Act to curb the menace of money laundering 

          ▪ Compliance to Anti-Money Laundering Standards 

• The Banking Ombudsman Scheme, 2006 

Characteristics of Management Prone to Fraud 

• Unduly aggressive financial Targets 

• Domination by person or group without controls 

• Aggressive accounting practice to keep stock prices high 

• Pressure to reduce tax liabilities 

• Major performance related compensation 

• Non-Financial personnel involved in accounting matters 

Ethical issues in Finance 

• Financial statements 

• Hostile Takeovers 

• Financial Markets 

–Insider Trading 

Fraud in Financial Statements 

• Fictitious Revenues 

• Concealed Liabilities and Expenses 

• Fraudulent Asset Valuations 

• Improper or Fraudulent Disclosures or Omissions 

        ➢Creative accounting – form of fraudulent financial reporting so as to provide misleading information. 

Duties of an Auditor 

• To give an accurate statement to the members about the state of affairs of a company 

• To meet the objectives of the Companies Act 1985 and also the Articles of Association 

• To be reasonably skillful and careful in identifying the true nature of the accounts 

Ethical Audit 

• An audit that assess a business’s structures, procedures, systems and policies. 

• It measures the extent to which the activities of a business comply with the standards it has publicly declared to its external customers 

• It measures business conduct against varied moral standards of the community. 

Objectives of Ethical Audit 

• To provide a critical assessment of functioning of business 

• To investigate into acquisition or restructuring operations 

• To determine the type of training necessary for employees 

• To establish ethical conduct of business 

• To enhance, measure and promote the quality that increases business performance by assessing them against the ethical business objective 

• To improve the quality of governance by evaluating the performance and ensuring that financial information is both available and reliable 

Ethical Issues in Financial Markets 

• Deception: act of misrepresenting relevant information 

• Churning: Excessive or inappropriate trading for clients account by a broker who has control over the account with intent to generate commissions rather than to benefit client 

• Unsuitability 

• Unfairness in Markets 

Insider Trading 

• Refers to trading on price sensitive information by company employees or individuals closely connected with the firm 

• This information has not been disclosed to other market participants 

Ethics & Insider Trading 

• It violates equality of opportunity 

• Does not give a level playing field between insiders and outsiders 

• Might harm exchange as a whole because investors might not be willing to trade on exchange that does not give shareholders their rights. 

Anti-takeover defense measures 

• Poison Pills 

• Green mail 

• Golden Parachute 

• People 

Pill Poison Pills 

• An anti-takeover device used by company’s management to make takeover prohibitively expensive for the bidders 

• Company under target changes AOA so that group of Shareholders have special rights to buy and sell preferred stock at highly favorable prices (At times below market price) 

 Ethics & Poison Pills 

• Poison pills are prohibited in Britain by takeover code because they prevent open competition between bidders for shares 

• Use of poison pills are ethical if they are designed to protect the management from unwanted takeover bids. Greenmail 

• It occurs where a potential takeover agent purchases stock in a company 

• After the purchases have totaled five percent the agent must announce his intention to takeover the company, if that is the intent

 • Stock prices go up in anticipation of takeover battle 

• Management of target company sends greenmails to prevent a shareholder from taking over the company 

• Takeover agent ends up selling the shares back to company at an increased or higher negotiated price 

 Ethics & Greenmail 

• Target company may be forced to incur debts to raise funds to finance the buy back of shares at premium price 

Golden Parachute

 • A company gives lucrative benefits to its top executives such as stock options, bonuses, etc 

• Presence of parachute allows management to evaluate takeover bid more objectively 

People Pill

 • Management threatens that in event of a takeover the entire management team will resign • If managers act in their own interest rather than company’s long term value then they are acting unethically

 Management Buyout 

• It occurs when management decide to bid for the company 

• They convert the company into a private company and at a later date, bring it back to market to make substantial profits. 

Ethics & Management Buyout

 • Shareholder believe that management may resort to unethical practices to bring down share prices and buy out at cheaper rate 

• Unethical activities can involve leaking confidential information by managers for their benefit during buy out

Ethical Issues in Information Technology

Ethical Issues in Information Technology 

Structure of IT- ITES industry 

• IT Services 

• IT Enabled Services 

IT services 

• IT Services is the dominant sector of the industry in terms of revenues as well as size. This particular sector can be understood in terms of the value chain of services it offers to its customers. 

• IT Services Tier I: Consultancy and Product Development 

• IT Services Tier II: Infrastructure Management and Systems Integration 

• IT Services Tier III: Application Development and Maintenance 

 IT enabled services 

Business Process Outsourcing (BPO) is the practice of contracting a third party, by an organization, to carry out a specific activity or process of its business. Broadly, BPO operations can be of two types: 

• Outsourcing front office 

• Back office processes. 

Front office operations include customer service, marketing etc. Examples of back office operations are logistics, supply chain management etc. 

Unique characteristics of IT-ITES industry 

• Technology and the Medium of Operation 

• IT Industry’s workforce 

• IT Industry’s output process: Information and tools 

Ethical perspective of IT-ITES industry 

• Information security: Lack of information security processes; disclosure of confidential information about customers to unauthorized people; forcing of customers to part with confidential information; hacking; cookies; conspiracy among IT employees/organizations to help clients perform unethical transactions 

• Intellectual property rights: software piracy; violation of EULA (End-user license agreement); illegal use of intellectual properties; reverse engineering of programs to gain access to the business logic and intellectual property of the vendor company.  

• Work culture and environment: leakage of recruitment test question papers; wastage of company time and resources; breach of employment agreements; fraudulent bills; poaching of employees from competitors; unethical means of retaining the employees; unrealistic estimations and plans; breach of privacy of the employee; non-ergonomic working conditions 

Computer ethics 

“Computer ethics” is the analysis of the nature and social impact of computer technology and the corresponding formulation and justification of policies for the ethical use of such technology. 

 IT Ethics Can Span a Broad Range of Concerns 

• Information Security 

– “Ethical hacking”? 

• Assumptions of Information Privacy 

– Regulatory compliance 

• Ethics as Information Security 

– When do you say “No” to a customer? 

• Admin Rights as Ethical Quandary 

– “Just because you can do a thing…” 

Ethics in Information Technology 

• Public concern about the ethical use of information technology includes: 

– E-mail and Internet access monitoring 

– Peer-to-peer networks violation of copyright 

– Unsolicited e-mail 

– Hackers and identify theft 

– Plagiarism 

– Cookies and spyware 

Ethics in Information Technology 

• The general public has not realized the critical importance of ethics as applied to IT 

• Important technical decisions are often left to technical experts 

• General business managers must assume greater responsibility for these decisions 

• They must be able to make broad-minded, objective, ethical decisions based on technical savvy, business know-how, and a sense of ethics 

• They must also try to create a working environment in which ethical dilemmas can be discussed openly, objectively, and constructively 

Corporate ethics officer 

– Is a senior-level manager 

– Provides vision and direction in the area of business conduct 

– Tries to establish an environment that encourages ethical decision making 

Corporate ethics officer 

• Responsibilities include: 

– Complete oversight of the ethics function 

– Collecting and analyzing data 

– Developing and interpreting ethics policy 

– Developing and administering ethics education and training 

– Overseeing ethics investigations 

Conducting Social Audits 

• Social audit 

– Identifies ethical lapses committed in the past 

– Sets directives for avoiding similar missteps in the future 

Requiring Employees to Take Ethics Training

• Comprehensive ethics education program encourages employees to act responsibly and ethically

 – Often presented in small workshop formats 

• Principle-based decision making is based on principles in corporate code of ethics 

When Good Ethics Result in Short-Term Losses 

• Operating ethically does not always guarantee business success 

• Organizations that operate outside the United States 

– Deal with a “business as usual” climate 

– Are placed at a significant competitive disadvantage 

• Good ethics will prove to be good business in the long term 

How Management Can Affect Employees’ Ethical Behaviour 

Manager’s Checklist 

Ethical Issues in Human Resource Management

Ethical Issues in Human Resource Management 

Definition of HRM 

HRM is a management function involving the recruitment of suitable human resources, training, developing and sustaining their competencies, motivating them, offering them rewards on a rational and equitable basis, and ensuring their continued commitment to the organization for achieving its overall objectives. 

Growth of Human Resource Management 

• 1890–1910 – Fredrick W. Taylor formulated scientific management, which included a careful selection of employees; finding out the best method of doing the job; systematic training of workers; provision of suitable implements; and giving adequate rewards for good performance. 

• 1910–1930 – Greater importance to welfare of workers, emergence of industrial psychology and improvements in the mode of recruitment procedures 

• 1930–1945 – Principle of Hawthorne studies gains momentum in personnel management in an industrial organization. Greater emphasis given to motivating factors affecting worker productivity. 

• 1945–1965 – More emphasis on collective bargaining and labour relations. Compensation and benefits gained importance as unions negotiated for and obtained paid vacations, paid holidays and insurance coverage.

• 1965–1985 – Equal employment opportunity and affirmative action became crucial human resource management responsibilities 

• 1985–2005 – Increased diversity of the labour force, in terms of age, gender, race and ethnicity; globalization of business and the accompanying technological revolution; focus on HRM as a “strategic function” 

Different aspects of HRM 

• Recruitment 

• Training and development 

• Learning organizations 

• Performance management 

• Pay 

• Team work 

• Motivation 

HR related ethical issues 

• Discrimination issues 

• Suppression of democratization in the workplace 

 • Privacy issues 

      ▪ Recruitment and selection 

      ▪ Performance tracking 

      ▪ Privacy issues of computerized employee records 

      ▪ Electronic surveillance 

• Safety and health 

• Performance appraisals 

Emerging challenges of HRM 

a. Globalization of markets and intensification of competition has made employers and employees conscious of their changing and strategic roles in organizations; 

b. Corporate restructuring has become an absolute necessity for organizations; 

c. Need for reconciling to multiple work ethos as a result of mergers and acquisitions;  

e. Emphasis on total quality management; 

f. Changing job profiles and the need for and ability to get adjusted to them; 

g. Adoption to changing workforce profile consequent on structural changes;  

h. Increasing role of women employees in organizations; 

i. Increasing use of Information Technology that is altering the very nature of work delivery in organizations; and 

j. Increasing emphasis on knowledge management and the need for acquisition and use of knowledge to keep pace with the fast changing world. 

Role of HRM in creating an ethical organization 

• The top management should be committed to ethical behaviour 

• They should be the role models to their employees 

• The organization should evolve codes of ethics for its employees and enforce them. 

• Ethics committees should be formed with top executives as members to advice on ethical issues.

• Company journals to publish articles on ethical issues and pose hypothetical ethical dilemmas and discussions on how to resolve these 

• An ethics office with ethics officers to oversee the process and help communicate policy to employees. 

• Organize employee ethics training which can play an integral role in ensuring compliance with the ethics code. 

• A disciplinary system to deal with ethical violations promptly and decisively. 

Categories 

• Employers 

• Employees 

• Government Agency 

• Manpower Consultancy 

• Outside Sources 

Discrimination Origin 

• Age 

• Sex • Handicapped 

• Religion or Caste 

• Country of Origin 

• Whimsical – No Fixed Reason

Ethics in Functional Areas

Ethics in Functional Areas: 

–Operations
–Marketing 
–Finance 
–HR 
–Information Technology 

•Recent challenges in ethics 
•Ethics in different countries 

Factors affecting ethical dilemmas of Indian corporations 

1. Socio-cultural factors; 
2. Psychological fear of losing jobs; 
3. Relaxed government structures and regulations; 
4. Sanctions and discriminations in society that can be offset with accumulation of wealth by fair or foul means; 
5. Uncertainties and fears about the future; 
6. Strong family traditions and laws of inheritance; 
7. Overall scarcity of resources and the difficulty of amassing wealth through normal and legitimate means; 
8. An inequitable and scorching tax system; 
9. A belief that business and ethics are irreconcilable; and 
10. A tendency to adopt an easy option when confronted with difficult ethical choices. 

 Defining marketing ethics 

• Marketing ethics as a right or wrong action: marketing ethics means a standard by which a marketing action may be judged ‘right’ or ‘wrong’ 

• It can also be defined as how moral standards are applied to marketing decisions, behaviors, and institutions. 

 ETHICAL VALUES 

• Honesty 
• Responsibility 
• Fairness 
• Respect 
• Transparency 
• Citizenship 

Areas in marketing ethics 

• In product development 
• In pricing 
• In placing (distribution) 
• In promotions (advertising) 
• In other promotional activities (i.e. excluding advertising) 

 Unethical practices in marketing 

• Clarity in pricing 
• Selling at a loss to increase market share and destroy competition in order to subsequently raise prices 
• Price fixing cartels 
• Attracting customers and then subjecting them to high pressure selling techniques to switch to an more expensive alternative 
• Counterfeit goods and brand piracy 
• Copying the style of packaging in an attempt to mislead consumers 
• Deceptive advertising 
• Unethical practices in market research and competitor intelligence 
• Selling goods abroad which are banned at home 
• Omitting to provide information on side effects 
• Unsafe products 
• Wasteful and unnecessary packaging 
• Deception on size and content 
• Inaccurate and incomplete testing of products 
• Treatment of animals in product testing 

Ethics and the supply chain 

• The use of child labour and forced labour 
• Production in sweatshops 
• Violation of the basic rights of workers 
• Ignoring of health, safety and environmental standards 

Institute of Business Ethics Suggestions for Good Practice 

• Relations with customers 
• Relations with shareholders and other investors 
• Relations with employees 
• Relations with suppliers 
• Relations with the government and the local community 
• The environment 
• Relations with competitors 
• Issues relating to international business 
• Behaviour in relations to mergers and takeovers 
• Ethical issues concerning directors and managers 
• Compliance and verification 

Marketing and the Natural Environment 

• The natural resources and materials used 
• The amount of energy required in the production process 
• The residuals that result from production 
• The consumption of resources and energy that is required to use products 
• The generation of pollutants in using products 
• The amount of packaging material that may have to be discarded.    

How to create an ethical working environment?

How to create an ethical working environment? 

• Make the decision to commit to ethics • 

Recognise that you are a role model by definition, by your action, and by your values. 

• Assume the responsibility for instilling ethical behaviour. 

• Articulate your values. 

• Train your staff 

• Encourage open communication 

• Be consistent 

• Abide by the laws of the land 

Walton’s six models of business conduct 

• THE AUSTERE MODEL 

It gives almost exclusive emphasis on ownership interest and profit objects Walton’s six models of business conduct 

• THE HOUSEHOLD MODEL Following the concept of an extended family, the model emphasizes employee job, benefits and paternalism. 

• THE VENDOR MODEL In this model, consumer interests, tastes and rights dominate the organization. Walton’s six models of business conduct 

• THE INVESTMENT MODEL This model focuses on the organization as an entity and thus on long-term profits and survival. 

• THE CIVIC MODEL Its slogan is ‘corporate citizenship’. It goes beyond imposed obligations, accepts social responsibility and makes a positive commitment to social needs. 

• THE CREATIVE MODEL This model encourages the organization to become a creative instrument, serving the cause of an advanced civilization with a better quality of life. 

The employees perform as artists, building their own creative ideas into actions, resulting in new contributions not originally contemplated. 

 Ethics will be different at different levels 

• At the basic level, it is about discipline, i.e.. to maintain punctuality, coming to work on time, behaving properly with superiors, colleagues and subordinates and not wasting time during working hours.

 • At the top level, it is about commitment and Protecting the interests of the organization. 

Levels of business ethics 

1. The society level, which defines ethical behavior and assesses the effect of business on society. 

2. The industry level, which suggests that different industries have their own set of ethical standards

3. The company level, under which different companies have their own set of ethical standards

4. The individual manager level, at which each manager and other corporate participants are responsible for their own ethical behavior 

Six principles of business ethics and conduct

 ➢ Comply with a written code of business conduct. 

➢ Provide sufficient training to all personnel within their organization regarding personal responsibility under the code. 

➢ Encourage internal reporting of violations of the code with the promise of no retaliation for such reporting. 

➢ Self-govern their activities by implementing controls to monitor compliance with all applicable laws and regulations. 

➢ Share their best practices in implementing the principles through participation in an annual Best Practices Forum. 

➢ Be accountable to the public. 

STRUCTURE OF ETHICS MANAGEMENT 

• Formal code of conduct 

• Ethics committee 

• Ethical communication 

• An Ethic office with Ethical officers 

• Ethics Training Programme 

• A disciplinary system 

• Establishing an ombudsman. 

• Monitoring 

 Functions of the ethics officers 

• Ethics officers are responsible for assessing the needs and risks that an organization-wide ethics programme must address. 

• To develop and distribute a code of conduct or ethics 

• To conduct ethical training programme for employees 

• To establish and maintain a confidential service 

• To answer employees questions about ethical issues. 

• To ensure that the organization is in compliance with governmental regulations 

• To monitor and audit ethical conduct 

• To take action on possible violations of the company‘s code 

• To review and update code in time 

 Code of Ethics in Business 

• Codes of conduct specify actions in the workplace 

• Codes of ethics are general guides to decisions about those actions 

CODES OF ETHICS 

• It will conduct all business dealings with fairness, honesty and integrity 

• It will protect all information and resources available to the organization from loss, theft, and misuse. 

• It will avoid even the appearance of conflict of interest or any other impropriety. 

• It will treat all employees fairly and with dignity and respect. 

• It will help create and sustain an atmosphere conducive to the spirit of this code.

 Responsibilities of Business 

• not to do harm knowingly, to adhere all applicable laws and regulations, the accurate representation of their education, training and experience, 

• active support, practice and promotion of this code of ethics. 

Honesty and Fairness 

• Being honest in serving consumers, clients, employees, suppliers, distributors and the public. 

Rights and Duties of parties 

• products and service offered are safe and fit for their intended use, 

• communications about offered product and services are not deceptive, 

• all parties intend to discharge their obligations, financial and otherwise, in good faith, Ethics @ Workplace 

• Body Language 

• Avoid Creating Disturbance 

• Trust & Respect for Others Work 

• Don’t Interfere In Others Work 

• Respect the Privacy of your Co-workers 

• Avoid Ethnic & Gender Biasness 

• Improve Your Self Presentation 

• Avoid Lobbying 

• No/Least Personal Work During Work Hours 

•Maintain the balance between transparency/ openness and confidentiality 

Benefits of Ethics 

• Fostering a more satisfying and productive working environment 

• Building and sustaining Organization reputation • Maintaining the trust of staff to ensure continued self-regulation 

• Providing ethical guidance for employees prior to making difficult decisions 

• Aligning the work efforts of employees with the Organization's broader mission and vision 

• Increased employee loyalty, higher commitment and morale as well as lower staff turnover 

• Attraction of ‘high-quality’ staff 

• Reputation benefits (customers and suppliers) 

• More open and innovative culture 

• Decreased cost of borrowing and insurance 

• Generation of good-will in the communities in which the business operates 

INDIAN BUSINESS LAWS AND THEIR IMPACT ON ETHICAL BEHAVIOUR: 

• All laws relating to business in India, can be broadly classified into 2 categories- 

– Business laws 

– Labour laws 

The Industries development and regulation act 

– This Act enacted in 1951 with the main objective of giving practical effect to the industrial policy, gave the government sweeping powers to control industries. 

– It empowers the central government to develop and regulate the industrial sector in India, through suitable and appropriate means. 

Foreign Exchange Regulation Act, 1973: 

• This Act applies to all citizens of India, outside India and to branches of companies registered in India. 

• The main objective of FERA is the conservation of the foreign exchange resources of the country and the proper utilization thereof in the interests of the economic developments of the country. 

The Companies Act, 1956 

• This Act provides for a greater government control over the formation and management of companies. 

The Monopolies and restrictive Trade Practices Act, 1969 

• The main objective of this Act is to control the concentration of economic power and monopolies and to prohibit monopolistic restrictive and unfair trade practices. The act has restricted and stopped many misleading advertisements, adulteration and all sorts of false trade practices. 

The Essential Commodities Act, 1955 

• It was set to provide in the interest of the general public, control of production, supply and distribution of trade and commerce in certain commodities. 

Some of the other laws to control business behaviour are 

• The capital issues control act 1956 

• The securities contracts act 1956 

• The imports and exports act 1947 

• The Indian Patents Act.1970 

• The partnership Act.1932 

• The sale of goods act 1930 

• The consumer Protection act 1986 

Laws relating to weaker Section (ie, children and women) 

• The Factories Act, 1948 

• The Mines Act, 1952 

• The Plantation Labour Act, 1951 

• The employment of children Act, 1938 

• Maternity Benefit Act, 1961 

Laws relating to Specific Matters- 

• Wages 

– The payment of wages Act, 1963 

– The minimum Wages Act, 1948 

– The Equal Remuneration Act, 1976 

Laws relating to Specific Matters- 

• Social Security 

– Workmen Compensation Act, 1923 

– Retrenchment Benefit Act 

– The payment of Bonus Act, 1965 

– Employee State Insurance Act, 1948 

– Fatal Accident Act, 1955 

• Trade union Act, 1926 

• Industrial dispute Act, 1947 

• The workmen compensation Act, 1923 

• Bonded Labour system(Abolition)Act, 1976