Business Ethics
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What is ethics?
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Doing the right thing.
Doing it the right way.
Doing it for the right reason.
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Business Ethics
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Planning & Leadership
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Organizing
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Aim at doing the right thing
Do it the right way
Control
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Do it for the right reason
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Evolution of Business Ethics
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Business
Historically not known to be ethical
 Profit before any thing else
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Ethics
Religious influence
 Social influence
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Why Business is being ethical now?
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Stricter laws and regulations
Watch dogs
Realization that ethics is profitable
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How to enforce Ethics
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Law
Industrial and professional codes
Internal codes
Wanting to be ethical
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Law
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Words of law and spirit of law
Laws cannot create honesty
Laws cannot cover every thing.
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Professional Codes
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Lesser force than law.
Professional associations e.g. ICAP force their
members to follow ethics, or face expulsion.
Professionals work for companies and force
companies to follow ethics.
Industrial associations also exhort their
members to be ethical.
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Internal Code
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The most compelling reason for a company to
be ethical is its own board.
A company can become ethical only if its board
is willing to face the consequences and pay the
price of honesty.
Setting up a formal policy on ethics is essential.
Ethics should be part of every thing that a
company does. Doing certain things in name of
ethics is not enough.
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Advantages of BE
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Improvement in image
Higher productivity
Access to more and cheaper capital
Helps society; society helps company
Every one is a winner
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Impact on Employees
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If the company is honest, employees tend to be
honest as well. This means better work
environment, better productivity, higher
efficiency.
Honest companies have lesser frauds and thefts.
Ethical companies attract better quality of staff.
Ethical companies are able to retain good staff.
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Characteristics of
an ethical organization
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Formal code of ethics
Regular interaction with stakeholders
Obsessively fair to all
Managers feel responsible individually; do not
hide behind collective responsibility charade
Employees see a purpose in their work
Non-bureaucratic procedures
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Roots of individual
unethical behavior
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Pressure of work and family life
Poor communication between company and
employees
Poor leadership of the company
Heavy work load; long working hours
Undue pressure / targets
Politics, favoritism
Personal traits & circumstances
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Handling these causes
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All these causes can be handled by a good
management team by:
Fairness and equal treatment of all employees
 Reasonable load of work
 Reasonable targets
 Good HR practices
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Aspects of corporate
unethical behavior
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Bribery
Coercion
Conflict of interest: company & others
Tax evasion
Insider trading
Lack of regard for the society
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How to enforce ethics
in a company?
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Decide to be ethical
Ethical decision making as norm for all
operations.
Draw up a formal Ethics Policy and let it be part
of normal operational manuals.
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Ethics Policy
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Avoidance of conflict of interest at all levels
Honesty and integrity
Fairness in dealing with every one
Acting in good faith
Compliance with law
Encouraging ethical reporting: whistleblowing
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Pakistani Scene
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Companies are not willing to be ethical
Those that are willing cannot afford to be
ethical.
Those that can afford, are not allowed by the
situation.
One has to bribe even to get one’s rights
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Rectifying the situation
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Principal causes:
Company policies
 Unethical industrial climate
 Rampant corruption in government
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Solution:
Bigger companies should start; others will follow
 Gradually the business climate will change
 Once business is honest; government will have to
get honest.
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Thank you
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