Business ethics and corporate governance

PPT on business ethics and corporate governance.
uploaded for reference by students
useful for B.COM, M.COM students
notes for business ethics

1. DONE BY D. SANGEETHA M.COM ( A & F) VIDHYA SAGAR WOMEN’S COLLEGE, CHENGALPATTU BUSINESS ETHICS AND CORPORATE GOVERNANCE

2. CONTENTS BUSINESS ETHICS – INTRO BASIC CONCEPTS OF BUSINESS ETHICS CONCEPTS OFJUSTICE SOURCES OF ETHICS VALUES AND ETHICS CODES OF CONDUCT IMPORTANCE OF EMPLOYEE CODE OF CONDUCT WHAT IS AN ETHICAL ISSUE? ETHICAL ISSUES IN BUSINESS?

3. INTRODUCTION TO BUSINESS ETHICS Business ethics – meaning Business ethics is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations Business ethics is the study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.

4. Basic concepts of business ethics Businesses as a "Corporate Entity” Business Ethics considered as “Good” Unethical Business Practices Moral Rights The Concept of Justice

5. Business ethics as a “corporate entity”: Business corporations in most of the nations are considered legally as entities or persons, i.e. the rights and liabilities legally applicable to persons or citizens are also applicable to business corporations. The eventual objective of individual ethics is developing a set of ethical standards which can be held as acceptable after considering everything carefully in a particular situation. These individually accepted ethical standards can also be applied to different situations such as personal, social and even in a business.

6. Business ethics as “good”: Business ethics considered as "Good" requires containing and following a norm of moral values keeping the expectations and rights of people ahead of the profit maximization of business. A business’s main goal is to make a profit but peoples’ rights and expectations should not be ignored .   It Discourages the breaking of laws in business activities. It assists businesses to avoid steps for which the company may come under costly civil lawsuits. It demotivates companies to engage in actions which can damage the image of the company . Good business ethics helps to improve businesses profitability as following ethical values prevents loss of revenue and company reputation.

7. Unethical Business Practices: Many big companies have been fined a large amount of money for following unethical business practices. Unethical business practices go far beyond functions breaking the law . Many renowned companies are engaged in unethical and questionable practices without breaking any laws. They follow practices just to increase their profits ignoring the rights of the consumers, such as, giving less in quantity or quality, selling old or low-quality products with free gifts, etc. The businesses have to make a profit but not at the cost of moral or ethical values . Businesses are ethically responsible for their activities as individuals are responsible for theirs.

8. Moral Rights : Generally, a moral right refers to a person’s claim to something . The entitlement of moral or ethical rights implies that others have particular duties towards the person bearing the right . For example, education, you have the right to educate yourself. If you are eligible to get yourself admitted to a varsity to get an education on a specific subject or do a specific course, the varsity has to provide you the benefit of education.

9. The Concepts of Justice: The concepts of justice are based on ethical principles that determine just means of allocating benefits and burdens to all people of the society . Egalitarianism   It states that all human beings are equal. According to this belief, all the benefits and burdens of the society should be circulated according to this principle: “Every person should be given exactly equal shares of a society’s or a group’s benefits and burdens.” Utilitarianism It  states that a just society’s laws and institutions promote the best overall or average welfare of its members . According to this belief, the greatest benefits for all, and the society should be organized in such a way that its wealth is allocated to meet everyone’s basic needs .

10. Capitalist justice  states that a person should receive the benefits proportionate to his or her contribution to the society. Libertarian justice  states that the free market is naturally just, and that redistributive taxation breaches the property rights of people. Every business person should follow the business ethics properly because studies prove that ethically correct business becomes profitable in the long run.

11. Sources of ethics Ethics in general refers to a system of good and bad, moral and immoral, fair and unfair. It is a code of conduct that is supposed to align behaviors within an organization and the social framework . But the question that remains is, where and when did business ethics come into being?

12. Primarily ethics in business is affected by three sources: C ulture , R eligion and L aws of the state . It is for this reason we do not have uniform or completely similar standards across the globe. These three factors exert influences to varying degrees on humans which ultimately get reflected in the ethics of the organization. For example, ethics followed by Infosys are different than those followed by Reliance Industries or by Tata group for that matter. Again ethical procedures vary across geographic boundaries.

13. RELIGION It is one of the oldest foundations of ethical standards . Religion wields varying influences across various sects of people . It is believed that ethics is a manifestation of the divine and so it draws a line between the good and the bad in the society . Depending upon the degree of religious influence we have different sects of people

14. Culture Culture is a pattern of behaviors and values that are transferred from one generation to another, those that are considered as ideal or within the acceptable limits . No wonder therefore that it is the culture that predominantly determines what is wrong and what is right. It is the culture that defines certain behavior as acceptable and others as unacceptable.

15. Law Laws are procedures and code of conduct that are laid down by the legal system of the state . They are meant to guide human behavior within the social fabric . In business, complying with the rule of law is taken as ethical behavior, but organizations often break laws by evading taxes, compromising on quality, service norms etc.

16. VALUES AND ETHICS Values and ethics in simple words mean principle or code of conduct that govern transactions; in this case business transaction . These ethics are meant to analyze problems that come up in day to day course of business operations . Apart from this it also applies to individuals who work in organisations, their conduct and to the organisations as a whole.

17. ETHICS VALUES Ethics refers to a system of moral principles Values are associated with the thought process, a person’s sense of what is wrong and what is right.  Ethics aligns with a professional setup Values are associated with personal aspects of a person Ethics has 3 major areas of study – Meta-Ethics, Normative Ethics, Applied Ethics. Different types of values are moral values, social values, aesthetic values, religious values, political values. Ethics will be consistent within a professional setup but would vary between 2 different organisations or institutions.  Values vary from person to person, it need not be consistent. Ethics are determined by an institution, organisation and varied professions. Ethics that are followed by medical professionals will be different from ethics followed in the public administration domain Values formed in a person are determined by family values, religion, culture, community etc.

18. ETHICS VALUES Ethics could act as a constraint. The action that needs to be taken in an organization could be consistent with the values of a person, however, there could be chances that it cannot be executed as it may not align with the ethical standards of the profession, organization or institution. Values could act as a catalyst for the necessary motivation in a person.

19. 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. CODES OF CONDUCT

20. 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.

21. Importance of Employee Code of Conduct Employee code of conduct guides individuals as to how they should behave at the workplace. Employees need to be aware as to what is expected out of them in the office . There has to be a proper dress code for employees.  Employee code of conduct ensures career growth and also benefits the organization in the long run Employee ethics ensures employees attend office on time and genuinely respect their superiors Most essentially, employee ethics is important as it goes a long way in making the value system of employees strong.

22. WHAT IS AN ETHICAL ISSUE Definition:   Ethical issues in business is a situation where a moral conflict arises and must be addressed. In other words, it is an occasion where a moral standard is questioned. What Does Ethical Issues Mean? Ethical issues occur when a given decision, scenario or activity creates a conflict with a society’s moral principles. Both individuals and businesses can be involved in these conflicts, since any of their activities might be put to question from an ethical standpoint. Individuals are subject to these issues in their relationships with other individuals or in their relationships with organizations and same goes for organizations .

23. These conflicts are sometimes legally dangerous, since some of the alternatives to solve the issue might breach a particular law. In other occasions, the issue might not have legal consequences but it might generate a negative reaction from third parties. Ethical issues are challenging because they are difficult to deal with if no guidelines or precedents are known. For this reason, many professional and industry associations have ethical codes that are discussed and approved by key participants to provide a useful framework for companies and individuals to make adequate decisions whenever they face one of these conflicts.

24. What are ethical issues in business? 1 . Sexual Harassment 2. Diversity & Discrimination 3 . Social Media 4. Health & Safety 5. Environmental Responsibility 6. Accounting Practices 7. Data Privacy 8. Nepotism

25. THANK YOU!!!