FACOTRS GOVERNING BUSINESS ETHICS PPT.pptx

FACOTRS GOVERNING BUSINESS ETHICS

1. Dr.V.SHANTHA MEENA, ASSISTANT PROFESSOR OF COMMERCE, V.V.VANNIAPEUMAL COLLEGE FOR WOMEN, VIRUDHUNAGAR

2. BUSINESS ETHICS The term business ethics refers to the set of moral principles that guides a company's conduct. These principles govern every aspect of the company's operations, including its interaction with the government and other businesses, its treatment of its employees and its relationship with its customers. Business ethics refers to implementing appropriate business policies and practices with regard to arguably controversial subjects.

3. WHY BUSINESS ETHICS? A business that treats its customers or clients ethically can build trust and create longstanding relationships. These customers are likely to return and may recommend the business to people within their sphere of influence. Also, a business known for its effective ethical principles can gain respect and elevate the quality of its brand.

4. ELEMENTS OF BUSINESS ETHICS

5. 1.Top Management Commitment: The top management of an organization plays a crucial role in ensuring business ethics. They guide the whole organization towards ethical behaviour. To get better results and inculcate ethical behaviour amongst the members of an organization, the CEO and other top-level managers need to strongly commit themselves to ethical conduct. 2.Publication of Code: Companies having effective ethics programmes define the principles of conduct in written form for the whole organization. This written document of principles of conduct is known as “code.” The code or code of conduct covers various areas, like product quality, product safety, fundamental honesty, adherence to laws, financial reporting, marketing practices, employment practices, health and safety at the workplace, etc.

6. 3.Involving employees at all levels: Employees of an organization play a crucial role in the implementation of ethical policies at different levels of the business, making the idea of ethical business real. Therefore, organizations need to involve employees in ethics programmes. 4. Measuring results: It is not easy to measure the results of an ethics programme with full accuracy. Therefore, the organizations implementing ethics programmes can verify and audit the end results and ensure that the employees carry out the work according to ethical standards. Once the auditing has been completed, the top-level management and other employees of the firm can discuss the end results for their further course of action.

7. SOURCES OF ETHICAL STANDARD Primarily ethics in business is affected by three sources - culture, religion and laws of the state. 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 . 1.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 .

8. 2.Culture Culture is a pattern of behaviours 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 . 3.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 behaviour within the social fabric.

9. FACTORS GOVERNING BUSINESS ETHICS   Culture   Culture refers to a society or group’s social norms, customs, and beliefs. Culture influences business ethics because it affects how people perceive and do things. Where people come from forms a part of their identity and personality. Religion, heritage, family system, and education system are some of the main elements of an individual’s culture. 2. Personal Code of Ethics   This personal code may not be written, but it is deeply ingrained in each individual and plays a major role in his everyday life. The personal code of conduct of each employee of the organization may be different. These may clash and lead to business ethics issues as well.

10. 3. Legislation   Legislation concerning business ethics refers to the fact that government departments and agencies will intervene and enact laws and rules to prevent companies from engaging in unethical behaviour. These measures will only be taken when situations go out of hand and malpractices by entities are beyond our control . 4. Government Rules and Regulations   Various laws are enacted in India concerning various aspects of business functions, such as laws regarding working conditions, insurance, pension, minimum wages, the rights of employees and labourers, etc., which act as a guide to organizations in the formulation of their ethical code of conduct . 5.Ethical Code of the Company   The code of ethics that has been designed, communicated, and implemented by the entity also influences its ethical climate. The code of conduct, which is usually communicated to all the employees of the company and is available in various publications of the company, such as their website, drives how employees and staff behave in the entity.

11. 6. Social Pressures Societal pressures and forces are other factors that play a role in influencing the business ethics of an entity. In today’s world, when a business sells substandard products or services or is involved in unethical activities or practices, society will immediately develop a negative attitude toward the company. This attitude is converted into a refusal to purchase the goods and services sold by the entity. 7 . Ethical Climate of the Industry As every industry becomes more and more competitive, companies need to ensure that they adhere to the industrial code of conduct so that they can be part of the competition with other companies in the long run. When other companies in the same industry adhere to a strict code of conduct, the company in question should also ensure to follow these codes to the same standard. If the company cannot perform at the same level as other companies in the same industry, it will be kicked out.