BUSINESS ETHICS

Small Article on business ethics
NATURE OF ETHICS
· Ethics is a subject that deals with human beings. Humans by their nature are capable of judging between right and wrong, good and bad behavior. Thus, the question of ethics arises, as the human beings are associated with values and morals.
· There was an argument whether ethics is a science or an art. But experts were of the opinion that ethics is more a science than an art. Because it is a systematic knowledge about moral behavior and conduct of human beings.
· Ethics is a normative science. The term normative implies a guide or control of action; so, normative ethics tells us what we ought to do.
· Finally, ethics deals with human conduct that is voluntary and not forced by any persons or circumstances.

OBJECTIVES OF ETHICS
· Ethics deals with human behavior. It assesses whether a particular act or decision taken by an individual is moral or not.
· To establish moral standards arid norms of the behavior.
· To judge human behaviour based on these standards and norms.
· To assess human behavior and express an opinion or attitude about the behavior.
· To set a standard or code for the moral behavior and make recommendations about the desired behavior.



NATURE OF BUSINESS ETHICS
Most businesses encounter two types of ethical problems known as Overt and Covert ethical problems.

Overt ethical problems deals with bribery, theft, collusion, etc. They are clear (transparent) and reprehensible. Where as Covert ethical situations occur in corporate acquisitions, marketing and personnel policies, capital investment etc. They are complex, clear, and have deft ethical solutions.
An ideal ethical decision comprises of following virtues.
· Right — Morally correct
· Equitable — Just and equal
· Good — Highest good for all concerned
· Proper — Appropriate and acceptable
· Fair — Honesty
· Just — Action
Obligations are outcome of ethical decisions. If these obligations benefit a single person, then they do not form a part of ethical decision. In other words, the obligations or results should focus to society at large.

The concept of ethics is very vague, abstract and unstructured. There is no universally accepted definition of ethics because, ethics is dependent on moral standards. Moral standards are dependent on a value system, and value systems are dependent on individual’s background. The background of each individual differs according to his or her experience. Hence, the ethical practices of people are different.

Before discussing about the concept business ethics, let us understand the meaning of business. Business can be defined as a primary economic institution through which people in modem societies carry on the task of producing and distributing goods and services. And business ethics refers to the application of ethical judgments to business activities. Though various thinkers view this concept differently, broadly speaking. business ethics concerns itself with what is right or wrong in the workplace. Some philosophers have defined business ethics as the normative study of moral standards as they apply to business policies, institutions and human behavior.’ Others regard business ethics as an ethical analysis of business practices.’

Business ethics explains that business cart generate profits being ethical. But this though (business ethics) till last decade was being contradicted. Due to expansion of business, the application of ethical practices and its implications has created a need for practicing business ethics. Today more and more importance is being given to the application of ethical practices in business dealings and the ethical implications of business decisions.

Human beings have the ability to choose. When a choice is provided between right and wrong or good and bad. an individual chooses one of the alternatives by distinguishing between the options available. This concept applies to the business, since businesses are operated by human beings, they should be able to distinguish between right or wrong decisions in the business. Thus, businesses also have choices or alternatives, such as to maximize profits, increase sales volume, provide employee benefits and concern for society.

However, at times profits and social responsibility cannot coexist. Because, while earning profits entrepreneurs may neglect social responsibility. For instance, some chemical firm driven by profit motive may postpone its investment in social welfare projects like Effluent Treatment Plant (ETP), although the industrial waste left into the environment is hazardous to public health. Thus it becomes difficult to maximize both profits and social responsibility. This situation results in managerial dilemma. Where managers have to choose between profit for the organisation and social consideration towards the community.

At times, business finds it difficult to explain its actions on ethical grounds. For instance, banks’ decision to computerize its activities to provide spontaneous quality service to meet customer requirements may result in redundancy of clerical jobs. The ethical solution lies job reassignment or retraining for alternative job assignments.

Any business, if it wants to survive and grow in the long-run must strike a balance between its social obligations and economic objectives. These obligations may be complex and costly to discharge. But if the organization wants to be ethical, it has to discharge its social obligations towards the society.



BUSINESS ETHICS

The term business ethics refers to the system of moral principles and rules of conduct applied to business: –

That there should be business ethics means that the business should be conducted according to certain self-recognised moral standards. Business, being a social organ, shall not conduct itself in a way detrimental to the interests of society and the business sector itself.

A profession is bound by certain ethical principles and rules of conduct which reflect responsibility, authority and dignity. The professionalisation of business management should, therefore, be reflected in the increasing acceptance of business ethics.

There is, however, no unanimity of opinion on what constitutes business ethics. In this connection, Peter Drucker very appropriately remarks: “There neither is a separate ethics of business not is one needed.” For “men and women do not acquire exemption from ordinary rules of personal behaviour because of their work or job. Nor, however, do they cease to be human beings when appointed vice-president, city manager, or college dean. And there have always been a number of people who cheat, steal, lie, bribe or take bribes. The problem is one of moral values and moral education of the individual, of the family, of the school”.

One is inclined to agree with Drucker that every individual and organ in society should abide by certain moral codes, and that there is no separate ethics of business.

However, certain norms and principles of conduct have been commonly advocated constituting business ethics.

In the 1930s, Rotary International developed its Code of Ethics that is still used extensive It uses four questions that are called the four way ethical behaviour for any ethical issue a business faces.
• Is it the truth?
• Is it fair to all concerned?
• Will it build goodwill and better friendship?
• Will it be beneficial to all concerned?

The most important professional ethics is expressed by the Hippocratic oath of the Greek physician : Premium non nocere ( “not knowingly do harm”). This dictum implies that a professional should carefully evaluate his decision and ensure that his actions will not produce negative effects. Thus, this code rules out all anti-social business practices.

The code, premium non nocere, encompasses most business ethics. We may, however, list the important ethical principles that a business should follow:
2. Do not deceive or cheat customers by selling sub-standard or defective products, by under- measurement or by any other means.
3. Do not resort to hoarding, black-marketing or profiteering
4. Do not destroy or distort competition.
5. Ensure sincerity and accuracy in advertising, labelling and packaging
6. Do not tarnish the image of competitors by unfair practices
7. Make accurate business records available to all authorised persons
8. Pay taxes and discharge other obligations promptly
9. Don not form cartel agreements, even informal, to control production, price, etc. to the common detriment.
10. Refrain from secret kickbacks or payoffs to customers, suppliers, administrators, politicians, etc.
11. Ensure payment of fair wages to and fair treatment of employees.


CHARACTERISTICS OF ETHICAL DECISIONS IN BUSINESS
“Ethical decisions differ according to an individual’s perspective. Individual views the ethical decisions in his or her frame of reference or value system. Hence. ethical decisions do not have a unique solution, but a multitude of alternatives.
Decisions, either ethical or unethical, have wide ramifications. Hence affects the other situations.

The consequences of most unethical decisions are ambiguous in nature. For instance, an individual seeking employment in government office bribes the officials. But the individual is uncertain whether he will be provided with the employment.

Ethical or unethical decision depends upon individual actions.
Ethical decisions result from the voluntary human actions and not from situations that are beyond one’s control,


RELATIONSHIP BETWEEN BUSINESS AND ETHICS

The question arises what is the basic relationship between business and ethics. As people are under the notion that business and ethics are incompatible, it is not easy to establish a relationship.

Classical thinkers like Adam Smith were of the opinion that the objective of any business was to generate profits only, and business had no relationship with ethics. While other thinkers expressed that neither the business was an extension of morality and ethics, nor can business keep itself faraway from ethical practices of the society where it exists and operates. Later economists like Milton Friedman and Talcott expressed different views about the relationship between ethics and business. The result was Unitarian view of ethics, Separatist view of ethics and Integration view of ethics.