Will ethical behavior pay off in long run?

Answer: I do believe that ethical behavior will pay off in the long run, however I do not believe it will pay off as much as people expect it to. People want ethical behavior to be widespread and change the world, but the truth is that some people will never be ethical. Plus, what is ethical to one person is unethical to another. It depends all in the way individuals interpret things. So although I think that consistently acting ethical and passing those beliefs down through the generations will pay off, I do not believe it will pay off as much as people want it to.

Definition: – Pearson Custom Publishing (Pearson, 1998-2002) defines ethics as the “standards of conduct and moral judgment.” Markula Center for Applied Ethics (1995-1998) defines ethics as those standards that compel one to refrain from committing crimes against another person such as stealing, murder, assault, slander, and fraud. It is also the standards that encourage honesty, integrity, compassion and loyalty. Ethics is not a religious principle, nor is it based on “feelings” about a particular problem. It cannot be defined as a legal practice because laws are created to protect rights, not manage ethical principles.

While the definition may seem clear, ethics as a practice is somewhat ambiguous since interpretation plays a big part in how people perceive right from wrong. The Markala Center for Applied Ethics (1995-1998) states that in order to understand the meaning of ethics we must find answers the following questions, “According to what standards are these actions right or wrong? What character traits (like honesty, compassion, fairness) are necessary to live a truly human life?”

Defining ethics is relatively easy compared to practicing ethics in the work place. Since the primary concern of most businesses is the bottom line, the ethical views may differ based on the type of business. Ethical views of employees may also differ from the views of the company. This can cause conflict among workers and management as companies strive to improve the bottom line. Personal ethics may be compromised in an effort to keep a job.

Most Renowned companies like Enron, Satyam, Lehman Brothers, Tyco, Worldcom, Adelphia, Merrill Lynch, Morgan Stanley, Arthur Anderson …. Came tumbling down. They were the darling of the masses as well as the bourses. They were seen to be responsible to employees, shareholders, suppliers, customers. All the reputation and trust built over years was wiped off due to unethical practices.

For a business to be successful, it need not compromise with mortality. The more the business does something unethical or illegal the more likely that it will be caught. When ethical environment is poor, organizational performance suffers because of poor group dynamics and suppressed communication. In unethical organizations the employee morale is badly affected leaving organizations vulnerable to setbacks.

Sound ethics is necessary precondition of any long term business enterprise. Excellence in business must exist on foundation of values that most of us hold dear. Without a base of shared values, trust and mutual benefits, today’s national and international business would fall apart. Basic principles of integrity and fairness can build an enduring reputation.

No separate ethical laws are required; we already have a plethora of laws encompassing every facet of business

The Factories Act

Indian Contract Act

Sale of Good Act

Companies Act

The Consumer Protection Act

The Indian Forests Act

Prevention of Corruption Act

The Mines and Minerals (Regulation & Development Act)

Agriculture Marketing Act

Prescription Drug Marketing Act

Accounting Act

In the 21st century – in the age of instant noodles and instant information, stakeholders can not be taken for granted and they evaluate the business on the following yardsticks

Is the business complying with the law of the land?

Does the business have a sense of ‘propriety’?

Do product claims match reality?

How forth Coming is the company with information sharing

How does the company handle third party ethics

How charitable is the company?

How does the company react when faced with negative disclosures?

Responsible Business

Business should not be considered as a commercial activity aimed at maximizing profit. Profit to be maximized but not at the cost of responsibility to shareholders, suppliers and customers. Business should always take into consideration aspects of human rights and social responsibility. Wealth and knowledge must always be shared with the community as water in village pond unlike water in a private well.

Pay Back Time

Ethical behavior induces further ethical behavior. Employees who are treated ethically will be more likely to behave ethically with customers and business associates. Ethical behavior/decision making will overtake unethical or immoral practices in the long run. Ethical behavior results in confidence, stability of mind and soundness of position, restful sleep and hassle free life. Energies are freed for maximum productivity, creativity, flow of knowledge, information and reasoning capabilities. While practicing unethical behavior one has to engage in exhaustive subterfuge, resulting in diminished effectiveness and reduced success.

Satisfy your Inner self

Being ethical is doing the right thing when no one is watching

Integrity has no need of rules.

Real integrity is doing the right thing, knowing that nobody’s going to know whether you did it or not-Oprah Winfrey.

Most Reversed

Tatas were among the first families in India to spread their wealth and wisdom for the benefit of humanity, some examples:

In 1998 the Tata Mills failed to pay a dividend. The name Tata was at stake. Sir Jamesedji Tata risked his personal fortune to save a public company, displaying that people mattered to him before profits.

In 1924 when Tata Steel was its lowest ebb with no money to pay co-workers, Sir Dorabji Tata risked his entire personal fortune of Rupees One Crore(of that time) which also included his wife’s jewelry to get a loan from Imperial Bank of India, for public limited company to save the name of Tatas.

One of the guiding principles of JRD Tata was-

No success or achievement in material terms is worthwhile unless it serves the needs or interests of the country and its people and is achieved by fair and honest means.’ Business as a spiritual pursuit’ encapsulates JRD’s philosophy and the ethos of the group he symbolized by stating that” we (in Tatas) have retained the fire of idealism and in its glow we have come to recognize that no wealth or power can be more valuable than our dignity; no loss or profit can be more critical than loss of our credibility; no skills or qualification can substitute the integrity of our character.

Conclusion

Utilizing the principles of ethics in the decision making process will help to ensure that decisions made are fair and respect the rights of those parties involved. Unfortunately, ethical decision making is only as morally sound as the person making the decision. If the person making the decision is does not live by an ethical code, the decision will be swayed in the direction of that belief. Therefore, in order to make sound ethical decisions, decision makers must constantly evaluate their own beliefs and strive to live in an ethical manner and that will definitely pay off in longer run.

References

http://www.sptimes.com/News/110200/NIE/Treat_others_as_you_w.shtml

http://www.powerhomebiz.com/books/ethics101.htm

http://essaysforstudent.com/tag/ethical%20behaviour/page1.html

http://www.allbusiness.com/buying_exiting_businesses/3503597-1.html

http://en.wikipedia.org/wiki/Ethical_leadership

http://www.businessballs.com/ethical_management_leadership.htm

7. Fu, Jie, and Joshua Hall. Forthcoming. “Fremont General Corporation.” In Booms and Busts: An Economics Encyclopedia, Mehmet Odekon, editor. New York: M.E. Sharpe.

8. Morningstar. 2009. “Our 2009 CEO of the Year Nominees.” Online at: http://news.morningstar.com/articlenet/article.aspx?id=269242.

Question 2

Within the business context business are expected to have good ethical values and act socially responsible. The problem is that the ethics of a business is a mixture of individual sets of ethics. This is why it is important to have good individuals as employees. It is also equally important that when you go to work somewhere that you feel like you share the values of those you work with. Ethics is not just talking about the right thing. It is doing what is right in every decision that is made.”

Based on the above observation discuss the impact on society that ethical leaders can make.

American corporations dole out an estimated 15 billion dollars per year on training and consulting for up and coming mangers and leaders. Some target high performers and potential leaders within the organization. Others believe that leadership is more about what you do rather than who you are and, therefore, everyone in the organization is capable of becoming a leader. We have been arguing and writing about the science and practice of management since the early 1900’s, and about leadership for at least 2000 years, all in an effort to demystify both. Is management, in fact, a practice, an art, or a science? Are leaders born or made? What do managers actually do? The argument continues.

:- It is important to have good individuals as your employees but it is also important that those employees should be ethical because only they make the right decision and make others to follow.

Some of the theories that tells us about the leadership ethics are being given to us by some of the philosophers as they are really heplfull they are given below:-

Heifetz’s Theory -Leadership involves authority to help followers uphold values in the workplace.

Burn’s Theory – Emphasizes the moral development of followers and maintains high standards of moral conduct.

Greenleaf’s Theory – Strong ethical overtones, true leadership is service to others.

Moral development plays a vital role in building up good ethics.

Acc. To john locke

A new born child is a blank tablet on which life script can be written.

Experience and learning shapes the content, structure and direction of a person’s life.

Examples of Great Ethical Leaders

Cyrus the Great (590 BC-529 BC)

The study of Cyrus the Great and establishment of his ethical Persian empire some 2500 years ago is a good indication that in our time the concept of world order based on ethics, ethical state, peace and harmony among nations are not an impossible goal and illusion. In this century the most fundamental and essential ingredients of an evolution towards these goals are democracy, freedom of expression, freedom of choice, freedom of religion, cultural toleration, human rights, political feedback mechanism, open trade policy, and open communications among people in this globe. The ethics of life are the pursuit of awareness for us and others. The ultimate goal is total awareness. Ethical Government is a means of achieving that goal by raising man to a higher state of total awareness. Ethical leaders can lead men toward Ethical Government and Society, which can lead man to total awareness. To increase man’s power is always ethical. However, only men who use power to expand awareness are ethical. Men who use power to diminish awareness are unethical.

Business ethics in the field

As part of more comprehensive compliance and ethics programs, many companies have formulated internal policies pertaining to the ethical conduct of employees. These policies can be simple exhortations in broad, highly generalized language (typically called a corporate ethics statement), or they can be more detailed policies, containing specific behavioral requirements (typically called corporate ethics codes). They are generally meant to identify the company’s expectations of workers and to offer guidance on handling some of the more common ethical problems that might arise in the course of doing business. It is hoped that having such a policy will lead to greater ethical awareness, consistency in application, and the avoidance of ethical disasters.

An increasing number of companies also require employees to attend seminars regarding business conduct, which often include discussion of the company’s policies, specific case studies, and legal requirements. Some companies even require their employees to sign agreements stating that they will abide by the company’s rules of conduct.

Many companies are assessing the environmental factors that can lead employees to engage in unethical conduct. A competitive business environment may call for unethical behavior. Lying has become expected in fields such as trading. An example of this is the issues surrounding the unethical actions of the Saloman Brothers.

Not everyone supports corporate policies that govern ethical conduct. Some claim that ethical problems are better dealt with by depending upon employees to use their own judgment.

Others believe that corporate ethics policies are primarily rooted in utilitarian concerns, and that they are mainly to limit the company’s legal liability, or to curry public favor by giving the appearance of being a good corporate citizen. Ideally, the company will avoid a lawsuit because its employees will follow the rules. Should a lawsuit occur, the company can claim that the problem would not have arisen if the employee had only followed the code properly.

Sometimes there is disconnection between the company’s code of ethics and the company’s actual practices. Thus, whether or not such conduct is explicitly sanctioned by management, at worst, this makes the policy duplicitous, and, at best, it is merely a marketing tool.

To be successful, most ethicists would suggest that an ethics policy should be:

Given the unequivocal support of top management, by both word and example.

Explained in writing and orally, with periodic reinforcement.

Doable….something employees can both understand and perform.

Monitored by top management, with routine inspections for compliance and improvement.

Backed up by clearly stated consequences in the case of disobedience.

Remain neutral and nonsexist.

The effectiveness of ethics officers in the marketplace is not clear. If the appointment is made primarily as a reaction to legislative requirements, one might expect the efficacy to be minimal, at least, over the short term. In part, this is because ethical business practices result from a corporate culture that consistently places value on ethical behavior, a culture and climate that usually emanates from the top of the organization. The mere establishment of a position to oversee ethics will most likely be insufficient to inculcate ethical behavior: a more systemic programmed with consistent support from general management will be necessary.

The foundation for ethical behavior goes well beyond corporate culture and the policies of any given company, for it also depends greatly upon an individual’s early moral training, the other institutions that affect an individual, the competitive business environment the company is in and, indeed, society as a whole.

The caring leaders focuses on the welfare of

: Customers

: Employees

: Shareholders

: Community

: Define problems

: Find out best alternatives

: Collect information

Religious views on business ethics

The historical and global importance of religious views on business ethics is sometimes underestimated in standard introductions to business. Particularly in Asia and the Middle East, religious and cultural perspectives have a strong influence on the conduct of business and the creation of business values.

Examples include:

Islamic banking, associated with the avoidance of charging interest on loans.

Traditional Confucian disapproval of the profit-seeking motive.

Quaker testimony on fair dealing.