BUSINESS ETHICS

[Mr. M. GOVINDARAJAN]

Business ethics is a form of the art of applied ethics that examines ethical rules and principles within a commercial context, the various moral or ethical problems that can arise in a business setting and any special duties or obligations that apply to persons who are engaged in commerce. In the increasingly conscience focused market places of the 21st century, the demand for new ethical business processes and actions is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws.

General Business Ethics:

* The business ethics overlaps with the philosophy of business, one of the aims of which is to determine the fundamental purposes of a company. If a company's main purpose is to maximize the returns to its shareholders, then it could be seen as unethical for a company to consider the interests and rights of anyone else;

* Corporate Social Responsibility is an umbrella term under which the ethical rights and duties existing between companies and society is debated;

* Issues regarding the moral rights and duties between a company and its shareholders - fiduciary responsibility, stakeholder concept v. shareholder concept;

* Ethical issues concerning relations between different companies - e.g., hostile takeovers, industrial espionage;

* Leadership issues - Corporate Governance;

* Political contributions made by Corporations;

* The misuse of corporate ethics policies as marketing instruments.

Professional ethics:

Professional ethics covers the myriad of practical ethical problems and phenomena which arise out of specific functional areas of companies or in relation to recognized business professions.

Ethics of accounting information:

* Creative accounting, earnings management, misleading financial analysis;

* Insider trading, securities fraud, forex scams - concerns (criminal) manipulation of the financial markets;

* Executive compensation - concerns excessive payments made to corporate CEOs;

* Bribery, kickbacks, facilitation payments - while these may be in the interests of the company and its shareholders, these practices may be anti competitive or offend against the values of society;

Ethics of human resource management:

* The ethics of human resource management covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee;

* Discrimination issues include discrimination on the basis of age, gender, race, religion, disabilities, weight and attractiveness;

* Issues surrounding the representation of employees and the democratization of the work place;

* Issues affecting the privacy of the employee;

* Issues affecting the privacy of the employer;

*Issues relating to the fairness of the employment contract and the balance of power between employer and employee;

* Occupational safety and health.

Ethics of Sales and marketing:

Marketing which goes beyond the mere provision of information about a product and seek to manipulate our values and behavior. To some extent society regards this as acceptable, but where is the ethical line to be drawn? Marketing ethics overlaps strongly with media ethics, because marketing makes heavy use of media. However, media ethics is a much larger topic and extends outside business ethics.

* Pricing - Price fixing, price discrimination, price skimming;

* Anti-competitive practices;

* Specific marketing strategies;

* Content of advertisements;

* Children and marketing;

* Black markets, grey marks.

Ethics of Production:

This area of business ethics deals with the duties of a company to ensure that products and production processes do no cause harm. Some of the more acute dilemma in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the charging state of preventive technologies or changing social perceptions of acceptable risk.

* Defective, addictive and inherently dangerous products and services;

* Ethical relations between the company and the environment pollution, environmental ethics, carbon emissions trading;

* Ethical problems arising out of new technologies;

* Product testing ethics.

Ethics of intellectual property, knowledge and skills:

Knowledge and skills are value but not easily 'ownable' objects. Nor is a obvious who has the greater rights to an idea: the company who trained the employee or the employee themselves? The country in which the plant grew or the company which discovered and developed the plant's medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise;

* Patent infringement, copy right infringement, trade mark infringement;

* Misuse of the intellectual property systems to stifle competition;

* Even the notion of intellectual property itself has been criticized on ethical grounds;

* Employee raiding - the practice of attracting key employees away from a competitor to take unfair advantage of the knowledge or skills they may possess;

* The practice of employing al the most talented people in a specific field, regardless of need, in order to prevent any competitors employing them;

* Business intelligence and industrial espionage.

As part of more comprehensive compliance and ethics programs, many companies have formulated internal policies pertaining to the ethical conduct of employees. These polices can be simple exhortations in broad, highly generalized language or they can be more detailed policies containing specific behavioral requirements. 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.

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;

* 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.