Business Ethics

Dr Safdar A. Butt

What is ethics?

Doing the right thing. Doing it the right way. Doing it for the right reason.

Business Ethics

Planning & Leadership

Aim at doing the right thing

Do it the right way Do it for the right reason

Organizing

Control

Evolution of Business Ethics

Business
Historically not known to be ethical Profit before any thing else

Ethics
Religious influence Social influence

Why Business is being ethical now?

Stricter laws and regulations Watch dogs Realization that ethics is profitable

How to enforce Ethics

Law Industrial and professional codes Internal codes Wanting to be ethical

Law

Words of law and spirit of law Law cannot create honesty Law cannot cover every thing.

Professional Codes

Lesser force than law. Professional associations e.g. ICAP force their members to follow ethics, or face expulsion. Professionals work for companies and force companies to follow ethics. Industrial associations also exhort their members to be ethical.

Internal Code

The most compelling reason for a company to be ethical is its own board. A company can become ethical only if its board is willing to face the consequences and pay the price of honesty. Setting up a formal policy on ethics is essential. Ethics should be part of every thing that a company does. Doing certain things in name of ethics is not enough.
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Advantages of BE

Improve in image Higher productivity Access to more and cheaper capital Helps society; society helps company Every one is a winner

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Impact on Employees

If the company is honest, employees tend to be honest as well. This means better work environment, better productivity, higher efficiency. Honest companies have lesser frauds and thefts. Ethical companies attract better quality of staff. Ethical companies are able to retain good staff.

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Characteristics of an ethical organization

Formal code of ethics Regular interaction with stakeholders Obsessively fair to all Managers responsible individually; do not hide behind collective responsibility charade Employee see a purpose in their work Non-bureaucratic procedures
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Roots of individual unethical behavior

Pressure of work and family life Poor communication between company and employees Poor leadership of the company Heavy work load; long working hours Undue pressure / targets Politics, favoritism Personal traits & circumstances
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Handling these causes

All these causes can be handled by a good management team by:

Fairness and equal treatment of all employees Reasonable load of work Reasonable targets Good HR practices

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Aspects of corporate unethical behavior

Bribery Coercion Conflict of interest: company & others Tax evasion Insider trading Lack of regard for the society

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How to enforce ethics in a company?

Decide to be ethical Ethical decision making as norm for all operations. Draw up a formal Ethics Policy and let it be part of normal operational manuals.

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Ethics Policy

Avoidance of conflict of interest at all levels Honesty and integrity Fairness in dealing with every one Acting in good faith Compliance with law Encouraging ethical reporting: whistleblowing

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Pakistani Scene

Companies are not willing to be ethical Those that are willing cannot afford to be ethical. Those that can afford, are not allowed by the situation. One has to bribe even to get ones rights

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Rectifying the situation

Principal causes:
Company policies Unethical industrial climate Rampant corruption in government

Solution:
Bigger companies should start; others will follow Gradually the business climate will change Once business is honest; government will have to get honest.

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Thank you
Dr S A Butt

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