BUSINESS ETHICS

ETHICS

Ethics is based on well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues

Ethics provides a framework for answering these questions well. It allows us to be consistent in our judgement, provide reasons for our beliefs and to critically examine opinions. Most importantly, ethics allows us to act in a manner that accords with a set of core values and principles

Ethics isn't just an exercise for philosophers or intellectuals. It is at the core of everyday life.
We ask ethical questions whenever we think about how we should act. Being ethical is a part of what defines us as human beings. We are rational, thinking, choosing creatures. We all have the capacity to make conscious choices – although we often act out of habit or in line with the views of the crowd. We could all make conscious and conscientious ethical choices if we wanted to.

WHY BE ETHICAL?

Lots of people like to play devil's advocate and ask why they should be ethical. After all, sometimes doing what's ethical comes at a personal cost. If ethics means we can’t exploit other people, tell lies, or steal when these things are in our best interests, why bother?

Ethical questions are an inescapable part of being human. We think and act according to ethical judgement all the time, whether we want to or not. Often the things that drive our actions are unknown to us – underpinning habits that lead us to act for good or ill without serious thought. Ethical reflection helps us make responsible judgement that reflect what we care about most. 
There is no ethical theory that can resolve every situation perfectly. Lots of things in our lives have moral value - sometimes they come into conflict. Moral dilemmas are inevitable. 

WHAT IS BUSINESS ETHICS?

Business ethics is the study of proper business policies and practices regarding potentially controversial issues such as corporate governance, insider training, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Law often guides business ethics, while other times business ethics provide a basic framework that businesses may follow to gain public acceptance.

In a nutshell Business ethics is about…

• Relationships.
• Struggling to develop a well-informed conscience.
• Being true to the idea of who we are and what we stand for.
• Having the courage to explore difficult questions.
• Accepting the cost of doing what we think is right.
• Asking one simple question – ‘what ought I to do?

ETHICS IN HUMAN RESOURCE:

Human resource management deals with manpower planning and development related activities in an organization. Arguably it is that branch of management where ethics really matter, since it concerns human issues specially those of compensation, development, industrial relations and health and safety issues

Ethical issues in Human Resource:

Of all the organisational issues or problems, ethical issues are the most difficult ones to handle or deal with. Issues arise in employment, remuneration and benefits, industrial relations and health and safety.

• Cash and compensation plans:There are ethical issues pertaining to the salaries, executive perquisites and the annual incentive plans etc. The HR manager is often under pressure to raise the band of base salaries. There is increased pressure upon the HR function to pay out more incentives to the top management and the justification for the same is put as the need to retain the latter

• Race, gender and Disability:In many organisations till recently the employees were differentiated on the basis of their race, gender, origin and their disability. Not anymore ever since the evolution of laws and a regulatory framework that has standardized employee behaviors towards each other.
• Employment issues:Human resource practitioners face bigger dilemmas in employee hiring. One dilemma stems from the pressure of hiring someone who has been recommended by a friend, someone from your family or a top executive.
• Privacy issues:Any person working with any organisation is an individual and has a personal side to his existence which he demands should be respected and not intruded. The employee wants the organisation to protect his/her personal life. This personal life may encompass things like his religious, political and social beliefs etc,.

Unethical issues in human resource:

Those Employees who behave unethically, which brings loss to the organisation are punished and penalized so that no other employees will dare to do that.

some of the unethical issues are mentioned below:

1. Misusing company time:Whether it is covering for someone who shows up late or altering a time sheet, misusing company time tops the list. This category includes knowing that one of your co-workers is conducting personal business on company time

1. Abusive behavior: Too many workplaces are filled with managers and supervisors who use their position and power to mistreat or disrespect others. Unfortunately, unless the situation you're in involves race, gender or ethnic origin, there is often no legal protection against abusive behavior in the workplace

1. Employee theft:Employee fraud is also on the uptick, whether its check tampering, not recording sales in order to skim, or manipulating expense reimbursements. 

1. Lying to employees:The fastest way to lose the trust of your employees is to lie to them, yet employers do it all the time. One of out every five employees report that their manager or supervisor has lied to them within the past year
2. Violating company internet policies: Cyber-slackers. Cyber-loafers. These are terms used to identify people who surf the Web when they should be working. It's a huge, multi-billion-dollar problem for companies

ETHICS IN FINANCE:

There are many situations where you act without considering if it is ethical or not. For example, you would not think much of someone claiming personal traveling expenses as official traveling expenses to save tax.

Most large companies have a code of ethics—a set of general guidelines to encourage employees to behave ethically and responsibly. However, a code of ethics might do more harm than good especially if it lays stringent do's and don'ts. This might give the employees a false notion that anything if it is not specifically forbidden would be acceptable.

In addition to the company specific codes of ethics, companies and professionals are also bound by ethical codes of conducts of numerous professional organizations and institutions.

Ethical issues in Finance

Ethics in finance can be developed around three broad themes: 

• In financial markets

• In financial services industry (including banking and insurance)

•  By financial people in organizations

1. Frauds in the financial sector Legal authorities define fraud as a crime that “involves the use of dishonest or deceitful conduct in order to obtain some unjust advantage over someone else”. 

1. Frauds include: Financial services sector, i.e., credit card fraud, cheque fraud and other types of identify-related fraud,Insurance fraud,Telecommunication-related fraud ,Securities-related fraud,Computer-related

1. Fraud Types of bank frauds ,Unauthorized extension of credit facilities,Pledging of spurious goods,Hypothesizing goods to more than one bank,Inflating the value of goods,Removing goods with the involvement or negligence of bank employees

1. Frauds in deposit accounts are opening of bogus accounts, forging signatures of introduce-rs, and collecting through such stolen accounts or forged cheques or bank drafts,Frauds are also committed in the area of granting overdraft facility in the current accounts of customers ,Credit card fraud,Phishing- Duplicate

• Measures against bank frauds Prevention of Money Laundering Act, 2002 :Reporting of Cash and Suspicious Transactions : Types of Reports: Cash Transaction Reports (CTR), Suspicious Transaction Report (STR), Counterfeit Currency Report (CCR), Reporting to RBI

• Frauds in insurance sector We can identify three types of fraud in the insurance industry: 1. Internal fraud against the insurer committed by an employee; 2. Policy holder/claims fraud committed against the insurer, in the purchase and/or 3. execution of an insurance product by obtaining wrongful coverage or payment

• The term “window dressing” has similar meaning when applied to accounts, but is a broader term that can be applied to other areas. In the US it is often used to describe the manipulation of investment portfolio performance numbers. In the context of accounts, “window dressing” is more likely than “creative accounting” to imply illegal or fraudulent practices, but it need to do so.

• Insider trading refers generally to buying or selling a security , in breach of a fiduciary duty or other relationships of trust and confidence, while in possession of material, nonpublic information about the security.

Unethical issues in Finance

Despite the best efforts of all concerned, the financial sector continues to have a bad reputation for illegal and unethical behavior and to be more prone to ethical lapses than other business sectors. John Hendry explores why this should be, and what might be done about it in practice

Deliberate abnormal delays in payments to (a) Vendors, (b) Dealers commissions and promotion costs.

1-Delays in paying wages, interest to financiers, incentive, bonus to employees.

2-Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payment to earlier vendors.Not prompt in statutory payments of ESI, PF, Sales Tax and Excise Duties.
3-Cheating employees of their dues towards medical expenses, leave travel assistance, children education fees etc.,

4-Opening of current accounts in different banks to avoid adjustments against loans by earlier banker.

5-Creating bogus bills of purchase to show higher costs and hence losses to avoid bonus payment to employees.

6-Collecting loans from private financiers at higher rate of interest to help kith and kin and to get kick-backs.

ETHICS IN MARKETING

When one starts a company, either online or in real life, many have hopes of striking it rich. However, not everyone wants to make money honestly using hard work, not everyone has what it takes to be successful solely through ethical marketing practices.

Ethical issues in marketing

Ethical issues and considerations in Marketing Research

1. Information or data collected from respondents should not used for any other purpose or for any

other research work

2. Researcher should not force any respondent for answers

3. Protection of data or confidentiality of data

4. In case of personal or sensitive questions, researcher should give time to respondents to think

about it, and refuse to participate in study.

Researcher or trained staff of appropriate sex can be used to reduce embarrassment cause. For example

suppose questions are related to female product, then it will be better to select female staff to do the

research

5. Proper, Unbiased and accurate information collection

Marketing researcher should collect accurate information and report to the research organization &  client without any bias

Unethical issues in marketing

 1.Forcing Customers Into Making A Purchase

There are several ways to convince people to buy your product. This may be done honestly, or occasionally in a forceful manner. 

In most cases your product should sell itself through referrals and word of mouth. You may inform customers of what they would gain by buying what you have to offer. Alternatively, you could also honestly say what difference your product could make over others. 

2. Accuracy in text or advertising

Sometimes goods on the market are not worth buying. Online marketing often uses photography and writing techniques to mislead. Unfortunately, often if the prices are too cheap, there is an almost certain compromise on Quality. If the pictures are of food, it may be much smaller than it seems to be. Close-ups, zooming in, and lighting can serve to trick a customer into placing an order. 

This practice may serve to get you a few initial orders, but very few repeat purchases. Customers would definitely not return to a vendor who has fooled them once.

3. Having Lackluster Customer Support/Service

A well-meaning company always has a great system of customer support. This serves to help the customers with any problem they may have. The system makes it easy for consumers to place orders, view their accounts and products, and register complaints.

It is also customer support which helps in analyzing feedback from the customers. This contributes to the market research which can enhance the company’s performance. Plus, customers greatly appreciate a polite and efficient system. Even if they are less than happy with the products for some reason, good customer service may keep them coming back. 

Moreover, it is very important that your customer service teams are well trained, polite and knowledgeable. Customer service is an important ethical part of your company and can work of as a strong marketing tool.

4. Under Delivering And Over Charging

These practices would never endear a company to its customers, nor help in attracting new ones. When you don’t deliver the full order or charge exorbitant prices, you are very likely to turn off customers. 

Many marketers adopt the unethical practice of promising the customers a lot of things within a package. However, once the customer makes the purchase, they are told that the extra items are out of stock. This is a highly disappointing event and could lead to a lot of anger and frustration. Honesty for your company is one of the most important practices and should got through your whole company

CONCLUSION:

A business is a collection of different proprietorship. Ethics is issues of right, wrong, fairness, and justice. Therefore, business ethics places it focus on ethical issues that arise in the commercial world.