Ethics & Responsibility

MODULE 5
Contents to be learnt
Module V: Ethics & Social Responsibility:
• Managerial ethics
• Factors affecting ethical choices
• Ethical issues and ethical dilemma in business
• Corporate Social Responsibility (CSR)
• Stakeholders
• Corporate Philanthropy
• Managing company ethics and social responsibility
• Concept of Corporate Governance
• Indian Ethos for Management
• Value-oriented Holistic Management.
#1 Ethics & Managerial Ethics
 Write 3 ethical and unethical practice
That you do as a student

Ethical practices

Unethical Practices
 Ethics & Managerial Ethics

Ethics?

Ethics is the foundation of deciding what is wrong or what is right in

a given position.

Managerial Ethics?

Managerial ethics is the set of standard behavior that guide the

individual manager in their work to make managerial decisions.

 Ethics – General for social life

 Managerial Ethics – Right and wrong related to company
Ethics & Managerial Ethics

According to Decenzo and Robbins “Ethics commonly refers to a set of rules or

principles that defined right and wrong conduct.”

According to Webster’s Dictionary, “Ethics is defined as the discipline dealing

with what is good and bad with moral duty and obligation.”

According to Clarance D. Walton, “Business ethics is concerned with truth and

justice and has a variety of aspects such as expectation of society, fair
competition, advertising, public relations, social responsibilities, consumer
autonomy and corporate behavior in the home country as well as abroad.”
Importance of Ethics in organizations
Promotes Goodwill and Image: Helps to Maintain Good Relations with
Goodwill and image are gained through Stakeholders:
the trust of society towards the Stakeholders are all the parties who are
organization. The supply of goods and directly or indirectly related to the
services by considering quality, organization such as employees,
quantity, time, and price expected by customers, suppliers, lenders,
the customers facilitates gaining their government, etc. Ethical behavior helps
trust. to maintain relations with them.

Less Interference from Government: Promotes Fair Competition:

In case a business is not unethical, Business ethics helps to promote fair
violates the government rules, will attract competition among business firms. It
interventions of government. But an discourages businessmen to involve in
ethical businessman never performs any unfair trade practices like artificial
business activity by violating shortage, black marketing, adulteration,
government rules and regulations. obsolescence, etc.
 Importance of Ethics in organizations
Promotes Social Responsibility: Improves Working Environment:
The manager performs business in society It guides a manager to develop a better
to fulfill his economic objectives. Business working environment in the organization.
ethics guide managers to involve in social He tries to motivate employees by
welfare programs like participating in introducing a feeling of justice, equality,
education, healthy sports, environmental freedom, belongingness, a sense of
protection, etc. responsibility, and ownership.

Helps to increase Market Share:

Gaining prestige and reputation in society,
in the long run, helps to increase the
market share of a business firm.
 • Malabar Gold conducted a blood donation campaign is an
Tell example of:
• Choose the odd one out Ans. CSR (Corporate social responsibility)
A. Justice
• Which of the following is an example of unethical practice
B. Inequality
in business?
C. Fairness
A. Being angry at work place
D. Equality
B. Scolding employees for not completing task
Ans. (B)
C. Targeting a person and making ill comments
• Hoarding and selling black marketing is:
D. Being rude always
A. Unethical marketing
B. Unethical HR practice Ans. (C)
C. Unethical finance practice
D. All of the above • Tax evasion is an example of:
A. Unethical marketing
B. Unethical HR practice
C. Unethical finance practice
D. All of the abov
 • The practice adopted by companies to provide something
Tell back to the society is:
• ………. Is the practice of adding Ans. CSR (Corporate social responsibility)
something to increase quantity
• ……… refers to right or wrong conduct?
fakely
Ans. Ethics
A. Black market
B. Adulteration
• As a manager, you need to keep things secret. If you violate,
C. Artificial shortage
it is called as:
D. Obsolescence
Ans. Breach of trust / Integrity issue etc.
Ans. (B)
• Which of the following in which CSR relates to?
A. Ethical conduct
• Relabeling expired products and selling is B. Environmental practice
related to which? C. Community investment
A. Black market D. All of the above
B. Adulteration Ans. (D)
C. Artificial shortage
D. Obsolescence
Ans. (D)
Features of Business Ethics
• Based on moral values
It is based on moral values and offer principles for conducting business. Respect, kindness, honesty are some of the
moral values which is used for decision making.
• Code of conduct
Business ethics is useful to prepare a code of conduct – what to do and what not to do.
• Voluntary
Even though, business ethics is not enforced by law, majority of the business follow them to improve their brand
image. Society will not tolerate unethical practices.
• Protection
It enables the protection of different stakeholders of the business including employees, consumers and shareholders.
• Service motive
Customer satisfaction is more important than profit maximization.
 Factors affecting ethical choice
There are several factors of a manager which affects ethical choice which includes:

These are the reasons for

Adopting or not adopting
A set of ethics.

General factors

Personal Code Ethical code of

Culture Legislation Social pressure
of Ethics company
General Factors – Affecting ethical choice
• Culture:
Religion, heritage, family system, and education system are some of the main elements of an individual’s culture.
Their norms, customs, and practices define what is acceptable as per their culture and what is not. Managers and
promoters of entities understand the different cultures of people and solve ethical dilemmas arising from the same.

• Personal code of ethics:

Right after learning how one’s culture affects one, he perceives business ethics; the next factor is the personal code of
conduct. Every individual has morals that drive their behavior. The personal code of ethics of an individual
influences his decision-making and how he acts in a particular circumstance. The personal code of conduct of each
employee of the organization may be different.
General Factors – Affecting ethical choice
• Legislation:
Legislation concerning business ethics refers to the fact that government departments and agencies will intervene and
enact laws and rules to prevent companies from engaging in unethical behavior. These measures will only be taken
when situations go out of hand and malpractices by entities are beyond our control. Society will not tolerate entities’
unethical behavior for long and will revolt. Governments will be forced to act and enact laws and rules to curb the
situation.

• Ethical code of the company:

The code of ethics that has been designed, communicated, and implemented by the entity also influences its ethical
climate. The code of conduct, which is usually communicated to all the employees of the company and is available
in various publications of the company, such as their website, drives how employees and staff behave in the entity.
General Factors – Affecting ethical choice
• Social pressure:
Societal pressures and forces are other factors that play a role in influencing the business ethics of an entity. With the
growth of the “cancel” culture, just like people, businesses also get canceled for their beliefs and policies.
In today’s world, when a business sells substandard products or services or is involved in unethical activities or
practices, society will immediately develop a negative attitude toward the company.
 Ethical issues and
Factors affecting
Managerial ethics ethical dilemma in
ethical choices
business

Corporate Social
Module 5 – Ethics & Corporate
Responsibility Stakeholders
Social responsibility Philanthropy
(CSR)

Concept of Value-oriented
Indian Ethos for
Corporate Holistic
Management
Governance Management.
 Ethics & Managerial Ethics

Ethics?
Ethics is the
foundation of Ethics – General for
deciding what is social life
wrong or what is
right in a given
position.
Managerial Ethics?
Managerial ethics is
the set of standard Managerial Ethics –
behavior that guide Right and wrong
the individual related to company
manager in their work
to make managerial
decisions.
#2 Ethical issues & Dilemma in Business
Ethical Dilemma
An ethical dilemma is a paradox that comes up when there are two or more options, but neither of them are the best
ethical or moral option.

A situation in which a
difficult choice has to
be made between two
or more alternatives,
especially ones that are
equally undesirable
Themes of ethical dilemma
Themes of ethical dilemma - Examples
Theme Example (Ethical issues)
• A branch manager of the company reveals his company’s business secret to
Truth V/S Loyalty others.
• Starting a moon lighting company
• Suresh is the Dean Academics and he sets time table according to his
Individual V/S Group convenience and not focussing on others.
• Adding more score for aided faculty interview to accommodate a relative
• Trying to compromise the quality of product to recoup the loss of last year
Immediate V/S Future

• A criminal case convict’s death sentence was reduced owing to his family’s
Justice V/S Compassion situation
Ethical Issues in Business
Ethical Issues in Business
Harassment and Discrimination in the Workplace
Harassment and discrimination are arguably the largest ethical issues that impact business owners today. Should
harassment or discrimination take place in the workplace, the result could be catastrophic for the organization both
financially and reputationally.

Age: applies to those 40 and older, and to any ageist policies or treatment that takes place.

Disability: accommodations and equal treatment provided within reason for employees with physical or mental disabilities.

Equal Pay: compensation for equal work regardless of sex, race, religion, etc.

Pregnancy: accommodations and equal treatment provided within reason for pregnant employees.

Race: employee treatment consistent regardless of race or ethnicity.

Religion: accommodations and equal treatment provided within reason regardless of employee religion.

Sex and Gender: employee treatment consistent regardless of sex or gender identity.
Small check !
1. …….. Is a confusion situation where managers have two options; both of them undesirable.
Ethical dilemma
2. ……. Are the rights and wrongs or standard practices of behaviour
Ethics
Misuse and misappropriation of fund is called as:
Embezzlement
4. Accepting money, gift etc. for doing things (mostly unethical activities) is called:
Bribe / Bribery
5. Present use of resources without compromising the need for the future is termed as:
Sustainability / Sustainable devleopment
 Ethical Issues in Business
• Misuse of company’s resources: Inappropriate or • Discrimination: Involves treating individuals unfairly or
unauthorized utilization of a company's assets, such as unequally due to their race, gender, age, religion, or other
funds or equipment, for personal or non-business use. protected characteristics, which is both unethical and often
• Abusive behavior: Refers to any form of mistreatment or illegal.
harassment within the workplace, including verbal, • Environmental issues: Pertains to the negative impact a
physical, or psychological abuse directed towards business's activities may have on the environment, including
employees or colleagues. pollution, resource depletion, and climate change.
• Conflict of interest: Occurs when an individual's • Financial misconduct: Encompasses fraudulent or unethical
personal interests or relationships potentially interfere financial practices such as embezzlement, accounting fraud, or
with their ability to make unbiased and objective insider trading that can harm shareholders and stakeholders.
decisions in a business setting.
Ethical Issues in Business
• Privacy issues: Revolve around the improper handling or • Bribery: Occurs when individuals or businesses offer
disclosure of sensitive personal information of or accept money, gifts, or favors to influence
employees, customers, or other stakeholders, violating business decisions or gain an unfair advantage, often
their privacy rights. violating legal and ethical standards.
• Dishonest colleagues: Refers to individuals engaging in • Sexual harassment: Involves unwanted sexual
deceptive or unethical behaviors within the workplace, advances, comments, or behaviors in the workplace,
which can undermine trust and the integrity of the creating a hostile or uncomfortable environment for
organization. victims and violating their rights.
• Breach of confidentiality: Involves the unauthorized
sharing of confidential or proprietary information,
which can harm an organization's competitiveness and
reputation.
#3 CSR & Stakeholders
 What is CSR

Corporate social responsibility (CSR) is a self-regulating business

model that helps a company be socially accountable to itself, its
stakeholders, and the public.

Corporate Social Responsibility (CSR) implies a concept, whereby

companies decide voluntarily* to contribute to a better society and a
cleaner environment.

• The companies integrate social and other useful concerns in their

business operations for the betterment of their stakeholders and
society in general in a voluntary way.
CSR and Corporate Citizenship
Definition of CSR
Corporate Social Responsibility is a management concept whereby companies integrate social and environmental
concerns in their business operations and interactions with their stakeholders.

By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the
kind of impact they are having on all aspects of society, including economic, social, and environmental.

In simple terms, the

activities of companies
to provide benefits to:

Environment Society Economy

Why CSR (Importance / Benefits)?

• Brand image: CSR improves the public image by publicizing the efforts towards a better society and increasing
their chance of becoming favorable in the eyes of consumers.
• Media coverage: CSR increases media coverage as media visibility throws a positive light on the organization.
• Positive relationship: CSR enhances the company’s brand value by building a socially strong relationship with
customers.
• Reduce competition: CSR helps companies to stand out from the competition when companies are involved in
any kind of community.
• Mandatory requirement: 2% of its average net profits spent towards CSR activities
• Net worth of more than Rs.500 crore
• Turnover of more than Rs.1000 crore
• Net profit of more than Rs.5 crore
Some CSR examples

 Provide fund for  Clean water  Free health  Sustainable  Planting trees
education project. check-ups development  Reduce pollution
 Adopting schools  Cleaning  Blood donation measures.  Using renewable
or colleges beaches / public campaigns  Community resources.
places etc. housing
 Job opportunities
 Three aspects of CSR
Job, Equality, Development

Towards:
Economy, Environment,
Sustainability
Society

Reduce pollution,
Education, Health, Social
Optimum use of resources,
development
Protection

Assuming responsibility Keeping no information

for own actions Accountability Transparency hidden from stakeholders
Principles of CSR
1. Accountability: An organization is accountable for the effects of its actions on society and the environment

2. Transparency: A transparent company offers information so that the engaged stakeholders can comprehend the
problems that are important to them

3. Ethical behavior: Fair treatment of all stakeholders, including the leadership team, investors, employees,
suppliers, and customers, is how organizations demonstrate ethical behavior.

4. Respect for stakeholder interests: Owners, members, consumers, and constituents, are a few examples of the
stakeholders whose rights and interests need to be considered.

5. Respect for the rule of law: An organization must abide by all applicable laws and regulations.

6. Respect for truth: It is unacceptable for a company to ignore or profit from wrongdoing.

7. Respect for Human Rights: An organization should address the negative effects they cause and ensure they do
not violate the rights of others.
Stakeholders

Stakeholders are the key people who are interested to know the operations of the company. They are classified into
internal and external stakeholders.
 Internal Stakeholders

Owners:
Employees: Managers:
Individuals or entities (such as investors
Individuals who work for a company, Individuals responsible for overseeing
or entrepreneurs) who have a legal
contributing their time, skills, and labor and directing the day-to-day operations
claim to a company and bear the
to achieve the organization's goals and of a business, ensuring that tasks are
financial risks and rewards associated
receive compensation in return. carried out efficiently and effectively.
with it.

Board of Directors: Shareholders:

A group of elected or appointed Individuals or entities who own shares
individuals who provide oversight, (equity) in a company, often with a
guidance, and strategic decision-making financial interest in its success and the
for a company, representing the right to vote on certain corporate
interests of shareholders. matters.
External Stakeholders
Government:
Suppliers: Customers:
The regulatory and governing bodies
Entities that provide goods, services, or Individuals or organizations that
responsible for setting laws, regulations,
raw materials to a company, enabling it purchase products or services from a
and policies that can affect businesses in
to manufacture products or deliver company, driving its revenue and
areas such as taxation, trade, and
services. determining its market success.
environmental compliance.

Media: Society:
Various outlets and platforms, including The broader community and population
newspapers, television, radio, and digital affected aspects of environmental, social,
channels, that disseminate information and ethical considerations, which may
can significantly influence public impact a company's reputation and
perception. sustainability.
Stakeholder mapping

Stakeholder mapping provides an overview about the expectations and power in the organization regarding various
aspects (Merkus et al., 2019).
#4 Corporate Philanthropy
What is Corporate Philanthropy
The act of a corporation or business promoting the welfare of others, generally through charitable donations of funds
or time. It can be sometimes a part of CSR.
Company Company Employees
to to Match time to
Employee employee charity

Company to Company to Organizatio

employees Org. direct n asks
(Reimburse) company
 Shiv Nadar (HCL Tech) – 1161 crore
donation Tim Cook - Apple also contributes millions
of dollars to nonprofits through corporate
grants.
On April 1, 2020, Azim
Premji Foundation (Rs
1,000 crore), Wipro (Rs 100
crore), and Wipro
Enterprises (Rs 25 crore)
committed Rs 1,125 crore
towards tackling the
pandemic. These are in
addition to the annual CSR
activities of Wipro, and the
usual philanthropic spending
of the Azim Premji
Foundation.
Corporate Philanthropy - Benefits
• Corporate philanthropy can enhance a company's public image by
Improved Public Image demonstrating its commitment to social and environmental issues,
thereby fostering goodwill and trust among consumers and stakeholders.
• Philanthropic initiatives can boost employee morale, engagement, and
Employee Engagement
job satisfaction by fostering a sense of purpose and pride in the
and Satisfaction
company's values and contributions to society.
• Supporting charitable causes and initiatives can strengthen a company's
Enhanced Reputation
reputation and brand value, setting it apart from competitors and
and Brand Value
attracting customers who value socially responsible businesses.
Corporate Philanthropy - Benefits

• By addressing social, environmental, and economic challenges, corporate

Long-Term Business
philanthropy contributes to a company's operations' long-term sustainability
Sustainability
and stability.
• Corporate philanthropy helps support community development and create
Community Development
positive social change by providing resources and funding for vital programs,
and Social Impact
services, and initiatives.
• Engaging in corporate philanthropy can provide businesses with tax benefits
Tax Benefits and
and incentives, such as deductions for charitable donations or credits for
Incentives
supporting certain community initiatives. (Section 35AC – 100 % claims)
#4 Corporate Governance
What is corporate governance
“Corporate governance is the system by which companies are directed and controlled”.

Corporate governance essentially involves balancing the interests of a company's many stakeholders, which can
include shareholders, senior management, customers, suppliers, lenders, the government, and the community.
Benefits of corporate governance
Stakeholder satisfaction: Builds trust: Concreate direction:
Corporate governance can give
Creates transparent rules and It helps build trust with investors,
investors and stakeholders a clear
controls, guides leadership, and the community, and public
idea of a company's direction and
aligns the interests of stakeholders officials.
business integrity.

Long term benefits: Capital raising: Better share price:

It promotes long-term financial It can facilitate the raising of Good corporate governance can
viability, opportunity, and returns. capital. translate to rising share prices.

Reduce loss: Strategic benefits:

It can reduce the potential for
It is a game plan for resilience and
financial loss, waste, risks, and
long-term success.
corruption.
Principles of corporate governance
• Fairness: The board of directors must treat • Responsibility: The board is responsible for the oversight of
shareholders, employees, vendors, and communities corporate matters and management activities. It must be aware of
fairly and with equal consideration. and support the successful, ongoing performance of the company.
• Transparency: The board should provide timely, Part of its responsibility is to recruit and hire a chief executive
accurate, and clear information about such things as officer (CEO). It must act in the best interests of a company and its
financial performance, conflicts of interest, and risks investors.
to shareholders and other stakeholders. • Accountability: The board must explain the purpose of a company's
• Risk Management: The board and management must activities and the results of its conduct. It and company leadership
determine risks of all kinds and how best to control are accountable for the assessment of a company's capacity,
them. They must act on those recommendations to potential, and performance. It must communicate issues of
manage risks and inform all relevant parties about importance to shareholders.
the existence and status of risks.
 Small check !
1. …….. Is a situation where managers are to take either of the two decisions which has some ethical
consideration.
Ethical dilemma
2. Practices for providing something by company to the society is termed as ………..
CSR
3. Formal system of controlling and directing organization is called as ……….
Corporate Governance
4. ……….. Refers to the practice of companies to provide welfare in the form of charity.
Corporate philanthropy
5. Providing information to all stakeholders is related to ………. Principle.
Transparency
 Today’s Presentation @ 10.30 am
1. Thanesh Bhat
2. Vinay Chandak
3. Vignesh P Manoj
4. Augustal Thomas
#5 Indian ethos for Management
Indian ethos for Management

Ethos: Ethos is also: Related to:

• Guiding principles of a • Belief, Principles • Social behavior and
person, group or of an relationship of a person or
organization. group.

Indian ethos refers to the principles of self-management and governance of society, entity or a system by
wisdom as revealed and brought-forth by great scriptures in the Holy Books.
Six basic principles of Indian Ethos
Holistic approach:
Each soul is a potential God :
It indicates the unity between the Divine
Immense potential, energy, and talents for
(The Divine means perfection in
perfection as a human being have the spirit
knowledge, wisdom, and power), individual
within his heart. A human being has a soul,
self and the universe. The Universe is an
a spark of the divine. The Divine resides in
undivided whole where each and every
the heart of a person.
particle is connected.

Equal importance to subjectivity/

objectivity:
Subtle, intangible subject and gross
tangible objects are equally important.
One must develop one’s Third Eye,
“JnanaChaksu”, the Eye of Wisdom,
Vision, Insight and Foresight.
Six basic principles of Indian Ethos
Selfless work:
Excellence:
Selfless work (Karma Yoga) offers
It indicates excellence at work through
double benefits, private benefit in the
self-motivation and self-development
form of self purification and public
with devotion and without attachment.
benefit. “

Co-operation:
Co-operation is a powerful instrument
for teamwork and success in any
enterprise involving collective work.
Major aspects of Indian ethos
Purification of
Know Oneself Humanity Mutual Trust
Mind

Value Oriented Spirit of Unity in

Peace
Services Sacrifice Diversity

Team Spirit Co-operation

#6 Value oriented holistic management
Value oriented holistic management

Value? What is it? In management?

A value is something that It is a process of seeing It is a holistic approach

has worth or any thing as a whole of management with
importance to an but not as a part. no opponent but unity
individual. of all corporate
members working in
transnational way for
the good of all people.
Principles / Concepts related to VBHM

Integrity: Goodness:
Wholeness:
Integrity is wholeness, goodness, It covers all essential values such as
Totality, soundness, perfection and
courage, and self-discipline to live by honesty, morality, kindness, fairness,
completeness.
your inner truth. charity, truthfulness, generosity etc.

Living by Inner Truth:

Courage:
Self-discipline: Living by inner truth or by inner
Courage points out acts of bravery,
Soul is the boss who takes control of mind, which is not known to us unless
e.g. deciding not to conceal
the mind and directs the mind and the we go within is related to integrity. It
something one knows. Courage is
senses to move on. is the most important of all.
telling the truth in the face of danger.
Need for VBHM

Long-Term Sustainability: It considers long-term

sustainability by considering environmental, social,
and economic impacts.
Innovation and Adaptability: Staying competitive by
continuously improving and learning in a dynamic business
Stakeholder Alignment: Promotes positive environment.
relationships and shared responsibility among
employees, customers, suppliers, communities, and
the environment. Integrated Performance Metrics: It considers ESG parameters
for providing a comprehensive assessment of overall
performance and insights for improvement.
Ethical Decision-Making: It incorporates ethical
considerations into decision-making processes which
is transparent.
Thank You….. And to Summarize
Managerial Ethics
Ethical Dilemma & Ethical issues
CSR, CP & Stakeholders
Corporate Governance
Indian Ethos & VBHM
2021 – November QP – Part A (Minor
change in syllabi)
2021 – November QP – Part B

2021 – November QP – Part C