Ethical Corporate

Behavior
CHAPTER 5
 01
OVERVIEW
Corporate Code of Ethics

02 Advantages
 INTRODUCTION
To understand the term ‘organizational ethics’, one has to
first try and understand the two terms ‘organization’ and
‘ethics’. An organization is a collection of individuals with a
common mission while ‘ethics’ may be described as an
attempt or endeavour by individuals, to understand what is
‘right’ or ‘wrong’. Ethics is concerned with the critical
analysis of situations.

Organizational design follows a set of core principles or

concepts in an attempt to develop ethical corporate
behaviour.
 Organizational ethics involves

ETHICAL understanding and managing the moral and

rational aspects of an organization. It’s
different from management ethics, which
CORPORATE focuses on the ethical decisions and actions
of individual managers. Instead,
BEHAVIOUR organizational ethics looks at the overall
activities and impact of the organization.
 Corporate mission
Organizational
ethics can be
addressed at three
Constituency
levels: relations
Policies and practices
Corporate mission
This is about defining the organization’s goals and ethical responsibilities. It
reflects the aspirations of both the organization and its employees, who should
be engaged effectively to achieve these goals.

Constituency relations
This involves managing the organization’s responsibilities towards different
groups, such as employees, customers, suppliers, shareholders, and the public,
to ensure ethical conduct.

Policies and Practices

This involves evaluating how well the organization’s practices and
commitments align with ethical principles.
Organizational ethics also depends on the type of the
organization. Organizations can be classified by considering
their economic and ethical concerns. Organizations can be
classified into four types. These are:

Exploitative Manipulative

Holistic Balanced
 Exploitative Manipulative
Organizations with low Organizations with high
economic and ethical concerns economic performance
are called exploitative concerns and low ethical
organizations. concerns are called
manipulative organizations.

Holistic Balanced
Organizations with high Balanced organizations have
ethical concerns and low high ethical and economic
economic concerns are called concerns.
holistic organizations.
Corporate
Code of
Ethics
 Corporate ethical codes are the standards and beliefs set by an
organization’s managers. They are designed to guide the behavior and
attitudes of everyone within the organization. These codes help shape
how employees think and act in alignment with the organization’s
values.

Corporate ethical codes differ from ethical rules, which are specific
requirements that individuals must follow. While ethical rules focus on
personal behavior, corporate ethical codes provide a broader
framework for the organization as a whole.
Snoeyenbos and Jewell define three
elements to implement ethical behaviour in
the organization. These elements are:

Implementing the Introducing an Introducing a

corporate ethical ethics committee management
code training
programme that
includes ethics
training
 Organizations can manage ethical issues by
including a code of business conduct in their
corporate structure. These codes advise, guide, and
regulate how employees should behave. To create
these codes, organizations translate core human
values into specific guidelines. While many
organizations have their codes of ethics, there are
also similarities among them.
 Ethical codes for discipline

Proper code of dressing

These formulated codes
of ethics can be used as a Avoiding abusive language or
tool for developing ethical actions
conduct. Some of the
ethical codes formulated Punctuality
by organizations are:
Legalistic ethical codes

Always following instructions from

superiors
 Performance of fair performance
appraisals

These formulated Personal and cultural ethical codes

codes of ethics can be
used as a tool for Not using official property for
developing ethical personal use
conduct. Some of the Performance of good quality of work
ethical codes
formulated by Having initiative
organizations are:
Conservation of resources and
protection of quality of environment
Advantages
of a Code of
Ethics
Some of the advantages of a code of ethics are:

❖ A Code of ethics can be used to handle outside pressure.

❖ They can also be used in making overall strategic decisions.
❖ These codes can be used to define and implement the policies of the
organization and distribute work between the employees.
❖ A code of ethics can be used to optimize the public image and confidence
of the organization.
❖ They can be used to increase the skills and knowledge of the individuals.
❖ Code of ethics can also be used to respond to the different issues of
stakeholders.
❖ These codes of ethics can be used to discourage improper requests from
employees.
❖ They can also strengthen the enterprise system.
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Chapter 6

DEVELOPMENT OF
ETHICAL
CORPORATE
BEHAVIOUR
 01 Identifying practical issues and
assigning responsibilities
OVERVIEW 02 Analyzing existing practices and
framing a code of conduct
03 Raising fundamental philosophical
problems
Identifying Practical
Issues and Assigning
Responsibilities
 01 Employee rights

This approach explores 02 Ethical business conducts

various kinds of ethical
issues that can arise in 03 Environmental protection

business and society. 04 Child labour in business

Business activities should be
05 Discrepancies in the wages of women
conducted in such a way employees
that they do not cause any
06 Bonded labour
harm to society. The various
ethical issues that can arise 07 Exploitation of unorganized labour
in business and society are:
08 Minimum wages

Obligations of large and multinational

09
corporations
 Analyzing Existing
Practices and Framing a
Code of Conduct
 This approach deals with the subject of public policy
and with the identification of unethical practices. Various
areas of conduct require some amount of government
regulation. Such areas include product liability, worker
rights, environmental problems, white-collar crimes and
child labour.

This approach also deals with the ethical guidelines

that provide benchmarking for the decision-making
process.
Benchmarking is a process where an organization compares its
methods and performance to the best practices and outcomes from
other organizations.

• This helps identify areas for improvement and motivates change.

• The goal is to enhance quality and efficiency by learning from others,
reallocating resources, and training employees.

Benchmarking can be done internally (within the same organization),

functionally (with similar departments from different organizations), or
competitively (against industry leaders). It can be used for specific
projects or daily operations to improve areas like production speed,
customer service, or delivery times.
The following is the sequence of steps involved in an
effective benchmarking process:

Determine the key performance areas that need to be

benchmarked. These include products and services, customers,
business processes in all departments and organizations, business
culture and calibre and training of employees.

Identify the most relevant competitors and best organization in the

relevant industry.

Set the key standards and variables that need to be measured.

Measure the standard variables regularly and objectively.

Develop an action plan to gain or maintain superiority over

competitors.

Specify programmes and actions to implement the action

plan and monitor the ongoing performance of the
organization.
 Fundamental
Philosophical Problems
 Under this approach, business ethics can be defined as
an attempt to keep ethical obligations. This approach
deals with the relationship between the individual and the
society and is used to identify the area of development of
the society and its culture.

It also focuses on the differences between personal

morality and social morality. The main aim of this
approach is to identify and define business values.
Business values
Business values are core beliefs and principles that guide an organization's
actions and decisions. Examples include focusing on customer satisfaction,
encouraging enthusiastic teamwork, and using advanced technology in
production.

When these values are actively embraced and practiced by both

management and employees, they can lead to significant success and growth
for the organization.

Essentially, adhering to strong business values is crucial for an organization’s

long-term success and sustainability.
In general, the most common values that facilitate improving profits
and the image of the organization are as follows:

❖ Persistent progress: It refers to an eagerness and enthusiasm on the part

of the organization to keep its functioning as an ever-efficient and
up-to-date working endeavour towards progress.

❖ Customer satisfaction: It refers to making the customers feel important

and responding to their needs, and interests and, if need be, providing
solutions to their problems in case of any documentation processes
regarding the purchase of the organization’s product.

❖ Personnel development: It focuses on improving employees' skills, which

enhances their satisfaction and leads to more genuine and effective
performance, ultimately benefiting the organization.
❖ Innovation: It refers to the enthusiasm to take on new challenges
and responsibilities on the part of the employees and a desire to
diversify and try out new ventures on the part of the organization.

Optimal use of resources

It refers to making sincere efforts to enhance overall business performance
by maximum utilization of the organization’s current resources.
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questions?
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