Ethics & Governance

Topic 1 - Values & Ethics

in Organizations
Prof. Sandeep Hegde
 Ethics & Governance - Syllabus
• Values and Ethics in Organizations
– Values and Vision Statements (6 hours)
– Stakeholders Model (4 hours)
• Code of Ethics (4 hours)
• Ethical Dilemmas (8 hours)
• Ethical Decision Making (8 hours)
• Corporate Governance & CSR (5 hours)
• Environmental issues and Triple
Bottom Line Organizations (5 hours)

 Ethics & Governance
Pedagogy
• Class discussions
• Group discussions
• News Paper Clips and articles
• Video based discussions
• Case Study (This would be our main focus
for this course)
• Team Project Presentation
•
 Internal Evaluation Scheme
• Internal Assessment – 30 Marks
– Marks for class participation – 10 (for class
behavior, proactive participation and
knowledge sharing)
– Mid Trimester test – 10
– Team Presentation – 10
• Trimester end examination – 70 Marks
•
•
 Trimester end paper pattern
(70 Marks – 2 hours duration)
• One liners (10 X 1Mark) no options given
10 Marks
– Expected to write simple one line definition or explain the
term given in your own words
• Short Answer type questions (4 X 5 Marks) 4 out of 6 Questions
20 Marks
– Expected to give argumentative discussion based on theory
with some industry examples to supplement your
arguments
• Case Study (2 – 3 pages in length) with 2 questions of 15 marks
each. 30 Marks
– Expected to relate the case to theories covered in the entire
syllabus. Theoretical illustrations a must. Using the
theoretical illustration one must explain the case and bring
out solutions or recommendations. Citing industry
examples to illustrate your point would be highly
appreciated.
• Situational type of question or a news paper clip related to
theoretical concepts. 10 Marks
– Discussion oriented answer with argumentative pro’s and
con’s. Your personal viewpoints carry weight.
•
 Prescribed Text
• Business Ethics: Concepts and Cases
by Manuel G. Velasquez (6th ed)
• Essentials of Management by Harold
Koontz and Heinz Wiehrich (6th ed)
• Environmental Management by Bala
Krishnamoorthy
• www.greenpeace.org
• www.cse.org
• www.tata.com
•
 Ethics Vocabulary
Obligation
Professionalism
Responsibility
Virtue
Ethics
Morals
Courage
Character
Integrity
Honesty Accountability
Ideals
Self-Respect
 What is meant by ethics?
• Consists of moral principles governing the
right and wrongs of human conduct.
• Is about the principles of right and wrong
accepted by individuals or social groups.
• A code of behaviour considered morally
correct.
• Code of moral principles that guide the
action of people and groups.
• Ethical behaviour is doing what is morally
right
 Business ethics
• Business ethics are the principles and standards
that:
- Define acceptable conduct in business
- Should underpin decision making
• An alternative definition is: ”the moral values
which govern business behaviour and
restrains companies from pursuing the interest
of the shareholder at the expense of all other
considerations”
• Some activities might be profitable and legal but
nevertheless are considered to be unethical
• An ethical decision is one that is both legal and
meets the shared ethical standards of the
community
Is ethics the same as the law?
• - No - although the law should reflect the ethical views of
society there are certain activities permitted by law
which some individual or groups in society or
individual might regard as unethical.
- Ethical considerations are about what is right and
what is wrong
- The law is about what is lawful and what is unlawful
• The following business activities are legal but might pose
ethical dilemmas for individuals:
– Profiting from gambling
– Selling goods manufactured by low wage in developing
countries
– Engaging in the fur trade
– Experimenting on animals
•
 What is the starting point of
“Business Ethics”
• Mission
– A strategic plan starts with a clearly
defined business mission.
• Mintzberg defines a mission as follows:
– “A mission describes the organisation’s
basic function in society, in terms of
the products and services it produces
for its customers”.
 TATA Group and TBEM
Jamshedji Tata, said ...
 “Be sure to lay wide streets planted with
shady trees, every other one of a quick-growing
variety. Be sure that there is plenty of space for
lawns and gardens. Reserve large areas for
football, hockey and parks. Earmark areas for
Hindu temples, Mohammedan mosques and
Christian churches”


….he created a VISION, a key element of TBEM


 TATA Group and TBEM
JRD Tata said…
 “The wealth gathered by Jamshetji Tata and
his sons in half a century of industrial pioneering
formed but a minute fraction of the amount by
which they enriched the nation. The whole of
that wealth is held in trust for the people and
used exclusively for their benefit. The cycle is
thus complete, what came from the people has
gone back to the people many times over”


….he articulated our MISSION… again, a key



element of TBEM
“A perfect value consists in doing without witness all
that we could have done in front of the entire world”

- Nobel Laureate Gabriela Mistral

 Values and Vision
• Values form the foundation of a business’s
management style.
• Values provide the justification of
behaviour and, therefore, exert
significant influence on all major
business decisions.
 NESTLÉ CORPORATE BUSINESS PRINCIPLES

Nestlé is committed to the following business principles in all countries taking
into account local legislation, culture and religious practice:
– Nestlé's business objective, and that of management and employees at all
levels, is to manufacture and market the company's products in such a
way as to create value that can be sustained over the long term for
customers, shareholders, employees, business partners and the large
number of national economies in which Nestlé operates.
– Nestlé does not favour short-term profit at the expense of successful long-
term business development, but recognizes the need to generate profit
each year in order to maintain the support of the financial markets, and
to finance investments.
– Nestlé believes that, as a general rule, legislation is the most effective
safeguard of ethical conduct, although in certain areas, additional
guidance to management and employees, in the form of voluntary
business principles, is beneficial in order to ensure that the highest
standards are met throughout the organization.
– Nestlé is conscious of the fact that the success of a corporation is a
reflection of the professionalism, conduct and ethical values of its
management and employees, therefore recruitment of the right people
and ongoing training and development are crucial.
– Nestlé recognizes that consumers have a legitimate interest in the company
behind the Nestlé brands, and the way in which the Nestlé company
operates.

 Creating Shared Value
 Creating Shared Value is a
fundamental part of Nestlé's way of doing
business that focuses on specific areas of
the Company's core business activities –
namely water, nutrition, and rural
development – where value can best be
created both for society and shareholders.

•
 Values
• Terminal Values
– A lifelong goal or objective that an individual
seeks to achieve (e.g., success or happiness)
• Instrumental Values (virtues)
– A mode of conduct that an individual seeks to
follow (e.g., honest or capable)
• Value System
– The terminal and instrumental values that are
guiding principles in an individual’s life.
 Foundation of TBEM - Core
Values
• Visionary Leadership
• Organizational & Personal Learning
• Agility
• Valuing Employees & Partners
• Managing for Innovation
• Customer- Driven Excellence
• Focus on the Future
• Management By Fact
• Focus on Results & Creating Value
• Social Responsibility & Citizenship
• Systems Perspective

 TATA - Values and purpose
 The Tata Group is one of India's oldest, largest and most
respected business conglomerates. The Group's businesses are
spread over seven business sectors. It comprises 96 companies,
operates on six continents and employs 350,000 people.


Core values
 The Tata group has always been a values-driven organisation. These
values continue to direct the group's growth and businesses. The five core
Tata values underpinning the way we do business are:
– Integrity: We must conduct our business fairly, with honesty and
transparency. Everything we do must stand the test of public scrutiny.
– Understanding: We must be caring, show respect, compassion and
humanity for our colleagues and customers around the world, and
always work for the benefit of the communities we serve.
– Excellence: We must constantly strive to achieve the highest possible
standards in our day-to-day work and in the quality of the goods and
services we provide.
– Unity: We must work cohesively with our colleagues across the group and
with our customers and partners around the world, building strong
relationships based on tolerance, understanding and mutual cooperation.
– Responsibility: We must continue to be responsible, sensitive to the
countries, communities and environments in which we work, always
ensuring that what comes from the people goes back to the people many
times over.

 Growth of attention to Values & Ethics
Much
Amount of Attention

Little

1950 1960 1970 1980 1990

Phase I Phase II Phase III

Gestation and Innovation Development Maturity and

and Expansion Institutionalization
 Historical Phases of Social
Responsibility
Social
SocialResponsibility
Responsibility
1900’s
1900’s 1930’s
1930’s
1960’s
1960’s

Phase
PhaseOne:
One: Phase
PhaseTwo:
Two: Phase
PhaseThree:
Three:
Profit-Maximizing
Profit-Maximizing Trusteeship
Trusteeship Quality-of-Life
Quality-of-Life
Management
Management Management
Management Management
Management
Business’s
Business’sprimary
primary Corporate
Corporatemanagers
managers Managers
Managershavehavetotodo
do
responsibility
responsibility tosociety
to society need
need to maintainan
to maintain an more than achieve
more than achieve
isisto
to underwritethe
underwrite the equitable balance
equitable balance economic
economicgoals,
goals,but
but
country’s economic
country’s economic among
amongthe thecompeting
competing they
theyshould
shouldmanage
managethethe
growth
growthand andto
tooversee
oversee interests
interests of allgroups
of all groups quality-of-life by helping
quality-of-life by helping
the
the accumulationof
accumulation of with
with a stake inthe
a stake in the develop
developsolutions
solutionsforfor
wealth.
wealth. organization.
organization. society’s ills.
society’s ills.
 100%
Phase Three: Quality of Life

75%

Proportion of Phase Two:

Trusteeship
Firms Adopting

Each Perspective 50%

Phase One:
Profit Maximization

25%

1800 1900 2000

 Corporate Values Statements
• Describes the core values the company
wants its employees to exhibit including:
– How employees are to treat one another
– How employees are to treat customers and
stockholders
 How Are Tatas Showing
Commitment ?
 The Tata Group Purpose statement


 “Our Purpose in Tata is to improve the Quality of Life in

the communities we serve. We do this through Leadership in
sectors of National Economic Significance to which we bring a
unique set of capabilities. This requires us to grow
aggressively in focused areas of business.


 Our heritage of returning to society what we earn evokes

Trust among consumers, employees, shareholders and the
community. This heritage will be continuously enriched by
formalizing the high standards of behavior expected from
employees and companies.”


 The Tata name is a unique asset representing Leadership

with Trust. Leveraging this asset to enhance Group synergy and
become globally competitive is the route to sustained growth and
long term success.
 British Telecom Group
- defining its values:
• BT's activities are underpinned by a set of values that all BT people
are asked to respect:
- We put customers first
- We are professional
- We respect each other
- We work as one team
- We are committed to continuous improvement.
•
• These are supported by our vision of a communications-rich world -
a world in which everyone can benefit from the power of
communication skills and technology.

• A society in which individuals, organisations and communities have

unlimited access to one another and to a world of knowledge, via
a multiplicity of communications technologies including voice,
data, mobile, internet - regardless of nationality, culture, class or
education.

• Our job is to facilitate effective communication, irrespective of

geography, distance, time or complexity.
 References
• Essentials of Management – An
International Perspective by Harold
Koontz and Heinz Weihrich
• Business Ethics: Concepts and Cases
Sixth Edition. By Manuel G. Velasquez.
• www.tata.com