Chapter # 11 : Ethics and Social Responsibility
Ethics is a set of moral principles to guide behavior. It concerns with what is right and what is wrong.
Personal ethics professional ethics Org. culture Org. System
Ethical problems faced by organization:
While achieving a higher ROI, an organization faces following problems:
SHE Issues (Safety, Health, Environment)
Extra payments to govt. officials
Extortion (when officials threaten company with complete closure)
Bribery (where organization is not entitled to services)
Grease money ( where organization is entitled but unable to receive services)
Honesty in advertisement (e.g Marketing ethics)
Competitive behavior (e.g putting others to competitive disadvantage)
Ethical systems in an organization:
Personal ethics (e.g religious, political, personality ethics)
Professional ethics (e.g CA code of ethics, medical ethics, fit and proper criteria)
Organization culture (e.g. customers first)
Organization system (ethics must be contained in formal code e.g part of ethical sys. and mission statement)
2 approaches to manage ethics:
Compliance based approach aims to remain within letter of law by establishing system of audit and review so that violations are
prevented, detected and punished. It works from outside the system.
Integrity based approach combines a concern for the law with an emphasis on managerial responsibility. This approach
incorporates ethics in organization’s culture in which managers will do the right thing e.g shared accountability, sound behavior,
defining values. It works from within the system
It is the disclosure by an employee of illegal, immoral or illegitimate practices on part of the organization.
Four types of ethical leaderships in organisations:
i) Creative :- reflecting founder, such leaders create ethical style.
ii) Protective :- they sustain value of customer services
iii) Integrative :- aim through consensus through people
iv) Adaptive :- changing culture as per new environment
Objectives of a company: