Morality & Rationality in Organizations PGDM

Organization Culture Forms basis of rules, procedures and protocol of psychological and behavioral guides Three main elements Basic values, attitudes and beliefs of the organization Organizational goals, policies, structures and strategies which are shaped by these basic values, attitudes and beliefs Organizational way of doing things

Organizational Values Found in mission statements, code of ethics State what organization stands for and describe the ethical perspective of organization leaders Desired Values of a Business Organization Fairness Harmony Cooperation Continuous improvement Courtesy Humility Adjustment Gratitude Assimilation

Types of Organization Holistic Balanced Manipulative Ethical Concern High Holistic Balanced Ethical Concern Manipulative Exploitative Economic concern Low High

Corporate Code of Ethics Ethical codes are statements of norms and beliefs of an organization and ways in which organizational leaders want others to think

Need to formulate Codes Of Ethics Shaping Ethical Behavior Self-Regulation Improving Self Image To provide Inner Strength Avoid conflict of Interest To be socially responsible Comply with law and govt. guidelines Establish better corporate Culture Safeguard Propriety information Avoid Insider Trading

Implementing Code of Ethics Management Involvement and Supervision Constant consciousness of these codes Stressing code values during Training Recognition for conduct exemplifying desired values and standards Ombudsmen or other designated persons assigned for this purpose Periodic auditing to assure compliance Well defined and fair enforcement procedures Thorough concentration on high risk jobs in terms of violation of code values and standards

Critical Elements in Implementation Clarity Commitment of Top Management Quality Policy Customer Care Building Systems Communication Human Resource Policies Employee Training Ethics Workshops

Ethics workshops An overview of company’s code of ethics Discussion of several case that illustrate the code Discussion of some cases that involve dilemmas not covered by code Explanation of any assistance that company provides when faced with a dilemma Discussion of factors that employees believe impede ethical behavior in their departments

Stages of Ethical Consciousness in Business First Stage Law of Jungle: business Decisions are driven by “might is right” Business ills are common at this stage Second Stage Anything for Profit: believe “anything goes as long as one does not get caught by the law” Bribery to government, tax evasion etc are common Third Stage Profit maximizing in short term: Believe that “good business is good ethics”- to maximize profits within constraints of law

Stages of Ethical Consciousness in Business Fourth Stage Profit maximizing in Long term: Shift in focus from business to ethics- “sound ethics is good business” in long run. Here firms create post of ethics officer to supervise ethical aspect of business Fifth Stage Stakeholder concept- Companies concentrate on social and economic mission Focus on philanthropy Focus is to create mutual relationships between companies and society

Stages of Ethical Consciousness in Business Sixth Stage Corporate Citizenship: Higher level of ethical consciousness Belief that business can be healthy only if society around it is healthy and no other institution including government has resources to bring this transformation except Business Organizations Entrepreneurs seek to achieve social objectives such as promoting community health, employing handicapped people, etc