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Ethics in Functional Fields

The document discusses ethics in various business disciplines and functional fields such as human resources management, finance, marketing, and purchasing. It focuses on some of the ethical issues that can arise in human resources including compensation practices, discrimination, employment issues, privacy concerns, and downsizing/layoffs. Specifically, it discusses challenges around discrimination in hiring, gender pay gaps, age discrimination laws, ensuring ethical hiring practices, protecting employee privacy, conducting downsizing ethically, and treating employees with empathy, integrity, and courage during performance evaluations.

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0% found this document useful (0 votes)
2K views34 pages

Ethics in Functional Fields

The document discusses ethics in various business disciplines and functional fields such as human resources management, finance, marketing, and purchasing. It focuses on some of the ethical issues that can arise in human resources including compensation practices, discrimination, employment issues, privacy concerns, and downsizing/layoffs. Specifically, it discusses challenges around discrimination in hiring, gender pay gaps, age discrimination laws, ensuring ethical hiring practices, protecting employee privacy, conducting downsizing ethically, and treating employees with empathy, integrity, and courage during performance evaluations.

Uploaded by

sagartolaney
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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ETHICS IN BUSINESS DISCIPLINES/ FUNCTIONAL FIELDS

ETHICS IN BUSINESS DISCIPLINES


Ethics in:
Human Resources Management Finance & Accountancy Marketing Purchase

ETHICS IN HUMAN RESOURCES MANAGEMENT


Here we explore the Ethical dilemmas that face the worker, whether she or he is an employee on assembly line, the manager of a restaurant or the CEO of a large corporation. Ethics at work and in HRM is about our relationship with others and our organizations. Recent research supports a slew of earlier findings that companies that place employees at the core of their strategies produce higher long term returns to shareholders than do industry peers.

ETHICS IN HUMAN RESOURCES MANAGEMENT


When employees see that a firm values their emotions, as well as exhibits values such as honesty, respect and trust, they feel less pressure, feel more valued as employees and are also more satisfied with their organizations.

ETHICS & HRM

1. Cash & Compensation Plans


Salaries Raising the band of salaries of few management employees against all others Executive Perquisites & long term compensation plans Pressure to decide on plans favouring top managements interests instead of organization at large.

2. Discrimination
Though overt acts of discrimination might be decreasing, covert forms of discrimination are still at play. For instance, in recent research, University of Chicago scholars Marianne Bertrand and Sendhil Millainanthan found that there remains discrimination simply on the basis of ones name. These researchers answered help-wanted ads in Boston and Chicago newspapers by sending their resumes. Though the resumes were exactly the same in substance, they were different in the names attached to them. Names that were traditionally associated with Caucasians (Jill, Allison, Neil, Brad) drew 50% more callbacks than those traditionally associated with African Americans (Alisha, Ebony, Leroy). Even when researchers increased the quality of resumes, higher quality resumes from African Americans- sounding candidates received no more callbacks than the original resume.

2. Discrimination
Additional studies reinforce these findings that bias on the job is also common. Rutgers Law school professors Alfred and Ruth Blumrosen conducted a study in 2002 that concluded that about 2 million workers were affected by intentional discrimination in 1999. Within these, 22,000 employers were found to be hard-core discriminators, employing below average numbers of women and minorities for 10 years. Women often face challenges that are distinct from men. E.g. women and men are both subject to gender stereotyping, but suffer from different expectations in that regard. A woman who is aggressive in the workplace is often considered to be a Bully. Whereas, Aggressive men may be viewed as going after what they want, not letting anything get in their way and so on. Womens wages per hour are on an average about 60% of mens wages.

2. Discrimination
Federal law prohibits public or private employers to force their employees to retire before the age of 70, with the exception of a few job classifications as airline pilot. The reason provided is that the use of age is arbitary.

3. Employment Issues
Law and regulations dictate that we have to be ethical in hiring. However, ethical hiring practice goes beyond them as well. Applicants should be hired based purely on merits such as knowledge, skills, and ability in accordance to the needs of the organization. There should be no discrimination to people from any other group due to race, religion, gender, marital or pregnancy status. Consistency and objectivity during the recruitment process are very important. Candidates should be informed about the true state of the organization. E.g. Case of Phil McConey who was not informed of the take over of the organization while he was recruited. We have to be extra careful while recruiting from our Suppliers, Customers and Competitors since they may feel we are poaching their valued employees/ stealing of trade secrets etc.

4. Privacy Issues
Any person working with any organisation is an individual and has a personal side to his existence which he demands should be respected and not intruded. This personal life may encompass things like his religious, political and social beliefs etc. However certain situations may arise that mandate snooping behaviours on the part of the employer. For example, mail scanning is one of the activities used to track the activities of an employee who is believed to be engaged in activities that are not in the larger benefit of the organisation.

5. Downsizing/ Layoffs
Organizations in every segment of business, industry, government and education are downsizing. The very act of forcing people to leave their employment is rife with ethics-related questions.

Is downsizing ever ethical?


Jobs are the by-product of successful organizational endeavors, not their intended output. Downsizing is not necessarily a desperate move on the part of failing organizations. It can be and probably should be a strategic choice designed to serve the best interests of an organization.

How do we act more ethically in downsizing?


John Challenger suggested that we should consider Planning, Timing, Notice, Impact (on those who will go and those who will stay) and Stakeholder perceptions. The decision regarding downsizing should be made by a representative group so that all stakeholder interests can be considered and to earn the trust of those who will be impacted. Since employees should be kept aware of business conditions, the need for downsizing effort should not come as a great surprise.

How do we act more ethically in downsizing?


Notice: Some argue that a firm should give notice of downsizing as soon as that list is devised. On the other hand, the uncertainty and rumours that are sure to develop between the announcement of downsizing effort and the decision about who will be terminated may outweigh the benefits gained in early notification. Above all, during a time when relationships might be strained, it is most critical to be honest and forthright and to have sensitivity to the experiences of those you impact.

How do we act more ethically in downsizing?


Those who must leave: Being forced to leave a job, irrespective of separation-allowances,pension enhancements or any of the other tools used by organizations to soften the blow, feels wrong. It violates some values (EPIC as suggested by Kenneth Johnson): Empathy: the act of dismissal can be unempathetic, since it negatively affects those who are forced to give up their chosen path, no matter what future success may await them. Since typically they feel as though they had no voice in the decision. Patience: if the decision to downsize is perceived to be a faddish response to competitive pressures it will appear impatient or premature to those who must leave. Integrity: where there was either an implied or spoken promise of continuing employment as the repayment for employee loyalty and/ or successful completion of assigned work, the decision may be thought to lack integrity. Courage: downsizing can sometimes be seen about creating victims and displacing blame rather than accepting responsibility and choosing the more difficult, moral high ground.

How do we act more ethically in downsizing?


Those who remain: Surviving employees will often share perceptions about the ethics of this decision with those who are being forced to leave. They also experience emotional reactions anger, guilt, fear, depression when asked to take up the slack by doing more work, learning new tasks, for same or less money. Empathy: asking people to do more with less pay can seem unfair. Downsizing organizations put tremendous pressure on their surviving employees, and that often affects their families as well. This can seem to show a lack of caring on the part of decision makers, an insensitivity to the reality that employees are people with full lives and responsibilities outside of work. Patience: organizations which downsize often have a sense of urgency about realizing the promised benefits of doing more with less. If this rush to a new order is seen to be without a strong basis. Integrity: in organizations where downsizing is imposed at the same time that executives/ shareholders are receiving bonuses, there can be a perception of double standard. Courage: if executives blame their superiors for the necessity to downsize, and speak or act as tough they had no choice, the message can be that they lacked the courage to do what is right, to stand up for those who have served them loyally, no matter the personal risk. This is viewed as cowardice.

Downsizing & some exceptions


Some firms have survived decade after decade without any layoffs. One firm, Nucor, has not laid off a worker in 20 years. However, the firm maintains a 3 day work-week with an average wage of $8 per hour. When large contracts come in, it expands to a seven-day work week and $22 per hour wage. Other firms have entered into agreements with their workers where the firm promises not to terminate workers for reasons of the economy as long as the workers agree to lower wages or decreased hours during tough periods. For e.g., in December 1998, Volkswagen in Brazil was suffering under the collapse of that countrys economy and the resulting 25% downturn in the Brazilian car market. However it avoided terminations at its 20,000 worker plant by moving to a 4 day workweek.

Performance Appraisals are conducted to evaluate an employees performance over a set period of time. When evaluating subordinates, one has to remain consistent and objective. Consistency requires that you treat every employee's misbehaviour the same way. For e.g. it would be wrong to punish one employee's sluggishness while leaving another employee's tardiness unchecked. In order to maintain Objectivity & Uniform criteria, the companys standardized evaluation forms should be used. It is unethical to base salary adjustments upon performance problems that have not been brought to the employees attention. Constant feedback and communication between you and your subordinates is necessary to facilitate a positive and productive working relationship.

6. Performance Appraisals

7. Disciplinary Issues
Disciplining employees is one of the most difficult parts of a managers job. Nevertheless, it is vital to the growth and overall success of the organization. Disciplining employees both ensures productivity and sets standards for the future. Discipline should occur immediately after a problem has occurred. It is imperative that the disciplinary actions remain consistent for all employees.

7. Disciplinary Issues Sexual Harassment


A serious disciplinary issue is sexual harassment where employees are subjected to an unwanted sexual behavior that creates an intimidating or hostile work environment. Treating someone differently because of his or her gender is unlawful under Title VII. There are 2 types of sexual harassment that fit within this broad prohibition:
Quid Proquo exists where a supervisor offers an employment in exchange of sexual activity or where a supervisor refuses to give an employee deserved benefits unless she/ he engages in sexual activity. Hostile environment exists where a work environment is severely or pervasively altered such that a reasonable person would find it offensive or abusive.

ETHICS IN FINANCE AND ACCOUNTANCY

Ethics & Finance/ Accountancy


Ethics in Financial services area is the most visible area in business ethics in the first years of the new millenium. Accounting and investment firms that were looked upon as guardians of integrity in financial dealings are exposed as violating the fiduciary responsibilities entrusted to them. Enron, Worldcom, Tyco, Adelphia, Anderson, Ernst & Young, KPMG, Deloitte & Touche, Pricewaterhouse Coopers, J.P. Morgan, Merill Lynch, Morgan Stanley, are names of companies, accounting firms and investment firms that have all been implicated in some ethically questionable activity in the past few years, activities that have resulted in fines or criminal convictions.

Ethics & Accountancy


Accounting is a profession in the financial world wherein the Accountant is responsible for giving the financial pictures that are necessary for companies to stay in existence, and Auditors are responsible for verifying that the pictures are accurate and truthful. Bogle calls for the need of Accountants to be independent, and then contrasts the difference between being a mere business marketing a product and being a profession. When companies move from being professions to mere business marketers, a conflict of interest between the good of the client and the profit needs of the company arises. Ten of the top investment firms in USA had to pay fines for actions that involved conflicts of interest between research and investment banking. i.e. Companies that engaged in investment banking would pressure their research analysts to give high ratings to companies whose stocks they were issuing, whether those ratings were deserved or not.

Abusive Tax Shelters


Taxes are not part of the financial services market, but the avoidance of taxes is an impetus behind all sorts of financial instruments created and sold by financial players, tax lawyers, tax accountants and financial services firms. It is imperative for the general welfare that all constituents pay their fair share of taxes. Yet a large portion of the financial markets is intent on finding loopholes or dodges to help clients pay less than their fair share and thus free ride on the backs of the ordinary taxpayer.

Abusive Tax Shelters


For a system to be healthy, entities with power and privilege need to participate in what is always a necessary inconvenience, paying taxes, for the good of the whole. In April 2001, IRS named 25 companies who evaded $4 billion in taxes in improper shelters. The large accounting firms form teams dedicated to gaming the tax codes for the benefits of their clients, as long as the clients promise not to divulge the schemes.

Insider Trading
Insider trading refers to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include tipping such information, securities trading by the person tipped and securities trading by those who misappropriate such information. Ivan Boesky, Ken Lay and his colleagues at Enron have been accused of Insider trading. They allegedly dumped their stock, knowing of the inevitable downturn in the stocks worth, while encouraging others to hold on to it. The main argument against insider trading is that it is unfair to those who do not have the privileged information. So, if some executive gets rid of a stock he knows is going to be greatly decreased in worth because of bad news that no one except a few insiders knows, he takes advantage of those who bought the stock from him without full disclosure. There is also the argument that it is the unethical misappropriation of proprietary knowledge (i.e. knowledge that only those in the firm should have, knowledge owned by the firm and not to be used by abusing ones fiduciary responsibilities to the firm. Such behaviour undermines the trust necessary to the proper functioning of a firm. It is also unfairness to those who buy the stock under ignorance.

BUSINESS ETHICS AND MARKETING

CASE STUDY

Ethics in Marketing
Critics understand that Marketing is at best a Necessary evil Marketing is typically perceived as something that is done to customers; something that customers have to watch out for. Marketing, generally equated with selling and advertising, is viewed as a set of tactics used by firms to induce unsuspecting customers to buy products and services that they do not need, at prices that are much too high.

Marketing Critics
Most criticisms of marketing ethics pertain to tactics used by marketers:
Create demand for unnecessary products, Fail too provide complete information Create misleading advertising, Mark up prices when demand is high, Charge different prices for different customers and so on

Critics hence believe that criticisms of marketing are deontological i.e. concerned with the means employed by marketers, irrespective of the outcome.

Ethics & Marketing


Marketers respond to the above criticisms by pointing to a more expansive definition of marketing as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals.

Deontological (Code of Ethics) response for critics


Marketers have created and adopted a code of ethics that is mainly deontological i.e. it deals with how marketers must conduct their activities, irrespective of outcomes (Appendix A). In a survey of 1076 marketing professionals asking for the most difficult ethical issues they face in their work, respondents cited the following:
Bribery (gifts, questionable payments) Fairness (conflicts of interest, manipulation) Price issues (differential or predatory pricing) Products (safety, infringement) Personnel confidentiality, Advertising (puffing v/s misrepresentation), Manipulation of data and purchasing (reciprocity in supplier selection)

Creating a code of ethics and subscribing to it in practice can be entirely two different matters.

Recurring lapses in ethics on part of marketers


1. 2. Its legal, isnt it? : There is a perceptible trend to determine the wrongness and rightness of a decision by refering to the legality of an issue rather than using an internal or external ethical reference point. Do customers really care about ethics?: When purchasing products and services, customers seem to care about other aspects of purchase before they consider whether a firm is ethical or not. Customers consider ethics in purchase decision when the ethical issue affects them directly. If customers place ethics lower in the hierarchy of needs when actually purchasing, marketers lose incentive to pursue ethical behaviour. Where are the ethics police?: Ethical lapses by firms are made public by consumer advocacy groups, concerned citizens and members of media. Following the money: Short term mentality for profits (arising from shareholders expectations) is not conducive for encouraging ethical behaviour. Results from ethical behaviour are typically long term, often vague and sometimes unclear. Given the pressures from short-term oriented shareholders with very sharp teeth and comparing those to longer term, sometimes weak pressures from ethical interest groups with unclear dental records, the choice of behaviour is startingly clear- Ethics takes a back seat.

3. 4.

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