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Sunday, February 8, 2009

Business Ethics and Ethics in Management

For everything you wanted to know on building leadership and management, refer Shyam Bhatawdekar’s website:

(Refer our High Quality Management Encyclopedia “Management Universe” at:

Important Points to Ponder
  • There is no right way to do a wrong thing. Business ethics in the strictest sense means "no wrong things".
  • There is no pillow as soft as a clear conscience.
  • At times, nice guys may appear to finish last but usually they’re running in a different race.
  • Both the paths, the principled path and the un-principled path may get you name, fame, money and so called success but the two paths are parallel, they don't meet any where.

Definition of Ethics

  • Ethics is a set of principles/values that should govern the thinking and actions of an individual (a person, any professional, an employee/worker/manager at any level) or a group (governments, corporate sector, various other businesses, NGOs, non-profit organizations, health care organizations, social organizations, religious organizations etc). It deals with what is right and what is wrong, good and bad/evil, just and unjust.
  • Ethics = Right, Good and Just.

Principal Causes of Unethical Practices in Organizations

  • Large number of organizations are selfish and their interests take over the interests of their customers, employees and general public.
  • Many organizations encourage unethical behavior by resorting to forming cartels or lobbies to un-naturally beat the competition, twist the prices and literally kill the spirit of free economy.
  • They promote falsification about claims/advantages of their products through advertisements or other means and thus, increase their sales wrongly.
  • Many times, organizations reward secrecy and acts of dishonesty.
  • Top managers of organizations decide and grab enormously high salaries/unfair salaries not justified by any reason. On the other hand, they do not pass on the justifiable or fair salaries and returns to organization's stake holders.
  • Many times organization hierarchies put pressure on peers, subordinates, suppliers and other associates to adopt unscrupulous practices.
  • In many cases, top management of organizations is interested in short term results whether they are conducive to long term results or not and in the process, damaging the organizations heavily for it's long term standing.
  • Many organizations resort to high risk trading without making any substantial study.
  • Many organizations tend to falsify their accounting documents and paint a rosy picture of the organization.
  • Many times organizations and their various managers indulge in scams, frauds and corruption.

Ethics in Business and Management

Every business and every management of every organization must define (in writing) it's ethics by which they will be guided in their thinking, planning, actions and transactions. These ethics should be in consonance with or telescoped into or in tandem with the larger ethical systems like human and animal rights, human discrimination aspects, ban on child labor, environmental norms, health related issues, quality/safety of products related issues, laws/constitution of the land, international/globalized ethical issues, larger business philosophies, anti-trust (monopoly) laws, ethics related to intellectual property, knowledge and skills, company laws, issues concerning profiteering, frauds, scams and corruption, corporate social responsibilities, corporate governance and ethics of various professions like doctors, lawyers, engineers, managers, marketers etc.

Adherence to Ethics (Controls)

  • It's not enough to specify the ethics in business and management, but more important aspect is to ensure that the ethics is followed to the letter. For this purpose, there must be an internal will and discipline supported by the systems and mechanics of fool-proof controls to ensure adherence to ethical values.
  • In addition, there must be independent external checks and controls too. These could be: human rights audits, external financial audits, external cost audits, external security audits, external system audits, social audits, energy audits, environmental audits, sustenance audits etc. These audits should be carried out by external, independent and impartial professionals or body of professionals. It should be mandatory.

Ethics Check Questions

1. Is it legal?
Will I be violating various laws?

2. Is it balanced?
Is it fair to all concerned in the short term as well as long term? Does it promote
win-win relationships?

3. How will it make me feel about myself?
Will it make me proud?
Will I feel good if my decision/act was published in the media?
Will I feel good if my family members knew about it?

Do have I courage and conviction to advise my own son and my own daughter to do it?

Principles of Ethical Power for Individuals

1. Purpose: I believe that I am ethical person. My conscience guides me. I am always able to face myself in the mirror confidently, I can look myself straight in the eye and feel good about me.

2. Pride: I feel good about me. I don’t need the acceptance of other people to feel important. I have self-esteem.

3. Patience: I allow reasonable time line to achieve what have set out to achieve. I don’t need success or results overnight . I am at peace with what comes my way with my full efforts.

4. Persistence: I stick to my purpose, especially when I am in a dilemma. My actions then are consistent with my intentions.

5. Perspective: I use some of my time to reflect on my thoughts and actions. This leads me to see things clearly, remain focused and act ethically.

Principles of Ethical Power for Managements and Organizations

1. Purpose: Organization's vision, mission and objectives are guided by the ethical values. That helps every one in the organization, from the top most person of the organization to every one in the organization to determine what is acceptable and unacceptable thinking and behavior.

2. Pride: All the employees of the organization feel proud of themselves and of their organization. When they feel like this, they can resist temptations to think and act unethically.

3. Patience: All the employees believe that holding to ethical values will lead them to success in the long term. This involves maintaining a balance between results and the process of achieving the results.

4. Persistence: All the employees have a commitment to live by ethical values. They make sure that their thoughts and actions are consistent with organizational purpose.

5. Perspective: All the employees use part of their time to reflect on their thoughts and actions. Then, they determine the next courses of planning and actions.

For More Guidance, Assistance, Training and Consultation


Also refer:, and

Other Topics of Interest

All Management Topics (General Management, Marketing and Sales, Service, Operations/Manufacturing, Quality, Maintenance, Human Resources, Finance and Accounts, Information Technology, Life Management)

The topics are listed in alphabetic order:

(Home Pages for All the Management Topics) and
(Building Leadership and Management)
(Alphabetic List of All Management Topics)
(Home Page for Writings of Shyam Bhatawdekar)
(5S Housekeeping)
(Activity Based Costing- ABC)
(Anger Management)
(Assessment Centers)
(A to Z of Management Systems)
(A to Z of Quality Techniques)
(Balanced Scorecard)
(Basic Statistics)
(Behavioral Safety)
(Body Language or Non-verbal Communication)
(Books- Best Management Books)
(Business Ethics and Ethics in Management) (Business Plan)
(Business Process Reengineering- BPR)
(Career Planning within Organizations)
(Case Method)
(Case Studies in Management)
(CEO Roles, Qualities and Competencies)
(Change Management)
(Competencies- Life Management)
(Competency Matrix)
(Conflict Management)
(Corporate Governance)
(Cost Management)
(Cost of Quality- COQ)
(Counseling at Workplace)
(Creativity and Innovation)
(Critical Thinking skills)
(Cross Cultural Etiquette and Manners)
(Customer Orientation)
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(Daily Management)
(Decision Making)
(Design for Manufacture)
(Dining Etiquette and Table Manners)
(Discipline at Work)
(Dream Exotic)
(Effectiveness and Efficiency)
(Effectiveness Management: HSoftware)
(Efficiency Techniques: Work study: Motion and Time Study)
(Efficient Work Methods or Practices)
(Email Etiquette)
(Emotional Intelligence)
(Enterprise Resource Planning- ERP)
(Entrepreneurship and Entrepreneur)
(Executive Etiquette and Manners)
(Exit Interview)
(Financial Ratios and Financial Ratio Analysis)
(Financial Services)
(Functions of Management)
(Gemba Kaizen)
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(Global Mindset)
(Goal/Target Setting)
(Group Discussion)
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(How to Be a Good Boss)
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(Knowledge Management)
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(Life Management: Competencies)
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(Life Management: I Am Liberated)
(Life Positions and OKness)
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(Management Anecdotes)
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(Musings of Shyam Bhatawdekar on every topic on the earth)
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(Shyam Bhatawdekar’s Articles on Management)
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(Success in Life or Success)
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(Supply Chain Management)
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(Talent Management)
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(Telephone Etiquette)
(Three Sixty Degrees Appraisal System)
(Time Management)
(Total Productive Maintenance- TPM)
(Total Quality Management- TQM)
(Training and Development)
(Trainers’ Qualities)
(Transaction Analysis- TA)
(TRIZ- Inventive Problem Solving)
(Value Engineering/Analysis)
(Winners and Losers)
(Work Study: Method Study and Work Measurement)
(Work Methods or Practices: Efficient)
(World Class Manufacturing)
(Writings of Shyam Bhatawdekar on Management)
(Written Communication)
(Zero Based Budgeting)

Counseling: General and Psychological
(Anger Management)
(Children’s Behavior Problems)
(Cholesterol Control)
(Counseling: Psychological)
(Counseling: Psychological)
(Cross Cultural Etiquette)
(Executive Etiquette and Manners)
(Family Counseling)
(Health: Homeopathy)
(LifeManagement: Competencies)
(Life Management: Effectiveness Management: HSoftware)
(Life management: I Am Liberated)
(Marriage Counseling)
(Ownership on Job)
(Parental Responsibilities)
(Qualities of Spouse)
(Quit Smoking)
(Self Development)
(Stress Management)
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(Swine Flu and Its Prevention)
(Telephone Etiquette)
(Winners and Losers)

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General Knowledge and Out of Box Ideas
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(General Knowledge- Top 10 of Everything)
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(Running Commentary on the Run)