ETHICAL AND UNETHICAL BEHAVIOUR IN A BUSINESS

 

BUSINESS  ETHICS

Business ethics is also known as corporate ethics. It is a form of applied ethics or professional ethics that examine ethical principles & problems that can arise in a business environment.

ETHICAL  ISSUES --:

Following are a few ethical business practices that should be followed to build an honest reputation and ensure smooth running of the organization.

·       Investors: Ensuring safety of their money and timely payment of interest.

·       Employees: Provision of fair opportunities in promotions and training, good working conditions, and timely payment of salaries.

·       Customer: Complete information of the service and product should be made available. Personal information of the customers should not be used for personal gain.

·       Competition: Unscrupulous tactics and methods should be avoided while handling competitors.

·       Government: Rules and regulations regarding taxes, duties, restrictive and monopolistic trade practices, and unlawful activities like corruption and bribing should be adhered to.

·       Environment: Polluting industries should ensure compliance with the government norms regarding air, water and noise pollution.

UNETHICAL  ISSUES -:

The financial sector is abuzz with acts of violation of norms to amass wealth in an unethical manner. Following are some of the activities that come under the ambit of unethical practice.

·       Resorting to dishonesty, trickery or deception.

·       Distortion of facts to mislead or confuse.

·       Manipulating people emotionally by exploiting their vulnerabilities.

·       Greed to amass excessive profit.

·       Creation of false documents to show increased profits.

·       Avoiding penalty or compensation for unlawful act.

·       Lack of transparency and resistance to investigation.

·       Harming the environment by exceeding the government prescribed norms for pollution.

·       Invasion of privacy used as leverage, for obtaining personal or professional gains.

·       Sexual discrimination

ETHICAL AND UNETHICAL  ISSUES IN DIFFERENT DISCIPLINES OF MANAGEMENT

ETHICAL AND UNETHICAL ISSUES IN HR --:

1.  Employment Issues:

a. Pressure to hire a friend or relative of a highly placed executive.

b. Faked credentials submitted by a job applicant.

c. Discovery that an employee who has been with the organisation for some time, is skilled and has established a successful record, had lied about his educational credentials.

2. Cash and Incentive Plans:

Cash and incentive plans include issues like basic salaries, annual increments or incentives, executive perquisites and long term incentive plans:

Basic Salaries:

HR managers have to justify a higher level of basic salaries or higher level of percentage increase than the competitors to retain some employees. In some situations, where the increase is larger than normal they have to elevate some positions to higher grades. Annual increment/incentive Plans.

Executive Perquisites:

In the name of executive perquisites, sometimes excesses are often committed, the ethical burden of which falls on the HR managers. Sometimes the costs of these perquisites are out of proportion to the value added. For example, the CEO of a loss making company buys a Mercedes for his personal use or wants a swimming pool built at his residence.

3. Employees Discriminations:

A framework of laws and regulations has been evolved to avoid the practices of treatment of employees on the basis of their caste, sex, religion, disability, age etc. No organisation can openly practice any discriminatory policies, with regard to selection, training, development, appraisal etc.

4. Performance Appraisal:

Ethics should be the basis of performance evaluation. Highly ethical performance appraisal demands that there should be an honest assessment of the performance and steps should be taken to improve the effectiveness of employees.

5. Privacy:

The private life of an employee which is not affecting his professional life should be free from intrusive and unwarranted actions.

6. Safety and Health:

Industrial work is often hazardous to the safety and health of the employees. Legislations have been created making it mandatory on the organisations and managers to compensate the victims of occupational hazards.

7. Restructuring and layoffs:

Restructuring of the organisations often result in layoffs and retrenchments. This is not unethical, if it is conducted in an atmosphere of fairness and equity and with the interests of the affected employees in mind.

ETHICAL AND UNETHICAL ISSUES IN MARKETING-:

“As marketers, we recognize that we not only serve our organizations but also act as stewards of society in creating, facilitating and executing the transactions that are part of the greater economy. In this role, marketers are expected to embrace the highest professional ethical norms and the ethical values implied by our responsibility toward multiple stakeholders (e.g., customers, employees, investors, peers, channel members, regulators and the host community).”

ETHICAL-:

1. Issues related to Market research

2. Issues related to Target Customers and Market

3. Issues related to Pricing

4. Issues related to Advertising and Promotion

5. Issues related to data Collection and Privacy

6. Issues related to Distribution

UNETHICAL--:

1.  Misleading statements, which can land a business in legal trouble with the Federal Trade Commission and its truth in advertising provision Making false or deceptive comparisons about a rival product. Much more prevalent 20 years ago among general consumer products, you still might see this crop up in the tech sector
2.  Inciting fear or applying unnecessary pressure. “Limited time offers” are notorious for the latter, which is fine if a deadline really exists and the tone doesn't sound threatening.
3.  Exploiting emotions or a news event. Such instances pop up every once in a while, then make a quick exit when consumers complain about feeling manipulated.
4. Stereotyping or depicting women as sex symbols merely to draw attention to a product. "While it might be intuitive to use models in adverts for beauty products and cosmetics, having half-naked models in adverts for generators, heavy machinery, smartphones and other products not strongly related to women is both nonsensical and unethical,” says Profitable Venture.
5.  Disparaging references to age, gender, race or religion. Many professional comics have learned the hard way that the line between humor and bad taste can be painfully thin
6. Doctoring photos or using photos that are not authentic representations. Most people expect professional Plagiarizing* a competitor. For a small-business owner, discovering that a competitor has copied or impinged on a tagline, blog post or promotion can be painful –or infuriating.Spamming, or sending unsolicited emails to potential customers.

ETHICAL AND UNETHICAL ISSUES IN FINANACE--:

ETHICAL ISSUES:

1. In accounting – window dressing, misleading financial analysis.

2. Insider trading, securities fraud leading to manipulation of the financial markets.

3. Executive compensation.

4. Bribery, over billing of expenses, facilitation payments.

5. Fake reimbursements.

6. Misappropriation of assets - the use of company assets for any other purpose than company interests in the practice of the profession.

Unethical Practices in Finance:

The unethical practices in accounting are more in proprietary, partnership and private limited companies. It is at lower levels in public limited companies and MNCs.

Some of the unethical practices in financing and accounting are as under:

i. Deliberate abnormal delays in payments to (a) Vendors, (b) Dealers commissions and promotion costs.

ii. Delays in paying wages, interest to financiers, incentive, bonus to employees.

iii. Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payment to earlier vendors.

iv. Not prompt in statutory payments of ESI, PF, Sales Tax and Excise Duties.

v. Cheating employees of their dues towards medical expenses, leave travel assistance, children education fees etc.,

vi. Opening of current accounts in different banks to avoid adjustments against loans by earlier banker.

vii. Creating bogus bills of purchase to show higher costs and hence losses to avoid bonus payment to employees.

viii. Collecting loans from private financiers at higher rate of interest to help kith and kin and to get kick-backs.

ix. Quick release of payments to known or adjustment parties and delaying payment to others.

x. Taking private finance only from those who are ready to do personal favours to the finance department head.