Read the following text. 3. Say what is ethics. What is the difference in the meanings of the terms ‘ethics and ‘law’?

3. Say what is ethics. What is the difference in the meanings of the terms ‘ethics and ‘law’? What is social responsibility?

Ethics is difficult to define in a precise way. In a general sense, ethics is the code of moral principles and values that govern the behaviours of a person or group with respect to what is right or wrong. The source of these principles and values may be tradition, religion, or reasoned judgments about what is best for the individual and society as a whole. Ethics sets standards as to what is good or bad in conduct and decision-making. An ethical issue is present in a situation when the actions of a person or organization may harm or benefit others. Business ethics is the group of rules of conduct applied specifically to business activities.

Ethics is not the same as law. Many ethical beliefs are formally reinforced by law, but many are not. In practice, ethics is expressed and felt as a combination of pressures that direct one to take or not to take certain actions. Decisions must be acceptable to many different elements of society. An ethically acceptable decision is both legally and morally acceptable to the larger community.

Social responsibility is management’s obligation to make decisions and take actions that will contribute to the welfare and interests of society as well as to the organisation’s. Total corporate social responsibility can be subdivided into four criteria – economic, legal, ethical, and discretionary responsibilities.

Economic responsibilities. The business institution is the basic economic unit of society. Its responsibility is to produce goods and services that society wants and to maximize profits for its owners and shareholders.

Legal responsibilities. Businesses are expected to fulfill their economic goals within the legal framework.

Ethical responsibilities. To be ethical, organization decision makers should act with equity, fairness, and impartiality, respect the rights of individuals, and provide different treatment of individuals only when relevant to the organisation’s goals and tasks.

Discretionary responsibilities. It is purely voluntary and guided by a company’s desire to make social contributions not mandated by economics, law, or ethics.

Because ethical standards are not codified, disagreements and dilemmas about proper behaviour often occur. An ethical dilemma arises in a situation when each alternative choice or behaviour is undesirable because of potentially harmful ethical consequences. Right or wrong cannot be clearly identified. Most ethical dilemmas involve a conflict between the individual versus the organization, or the organization versus society as a whole.

The individual who must take an ethical choice in an organization is the moral agent.

Most people believe that individuals make ethical choices because of individual integrity, which is true, but it is not the whole story. The values held in the larger organisation also shape ethical behaviour. Personal needs, family influence, and religious background all shape a manager’s value system. Corporate culture can exert a powerful influence on behaviour in organizations. In most companies, employees believe that if they do not go along with the ethical values expressed, their jobs will be in jeopardy or they will not fit in.

Managers must take active steps to ensure that the company stays on an ethical footing. Management methods for helping organizations be more responsible include leadership by example, codes of ethics, ethical structures, and supporting whistle-blowers.

Leadership by example. The chief executive officer and senior managers must give constant leadership in renewing the ethical values of the organization.

Codes of ethics. They state the values or behaviours that are expected and those that will not be tolerated, backed up by management’s action.

Ethical structures. They represent the various systems, positions, and programmes a company can undertake to implement ethical behaviour.

Whistle-blowing. Employee disclosure of illegal, immoral, or illegitimate practices on the employer’s part is called whistle-blowing. Whistle-blowers must be protected if this is to be an effective ethical safeguard; otherwise, they will suffer and the company may continue its unethical or illegal activities.

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