Business Ethics From Me

Business ethics

Chapter no :12

Ethical management system

Group members: • • • • • •

Murk Afzal Gujjar Mahrunnisa Bharti Kewalramani Samer Hussain Nawal Saeed Parsa Rafique

ETHICAL MANAGEMENT SYSTEM • A system that basically helps minimizing the unethical acts in an organization.

• Better “Corporate Governance” ensures a good Ethical Management System. • Better Corporate Governance ??

CORPORATE GOVERNANCE • Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administered or controlled

CORPORATE GOVERNANCE • Structure vary from country to country • Standardized on American patterns • Globalized Capitalism… Self Governance • Substituting Governmental regulation of market

IMPORTANCE • McKinsey & Co. investor Survey, 2002 • “85% investors consider corporate governance to be equally or more important than financial issues, in deciding which company to invest in”

CORPORATE GOVERNANCE SHOULD • Ensure that managers effectively execute the strategy laid down by the B.O.D’s • Avoid fraud, deception, malpractices within the corporation. • Provide opportunities to share holders to examine the functioning and true performance of the corporation

Principles of Corporate Governance • Fairness-stake holders interest should also be considered. • Accountability • Responsibility • Transparency-especially of financial performance.

Moral Responsibilities • Maximization of long run profits • Diligent and competent in performing the duties • Recognize that directors are agents of the shareholders

Minimizing Corporate Risk • A major objective of corporate strategy • Types of Risk:

• Business

• Financial • Operational • Political

How to Minimize Risk? • A key element of the ethical management system is a mechanism for identifying and minimizing ethical risk. • Risk is minimized mainly by an ethics committee. • The risk of unethical behavior within the corporation is determined by the firms culture , policies and operational procedures . • Stakeholders’ perceptions should be considered both for evaluating the corporations ethical performance and for identifying stakeholders’ expectations.

Triple bottom line • Approach to achieve cost savings and improve environmental performance. • Enhanced reputation • Benefits of TBL:

• Benchmarked performance • Improved operations and management • Improved risk management • Increased confidence from investor, insurers and I financial organizations • Improved communication with stakeholders.

Contd…

• Improved Communication with stakeholders • Increased confidence from investors and financial organizations • “Corporations should show that their actions will have beneficial consequences on selected stakeholders”

ETHICAL MANAGEMENT AND REPORTING • For minimizing risk, corporations should take Ethical Management and Reporting seriously • Ethical Risks is identified by Ethics Committee

BETTER RISK MANAGEMENT • Identify stakeholders whose ethical perspective matter • Prioritization of stakeholders interest in terms of legal, technological, social, political and financial power of different stakeholder groups • Planning • Formulation

CODE OF ETHICS • A statement which explicates morally acceptable behavior within a corporation • Raises Ethical awareness & expectations • Provide guidance for ethical decision making

Contd…

• External code of ethics target stakeholders– specially customers • Codes may be imposed by management on employees • Likely to be effective when they are genuinely negotiated

ASPIRATIONAL OR DIRECTIONAL CODES • Aspirational Code is relatively short statement of expected ethical norms • Directional codes provide guidelines about employee behavior in different circumstances

DIRECTIONAL CODES • A statement of the rationale for the code • Expected ethical standards of behavior • Guidelines for conduct in specified situations • Sanctions for violating of guidelines

Continued…

• Codes should be regularly revised for improvements • They should be continuously re-negotiated

• Your Text here

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