LESSON 14 ETHICS IN PRACTICE STRUCTURE 14.0
OBJECTIVES
14.1
INTRODUCTION
14.2
SOME BASIC QUALITIES
14.3
ETHICS IN PRACTICE 14.3.1 14.3.2 14.3.3 14.3.4
THE BOEING CO. HEWLETT PACKARD CO. JOHNSON & JOHNSON INFOSYS
14.4
THE FINAL W ORD
14.5
ASSIGNMENTS 14.5.1 14.5.2
CLASS ASSIGNMENTS HOME ASSIGNMENTS
14.6
SUMMING UP
14.7
POSSIBLE ANSWERS TO SELF-CHECK QUESTIONS
14.8
TERMINAL QUESTIONS
14.9
REFERENCES AND SUGGESTED FURTHER READING
14.10
GLOSSARY
1
14. ETHICS IN PRACTICE In the previous lesson, the subject of Business ethics was discussed in a broad way. In this lesson we will discuss some basic ethical values that some leading business organisations follow.
14.0 Objectives After studying this lesson you will: •
Acquire an appreciation of the importance of some basic qualities in business like honesty, integrity and reliability.
•
Acquire an understanding of the ethical value system of some successful multinational companies.
14.1 Introduction ‘Honesty is the best policy”. This is not just another saying. If this principle is made the bedrock of any business, along with some other desirable qualities, then there is no doubt that business will flourish. In this lesson we will first see some basic desirable qualities which are essential for the success of any business. After that we will briefly discuss the ethical value system of some successful multinational companies.
14.2 Some Basic Qualities Desirable business / professional practices should serve both the shortterm and long-term interests of the business / profession. The most important qualities are those of honesty, integrity and sincerity and they should form the basic core of one’s business ethical system. These are qualities which create trust in the mind of the customer and help in forging a strong relationship with him/her, which goes beyond the immediate project/assignment. Another very important quality is that of reliability or credibility. Two examples can be given to illustrate the meaning of these terms. How do we feel, for example, when we go to a tailor’s shop to receive delivery of a garment we had given for stitching and he tells us that because of rush of work he has been unable to complete our work. He promises us another date – and the same story repeats itself again. Or we have a plumbing problem in our house. We give a ring to the plumber. He promises to come in two hours. He however, does not turn up. 2
On reminding him after a few hours, he says that he was busy with some work but he will come soon enough. And we know that it will not normally happen. The quality of Reliability, i.e., credibility and trust are essential for the success of any business. To be reliable and to be able to deliver as per one’s commitment, it is necessary that one does not over commit himself professionally - biting more than one can chew!! This can lead to making commitments, which one is not able to honour, thereby losing credibility in the eyes of customers. The result is that everyone concerned ends up angry, tense and dissatisfied. It is very important to know one’s organisation’s as well as one’s own capabilities and to work and commit within them. It is better to have one or two satisfied customers rather than a whole lot of partially satisfied or mostly dissatisfied customers. So let us learn to: •
Organise ourselves
•
Put in place systems which simplify things, and enable us to organise ourselves better, and help reduce duplication of work and drudgery.
•
Assess the requirements of the projects we wish to take up. Only if we can deliver in time, should we take them up.
Having achieved these, we should be guided by the norms of Business Ethics. We will pick up three successful companies of U.S.A. viz. the Boeing Co., Hewlett-Packard Co. and Johnson and Johnson and study their commitment to ethical behaviour. (These have been extracted from Chapter 7 of Reference 1) Finally we will also list the principles of corporate governance philosophy of Infosys (taken from their Annual Report 2002-2003).
Self-check Questions 1. Name the two most important / desirable qualities according to you.
14.3 Ethics in Practice 14.3.1 The Boeing Co. The firm, which has been widely recognised as a well-run, successful, ethical organisation, began operations in 1916 and is the world’s largest producer of commercial aircrafts. Boeing’s strong set of values can be traced back to William Allen, its CEO who took over at the end of World War II. He is remembered for his sincerity, honesty and integrity. In 1964 he created an ethics committee and an ethics policy was implemented which reinforced the company’s commitment to high values. 3
Inspite of the company’s high emphasis on ethical values, a number of ethical lapses were reported around 1995 - 2000 and these were attributed to its rapid growth involving a number of acquisitions which increased its work force by 96,000 employees. Through its training programs, Boeing introduced its new work force to its culture based on ethics. Boeing continues to upgrade its ethics program. Over the years, the program has been principle and value based rather than policy or rule focussed. 14.3.2 Hewlett- Packard Company The company was founded in 1939 and objectives were developed n 1960 to provide the foundation for the core values of the organisation: •
Recognize that profit is the best measure f a company’s contribution to society and the ultimate source of corporate strength.
•
Continually improve the value of the products and services offered to customers.
•
Seek new opportunities for growth, but focus efforts on fields in which the company can make a contribution.
•
Provide employment opportunities that include the chance to share in the company’s success.
•
Maintain an organizational environment that fosters individual motivation, initiative, and creativity.
•
Demonstrate good citizenship by making contributions to the community.
•
Emphasis growth as a requirement for survival.
The corporate objectives have been recently revised to include the following sections: customer loyalty, profit, market leadership, growth, employee commitment, leadership capability and global citizenship. In another document entitled ‘Business Ethics’, the focus is on integrity and the dedication to the principles of honesty, excellence, responsibility, compassion, citizenship, fairness and respect. 14.3.3 Johnson and Johnson Founded in 1887, Johnson and Johnson has become one of the world’s largest manufacturers of health care products. A simple one- page document called “Our Credo“ has been designed to guide their operations and some extracts are reproduced below: 1. Our responsibility is to all those who use services…everything we do must be of high quality.
our
products
and
2. We must constantly strive to reduce our costs in order to maintain reasonable prices. 3. Customer’s orders must be serviced promptly and accurately. 4. Our suppliers and distributors must have an opportunity to make a fair profit.
4
5. We are responsible to all our employees and must be mindful of ways to help them fulfil their family responsibilities 6. There must be equal opportunity for employment, development and advancement. 7. We must provide complete management and their actions must be just and ethical. 8. We must encourage civic improvement and better health and education. 14.3.4 Infosys The corporate Governance Report for 2002-2003 lists the principles on which the corporate governance philosophy of Infosys Company. These are: •
Satisfy the spirit of the law and not just the letter of the law. Corporate governance standard should go beyond the law.
•
Be transparent and maintain high degree of disclosure levels. When in doubt, disclose.
•
Make a clear distinction between personal conveniences and corporate resources.
•
Communicate externally, in a truthful manner, about how we run our company internally.
•
Comply with the laws in all the countries in which we operate.
•
Have a simple and transparent corporate structure driven by the business needs.
•
Management is the trustee of the shareholders’ capital and the owner.
14.4 The Final Word The four companies selected for the above discussion here have all a history of exemplary ethical behaviour. They are good examples of how business organisations should conduct themselves and the ethical principles that should guide their everyday working.
Self-check Questions 2. Name the companies whose ethical value system was discussed in this lesson.
5
14.5 Assignments 14.5.1 Class assignments i)
Through a Group Discussion, analyse and identify those values, which are considered as important for the success of any Business venture. Enumerate five values each in the following three categories: •
Critical values
•
Important values
•
Desirable values
The findings of the Group Discussion should then be summarised on a chart paper and displayed on the soft board in the class. 14.5.2 Home assignments i)
List the core values that a business organisation should have.
ii)
Describe the philosophy followed by a business organisation (of your choice) known for its ethical record.
14.6 Summing Up The desirable Business / Professional practices have been considered in this lesson. The working philosophies of four companies with a record of exemplary ethical behaviour have been described as they illustrate what good Business Ethics is all about.
14.7 Possible Answers to Self-check Questions 1. a) Honesty
b) Reliability
2. a) Boeing Company
b) Hewlett-Packard Company
c) Johnson and Johnson
d) Infosys
14.8 Terminal Questions 1. How does one build up trust in a business relationship? 2. What is the role of professional competence for a businessman?
6
14.9 References and Suggested Further Reading 1. Fritzsche, D. 1995. Business Ethics. McGraw-Hill, New York. 2. Clock Work, Annual Report 2002-2003 of Infosys, India. 3. Gupta, D. 2006. Ethics Incorporated: Top priority and bottom line. Response Books, New Delhi. 4. Piet, J.H. and Ayodhya Prasad (Eds.). 2000. An Introduction to Applied Ethics. Cosmo Publications, New Delhi.
14.10 Glossary 1.
Integrity
Wholeness, Uprightness
2.
Bedrock
Secure foundation, basic principles
3.
Credibility
Reliability
4.
Drudgery
Boredom, hard, dull or very mean work
5.
Foster
To help to develop, promote
6.
Corporate
Forming one body of many individuals
7.
Transparent
Easily seen through, evident
8.
Core values
The central or most important values
7