Ethical And Unethical Issues In Management

WHAT IS ETHICS AND WHY IT IS IMPORTANT?

Have you ever been in a situation where it was difficult to decide what is right and what is wrong in your day to day life? How will you respond to such situation ? Is it necessary to be ethical even when you will not get anything in return? For instance, If you receive too much change in market,do you return the excess? Would you copy a portion of essay because its getting late and you brain just can't produce any more prose? If you hit a car on the road and people got severely injured, would help the person or just run away from the scene because of the fear of getting caught? This is where the concept of ethics comes into play, ethics is concerned with the moral principle that governs a person's behaviour and conduct in an activity. The concept of ethics is very important as it guide people to act in a proper and a right way in varied situation.

"Do not do anything to others what you would not like them to do with us" is pharse that we have heard from our parent, elders and in our schools and home which summarises ethics in our day to day life.

WHY IT IS IMPORTANT TO BE ETHICAL IN BUSSINESS ?

Bussiness ethics simply means the practice of ethics in bussiness arena.Every company should have their own moral principles and guidelines. Following business ethics has more benefits than you think. It will help you to keep and attract employees, customers, and investors.

For example, consider that you are an “energy drink” manufacturing company and you’ve proclaimed on the labels and advertisements that you don’t add any preservatives to the drink, then You should adhere to the claims you’ve made. If you disobey your claims and sell the product by adding preservatives, then it is considered as unethical business practice. It will deteriorate your brand and eventually, you will lose trust from the customers. It also damages the reputation and keep away the stakeholders. Therefore, following business ethics is very important. 

WHAT IS ETHICAL AND UNETHICAL ISSUES?

The ethical issues managers confront cover a wide range of topics; but most arise due to a potential conflict between the goals of the organization, or those of individual managers, and the fundamental rights of important stakeholders. Stakeholders have basic rights that should be respected,and it is unethical to violate those rights. Shareholders have the right to timely and accurate information about their investments (in accounting statements). Customers have the right to be fully informed about the products and services they purchase, including how those products might harm them or others, and it is unethical to restrict their access to such information.

Employees have the right to safe working conditions, to fair compensation for the work they perform, and to be treated in a just manner by managers.Suppliers and distributors have the right to expect contracts to be respected,and a firm should not take advantage o fa power disparity to opportunistically rewrite contracts. Competitors have the right to expect that a firm will abide by the rules of competition and not violate the basic principles of antitrust laws. Communities and the general public, including their political representatives in government, have the right to expect that a firm will not violate the basic expectations society places on enterprises—for example, by dumping toxic pollutants into the environment or overcharging for work performance etc.

Ethical Issues In Finance

Financial managers prepare reports, oversee accounting functions, plan investment strategies and direct cash management functions. They also are involved in branch management functions at banks and other financial institutions. They are required to uphold the highest ethical standards because internal and external stakeholders depend on transparent, timely and complete financial documents to make decisions.

Accuracy

A company’s financial manager ensures that all financial publications accurately and fairly reflect the financial condition of the company. Accounting errors and financial fraud.

Timeliness

Timely financial information is just as important as accurate and transparent information. Management, investors and other stakeholders require timely information to make the right decisions. 

Integrity

Financial managers should strive for unimpeachable integrity. Customers, shareholders and employees should be able to trust a financial manager's words. Managers should not allow prejudice, bias and conflicts of interest to influence their actions. 

Transparency

Financial documents reflect a company's performance relative to its peers, and its internal strengths and weaknesses. Regulatory agencies require publicly traded companies to submit periodic financial statements and make full disclosures of material information. 

Unethical Issues In Finance

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.

Case of Saradha ‘Chit Fund’ Ponzi Scheme

The Ponzi scheme run by Saradha Group collected money from investors by issuing redeemable secured debentures and bonds and promising incredulously high profits from reasonable investments. Local agents were hired throughout the state of West Bengal and given huge cash payouts from investor deposits to expand quickly, eventually forming a conglomerate of more than 200 companies. This syndicate was used to launder money and confuse regulators like SEBI. In April 2013, the scheme collapsed completely causing a loss of approximately US $5 billion and bankrupting many of its low-income investors.

Ethical issues in marketing

1. Be truthful in describing the product, its features, and its benefits. Making unsubstantiated claims is bad for business, unethical, and likely illegal.
2. Make a clear distinction between your advertisement and ordinary news. Making your ad look like a news posting, or linking to an article that looks like a news article is deceiving. There’s a fine line on this one. Be on the right side.
3. Be fair towards vulnerable audiences and don’t exploit personal tragedies. There could be many types of vulnerable audiences, and identifying the right ones will depend on your product, but some that come to mind immediately are kids, elders, people with serious illnesses, and people with Anorexia or other disorders/obsessions.
4. Regarding the marketing development process, discuss ethical questions openly before making core marketing decisions, and if necessary, consider asking other professionals for their opinion. 
5. Privacy. This one is a big one, and it’s a growing concern, particularly for online services. Go to great lengths to protect your users privacy, including email address, mailing/billing address, credit card information, and their online behavior.

Unethical Issues In Marketing

1. Misleading statements, which can land a business in legal trouble with the Federal Trade Commission and its truth in advertising provision.  

2. Making false or deceptive comparisons about a rival product. 

3.  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. 

4. 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. 

5. Disparaging references to age, gender, race or religion. Many professional comics have learned the hard way that the line between humour and bad taste can be painfully thin.  

6 .Doctoring photos or using photos that are not authentic representations. Most people expect professional photographers and videographers to make the most of lighting and close-ups 

7.  Plagiarising 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 

8. Spamming or sending unsolicited emails to potential customers.

Unethical Representation Of Ganesha By MLA

Meat and Livestock Australia’s (MLA) decided to showcase Lord Ganesha eating a lamb. The theme of the advertisement titled  “You Never Lamb Alone”, was that no matter what is your faith and belief, everyone loves to eat lamb. The ad features Jesus, Moses, Aphrodite, Buddha, Ganesha, Zeus, Obi-Wan Kenobi, and Ron Hubbard, the founder of Scientology. Prophet Mohammed calls in to inform that he can’t make it.

The advertisement offended Hindus all over the world, and such was the controversy that High Commission of India had to make a “démarche” to the Department of Foreign Affairs and Trade, the Department of Communication and Arts and the Department of Agriculture over the “insensitive” ad. The advertisement is not available in India but is still running in Australia. 

Ethical Issues And Unethical Issues In Human Resource Management

1. Cash and Compensation Plans

   There are ethical issues pertaining to the salaries, executive perquisites and the annual incentive plans etc. The HR manager is often under pressure to raise the band of base salaries. There is increased pressure upon the HR function to pay out more incentives to the top management and the justification for the same is put as the need to retain the latter. Further ethical issues crop in HR when long term compensation and incentive plans are designed in consultation with the CEO or an external consultant. While deciding upon the payout there is pressure on favouring the interests of the top management in comparison to that of other employees and stakeholders.

2. Race, gender and Disability

   In many organisations till recently the employees were differentiated on the basis of their race, gender, origin and their disability. Not anymore ever since the evolution of laws and a regulatory framework that has standardised employee behaviours towards each other. In good organisations the only differentiating factor is performance! In addition the power of filing litigation has made put organisations on the back foot. Managers are trained for aligning behaviour and avoiding discriminatory practices.

3. Employment Issues

   Human resource practitioners face bigger dilemmas in employee hiring. One dilemma stems from the pressure of hiring someone who has been recommended by a friend, someone from your family or a top executive.
   Yet another dilemma arises when you have already hired someone and he/she is later found to have presented fake documents. Two cases may arise and both are critical. In the first case the person has been trained and the position is critical. In the second case the person has been highly appreciated for his work during his short stint or he/she has a unique blend of skills with the right kind of attitude. Both the situations are sufficiently dilemmatic to leave even a seasoned HR campaigner in a fix.
4. Privacy Issues Any person working with any organisation is an individual and has a personal side to his existence which he demands should be respected and not intruded. The employee wants the organisation to protect his/her personal life. This personal life may encompass things like his religious, political and social beliefs etc. However certain situations may arise that mandate snooping behaviours on the part of the employer. For example, mail scanning is one of the activities used to track the activities of an employee who is believed to be engaged in activities that are not in the larger benefit of the organisation

CASE OF WIPRO LAYOFF

Large scale layoff of senior employee who are have over 10 years experience stagnated in their career in roles like PM, Test manager, PMO, Release manager, Test lead, proposal, pre-sales , support , resourcing etc are being laid off as these employees draw higher salaries and add almost same value as people with less exp who are waiting to move to these roles.

Since companies don't have any higher roles to utilize their experience there is a glut of skills in these roles who draw higher salary each year without any increase in responsibility/ or niche skill

Instead of slowing down hikes are rationalizing pay, seniors are being labelled as outdated and being fired.

 

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