BUSINESS ETHICS

BUSINESS ETHICS

 

Business being a social organ shall not be conducted in a way detrimental to the interests of the society and the business sector. The business as social establishment, should follow certain ethical values and rules. These can be called business ethics.

The term ‘Business Ethics’ refers to the system of moral principles and rules of the conduct applied to business. It applies to all aspects of business conduct and is to be followed by all individuals and organizations in the business.

However, there is no unanimity of opinion as to what constitutes business ethics. There are no separate ethics of business but every individual and organization in society should abide by certain moral orders.

 

Definitions of Business Ethics

Business ethics can be defined as the systematic study of ethical matters pertaining to the business or related persons and their activities.

“Business ethics is the systematic handling of values in business and industry.” —John Donaldson

 

Business is a group of people who are engaged in the production and distribution of goods or services. Therefore the business ethics is to be followed by each and every person in the business process. They may be management people, the employees and even the distribution people.

It may be easy to follow ethics by one person or a group of persons consisting of five to ten members. But it is not so easy to implement ethics in a business which involves large number of people.

SOURCES OF BUSINESS ETHICS

SOURCES OF BUSINESS ETHICS

 

In every society there are three sources of business ethics-

Religion, Culture and Law.

 

Religion: Religion is considered the oldest source of ethical inspiration. These are considered the ethical base of majority of people in the world. It is believed that nearly one lakh religious groups are existing across the whole world, with their own cultural and ethical practices and values.

Every religion gives an expression of what is wrong and right in all walks of life including business. However, all of them are in agreement on certain fundamental principles of ethics. The Principle of reciprocity towards one’s fellow beings is found in all the religions. Religions preach the necessity for an orderly social system and emphasize upon social responsibility with an objective to contribute to the general welfare.

 

Culture: Culture is the set of important understandings that members of a community share in common. It consists of basic set of values, ideas, perceptions, preferences, concept of morality, code of conduct etc. which creates distinctiveness among human groups.

Culture differs from society to society. Moreover, culture is passed from generation to generation. Most of the cultural practices found in the world, advise the generations to be committed towards certain values, over and above one’s individual self-interest. Every business should frame their ethics, based on the culture of the country, in which the business situates.

Culture encourages the members of the organizations to give priority to organizational goals over and above their personal interests. Culture also serves as a, ‘sense-making and control’ mechanism that guides and shapes the attitudes and behaviour of people.

 

Law: The legal system of any country, guide the human behaviour in the country. Law can be considered as legalised ethics. The society expects the business to abide by the law. Whenever there is an attempt from the part of business to violate law, it becomes not only against Law but against ethics also. Tax evasion, hoarding, adulteration, poor quality of products, high pricing of products, environment pollution etc. are against the law as well as against the ethics.

ETHICAL PRINCIPLES FOR BUSINESS

ETHICAL PRINCIPLES FOR BUSINESS

 

Ethical principles are universal standards of right and wrong. These principles prescribe the kind of behavior an ethical company or person should engage in. Business people and business executives should practice the principles in their personal life also.

 

Principles of an ethical business can be explained as follows:

 

Honesty

Be honest in all communications and actions. Ethical business should be trustworthy. It should not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means.

 

Integrity

Maintain personal integrity. Integrity refers to a wholeness of character demonstrated by consistency between thoughts, words and actions. Ethical business should be principled, upright and positive. It should not sacrifice principles for convenience and for the sake of practicality.

Promise-Keeping

Keep promises and fulfill commitments. A business is worthy only when it makes every reasonable effort to fulfill the letter and spirit of its promises and commitments. It should never try to interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping from commitments.

 

Loyalty

Ethical business executives should demonstrate loyalty by safeguarding their ability to make independent professional judgments. Their decisions should always be for the growth and development of business. They should never use or disclose information learned in confidential way, for personal advantage. 

 

Fairness

Strive to be fair and just in all dealings. Business people should never make use of any kind of indecent means to gain or maintain any advantage. They should never take undue advantage of another’s mistakes or difficulties. Ethical executives must be committed to justice, and should give equal justice and treatment to all individuals. They should be open-minded; and willing to admit their mistakes.

 

Caring

Demonstrate compassion and a genuine concern for the well-being of others. Ethical executives should be caring, compassionate, benevolent and kind towards all stakeholders of business. Whenever they take decisions, they should consider the financial and emotional consequences of their actions on all stakeholders. 

Respect Others

Treat everyone with respect. Ethical executives should demonstrate respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions. They should be courteous and treat all people with equal respect and dignity regardless of sex, race or national origin. 

Law Abiding

Obey the law. Every business should follow laws, rules and regulations relating to its business activities.

 

Commitment to Excellence

Pursue excellence all the time in all things. Ethical executives must be excellent in performing their duties. They should be well-aware of all environmental factors around and be prepared to increase their proficiency in all areas of responsibility. 

Leadership

Exemplify honor and ethics. Ethical executives should be conscious of their own responsibilities. They should make use the opportunities of their position of leadership and should be positive ethical role models by their own conduct and character.

Reputation and Morale

Build and protect the company’s good reputation and morale of its employees. It is the duty of business executives to create, maintain and increase the reputation of the company. They should never engage into any actions which hurt the morale of employees.

Accountability

Be accountable. Business should be accountable to its own people such as management, employees etc. and also to communities, customers, competitors and government. It should expect a social audit every time and should be prepared for it.

BENEFITS AND ADVANTAGES OF BUSINESS ETHICS

BENEFITS AND ADVANTAGES OF BUSINESS ETHICS

 

Ethical behavior is essential for long term success of business, both from micro and macro perspective. If a business organization follows business ethics then it will result in certain benefits: -

 

·      Ethical business can give better service to the society.

·      Such a business creates goodwill in the minds of customers and public.

·      It creates good environment in organization.

·      Ethical environment helps to increase productivity and positivity of employees.

·      Ethical business follows legal formalities and therefore such a business can enjoy freedom from legal and other issues.

·      Management of an ethical business is respected by the whole people both inside and outside the business.

 

Create Value and Better Image

Business functions among different groups of people, like employees, owners, suppliers, creditors, customers, pubic etc. Everybody like to be associated with an establishment which is honest and socially responsible. Employees feel proud of being part of it; suppliers feel honored as they get opportunity to deal with such a reputed organization; customers are satisfied as they get quality product at reasonable price, Government is also happy about such a business unit, as it creates income and provide employment to a lot of people. Image and goodwill of an ethical business increase and it will help the business in its further growth and development.

 

Increase Credibility of Business

Credibility of a business organization is vital on its growth. A business organization which follows ethics in its business, can create a positive attitude among others. People like to buy products of such a business. It creates credibility in the public eye. Such a business can raise capital easily either through public issues or through loans from financial institutions.

 

Satisfied Customers

Ethical organizations ensure value for money spent by their customers. Such organisations always respect their customers and therefore ensure quality products at reasonable price. It means that, such ethical business never over-price their products with an intention to make maximum profit. It creates satisfaction among customers.

 

Satisfied Employees

An ethical organization never exploit their employees, in order to minimize their expenses or to maximize their profit. Such organizations treat their employees as valuable human resource and never compromise their safety and rights. Such business can ensure the best work environment inside the business, and these steps brings in satisfaction among employees.

 

Maximize Profitability

When employees are convinced of ethical values of the organization, they will be happy to be part of it. Such an attitude reduces employee turnover and increases their productivity.   Moreover, employees hold the organisation in high esteem, by upholding quality in all aspects. Higher quality products and best image of the business unit among customers will increase demand and profitability.

 

Better Decision Making

Ethical management always take into consideration, various economic, social and ethical aspects while taking decisions. Decision making will be better if the decisions are in the interest of the public, employees and company’s own long term good.

 

Protection of Society

Ethics can protect society in a better way than even the legal system of the country. Where law fails, ethics always succeed. The government cannot regulate all activities of the business that are harmful to the society. If business units practice ethics instead, it will be the best option to ensure protection of society. Therefore, all business units should follow ethics in all their decisions and practices including competitions.

TYPES OF BUSINESS ETHICS

TYPES OF BUSINESS ETHICS

 

        It is very difficult to classify business ethics into certain definite types. However, certain attempts have been made to classify them on the basis of values and responsibilities.

 

On the basis of Values

 

On the basis of Values, Business Ethics can be summarized under three heads. They are Equality, Respect and Freedom

 

Equality: Equality means - avoiding all kinds of discrimination against any person. Any discrimination on the basis of gender, race, religion etc. should be avoided inside the business. The business should be able to treat all persons inside and outside business equally. It should provide a work environment which is suitable to all types of people. The business should ensure that all groups of people are happy and satisfied inside the business. Similarly, all customers should get equal consideration especially in times of seeking redressals on complaints. There should not be any kind of price discrimination. There should not be any kind of quality or quantity discrimination.

 

Respect: Business can respect the interests of all stakeholders around the business. It is an attitude of deference, admiration or consideration and also the feeling of protection offered to others by the business. Everybody connected to the business should be felt honored or esteemed. This behavior can increase good image and also reduce many ego problems arising out of ill feelings.

 

Freedom: It is the quality or state of being free: such as the absence of coercion, threat or penal action. Customer has freedom to select goods and shops at their wish. The business should allow this freedom to its customers. Duty of business is to serve the customers who approach it, and it has no right to interfere into their freedom in selecting a product or shop.

 

On the Basis of Responsibilities

 

On the basis of responsibilities, business ethics can be summarized under four heads: such as Personal Responsibilities, Official Responsibilities, Corporate Responsibilities and Organizational Responsibilities.

 

Personal Responsibilities: as a person everybody has a responsibility to be honest and sincere. Every person has a responsibility to respect others. Every person has a responsibility to obey rules and regulations prevailing in the country.  It means that, responsible behavior of persons inside the business is basis of ethics in business.

 

Official Responsibilities: Only persons or human beings occupy positions. A person who-is occupying a certain position in a business should strictly follow certain norms and other standards set for that official capacity. Being responsible to that position means, being ethical towards others. As an official, a person has responsibility to obey his superiors and to follow the rules and regulations of the orgnisation. Responsible behavior of officials can bring ethics.

 

Corporate Responsibilities: The business as a corporate has some responsibilities towards society, towards its customers and government. Corporates has certain responsibilities towards competitors also. It should never try to harass or insult the competitors. The responsibilities may not be identical with the personal moral codes of the managers who run the company. These responsibilities may be internal or external.

 

Organizational Responsibilities: As an organization the business has some responsibilities towards employees, customers and society. The business makes use of resources from the society and therefore, it has responsibility to give back quality products to its customers and society. The business makes use of opportunities available in the environment to grow and develop its business, and therefore has responsibility to protect the society and environment. It should never exploit its employees and customers. It should never destruct the ecological balance. It should never pollute the environment. As an organization, the business has responsibility to abide laws prevailing in the country. Being responsible organization, any business can become part of growth of people and nation.

CORPORATE SOCIAL RESPONSIBILITY

CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility, often abbreviated as "CSR," is the responsibility of corporates towards society. It includes a corporate's  initiatives and efforts to assess and improve environmental and social wellbeing. It includes all steps taken by the corporates to promote positive social and environmental changes in addition to legal requirements.

Corporate social responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.

WORK ETHICS

WORK ETHICS

 

Work ethics is also called Work place ethics. It is about how the ethics is followed by people at their work place. It explains how one applies values to work in actual decision making.

It is the duty of managers to ensure ethics in work place. Workplace ethics gives some guidelines to the mangers in implementing ethical practices in business. For this purpose, the manager must have an idea about the factors influencing work place ethics.

 

Factors Influencing Work Ethics

 

Three factors are influencing work place ethics. They are:

·      Individual moral standards

·      Influence of managers and co-workers

·      Opportunity to engage in misconduct

 

The first and most important factor of work place ethics is the individual moral standards. It means that, only good people - people who follow ethics in personal life - can behave well in work place. Here the duty of the manager is to find and appoint people with ethics. The other two factors are under the control of managers to a great extent. He should be a man of ethics. It enables him to reduce chances of misconduct through proper supervision and control.

 

HOW TO IMPLEMENT ETHICS IN BUSINESS?

HOW TO IMPLEMENT ETHICS IN BUSINESS?

 

A business should ensure fair dealing with everyone. It should be capable of protecting the interests of all stakeholders. The business is not a single man, but a group of people. Therefore, to implement ethics, there should be proper planning. Following steps can be taken to implement ethics in business.

 

Steps in Implementation of Ethics in Business

·      Code of conduct

·      Policies and procedures

·      Create ethical work environment

·      Proper orientation and training

·      Developing work ethics

·      Clear communication to all regarding ethical practices

·      Ethics should be fixed for everyone.

·      Deal ethical violations seriously

 

It is the duty of manager to develop ethical culture in the organization. It can be developed through code of conduct and policies. Employees should be informed the need and necessity of keeping work place ethics. Proper orientation and training should be given to all people in the organisation.

Business ethics should be based on broad guidelines of what should be done and what should be avoided. Each and every person should be well aware of his do’s and don’ts. Ethics should be fixed for everyone working in the organisation at any level and their implementation should be linked with reward- punishment system.

It is mandatory to have a clear awareness to all regarding their own duties and responsibilities. The business management should ensure that all persons in the organization follow ethics in their behavior both inside and outside the organization. If there is any violation it should be dealt seriously.

ETHICAL ISSUES IN BUSINESS

ETHICAL ISSUES IN BUSINESS

 

Business always face ethical issues in its day to day operations and strategy formulations. Business units are meant for profit and therefore the question is this, whether to compromise quality in certain areas with a view to make profit. Or is it possible to make profit by keeping all ethical, legal and environmental requirements. The answer is simple - the business should keep all ethical and legal aspects.

 

Business can create value and good image in the mind of people through ethical practices. It helps the business to survive for long time. Unethical business cannot survive for a long period.

 

Ethical management can solve many problems very easily. It Promotes work culture, self-discipline and consciousness among the employees. It helps the management to make use of valuable human resources very effectively. This environment brings in harmony and happiness in the business.

 

      Ethical actions redefine human attitudes. It purifies the mind. It helps in protecting from unwanted stress, strains, unrest and loneliness. It also helps in reducing conflicts and disputes. This enhances reputation and goodwill of the organization.

 

      Therefore, the question of whether to go for ethics is meaningless. However, when we try to implement ethics, there may be some problems.

 

They can be divided into three:

1.    Fundamental issues in following ethics in business

2.    Ethical issues in advertising

3.    Ethical dilemma in business

In order to solve ethical problems, companies and organizations should develop strict ethical standards for their employees. Every company must demonstrate its concerns regarding ethical norms within the organization. In addition, companies may provide ethical training to their employees.

FUNDAMENTAL ETHICAL ISSUES IN BUSINESS

FUNDAMENTAL ETHICAL ISSUES IN BUSINESS

 

Business consists of a group of people inside the organization. When the orgainsation follows ethics, it means that everyone in the business is following ethics, both inside and outside business. Following are the fundamental ethical issues experienced by the business in common.

 

Creating Integrity and Trust- Integrity is the commitment of business in keeping promises, price and quality. Through integrity, business can build trust in the mind of customer. Integrity of business is the integrity of all inside the business. It is very difficult to expect it from all in the right spirit.

Creating Value in The Employee Behavior- The world is diverse and therefore the employees may be with different nature and culture. Their educational and economical levels may be different. They all should be given proper training and practices to learn and follow the business culture. It is very difficult to make all these employees responsible and ethical in all aspects.

Ethical Decision-Making - Every decision of the business should protect employee and customer rights. The decisions should be capable of ensuring that all business operations are fair and just, protecting the common good and welfare. Moreover, the decisions should protect individual values and beliefs of workers and community. Some of these may be conflicting in certain situations and creates problems to management.

Compliance to Law- Business is expected to fully comply with environmental laws, consumer laws, safety regulations, fiscal and monetary statutes and all other civil rights laws. Many times, the management team finds it very difficult to protect the interests of business after keeping all other laws and other requirements.

ETHICAL ISSUES IN ADVERTISING

ETHICAL ISSUES IN ADVERTISING

Advertising means a mode of communication between a seller and a buyer. Ethics in advertising means practicing a set of well-defined principles which govern the ways of communication taking place between the seller and the buyer. An ethical ad is the one which doesn’t lie, doesn’t make fake or false claims and is in the limit of decency.

Though there are many benefits of advertising, there are some points which don’t match the ethical norms of advertising. Nowadays, ads are more exaggerated and a lot of puffing is used. Sometimes the genuine consumers may get confused, whether to believe the claims in the ads or not. The advertisers usually claim that their product is the best, having unique qualities than the competitors, more cost effective, and more beneficial. But most of these ads are found to be false, misleading and unethical.

According to Vatican, ads should follow three moral principles - Truthfulness, Social Responsibility and Upholding Human Dignity.  During times of stiff competition, business finds it very difficult to make ads and attract customers, keeping all conditions.

ETHICAL DILEMMA IN BUSINESS

ETHICAL DILEMMA IN BUSINESS

Ethical dilemma (ethical paradox or moral dilemma) is a problem faced by business managers in the decision-making process. It is the decision making from few options where neither of these are absolutely acceptable from an ethical perspective. It is also known as ethical paradox, and moral dilemma. Ethical dilemmas are extremely complicated challenges that cannot be easily solved. Therefore, the ability to find the optimal solution for ethical dilemmas is critical to everyone.

In times of ethical dilemma, managers usually adopt certain strategies.

Refute the Paradox (dilemma): Under this strategy, the situation is carefully analyzed and the existence of the dilemma is be logically refuted. Sometimes, the dilemma may be just a feeling, or may not be so much complicated. If it is not so complicated, it is easy to solve.

Value Theory Approach: Under this strategy, choose the alternative that offers the greater good and the lesser evil. Selecting a less harmful option is the only way to find solution.

Find Alternative Solutions: Under this strategy, all the available options are found unethical. Here there is no question of selecting either of it. In this case, the problem can be reconsidered, and the new alternative solutions need to be sought.

INTRODUCTION TO HOSPITALITY MANAGEMENT

INTRODUCTION TO

HOSPITALITY MANAGEMENT

 

Hospitality is the relation between guest and host. It is the friendly and generous behaviour towards visitors and guests, in order  to make them feel welcome. It is the act or practice of being hospitable to others, especially to the guests and visitors. In this way, hospitality is the relationship between guest and host, or the reception and entertainment of guests, visitors, strangers  or tourists.

Hospitality involves welcoming and treating the guests with respect and friendly way. Satisfaction of guest is the most important aim of hospitality management.

The hospitality activities of people may vary according to the culture and belief of people. In India people give maximum respect to guests. There is a famous slogan in this regard – athidhi devo bhava, it means ‘Guests should be treated as God’.

 

Guest

Guest is a person entertained at the home of another; or a visitor. He may also be a person entertained by another at a hotel, tourist place, restaurant, theater, etc.

For the purpose of study, any paying customer of a hotel or restaurant can be called a guest. He may also be a tourist or a visitor receiving the hospitality of a club, hotel, resort, institution, etc. In commercial terms, a guest simply means, a person staying in a hotel or guest house.

 

Host

Host is the one who entertains another, whether gratuitously or for compensation; or one from whom another (guest) receives food, lodging, or entertainment. Here the guest and host are two sides of the same coin. On one side there is provider of hospitality- the host; and on the other side there is receiver of hospitality- the guest.

 

Hospitality Management

Hospitality management is the management of guests and visitors; with a view to make them feel comfortable and satisfied. It is an umbrella term concerned with different services such as food and beverage, travel, events, tourism, hotel etc. Hospitality refers to the application of management concepts and leadership in the areas of accommodation, dining and general guest services.

 

Hospitality and Hotel

Hospitality management is a term always mixed up with the term hotel management; these terms are not synonymous. Hotel management involves management techniques applicable to hotel administration, marketing, housekeeping, maintenance, catering, etc. Unlike the hospitality industry, hotel management is focused only on the hotel industry and its functioning.