BUSINESS ETHICS and Corporate governance

What is ethics?Ethics is the branch of philosophy that focuses on morality and the way in which moral principles are applied to everyday life. Ethics has to do with fundamental questions such as What is fair? What is just? What is the right thing to do in this situation? Ethics involves an active process of applying values, which may range from religious principles to customs and traditions.

What is business ethics?Business ethics focuses on what constitutes right or wrong behavior in the world of business. Corporate business executives have a responsibility to their shareholders and employees to make decisions that will help their business make a profit. But in doing so, businesspeople also have a responsibility to the public and themselves to maintain ethical principles.

Although ethics provides moral guidelines, individuals must apply these guidelines in making decisions.

Ethics that applies to business (business ethics) is not a separate theory of ethics; rather, it is an application of ethics to business situations.

Although all people have ethical responsibilities, higher ethical standards are imposed upon professionals who serve as social models, such as physicians, attorneys, and businesspeople.

Measures to Improve Ethical standards in Business Measures at the Business/ Organizational Levela) Adoption of code of conduct for dealing with employees, consumers, shareholders and other social groupsb) To hire the services of expert in business ethics and arrange for his lectures.c) To make social audit compulsory to identify the ethical and unethical conduct of business.d) To arrange training progammes on ethical standards for executives and employees.e) To introduce open and free communication system and bring total transparency is business working.f) To penalize those employees who willfully violate rules of ethical standards

Measures at the Government Level a)Government policies, procedure and working should be simplified.b) Excessive or unwanted controls over business working be lifted or reduced.c) Strict enforcement of laws relating to protection of interest of shareholders, consumers, employees and other social groups.d) There should be political discipline and corrupt politicians must be punished seriously.e) The working of Lok- Adalat should be popularized.f) Quick dispersal of legal cases relating to unethical business practices.

At the Social Level:-A)) Social boycott on the products made by companies involved in unethical business.b) Trade Associations and chambers of commerce to prescribe code of conduct to its members and they must be made to observe it strictly.c) Social organisations like Consumers Guidance Society of Bnagladesh, and Council for Fair Business Practices should play active role in spreading the message of ethical values in business

Roots of Unethical Behavior Personal Ethics Decision-Making Processes Organizational CultureLeadershipUnrealistic Performance expectations Primary Psychological TrapsPersonality Traps Defensive Psychological TrapsGreedCorruption

A code of conduct is framed by Council for Fair Business Practices (CFBP) for its members. The following are the highlights of code of conduct of CFBP:

To charge fair and reasonable prices.To ensure accuracy in weights and measures.To ensure that intermediaries do not manipulate the prices.To fulfill social responsibility towards various sections of the public such as employees, customers, shareholders, government, suppliers, competitors, dealings, and the general public.To pay attention to consumer rights.To provide product warranty in clear termsNot to engage in hoarding and profiteering.Not to adulterate the goods.Not to trade in sub- standard products, and also smuggled products.Not to undertake misleading and deceptive advertisements.

Importance:-Standard of behavior True North Principles to lead a Business Short Term Gain and Long Term Pain V /s Short Term Pain and Long Term Gain Value Based Leadership creates Ethical Practices Moral values of employees Strong and Independent Board Role of Regulation in Business Ethics Role of Information Technology & Business Ethics

How Ethics Can Make Corporate Governance More Meaningful? Corporate governance is meant to run companies ethically in a manner such that all stakeholders creditors, distributors, customers, employees, the society at large and governments are dealt in a fair manner.

Good corporate governance should look at all stakeholders and not just shareholders along. Otherwise, a chemical company, for example, can maximize the profit of shareholders, but completely violate all environment laws and make it impossible for the people around the area to lead a normal life.

Corporate governance is not something which regulators have to impose on a management, it should come from within. There is no point in making statutory provisions for enforcing ethical conduct.

4.There is a lot of provisions in the companies act, for example, in dealing with the following issues: (1) disclosing the interest of directors in contracts in which they are interested; (2) abstaining from exercising voting rights in matters they are interested; (3) statutory protection to auditors who are supposed to go into the details of the financial management of the company and report the same to the shareholders of the company.

There is a number of grey areas where the law is silent or where regulatory framework is weak, which are manipulate by unscrupulous persons The Serious Fraud Investigation Office (SIFO) in the Department of Company Affairs (DCA). has been investigating several "Vanishing Companies". By 2003, SEBI has identified 229 as "vanishing companies" which tapped the capital market, collected more than Rs. 800 crores from the public and subsequently became untraceable. However, thousands of investors have lost their hard-earned' money and no agency has come to their rescue so far.

Unfair or Unethical Business practices in Bangladesh (I) With Respect to Customer:Pricing Advertisement Product Promotion Customer Service Price Fixing

Unethical business practice of employees Job Switching Giving Information which is Confidential (Insider Information Industrial Espionage Occupational Crimes

Principles of business ethics in Bangladesh are as follows Avoid exploitation of consumers Avoid profiteering Encourage healthy competition Ensure accuracy Pay taxes regularly Get accounts audited Fair treatment to employees Keep investors informed Avoid injustice and discrimination

No bribe and corruption Discourage secret agreement Keep service before profit Practice fair business Avoid monopoly Fulfill customers expectations Respect consumers rights Accept social responsibilities Satisfy consumers wants Service motive Protect group interests Optimum utilization of resources Intentions of business

Follow Woodrow Wilson's rules Rule of publicity Rule of equivalent price Rule of conscience in business Rule of spirit of service