Workplace Ethics: Notes | Corporate & Other Laws for CA Intermediate PDF Download

 Page 1


 
9 
Workplace Ethics 
Learning Objectives 
After reading this chapter, you will be able to understand - 
? The role and importance of ethical behaviour at the workplace 
? Ethical dilemmas of the individual 
? Discriminatory practices and harassment in organisations 
? Measures to ensure ethics in the workplace 
It's the action, not the fruit of the action, that's important. You have to do the right thing. It may 
not be in your power, may not be in your time, that there'll be any fruit. But that doesn't mean 
you stop doing the right thing. You may never know what results come from your action. But if 
you do nothing, there will be no result.”  
MAHATMA GANDHI 
9.1  Introduction  
Gandhi's ethics of khadi (homespun cloth) is closely linked with swadeshi. To him it meant a specific 
form of home-industry to counter the exploitation inherent in the more imperialistic forms of capitalism. 
Today industrialisation is an irreversible fact; but in our context khadi may certainly be interpreted to 
mean the intimate relation between a man and his work - the demand that a man should bear 
responsibility for his work in order to lend it dignity; and that he should share in the fruits of his labour. 
In other words - no man should be exploited in his work or alienated through his work. 
Public concerns about ethical practices in business usually relate to issues like fraud and 
embezzlement, accepting bribes or lying.  Well  publicized incidents of unethical activities ranging 
from financial scams to deceptive advertising of food and beverages to unfair competitive practices 
strengthen the public perception that ethical standards in business need to be improved. Ensuring 
the presence of sound values and ethics is a vital and ongoing part of good governance in 
organizations and an integral part of good management practices. “Workplace ethics” is how one 
applies values to work in actual decision making - a set of right and wrong actions that directly 
impact the workplace. They are an extension of the personal standards or lack of them that is 
intrinsic in the people who comprise the workplace. It is about making choices that may not always 
feel good or seem beneficial but are the “right” choices to make. 
Page 2


 
9 
Workplace Ethics 
Learning Objectives 
After reading this chapter, you will be able to understand - 
? The role and importance of ethical behaviour at the workplace 
? Ethical dilemmas of the individual 
? Discriminatory practices and harassment in organisations 
? Measures to ensure ethics in the workplace 
It's the action, not the fruit of the action, that's important. You have to do the right thing. It may 
not be in your power, may not be in your time, that there'll be any fruit. But that doesn't mean 
you stop doing the right thing. You may never know what results come from your action. But if 
you do nothing, there will be no result.”  
MAHATMA GANDHI 
9.1  Introduction  
Gandhi's ethics of khadi (homespun cloth) is closely linked with swadeshi. To him it meant a specific 
form of home-industry to counter the exploitation inherent in the more imperialistic forms of capitalism. 
Today industrialisation is an irreversible fact; but in our context khadi may certainly be interpreted to 
mean the intimate relation between a man and his work - the demand that a man should bear 
responsibility for his work in order to lend it dignity; and that he should share in the fruits of his labour. 
In other words - no man should be exploited in his work or alienated through his work. 
Public concerns about ethical practices in business usually relate to issues like fraud and 
embezzlement, accepting bribes or lying.  Well  publicized incidents of unethical activities ranging 
from financial scams to deceptive advertising of food and beverages to unfair competitive practices 
strengthen the public perception that ethical standards in business need to be improved. Ensuring 
the presence of sound values and ethics is a vital and ongoing part of good governance in 
organizations and an integral part of good management practices. “Workplace ethics” is how one 
applies values to work in actual decision making - a set of right and wrong actions that directly 
impact the workplace. They are an extension of the personal standards or lack of them that is 
intrinsic in the people who comprise the workplace. It is about making choices that may not always 
feel good or seem beneficial but are the “right” choices to make. 
 Workplace Ethics  9.2 
 
9.2 Factors Influencing Ethical Behaviour at Work 
Ethical decisions in an organization are influenced by three key factors: individual moral 
standards, the influence of managers and co-workers, and the opportunity to engage in 
misconduct. While one may   have great control over personal ethics outside the workplace, 
co-workers and management through   authority for example, exerts significant control on 
ones choices at work. In fact, the activities and examples set by co-workers, along with rules 
and policies established by the firm, are critical in gaining consistent ethical compliance in an 
organization. If a company fails to provide good examples and direction for appropriate 
conduct; confusion and conflict will develop and result in the opportunity for unethical 
behaviour.  For example if the boss or co-workers leave work early, one may be tempted to do 
so as well. If one sees co-workers making personal long-distance phone calls at work and 
charging them to the company, then one may be more likely to do so also. In addition, having 
sound personal values contributes to an ethical workplace. 
Individual 
Standards 
and 
Values 
  
  
+ 
Managers’ 
and 
Co-workers’ 
Influence 
  
  
+ 
Opportunity: 
Codes and 
Compliance 
Requirements 
  
  
  
  
= 
Ethical/Unethical 
Choices in  
Workplace 
Factors Influencing Workplace Ethics 
The Individual: An ethical issue is an identifiable problem, situation or opportunity that 
requires a person to choose from several actions which could be evaluated as right or wrong. 
For example, should a salesperson omit the fact of frequent replacement of the filter while 
selling a kitchen chimney to a prospective customer? When does offering a gift to a customer 
become a bribe rather than a sales promotion? There are no easy answers. An individual’s 
ethical behaviour affects not only his or her reputation within the company, but may also 
contribute to the way in which the company is perceived by others. Values reflect enduring 
beliefs that one holds that influences attitudes, actions, and the choices one makes. As 
individuals, our values are shaped by our personal beliefs. Values developed in childhood and 
youth are constantly tested and on-the-job decisions reflect the employee’s understanding of 
ethical responsibility. Various socio-psychological factors could be responsible why individuals 
could develop negative attitudes or lose personal motivation.  
? Negative work or life experiences.  
? Employees failing to respect each others unique personalities.  
? Overly aggressive financial or business targets.  
? Pressures to perform  and take quick decisions  
 
Page 3


 
9 
Workplace Ethics 
Learning Objectives 
After reading this chapter, you will be able to understand - 
? The role and importance of ethical behaviour at the workplace 
? Ethical dilemmas of the individual 
? Discriminatory practices and harassment in organisations 
? Measures to ensure ethics in the workplace 
It's the action, not the fruit of the action, that's important. You have to do the right thing. It may 
not be in your power, may not be in your time, that there'll be any fruit. But that doesn't mean 
you stop doing the right thing. You may never know what results come from your action. But if 
you do nothing, there will be no result.”  
MAHATMA GANDHI 
9.1  Introduction  
Gandhi's ethics of khadi (homespun cloth) is closely linked with swadeshi. To him it meant a specific 
form of home-industry to counter the exploitation inherent in the more imperialistic forms of capitalism. 
Today industrialisation is an irreversible fact; but in our context khadi may certainly be interpreted to 
mean the intimate relation between a man and his work - the demand that a man should bear 
responsibility for his work in order to lend it dignity; and that he should share in the fruits of his labour. 
In other words - no man should be exploited in his work or alienated through his work. 
Public concerns about ethical practices in business usually relate to issues like fraud and 
embezzlement, accepting bribes or lying.  Well  publicized incidents of unethical activities ranging 
from financial scams to deceptive advertising of food and beverages to unfair competitive practices 
strengthen the public perception that ethical standards in business need to be improved. Ensuring 
the presence of sound values and ethics is a vital and ongoing part of good governance in 
organizations and an integral part of good management practices. “Workplace ethics” is how one 
applies values to work in actual decision making - a set of right and wrong actions that directly 
impact the workplace. They are an extension of the personal standards or lack of them that is 
intrinsic in the people who comprise the workplace. It is about making choices that may not always 
feel good or seem beneficial but are the “right” choices to make. 
 Workplace Ethics  9.2 
 
9.2 Factors Influencing Ethical Behaviour at Work 
Ethical decisions in an organization are influenced by three key factors: individual moral 
standards, the influence of managers and co-workers, and the opportunity to engage in 
misconduct. While one may   have great control over personal ethics outside the workplace, 
co-workers and management through   authority for example, exerts significant control on 
ones choices at work. In fact, the activities and examples set by co-workers, along with rules 
and policies established by the firm, are critical in gaining consistent ethical compliance in an 
organization. If a company fails to provide good examples and direction for appropriate 
conduct; confusion and conflict will develop and result in the opportunity for unethical 
behaviour.  For example if the boss or co-workers leave work early, one may be tempted to do 
so as well. If one sees co-workers making personal long-distance phone calls at work and 
charging them to the company, then one may be more likely to do so also. In addition, having 
sound personal values contributes to an ethical workplace. 
Individual 
Standards 
and 
Values 
  
  
+ 
Managers’ 
and 
Co-workers’ 
Influence 
  
  
+ 
Opportunity: 
Codes and 
Compliance 
Requirements 
  
  
  
  
= 
Ethical/Unethical 
Choices in  
Workplace 
Factors Influencing Workplace Ethics 
The Individual: An ethical issue is an identifiable problem, situation or opportunity that 
requires a person to choose from several actions which could be evaluated as right or wrong. 
For example, should a salesperson omit the fact of frequent replacement of the filter while 
selling a kitchen chimney to a prospective customer? When does offering a gift to a customer 
become a bribe rather than a sales promotion? There are no easy answers. An individual’s 
ethical behaviour affects not only his or her reputation within the company, but may also 
contribute to the way in which the company is perceived by others. Values reflect enduring 
beliefs that one holds that influences attitudes, actions, and the choices one makes. As 
individuals, our values are shaped by our personal beliefs. Values developed in childhood and 
youth are constantly tested and on-the-job decisions reflect the employee’s understanding of 
ethical responsibility. Various socio-psychological factors could be responsible why individuals 
could develop negative attitudes or lose personal motivation.  
? Negative work or life experiences.  
? Employees failing to respect each others unique personalities.  
? Overly aggressive financial or business targets.  
? Pressures to perform  and take quick decisions  
 
9.3 Business Law, Ethics and Communication 
 
Some examples of ethical issues faced by an individual in the workplace are: 
(1) Relationships with suppliers and business partners: 
(a) Bribery and immoral entertainment  
(b) Discrimination between suppliers 
(c) Dishonesty in making and keeping contracts 
(2) Relationship with customers 
(a) Unfair pricing 
(b) Cheating customers 
(c) Dishonest advertising 
(d) Research confidentiality 
(3) Relationship with employees 
(a) Discrimination in hiring and treatment of employees 
(4) Management of resources 
(a) Misuse of organisational funds 
(b) Tax evasion 
9.3 Ethical Issues 
As discussed earlier, an ethical dilemma exists when one is faced with having to make a choice 
among perplexing alternatives. Very often, business ethics is depicted as a matter of resolving 
conflicts in which one option appears to be the clear choice.  However, ethical dilemmas faced by 
managers are highly complex with no clear guidelines due to alternatives that are equally 
justifiable, and involves significant interest of many "stakeholders" in given situation.  
An individual’s ethical concerns are about relationships and responsibilities at the workplace 
where correct decisions are not perfectly clear, and there are no hard and fast rules to follow. 
One set of relationships and responsibilities is directly related to employees, and include such 
areas as discipline, performance appraisal, safety, and the administration of reward systems. 
Another set is concerned with customers and suppliers, and include the intricate aspects of 
such elements as timing, quality, and price. Ethical dilemmas also arise when there are 
conflicts in values with superiors or peers over such things as strategy, goals, policy, and 
administration. Mainly ethical issues can be categorized in the framework of their relation with 
business associates, conflicts of interest, fairness and honesty, and communications. 
Business Relationships: The behaviour of businesspersons toward customers, suppliers, 
and others in their workplace may also generate ethical concerns. Ethical behaviour within a 
business involves keeping company secrets, meeting obligations and responsibilities, and 
avoiding undue pressure that may force others to act unethically.  
Managers, in particular, because of the authority of their position, have the opportunity to 
Page 4


 
9 
Workplace Ethics 
Learning Objectives 
After reading this chapter, you will be able to understand - 
? The role and importance of ethical behaviour at the workplace 
? Ethical dilemmas of the individual 
? Discriminatory practices and harassment in organisations 
? Measures to ensure ethics in the workplace 
It's the action, not the fruit of the action, that's important. You have to do the right thing. It may 
not be in your power, may not be in your time, that there'll be any fruit. But that doesn't mean 
you stop doing the right thing. You may never know what results come from your action. But if 
you do nothing, there will be no result.”  
MAHATMA GANDHI 
9.1  Introduction  
Gandhi's ethics of khadi (homespun cloth) is closely linked with swadeshi. To him it meant a specific 
form of home-industry to counter the exploitation inherent in the more imperialistic forms of capitalism. 
Today industrialisation is an irreversible fact; but in our context khadi may certainly be interpreted to 
mean the intimate relation between a man and his work - the demand that a man should bear 
responsibility for his work in order to lend it dignity; and that he should share in the fruits of his labour. 
In other words - no man should be exploited in his work or alienated through his work. 
Public concerns about ethical practices in business usually relate to issues like fraud and 
embezzlement, accepting bribes or lying.  Well  publicized incidents of unethical activities ranging 
from financial scams to deceptive advertising of food and beverages to unfair competitive practices 
strengthen the public perception that ethical standards in business need to be improved. Ensuring 
the presence of sound values and ethics is a vital and ongoing part of good governance in 
organizations and an integral part of good management practices. “Workplace ethics” is how one 
applies values to work in actual decision making - a set of right and wrong actions that directly 
impact the workplace. They are an extension of the personal standards or lack of them that is 
intrinsic in the people who comprise the workplace. It is about making choices that may not always 
feel good or seem beneficial but are the “right” choices to make. 
 Workplace Ethics  9.2 
 
9.2 Factors Influencing Ethical Behaviour at Work 
Ethical decisions in an organization are influenced by three key factors: individual moral 
standards, the influence of managers and co-workers, and the opportunity to engage in 
misconduct. While one may   have great control over personal ethics outside the workplace, 
co-workers and management through   authority for example, exerts significant control on 
ones choices at work. In fact, the activities and examples set by co-workers, along with rules 
and policies established by the firm, are critical in gaining consistent ethical compliance in an 
organization. If a company fails to provide good examples and direction for appropriate 
conduct; confusion and conflict will develop and result in the opportunity for unethical 
behaviour.  For example if the boss or co-workers leave work early, one may be tempted to do 
so as well. If one sees co-workers making personal long-distance phone calls at work and 
charging them to the company, then one may be more likely to do so also. In addition, having 
sound personal values contributes to an ethical workplace. 
Individual 
Standards 
and 
Values 
  
  
+ 
Managers’ 
and 
Co-workers’ 
Influence 
  
  
+ 
Opportunity: 
Codes and 
Compliance 
Requirements 
  
  
  
  
= 
Ethical/Unethical 
Choices in  
Workplace 
Factors Influencing Workplace Ethics 
The Individual: An ethical issue is an identifiable problem, situation or opportunity that 
requires a person to choose from several actions which could be evaluated as right or wrong. 
For example, should a salesperson omit the fact of frequent replacement of the filter while 
selling a kitchen chimney to a prospective customer? When does offering a gift to a customer 
become a bribe rather than a sales promotion? There are no easy answers. An individual’s 
ethical behaviour affects not only his or her reputation within the company, but may also 
contribute to the way in which the company is perceived by others. Values reflect enduring 
beliefs that one holds that influences attitudes, actions, and the choices one makes. As 
individuals, our values are shaped by our personal beliefs. Values developed in childhood and 
youth are constantly tested and on-the-job decisions reflect the employee’s understanding of 
ethical responsibility. Various socio-psychological factors could be responsible why individuals 
could develop negative attitudes or lose personal motivation.  
? Negative work or life experiences.  
? Employees failing to respect each others unique personalities.  
? Overly aggressive financial or business targets.  
? Pressures to perform  and take quick decisions  
 
9.3 Business Law, Ethics and Communication 
 
Some examples of ethical issues faced by an individual in the workplace are: 
(1) Relationships with suppliers and business partners: 
(a) Bribery and immoral entertainment  
(b) Discrimination between suppliers 
(c) Dishonesty in making and keeping contracts 
(2) Relationship with customers 
(a) Unfair pricing 
(b) Cheating customers 
(c) Dishonest advertising 
(d) Research confidentiality 
(3) Relationship with employees 
(a) Discrimination in hiring and treatment of employees 
(4) Management of resources 
(a) Misuse of organisational funds 
(b) Tax evasion 
9.3 Ethical Issues 
As discussed earlier, an ethical dilemma exists when one is faced with having to make a choice 
among perplexing alternatives. Very often, business ethics is depicted as a matter of resolving 
conflicts in which one option appears to be the clear choice.  However, ethical dilemmas faced by 
managers are highly complex with no clear guidelines due to alternatives that are equally 
justifiable, and involves significant interest of many "stakeholders" in given situation.  
An individual’s ethical concerns are about relationships and responsibilities at the workplace 
where correct decisions are not perfectly clear, and there are no hard and fast rules to follow. 
One set of relationships and responsibilities is directly related to employees, and include such 
areas as discipline, performance appraisal, safety, and the administration of reward systems. 
Another set is concerned with customers and suppliers, and include the intricate aspects of 
such elements as timing, quality, and price. Ethical dilemmas also arise when there are 
conflicts in values with superiors or peers over such things as strategy, goals, policy, and 
administration. Mainly ethical issues can be categorized in the framework of their relation with 
business associates, conflicts of interest, fairness and honesty, and communications. 
Business Relationships: The behaviour of businesspersons toward customers, suppliers, 
and others in their workplace may also generate ethical concerns. Ethical behaviour within a 
business involves keeping company secrets, meeting obligations and responsibilities, and 
avoiding undue pressure that may force others to act unethically.  
Managers, in particular, because of the authority of their position, have the opportunity to 
 Workplace Ethics  9.4 
 
influence employees’ actions. For example, a manager can influence employees to use pirated 
computer software to save costs. The use of illegal software puts the employee and the 
company at legal risk, but employees may feel pressured to do so by their superior’s authority. 
Customer’s need should be considered most when it comes to ethical business practices. In 
the long run, a company will reap great profits from a customer base that feels it is being 
treated fairly and truthfully. Organizational pressures may encourage a person to engage in 
activities that he or she might otherwise view as unethical, such as invading others’ privacy or 
stealing a competitor’s secrets.   
Conflicts of Interest: A conflict of interest exists when a person must choose whether to 
advance his or her own personal interests or those of the organisation. Seven former 
executives of Daewoo, a South Korean conglomerate were arrested on charges of fraud and 
embezzlement. Prosecutors charged that the executives raised $20 billion by taking out illegal 
foreign exchange loans and pooling funds from company subsidiaries through falsified 
import/export documents. A bribe is a conflict of interest because it benefits an individual at 
the expense of an organization or society. Wal-Mart Stores, Inc., may have the toughest policy 
against conflict of interest in the retail industry. Sam Walton, the late founder of Wal-Mart, 
prohibited company buyers from accepting so much as a cup of coffee from suppliers. To 
avoid conflicts of interest, employees must be able to separate their personal financial 
interests from their business dealings. 
Conflicts of interest need not be financial. For example, “if my son is working in a company 
that manufactures the type of tools that my organisation purchases, I have an interest in 
seeing him succeed and may be motivated to give him my company's business even although 
other firms may offer better terms. 
Fairness and honesty: Fairness and honesty are at the heart of business ethics and relate to the 
general values of decision makers. At a minimum, businesspersons are expected to follow all 
applicable laws and regulations. But beyond obeying the law, they are expected not to harm 
customers, employees, clients, or competitors knowingly through deception, misrepresentation, 
coercion, or discrimination. One aspect of fairness and honesty is related to disclosure of potential 
harm caused by product use. For example, Mitsubishi Motors, a Japanese automaker, faced 
criminal charges and negative publicity after executives admitted that the company had 
systematically covered up customer complaints about tens of thousands of defective automobiles 
over a 20-year period in order to avoid expensive and embarrassing product recalls. Another 
aspect of fairness relates to competition. Although numerous laws have been passed to foster 
competition and make monopolistic practices illegal, companies sometimes gain control over 
markets by using questionable practices that harm competition. Rivals of Microsoft, for example, 
accused the software giant of using unfair and monopolistic practices to maintain market 
dominance with its Internet Explorer browser.  
Communications: Communications is another area in which ethical concerns may arise. 
False and misleading advertising, as well as deceptive personal-selling tactics, anger 
consumers and can lead to the failure of a business. Truthfulness about product safety and 
quality are also important to consumers. The Food and Drug Regulatory authorities need to 
Page 5


 
9 
Workplace Ethics 
Learning Objectives 
After reading this chapter, you will be able to understand - 
? The role and importance of ethical behaviour at the workplace 
? Ethical dilemmas of the individual 
? Discriminatory practices and harassment in organisations 
? Measures to ensure ethics in the workplace 
It's the action, not the fruit of the action, that's important. You have to do the right thing. It may 
not be in your power, may not be in your time, that there'll be any fruit. But that doesn't mean 
you stop doing the right thing. You may never know what results come from your action. But if 
you do nothing, there will be no result.”  
MAHATMA GANDHI 
9.1  Introduction  
Gandhi's ethics of khadi (homespun cloth) is closely linked with swadeshi. To him it meant a specific 
form of home-industry to counter the exploitation inherent in the more imperialistic forms of capitalism. 
Today industrialisation is an irreversible fact; but in our context khadi may certainly be interpreted to 
mean the intimate relation between a man and his work - the demand that a man should bear 
responsibility for his work in order to lend it dignity; and that he should share in the fruits of his labour. 
In other words - no man should be exploited in his work or alienated through his work. 
Public concerns about ethical practices in business usually relate to issues like fraud and 
embezzlement, accepting bribes or lying.  Well  publicized incidents of unethical activities ranging 
from financial scams to deceptive advertising of food and beverages to unfair competitive practices 
strengthen the public perception that ethical standards in business need to be improved. Ensuring 
the presence of sound values and ethics is a vital and ongoing part of good governance in 
organizations and an integral part of good management practices. “Workplace ethics” is how one 
applies values to work in actual decision making - a set of right and wrong actions that directly 
impact the workplace. They are an extension of the personal standards or lack of them that is 
intrinsic in the people who comprise the workplace. It is about making choices that may not always 
feel good or seem beneficial but are the “right” choices to make. 
 Workplace Ethics  9.2 
 
9.2 Factors Influencing Ethical Behaviour at Work 
Ethical decisions in an organization are influenced by three key factors: individual moral 
standards, the influence of managers and co-workers, and the opportunity to engage in 
misconduct. While one may   have great control over personal ethics outside the workplace, 
co-workers and management through   authority for example, exerts significant control on 
ones choices at work. In fact, the activities and examples set by co-workers, along with rules 
and policies established by the firm, are critical in gaining consistent ethical compliance in an 
organization. If a company fails to provide good examples and direction for appropriate 
conduct; confusion and conflict will develop and result in the opportunity for unethical 
behaviour.  For example if the boss or co-workers leave work early, one may be tempted to do 
so as well. If one sees co-workers making personal long-distance phone calls at work and 
charging them to the company, then one may be more likely to do so also. In addition, having 
sound personal values contributes to an ethical workplace. 
Individual 
Standards 
and 
Values 
  
  
+ 
Managers’ 
and 
Co-workers’ 
Influence 
  
  
+ 
Opportunity: 
Codes and 
Compliance 
Requirements 
  
  
  
  
= 
Ethical/Unethical 
Choices in  
Workplace 
Factors Influencing Workplace Ethics 
The Individual: An ethical issue is an identifiable problem, situation or opportunity that 
requires a person to choose from several actions which could be evaluated as right or wrong. 
For example, should a salesperson omit the fact of frequent replacement of the filter while 
selling a kitchen chimney to a prospective customer? When does offering a gift to a customer 
become a bribe rather than a sales promotion? There are no easy answers. An individual’s 
ethical behaviour affects not only his or her reputation within the company, but may also 
contribute to the way in which the company is perceived by others. Values reflect enduring 
beliefs that one holds that influences attitudes, actions, and the choices one makes. As 
individuals, our values are shaped by our personal beliefs. Values developed in childhood and 
youth are constantly tested and on-the-job decisions reflect the employee’s understanding of 
ethical responsibility. Various socio-psychological factors could be responsible why individuals 
could develop negative attitudes or lose personal motivation.  
? Negative work or life experiences.  
? Employees failing to respect each others unique personalities.  
? Overly aggressive financial or business targets.  
? Pressures to perform  and take quick decisions  
 
9.3 Business Law, Ethics and Communication 
 
Some examples of ethical issues faced by an individual in the workplace are: 
(1) Relationships with suppliers and business partners: 
(a) Bribery and immoral entertainment  
(b) Discrimination between suppliers 
(c) Dishonesty in making and keeping contracts 
(2) Relationship with customers 
(a) Unfair pricing 
(b) Cheating customers 
(c) Dishonest advertising 
(d) Research confidentiality 
(3) Relationship with employees 
(a) Discrimination in hiring and treatment of employees 
(4) Management of resources 
(a) Misuse of organisational funds 
(b) Tax evasion 
9.3 Ethical Issues 
As discussed earlier, an ethical dilemma exists when one is faced with having to make a choice 
among perplexing alternatives. Very often, business ethics is depicted as a matter of resolving 
conflicts in which one option appears to be the clear choice.  However, ethical dilemmas faced by 
managers are highly complex with no clear guidelines due to alternatives that are equally 
justifiable, and involves significant interest of many "stakeholders" in given situation.  
An individual’s ethical concerns are about relationships and responsibilities at the workplace 
where correct decisions are not perfectly clear, and there are no hard and fast rules to follow. 
One set of relationships and responsibilities is directly related to employees, and include such 
areas as discipline, performance appraisal, safety, and the administration of reward systems. 
Another set is concerned with customers and suppliers, and include the intricate aspects of 
such elements as timing, quality, and price. Ethical dilemmas also arise when there are 
conflicts in values with superiors or peers over such things as strategy, goals, policy, and 
administration. Mainly ethical issues can be categorized in the framework of their relation with 
business associates, conflicts of interest, fairness and honesty, and communications. 
Business Relationships: The behaviour of businesspersons toward customers, suppliers, 
and others in their workplace may also generate ethical concerns. Ethical behaviour within a 
business involves keeping company secrets, meeting obligations and responsibilities, and 
avoiding undue pressure that may force others to act unethically.  
Managers, in particular, because of the authority of their position, have the opportunity to 
 Workplace Ethics  9.4 
 
influence employees’ actions. For example, a manager can influence employees to use pirated 
computer software to save costs. The use of illegal software puts the employee and the 
company at legal risk, but employees may feel pressured to do so by their superior’s authority. 
Customer’s need should be considered most when it comes to ethical business practices. In 
the long run, a company will reap great profits from a customer base that feels it is being 
treated fairly and truthfully. Organizational pressures may encourage a person to engage in 
activities that he or she might otherwise view as unethical, such as invading others’ privacy or 
stealing a competitor’s secrets.   
Conflicts of Interest: A conflict of interest exists when a person must choose whether to 
advance his or her own personal interests or those of the organisation. Seven former 
executives of Daewoo, a South Korean conglomerate were arrested on charges of fraud and 
embezzlement. Prosecutors charged that the executives raised $20 billion by taking out illegal 
foreign exchange loans and pooling funds from company subsidiaries through falsified 
import/export documents. A bribe is a conflict of interest because it benefits an individual at 
the expense of an organization or society. Wal-Mart Stores, Inc., may have the toughest policy 
against conflict of interest in the retail industry. Sam Walton, the late founder of Wal-Mart, 
prohibited company buyers from accepting so much as a cup of coffee from suppliers. To 
avoid conflicts of interest, employees must be able to separate their personal financial 
interests from their business dealings. 
Conflicts of interest need not be financial. For example, “if my son is working in a company 
that manufactures the type of tools that my organisation purchases, I have an interest in 
seeing him succeed and may be motivated to give him my company's business even although 
other firms may offer better terms. 
Fairness and honesty: Fairness and honesty are at the heart of business ethics and relate to the 
general values of decision makers. At a minimum, businesspersons are expected to follow all 
applicable laws and regulations. But beyond obeying the law, they are expected not to harm 
customers, employees, clients, or competitors knowingly through deception, misrepresentation, 
coercion, or discrimination. One aspect of fairness and honesty is related to disclosure of potential 
harm caused by product use. For example, Mitsubishi Motors, a Japanese automaker, faced 
criminal charges and negative publicity after executives admitted that the company had 
systematically covered up customer complaints about tens of thousands of defective automobiles 
over a 20-year period in order to avoid expensive and embarrassing product recalls. Another 
aspect of fairness relates to competition. Although numerous laws have been passed to foster 
competition and make monopolistic practices illegal, companies sometimes gain control over 
markets by using questionable practices that harm competition. Rivals of Microsoft, for example, 
accused the software giant of using unfair and monopolistic practices to maintain market 
dominance with its Internet Explorer browser.  
Communications: Communications is another area in which ethical concerns may arise. 
False and misleading advertising, as well as deceptive personal-selling tactics, anger 
consumers and can lead to the failure of a business. Truthfulness about product safety and 
quality are also important to consumers. The Food and Drug Regulatory authorities need to 
9.5 Business Law, Ethics and Communication 
 
ensure that customers are told the truth about product safety, quality, and effectiveness 
claims. Some manufacturers fail to provide enough information to consumers about 
differences or similarities between products. For example, a lawsuit filed by consumers 
against Johnson claimed that the company’s Acuvue and 1-Day Acuvue contact lenses were 
actually the same product. Consumers were directed by the company to dispose of the 1-Day 
Acuvue lenses after one day’s use. The suit claims that because the two products were 
identical, the lenses could have been worn up to two weeks. It is estimated that six million 
people who used contact lenses spent $1.1 billion on unnecessary replacements because of 
the company’s misleading advertising. Johnson & Johnson agreed to pay up to $860 million to 
settle the complaints. Another important aspect of communications that may raise ethical 
concerns relates to product labelling. It is mandatory for cigarette manufacturers to indicate 
clearly on cigarette packing that smoking cigarettes is harmful to the smoker’s health.  
9.4 Discrimination  
The root meaning of the term discriminate is "to distinguish one object from another.” 
Discrimination is treating people differently. It is usually intended to refer to the wrongful act of 
making a difference in treatment or favor on a basis other than individual merit. Employment 
discrimination is treating one person better than another because of their age, gender, race, 
religion or other protected class status. Another approach to the morality of discrimination that 
also views it as a form of injustice is based on the formal "principle of equality”. 
Discrimination in employment involves three basic elements.  
? First, it is a decision against one or more employees (or prospective employees) that is 
not based on individual merit, such as the ability to perform a given job, seniority, or 
other morally legitimate qualifications. 
? Second, the decision derives solely or in part from racial or sexual prejudice, false 
stereotypes, or some other kind of morally unjustified attitude against members of the 
class to which the employee/s belongs. 
? Third, the decision (or set of decisions) has a harmful or negative impact on the interests 
of the employees, perhaps costing them jobs, promotions, or better pay. 
Discrimination in employment is wrong because it violates the basic principle of justice by 
differentiating between people on the basis of characteristics (race or sex) that are not 
relevant to the tasks they must perform.  
It is consequently understandable that the law has gradually been changed to conform to 
these moral requirements, and that there has been a growing recognition of the various ways 
in which discrimination in employment occurs. Among the practices now widely recognized as 
discriminatory are the following: 
Recruitment Practices: Firms that rely solely on the word-of-mouth referrals of present 
employees to recruit new workers tend to recruit only from those racial and sexual groups that 
are already represented in their labor force. Also, when desirable job positions are only