ETHICS AND LEADERSHIP FOR

BUILT ENVIRONMENT
Module I
What are ethics ?

Ethics is a requirement for human life. It is our means of deciding a

course of action. Without it, our actions would be random and
aimless. ...
To the degree which a rational ethical standard is taken, we are able
to correctly organize our goals and actions to accomplish our most
important values.

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Ethics definition

Dictionary meaning of Ethics: Moral principles that

govern a person’s behaviour of conducting an
activity.

synonyms:
Synonyms: Moral code, morals, morality, moral stand,
moral principles, moral values, rights and wrongs, ideals,
creed, credo, ethos, rules of conduct, standards of
behaviour) , virtues, dictates of conscience.
Ethics

 Action as per standards-Ethical

 Not as per standards –Un Ethical
 Actions which are lawful may not be ethical

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3001-003/)
Origin

► From olden days: What is right and what is wrong ?

► Rules by society= Ethics

Origin in India
• Bhagawad Gita
• Vedas
• Upanishads
• Neeti shatra by chanakya
• Vedanta

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People’s views on ethics

► "Ethicshas to do with what my feelings tell me is right

or wrong.“
► "Ethics has to do with my religious beliefs.

► “Being ethical is doing what the law requires.“

► “Ethics consists of the standards of behaviour our

society accepts.“
► "I don't know what the word means.“

► So, we can define an ethical decision as a decision

that fits within our standards of behavior, our sense
of right and wrong
Ethical dilemma

► Ethical dilemma means confusion: Eg: Lord Rama Obey or Rule Kingdom

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Origin in West

► Socrates(469-399BC)

► Plato(427-347BC)

► Aristotle(384-322BC)

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Religion Vs Ethics

► VS

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Ethics Vs Law

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Fundamental Principles of Ethics

Code of ethics:
A code of ethics is a set of principles of conduct within an
organization that guide decision making and behavior.
The purpose of the code is to provide members and other
interested persons with guidelines for making ethical
choices in the conduct of their work.

Principles of ethical behavior

► Integrity

► Objectivity

► Confidentiality

► Professional competence and due care

► Professional behavior
Ethics is Universal/ Constant?

► Ethical principles are some thing we follow regularly in

our life
► Some principles are universal.

Right Wrong

Honesty Lying

Reliability Cheating

Mutual respect Stealing

Non-violence
Universal Ethical standards

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Nature of Ethics

 Standards of Behavior tells us how to behave

 Not same as Feelings

 Feelings-Personal

 Ethics is not religion but it is advocated by

religion
 Ethics is not law but law contains ethics

 Vary from society to society

 Ethics is not science

Ethical relativism

What is morally
What is morally
right for a person
right for me in
in America( living
India ( in the 21st
In the 10th
Century)
century)

► This shows that the positive claim of relativism is that right and wrong are
relative to your society
Sources to Ethical standards

1.Utilitarian Approach
2.Rights/Deontological Approach
3.Fairness Approach
4.Common Good Approach
5.Virtue Approach
1. Utilitarian approach

 Do more good do less harm

 Produce balance between good and harm
 Deals with consequences
2. Rights approach

 Ethical action is which that protects and respects the

moral rights who got affected

 Based on Human Dignity gives ability to choose freely,

what they do with their lives
► Eg: 10 commandments

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3. Fairness approach

Aristotle contributed this idea

TREAT ALL HUMAN BEINGS EQUALLY

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4. Common Good approach

 Life is good in itself, and our actions contributed to

that life
 Relationship based on Ethical reasoning
 Calls common conditions for welfare of Every one
 System of law, Effective Enforcement, Educational
system or even public relational areas
5. Virtue approach

 Ancient Approach
 Ethical actions consistent with some ideal
virtues(Beliefs)
 Honesty, Courage, Compassion
 Generosity, Tolerance,
 Fidelity, Self control
► WHAT KIND OF PERSON WILL I BECOME IF I DO

THIS”
► IS THIS ACTION CONSISTENT WITH MY ACTING AT

MY BEST?”
Business Ethics

 Application of Every day moral or Ethical norms to

Business
 Being Ethical requires acting with awareness of how
• Products and Services
• Actions of Employees
• Stake holder and society
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► Code of conduct for doing Business

► Unite in common pursuit of justice –Mahatma Gandhi

► Truthfulness in Business, conduct reflection of their

country
Need of Business Ethics

► Application of “Ethics in Business”

► Authority to use” Natural Resources”

► Engage in “ social contract”

► Business man- Trustee

Benefits of following Business Ethics

 Easier change management

 Strong team work and productivity
 Enhanced Employee growth
 Guarantee that personnel policies are legal
 Helps to detect violations easily
 Helps to manage values associated with quality
management, strategic planning
Need of business ethics

► Major emphasis on CSR

► Responsible for share holders and stake holders

► Ethics in Company's- Mission Statement

► Profit maximization to wealth maximization

Ethical dilemma in Business

 Only few issues are straight forward

 In many cases conflicts with out clear option

 Arises to manager to decide between

 i)Right and wrong ii)Right & Right

 In finding solutions business man face Ethical dilemmas

 Most often business interests conflict with moral values

 Eg., Bribe Or a means of sales promotion

Guidelines to handle ethical dilemma

 Define problems clearly.

 Stand on the other side of the fence.
 How did the situations arise?
 Intention in making that decision
 Who will injure by your decision?
 What is probable results of the decision?
 Can you discuss with affected parties before decision?
 Symbolic potential of your action, if understood or
misunderstood?
 Exceptions to your stand?
Why do we need ethical practices in
business?

1. Self Interest
2. Reward Motive
3. Social Pressure
4. Legal Need
5. Consistent with profit Motive
6. Image
7. Payback Principle
 Ethical influence on Business

Area of Business Ethical practices

Plant Location Environment impact

Product Pollution

Purchase & Storage No hoarding of finished goods

Transportation Safety regulations

Advertising Realistic claims

Finance Appreciation of Capital

Personnel Equitable treatment

Ethics in issues in Finance

► Insider trading
► Financial markets
► Hostile takeovers
► Financial statements
An accountant is

► An employee of the company who maintains the

books of Account and has obligation as an employee
to the company.
► An independent certified public accountant who may
be hired by the company as outside counsel.
► There is a difference between these two kinds of
accountants.
Ethics in Accountancy

Accounting is-
► The process by which any business keeps track of

its Financial activities by recordings its Debits and

Credits and balancing its accounts….
► Accounting by its nature, is a system of Principles
applied to present the Financial position of a
business and the results of its operations and cash
flows..
Ethical issues surrounding
Accounting Practices

► Underreporting income
► Falsifying Documents
► Illegally evading income taxes
► Or otherwise engaging in Frauds
► Creative Accounting
► Example- The accounting Fraud case of Mr.
Ramalinga Raju in Satyam Computers
Who is an auditor?

► An auditor is a person or a firm appointed by a

company to execute an audit. To act as an auditor, a
person should be certified by the regulatory authority of
accounting and auditing or possess certain specified
qualifications.
Duties of an auditor

► To meet the objectives of the Companies Act 1985

and also the Articles of Association.

► To give an accurate statement to the members about

the state of affairs of a company.

► To be reasonably skillful and careful in identifying the

true nature of the accounts.
Objectives of an ethical audit

► To provide a critical assessment of functioning of

business.
► To investigate into acquisition or restructuring

operations.
► To determine the type of training necessary for
employees.
► To establish ethical conduct of business.

► To enhance, measure and promote the quality that

increases business performance by assessing them
against the ethical business objective.
► To improve the quality of governance by evaluating the

performance and ensuring that financial information is

both available and reliable.
Code of ethics in Finance

► Act with honesty and integrity avoiding conflicts of

interest in personal and professional relationships.
► To provide with information that is full, accurate, far

objective, timely and understandable.

► To promote ethical behavior among other associates.

► Respect the confidentiality of information acquired in

course of business.
► Adhere to and promote this code of ethics.
Ethics in Marketing

 Ethical marketing refers to the application of marketing ethics into

the marketing process.

 Marketing ethics has the potential to benefit society as a whole,

both in the short- and long-term.

 Study of ‘ ethical marketing” should be included in applied ethics

and involves examination of whether or not an honest and factual
representation.

 Marketing ethics has influenced companies and their response is

to market their products in a more socially responsible way.

 The increasing trend of fair trade is an example of the impact of

ethical marketing.
Continued…

 The philosophy of marketing is not lost with this newfound ethical

slant, but rather hopes to win customer loyalty

 Ethical marketing should not be confused with government

regulations brought into force to improve consumer welfare

 Marketing ethics is the area of applied ethics which deals with the
moral principles behind the operation and regulation of marketing.
Some areas of marketing ethics overlap with media ethics.
4 Ps of Marketing

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4 Ps of marketing

Product/Service

•What does the customer want from the product /service?

What needs does it satisfy?
•What features does it have to meet these needs?

•How and where will the customer use it?

Place
► Where do buyers look for your product or service?

► If they look in a store, what kind? A specialist boutique

or in a supermarket, or both? Or online? Or direct, via a
catalogue?
► How can you access the right distribution channels?
4 Ps of marketing

Price
•What is the value of the product or service to the buyer?

•Are there established price points for products or

services in this area?

•What discounts should be offered to trade customers, or

to other specific segments of your market?

•How will your price compare with your competitors?

Promotion
•Where and when can you get across your marketing

messages to your target market?

•Will you reach your audience by advertising online, in the

press, or on TV, or radio, or on billboards? By using direct

marketing mailshot? Through PR? On the Internet?
Unethical Practices Relating to
Products

► Selling goods abroad which are banned at home.

► Omitting to provide information on side effects

► Unsafe products

► Built in obsolescence

► Wasteful and unnecessary packaging

► Deception on size and content

► Inaccurate and incomplete testing of products

► Treatment of animals in product testing

List of Unethical Pricing Practices

► Bid rigging
► Dumping (pricing policy)

► Predatory pricing

► Price discrimination

► Price fixing

► Price skimming

► Price war

► Supra competitive pricing

► Variable pricing
List of Unethical Pricing Practices

► Bid rigging ( to manipulate fraudulently)

► Supra competitive pricing (beyond limits of) competitive pricing

► Price fixing : a practice whereby rival companies come to an illicit

agreement not to sell goods or services below a certain price.

► Price skimming (is a pricing strategy in which a marketer sets a

relatively high price for a product or service at first, then lowers
the price over time.[It is a temporal version of price
discrimination/yield management. It allows the firm to recover its
sunk costs quickly before competition steps in and lowers the
market price.
Unethical practices in marketing

► Predatory pricing(the pricing of goods or services at such a low level that

other firms cannot compete and are forced to leave the market.)

► Price war(a period of fierce competition in which traders cut prices in an

attempt to increase their share of the market.)

► Dumping (pricing policy): "dumping" is a kind of predatory pricing,

especially in the context of international trade. It occurs when
manufacturers export a product to another country at a price either below
the price charged in its home market or below its cost of production.

► Variable pricing: is a pricing strategy where a business offers varying

price points at different locations or points-of-sale. This is a common
approach used by retailers when the costs of offering certain goods and
services and the level of market demand justify it.

► Price discrimination: the action of selling the same product at different

prices to different buyers, in order to maximize sales and profits.
Ethical pitfalls in advertising and
promotion

► Advertising means a mode of communication between

a seller and a buyer. Thus ethics in advertising means
a set of well defined principles which govern the ways
of communication taking place between the seller and
the buyer. Ethics is the most important feature of the
advertising industry.
Issues o
► Issues over truth and honesty.
► Issues with violence, sex and profanity.

► Taste and controversy.

► Negative advertising techniques

Unethical practices in Place

► Taste and controversy

► Production in sweatshops

► Violation of the basic rights of workers

► Ignoring of health, safety and environmental standards

Why do we need ethics in marketing

► When an organization behaves ethically, customers

develop more positive attitudes about the firm, its
products, and its services.

► To create Values or trust with key stakeholders.

► To build good image about the organization in the

minds of Customer, employees, shareholders and the
society.
Bibliography

► Organizational behavior; Stephen P Robbins; 15th Edition, Pearson

Education.
► www.rics.org
► Business Ethics, an Indian Perspective by Ronald D. Francis & Mukti
Mishra, Tata McGraw-Hill