Ethics & IHRM
Ethics may be defined as an individual’s or society’s beliefs regarding what is right and wrong, or good and bad.
Ethics is about how our decisions affect other people.
It is also about the rights and duties of people, the moral rules that people apply in decision making and the nature of relationships in a society.
Managerial Ethics refer to the standards of behavior of individual managers in their work.
Four Levels of Ethical Questions in Business
Societal – At the societal level, we ask questions about basic institutions, practices and behaviors in a society.
For example, is racial discrimination right?
Is capitalism the just system to allocate resources in a society?
Stakeholder – At the level of the stakeholders of a business, such as customers, shareholders, suppliers, etc., the ethical issues concern, disclosing correct information to customers, insider trading, relationship and trust with suppliers, etc.
Internal Policy – Ethical issues relating to internal policy concern nature of employment policies, fairness of job contracts, work rules, motivation, layoffs, etc.
Personal – At the personal level ethics refers to individual behavior in an organization and covers issues of honesty, professional integrity, etc.
Tools of Ethics
Values – are beliefs that are
Relatively few in numbers
Serve as a guide for culturally appropriate behavior
Enduring or difficult to change
Not tied to specific objects or situations
Widely accepted by members of a society
Values are the answers to the “why” questions.
Rights – Claims that entitle a person to take a particular action
Duties – obligations to take specific steps or obey the law
Moral rules – Rules for behavior that often become internalized as moral values
Relationships – People are related directly or indirectly in a society, which makes ethical behavior necessary
Common morality refers to the body of moral rules governing ordinary ethical problems.
Some basic principles of common morality
Respect for Persons
Respect for Property
Approaches to Ethics
In the international context, there are three approaches to Ethics
Ethical Relativism – The belief that there are no universal or international rights and wrongs. So, an MNC may adopt the practices that are accepted as right in each country, regardless of whether such practices are accepted as right in the home country
Ethical Absolutism – The belief that an MNC should only follow what is accepted as ethical in its home country, regardless of which country it operates in.
Ethical Universalism – The belief that there are certain fundamental principles of right and wrong that are universal in nature and accepted by every culture. MNCs while operating in different countries must adhere to these universally accepted principles of right and wrong.
Ethics & IHRM
The existence of universal principles of right and wrong is to an extent proved by the adoption by many countries of the world of certain universal codes of conduct. For examples:
The UN Declaration of Human Rights
Guidelines for MNEs adopted by OECD countries
Caux Round Table Principles of Business
The Caux Principles
The Caux Round Table believes that the world business community should play an important role in improving economic and social conditions. As a statement of aspirations, this document aims to express a world standard against which business behavior can be measured. We seek to begin a process that identifies shared values, reconciles differing values, and thereby develops a shared perspective on business behavior acceptable to and honored by all.
The Caux Principles are based on two basic ethical ideals:
The Japanese Principle of Kyosei – which means living and working...