Tuesday, June 22, 2010

Operational areas of financial ethics

In the sections devoted to ‘Financial Ethics’ in ‘Business Ethics’ text books ethics of financial markets, financial services and financial management are discussed Fairness in trading practices, trading conditions, financial contracting, sales practices, consultancy services, tax payments, internal audit, external audit are discussed in them.

Creative accounting, earnings management, misleading financial analysis.
Insider trading, securities fraud, bucket shops, forex scams: concerns (criminal) manipulation of the financial markets.
Executive compensation: concerns excessive payments made to corporate CEO's and top management.
Bribery, kickbacks, facilitation payments: while these may be in the (short-term) interests of the company and its shareholders, these practices may be anti-competitive or offend against the values of society.

Ethics of human resource management

‘Human resource management’ occupies the sphere of activity of recruitment, selection, orientation, performance appraisal, training and development, industrial relations and health and safety issues where ethics really matters. The field since operate surrounded by market interests that commodify and instrumentalize everything for the sake of profit claimed in the name of shareholders, it should be predictable that there will be contesting claims of HR ethics . Predictably, ethics of human resource management is a contested terrain like other sub-fields of business ethics. Business Ethicists differ in their orientation towards labour ethics. One group of ethicists influenced by the logic of neoliberalism propose that there can be no ethics beyond utilizing human resources towards earning higher profits for the shareholders . The neoliberal orientation is challenged by the argument that labour well being is not second to the goal of shareholder profiteering. Some others look at human resources management ethics as a discourse towards egalitarian workplace and dignity of labour.

The Discussions on ethical issues that may arise in the employment relationship, including the ethics of discrimination, and employees’ rights and duties are commonly seen in the business ethics texts While some argue that there are certain inalienable rights of workplace such as a right to work, a right to privacy, a right to be paid in accordance with comparable worth, a right not to be the victim of discrimination, others claim that these rights are negotiable. Ethical discourse in HRM often reduced the ethical behavior of firms as if they were charity from the firms rather than rights of employees . Except in the occupations, where market conditions overwhelmingly favour employees, employees are treated disposable and expendable and thus they are defenselessly cornered to extreme vulnerability The expendability of employees, however, is justified in the the texts of ‘business morality’ on the ground the ethical position against such an expendability should be sacrificed for ‘greater merit in a free market system’(Machan, 2007: 68). Further, it is argued since because ‘both employees and employers do in fact possess economic power’ in the free market, it would be unethical if governments or labour unions ‘impose employment terms on the labor relationship’ (Machan, 2007). There are discussions of ethics in employment management individual practices, issues like policies and practices of human resource management, the roles of human resource (HR) practitioners, the decline of trade unionism, issues of globalizing the labour etc., in the recent HRM literature, though they do not occupy the central stage in the HR academics. It is observed that with the decline of labour unions world over, employees are potentially more vulnerable to opportunistic and unethical behaviorIt is criticized that HRM has become a strategic arm of shareholder profiteering through making workers into ‘willing slaves’ . A well cited article points out that there are ‘soft’ and a ‘hard’ versions of HRMs, where in the soft-approach regard employees as a source of creative energy and participants in workplace decision making and hard version is more explicitly focused on organizational rationality, control, and profitability.. In response, it is argued that the stereotypes of hard and soft HRM are both inimical to ethics because they instrumentally attend to the profit motive without giving enough consideration to other morally relevant concerns such as social justice and human wellbeing . However, there are studies indicating, long term sustainable success of organizations can be ensured only with humanely treated satisfied workforce

Market, obviously, is not inherently ethical institution that could be lead by the mythical ‘invisible hand’ alone; neither, it can be alluded that market is inherently unethical. Also, ethics is not something that could be achieved through establishment of procedures, drawing codes of ethics, or enactment of law or any other heteronomous means, though their necessity could remain unquestioned . However, though market need not be the cause of moral or ethical hazards it may serve an occasion for such hazards. The moral hazards of HRM would be on increase so much as human relations and the resources embedded within humans are treated merely as commodities .

Discrimination issues include discrimination on the bases of age (ageism), gender, race, religion, disabilities, weight and attractiveness. See also: affirmative action, sexual harassment.
Issues arising from the traditional view of relationships between employers and employees, also known as At-will employment.
Issues surrounding the representation of employees and the democratization of the workplace: union busting, strike breaking.
Issues affecting the privacy of the employee: workplace surveillance, drug testing. See also: privacy.
Issues affecting the privacy of the employer: whistle-blowing.
Issues relating to the fairness of the employment contract and the balance of power between employer and employee: slavery, indentured servitude, employment law.
Occupational safety and health.

All of the above are also related to the hiring and firing of employees. An employee or future employee can not be hired or fired based on race, age, gender, religion, or any other disciminatory act.

Ethics of sales and marketing

Marketing Ethics is a subset of business ethics. Ethics in marketing deals with the principles, values and/or ideals by which marketers (and marketing institutions) ought to act . Marketing ethics too, like its parent discipline, is a contested terrain. Discussions of marketing ethics are focused around two major concerns: one is the concern from political philosophy and the other is from the transaction-focused business practice . On the one side, following ideologists like Milton Friedman and Ayn Rand, it is argued that the only ethics in marketing is maximizing profit for the shareholder. On the other side it is argued that market is responsible to the consumers and other proximate as well as remote stakeholders as much as, if not less, it is responsible to its shareholders. The ethical prudence of targeting vulnerable sections for consumption of redundant or dangerous products/services, being transparent about the source of labour (child labour, sweatshop labour, fair labour remuneration), declaration regarding fair treatment and fair pay to the employees , being fair and transparent about the environmental risks, the ethical issues of product or service transparency (being transparent about the ingredients used in the product/service – use of genetically modified organisms, content, ‘source code’ in the case of software), appropriate labelling, the ethics of declaration of the risks in using the product/service (health risks, financial risks, security risks etc.), product/service safety and liability, respect for stakeholder privacy and autonomy, the issues of outsmarting rival business through unethical business tactics etc., advertising truthfulness and honesty, fairness in pricing & distribution, and forthrightness in selling etc., are few among the issues debated among people concerned about ethics of marketing practice.
Ethical discussion in marketing is still in its nascent stage. Marketing Ethics came of age only as late as 1990s . As it is the case with business ethics in general, marketing ethics too is approached from ethical perspectives of virtue, deontology, consequentialism, pragmatism and also from relativist positions. However, there are extremely few articles published from the perspective of 20th or 21st century philosophy of ethics

One impediment in defining marketing ethics is the difficulty of pointing out the agency responsible for the practice of ethics. Competition, rivalry among the firms, lack of autonomy of the persons at different levels of marketing hierarchy, nature of the products marketed, nature of the persons to whom products are marketed, the profit margin claimed, and everything relating the marketing field does make the agency of a marketing person just a cog in the wheel. Deprived of agency, the hierarchy of marketing hardly lets one with an opportunity to autonomously decide to be ethical. Without one having agency, one is deprived of the ethical choices.

Marketing ethics is not restricted to the field of marketing alone, rather its influence spread across all fields of life and most importantly construction of ‘socially salient identities for people’ and “affect some people’s morally significant perceptions of and interactions with other people, and if they can contribute to those perceptions or interactions going seriously wrong, these activities have bearing on fundamental ethical questions” . Marketing, especially its visual communication, it is observed, serve as an instrument of epistemic closure restricting worldviews within stereotypes of gender, class and race relationships.

1.Pricing: price fixing, price discrimination, price skimming.
2.Anti-competitive practices: these include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains. See: anti-competitive practices, antitrust law.
3.Specific marketing strategies: greenwash, bait and switch, shill, viral marketing, spam (electronic), pyramid scheme, planned obsolescence.
4.Content of advertisements: attack ads, subliminal messages, sex in advertising, products regarded as immoral or harmful
5.Children and marketing: marketing in schools.
6.Black markets, grey markets.

Ethics of production
This area of business ethics usually deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk.

Defective, addictive and inherently dangerous products and services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing, bungee jumping).
Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading
Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health.
Product testing ethics: animal rights and animal testing, use of economically disadvantaged groups (such as students) as test objects.

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