LEARNING OBJECTIVES Define Ethics and explain how ethical behavior relates to behavior govern by law and free choice. Describe how individual and organizational factors save ethical decision making. To understand the concept of Corporate social Responsibility (CSR) Managing organization ethics through CSR

INTRODUCTION Ethics and social responsibility are hot topics for today’s managers. The ethical domain of behavior pertains to values of right and wrong. Ethical decisions and behavior are typically guided by a value system. The social responsibility of a business requires the observing of business ethics. A business man should not ignore the business ethics while assuming social responsibility. Business ethics means the behaviour of a businessman while conducting a business, by observing morality in his business activities.

ETHICS Ethics is difficult to define in a precise way. In a general sense, ethics is the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong. Ethics sets standards as to what is good or bad in conduct and decision making. Ethics are the rules that help us tell the difference between right and wrong and encourage us to do the right thing and to avoid wrong thing. They can help people decide on the best course of action in situations where they aren’t sure what to do.

ETHICAL DILEMMA A situation that arises when all alternative choices or behaviors have been deemed undesirable because of potentially negative consequences, making it difficult to distinguish right from wrong. A company is hoping to build a new manufacturing plant and to install standard pollution control equipment in this plant the cost will be Rs. 10 lacks. The plant will employ many local workers from the very poor families. On the other hand my research shows that pollutions from the factory could potentially damage the local fishing industry. What you will do in this situation??? Managers must deal with this type of dilemma and to solve the same they have to enter in the domain of ethics. Now turn to approaches to ethical decision making that provide criteria for understanding and resolving these types of difficult issues.

Ethical Dilemma in workplace Ethical behavior can be rationalized by convincing yourself that: Behavior is not really illegal. Behavior is really in everyone’s best interests. Nobody will ever find out. The organization will “protect” you.

FACTORS INFLUENCING ETHICAL BEHAVIOR The person Family influences, religious values, personal standards, and personal needs. The organization Supervisory behavior, peer group norms and behavior, and policy statements and written rules. The environment Government laws and regulations, societal norms and values, and competitive climate in an industry.

FACTORS AFFECTING ETHICAL CHOICES When managers are accused of lying, cheating or stealing, the blame is usually placed on the individual or on the company situation. Most people believe that individuals make ethical choices because of individual integrity, which is true, but it is not the whole story. Ethical or unethical business practices usually reflect the values, attitudes, beliefs, and behavior patterns of the organizational culture ; thus, ethics is as much an organizationa l as a personal issue. Examine how the manager and organization shape ethical decision making.

ETHICAL BEHAVIOUR RESPECT FOR HUMAN DIGNITY Create culture that values employees, customers, and suppliers. Keep a safe workplace. Produce safe products and services. RESPECT FOR BASIC RIGHTS Protect rights of employees, customers, and communities. Avoid anything that threatening safety, health, education, and living standards. BE GOOD CITIZENS Support social institutions, including economic and educational systems. Work with local government and institutions to protect environment

FACTORS INFLUENCING ETHICAL BEHAVIOR

How Can High Ethical Standards Be Maintained? Areas often covered by codes of ethics: 1. Care for All Stakeholders 2. Respect to human rights 3. Respect to all human activities 4. Respecting and Protecting of Natural Environment 5. Ethical Functioning 6. Social Development and Inclusive Development 7. Maintain the Organisation’s Reputation

HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED? If we want to emphasis on these areas then we have to give focus on… CORPORATE SOCIAL RESPONSIBILITY

Perspectives on corporate social responsibility: Classical view— Management’s only responsibility is to maximize profits. Socioeconomic view— Management must be concerned for the broader social welfare, not just profits.

CORPORATE SOCIAL RESPONSIBILITY Corporate social responsibility concerns a company’s values toward society. How can organizations be good corporate citizens? The model for evaluating social performance uses four criteria: Economic responsibility met? Legal responsibility met? Ethical responsibility met? Discretionary responsibility met?

CSR IN COMPANIES ACT, 2013 With a view to have greater responsibility towards society by the corporates, 2013 Act, provides for CSR: Provisions applicable to every company having: – net worth of Rs. 500 Crore or more ; or – turnover of Rs Crore or more ; or – net profit of Rs. 5 Crore or more

CSR IN COMPANIES ACT, 2013 During any Financial Year Such companies are required to constitute CSR committee of its BOD which is responsible for formulating and recommending to the BOD the CSR Policy of the company. This committee needs to comprise of three or more directors, out of which, at least one director should be an independent director. The composition of the committee shall be included in the board’s report. The committee shall formulate the policy, including activities specified in Schedule VII. This Committee of such companies is mandated to spend, in every FY, minimum 2% of the average net profits of the company made during the 3 immediately preceding FYs, in pursuance of its the CSR Policy.

RELEVANT PROVISIONS ON CSR IN COMPANIES ACT, 2013 BOD is required to approve the CSR policy and disclose its content in the Director’s Report and also place the same on the company’s website. The company is required to give preference to local area and areas where it operates for spending the amount earmarked for CSR. If the company fails to spend such amount, BOD is required to specify the reasons for not spending the amount in the Director’s report. In view of the mandatory requirement under the 2013 Act, expenditure on CSR may be allowed as deduction under the Income Tax Act depending on the facts,

EXCEPTION An unlisted public / private company which is not required to appoint independent director shall have its CSR Committee without independent director. A private company having 2 director on its board shall have CSR committee with 2 such directors. In case of a foreign company covered under CSR Rules, the Committee shall comprise at least 2 person - 1 shall be authorized person ( section 380(1)(d)) and another nominated by foreign company.

CSR ACTIVITIES Schedule VII of the Companies Act, 2013 sets out the activities, which may be included by companies in their CSR policies. These activities relate to; eradicating hunger and poverty and malnutrition etc. promotion of education etc. promoting gender equality etc. ensuring environmental sustainability etc. protection of national heritage etc. measure for the benefit of armed forces veterans, war widows and their dependents training to promote rural sports, nationally recognized sports, Paralympic / Olympic sports contribution to Prime Minister National Relief Fund etc. contribution or funds provided to technology incubators located within academic institution which are approved by CG. rural development projects women empowerment such other matters as may be prescribed

ethics and social responsibility in leadership and the managerial role

CONCLUSION I f we want to maintain the ethical standard in our organisation from all aspects then we have to give importance on CSR. Therefore, it is imperative to understand that Business Ethics cannot be reached to the ultimate target users without influential and penetrative role of CSR and they are intimately related. CSR makes the organisation ethical.