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April 6, 2012

Business Ethics

Business ethics
is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer.
Many businesses have gained a bad reputation just by being in business. To some people, businesses are interested in making money, and that is the bottom line. It is the manner in which some businesses conduct themselves that brings up the question of ethical behavior.

Elements of business ethics:

· Integrity

· Honesty- its said that “honesty is the best policy”

· Sincerity

· Truthfulness

· Transparency

· Generosity

· Co-operation

· Empathy

· Leadership

· Selflessness

· Openness

· Fairness

· Accountability

A well-designed and implemented business ethics program provides enterprise employees and agents with the guidance and information they need for effective, efficient, and responsible choices and actions. We often hear the term "shared responsibility", but there is no such thing as "shared accountability". One could define accountability as the "ultimate responsibility"..


Accountability is defined as “framework for justifying management organizational actions, whether they are financial or employment-related. Ajunior manager is accountable to a senior manager for the completion of an organizational program by a particular date and within budget guidelines”. The word “accountability” most often comes up in this context—someone has crossed the line and done something very wrong. What happens to this person? This captures one very common usage of the word “accountability”: the process of assigning blame and punishing wrong-doing. There is, however, a different—and more positive--way to conceive of accountability.

Let’s begin with a brief discussion of accountability. When Canada reoriented its public service five years ago to focus on ethics and values, it listed this definition and characteristics of effective accountability systems:

Accountability is the process whereby the City and its leadership are responsible for their decisions and actions, and submit themselves to appropriate external scrutiny. In effect, accountability is the obligation to answer for a responsibility conferred and accepted.

Principles of Effective Accountability Systems

a. Clear roles and responsibilities

b. Clear performance expectations

c. Balanced expectations and capacities

d. Credible reporting

e. Reasonable review and adjustment


As individuals, it is our capacity for self-accountability that keeps us functioning ethically and responsibly. While people may be accountable to others, they may not be as accountable to themselves when there is no one else to observe, monitor or hold them responsible.

Self-accountability is the cornerstone of ethics: It is who you are and what you do when no one is watching. When you have a well-developed sense of self-accountability, you are honest with yourself, and are answerable and responsible for what you say and do. You have the ability to look beyond the immediate moment to consider the consequences and know if you are willing to pay them. You have personal ethics.

Group accountability:

Boundary Management refocuses accountability from individuals to groups. This is a major shift. Holding individuals accountable has been one of the central tenets of effective management practice, and includes its extension: that individuals should only be accountable for those things that they can control. It is essentially a strategy of matching accountability and degree of control. Everyone within the organization has a set of tasks and results over which they have control and for which they are accountable.

Any time you maximize a individual element of a process, the performance of the overall process diminishes. Focusing exclusively on individuals does exactly this. In fact, it is worse. It is trying to maximize all of the elements, and is a sure way to reduce overall performance.

The traditional accountability-control strategy gives a wonderful management structure over individuals and lousy control over the group. Anything that is left unconnected to someone goes to the manager. The manager is left with the all the white space in the organizational chart, everything between the boxes. This might sound appropriate but the group and not the manager control most of these items, and what falls to the manager is not a small list. These white space items are almost always in some state of flux and therefore require attention. They require balance and definition. It is difficult for one person to do this, and nearly impossible when no one else within the group feels accountable to help, and may actually be working against the whole.

Another interesting aspect of the accountability-control strategy is its opposition to entrepreneurism. We are never in control of entrepreneurial efforts. Their very nature means that we are not in complete control. They wouldn’t be entrepreneurial otherwise. In the real world, there are really few things over which we have complete control as individuals. Business itself is founded on an uncontrollable entity: the customer. To establish an enterprise that must continuously shift to meet customer demands, and then design an internal structure that is static so people can be in control seems foolish at best.

Boundary Managementsm is based on the concept that we almost always have some control and almost never have complete control. Instead of trying to match accountability to control, we need to increase control. We have been working with the wrong side of the equation. Group accountability/control does this. As individuals, we control little. As individuals functioning as a group, we control far more than the sum of the individuals. Individuals within a group can coordinate, negotiate, and collaborate. This not only increases the current level of control but also gives the group influence where none existed before.

Groups perform as groups when they are treated as groups. If we treat individuals only as individuals, they will not perform as a group. Organizations that can make this change from individual to group accountability will be able to move faster, change faster, and perform at a higher level. Boundary Managementsm establishes group performance measures and a group focus through the use of Boundary Theory. It sets up the structure for group performance.

Organisational accountability:

The organisation is also accountable to its employees, shareholder and in a broader sense to the society (stakeholders). During recession, many companies went for lay off, but TATA group set an example infront of the nation by following the strategy of no lay off. As per Indian Companies Act, all the public companies need to disclose their financial report to the public. Organisations are also focused on trasferablity and disclosure.

Accountability acts as an agent and drive the organisation towards the path of ethic.

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