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Business ethics refers to a kind of behavior in which business is going through it daily routines with the world. In a world of the business, ethics are generally diverse. It is mainly a way to interact with world and also a technique to interact one by one to the customer. In business it is necessary to travel through a right manner and the principles, these principles are understood through business ethics .It is generally a concept which deals with what is wrong? & what is right? In business and what is the effect of products, services and the relationship with a business market. Business ethics are supported not only in the field of business, law and philosophy but also in other aspects. Business ethics is an extremely good process to understand moral issues through it. Business ethics approach to different kind of branches such as leadership, morality, philosophy and also stake holder value driven behavior. (McNamara, 2010)
Business Ethic Program
For the creation of the business ethic program it is necessary to implement all the principles under it
Improvement of the Business performance of any organization or a company depends upon the responsible strategies and business ethics. And all the strategies are performed through various tasks under business performance. The benefits and business performance of an organization contains following key points:
Gather Reputation and goodwill
An organization or company reputation is essential for securing loyalty of users and costumers; it is also helpful in recruiting and retaining the best and honest employees, for making choice of business partners, getting community acceptance, or for acceptance of credit and capital. Ethic program give contribution for integration .It gives guidance to our employee and agents so they know who is the responsible in Business conducts .It also minimizes disputes in between stake holders and customers and also increase stake holder satisfaction. (Mcgill, 2010)
It is essential for an organization or a company that there is minimum risk. It is being strictly with law and subject to risks such as -:
i) It is used to expose to the criminal prosecution for bribing to a government contracting officer.
ii) It is being debarred from a government contracting officers. And also a strategic partnership is for appropriate gift.
iii) Recalling of products when failure to follow quality standards and procedures.
iv) By dealing with lost employee time for safety and health problem.
By giving clear guidelines that how to perform day to day business in the real world with the help of Business ethic program to staff we can easily improve the cost. In this guideline it is quite clear that how we conducts bid and tenders, how we conclude contracts, how we use confidential information, how we work with users and costumers and how we avoid conflict of interest etc.
Protection with agents and Unethical employee
It is generally not very pleasant to contemplate but the organization or company itself often abuse with agents and employees. Frauds of organization and company are another example. Carrying of supplies and tool, cheating on a time card and other losses happens in business every year which is large or small. It is been analyzed that companies in USA lose some 7% of their revenues yearly because of employee misconduct. This ethic program is generally constructed to establish procedures and standards to analyze violation of trust which put in employees. These Standard and procedures are process to protect company or organization assets. It is also use in monitoring, reporting systems and auditing systems. (Hooker., 2010)
Sustained long term growth and Increase profits
The responsible business discipline does not deliver instants results. Business ethics contains infrastructure and process of regular monitoring of compliance with ethics and law which help a company or organization to be more reliable and more stable over a time.
Strategy of Responsible Business
It is generally provides an approach to implement and design a business ethic program. It also provide knowledge that how one can easily help to improve performance, gain profits and in increasing prosperity of an organization or company to meet the expectations of stake holders. It also improved the management challenges of Business.
Strategies and planning
All company and organization set up their strategies to meet their objectives and goals. Business ethic program is generally a process which helps manager or owner to improve the business performance, profits and in contribution to economic progress by achieving reasonable expectations for stake holder .It also provide awareness for ethical issues, improvement of decision making and reduction of misconduct. To be more efficient and effective business ethic program have formal plan because it generally touches all and every aspects of company and organization human resources, marketing, communication. In formal planning it is necessary to ensure that managers and owner give due consideration to the company and organization relevant context, organization structure and reasonable stake holders expectations .It provides clear and systematic approach to guide managers and owners through that process. Manager does not need to fear from the formal planning for business ethic program. The process of planning needs to target stake holder participation more than large numbers of staff members. (khan)
Establishment of the Program Nature
A manager and owner should have to define and communicate all reasons and purpose of business ethic program as soon as possible. Responsible management should have to analyze that an effective business ethic program implement every decision and activity of an organization. It provides patterns, thoughts, action and choice to shape the organization structure. The program is generally based on core beliefs of an organization and fulfills all approach or orientation for employees and stake holders. After research and analysis, two factors come in first -:
The ethics is generally important for leadership from executive manager to supervisor.
Secondly employees believe that they are treated completely fair.
This is completely essential for both the organization or company policies and management actions are fair and consistent .And that reward system support all the ethical behavior. After analyzing it is found that familiar with code of conduct is not so important.
The Program Orientation
When we are talking about effectiveness of program it is always closely related to the orientation of employee perceptions of a business ethic program. The orientation of program is generally divided in to four primary orientation .The orientation always reflects manger and owners motivation in implementing and designing the program and it is one of an important condition of program effectiveness.
So the four primary orientations are as follows:-
1) In primary orientation first is used Compliance based approach which generally work on focusing primary on preventing, violation of law punishing and detecting or analyze.
2) In this second is used value based approach which works on defining organizational values and encourage commitment of employees to ethical aspirations.
3)Third is used to satisfying external stake holders approach by which organization hope to improve or maintain their public image and their relationship with stake holders.
4) Last is a protecting senior management approach by which it is always introduced to protect senior management and protect owner for ethical problem and failures.
These primary orientations are generally not mutually exclusive. In the ethic business program value based program always tend to be more effective.
Building a Responsible Based organization
Each organization and company has a unique ethic character. In this character quietly guides the entire member to think and say to do. It effects how external stake holders view the organization and company.
ADDEDIdentification of four level of organization is shown in figure. There is generally four levels reputation, compliance, risk management, value added .And to achieve the goals of ethic we have to set objectives for all level
Fig-1 Levels of an Enterprise's Identity
Level First Compliance
In the first level it is necessary to solve all legal requirements to prevent effective program and detect misconduct. The average business of an organization faces all the requirement and constraint. It is generally not enough that an organization must be intends to be law abiding. Compliance always requires that an organization able to demonstrate and it is pursued management practices.
Level Second Risk management Level
It is necessary to make Business ethic and compliance program more effective some argues that organization should go beyond compliance and symmetrically consider the market risks and other risk which an organization faces. This involves competition risks, activities, polices, examine organization, looking deeply at organization culture. Protecting the reputation of organization, risk management is an important level. All consequences which are failed to address these risks are not limited to, regulatory position, not satisfaction of stake holder, staff of labors disagreement, strategic partnerships.
Level Third reputation enhancement
It is always necessary to improve the reputation of organization by responsible business conduct. In the recent times the number of stake holders in the organization is expanded including media, non government and international institution. It is very effective and positive step to enhance ones reputation by making choice and act in such a manner that some ones deserve a good reputation. In a large number of members enhancing one's reputation and most diverse stake holder are represented by the third level.
Level Four Value Added Level
In the organization increasingly response business conduct generally included added through its decision and activities. It is commonly understood that every organization business needs a profit for growth and regular development. And it is also needed to see impact on stake holders. For example there are many organization have a quality assurance program to meet their goals to fulfill the needs of customers. It is generally considered as part of ethic business program, production of goods and the quality of service may constitute consumers fraud. (Reh.)
Analyze Strength and Weakness of Organization
It is very necessary in the organization to understand its strength and weakness according to Business ethics. Its infrastructure should be designed to encourage actions and responsible choices. All organizations have strength and weakness and it is also needed to perform strength and weakness.
In the figure it is quite clear that strength and weakness of organization. Owners and manager design a business ethic for its organization standards.
Fig-2 Best Practices Reflect Enterprise Strengths and Deal Business with Weaknesses
Knowing about the structural component of the Program
When a organization under takes to design a business ethics program than we have to find out answer what is require at a minimum to comply with law and also the area of accountability for managers and policy makers. If the managers sit on board of directors and owner is a senior manager than different roles and responsibilities need to be respected. In governance for example takes the major view setting policies to guide agents and employees also including with owner. The organization owner is the source of corporate board's authority. Pivotal authority is in the board. The board is always considers as a real adviser to the management rather than its source of authority. In the growing market economies lack of strong voice with stakeholders may lead assets to rent diversion and stripping and as a result corporate business governance under different stages of review and also reform in nation across a globe. (Hooker., 2010)
Islamic Business Ethics:
People have to confront with ethical issues everyday and it is actually difficult for them to understand how to deal with them .Recent surveys in USA and other countries reveal problems due to unethical behavior in organizations .Recently 2,000 surveys in USA industries disclosed some ethical problems mentioned below which are really a matter of concerned for managers :
Using abusive language due to drugs and alcohol
Quality control considered as a major issue
Discrimination in hiring and up gradation
Confidential information are misused
Company expense accounts' abuse
Company assets' are misused
Globally, values of business ethics are insufficient and actually something to be concerned about .In a recent survey of 300 companies all around the globe, almost 85% of managers revealed that the issues which are mentioned below are in their top list to concern about: Confliction in the interest of employees,
Miss of satisfaction in gifts, authorization in the payments and Sexual harassment are not allowed.
Even for Muslim businessman ,behaving ethically is very popular .Islamic business ethics governs all prospects of life .The conditions for them to achieve unbeatable success is common for all of them: whether it about behaving ethically in business or it is about behaving in daily life activities .According to Allah successful people are those who:
Allow that in their life which is good (khayr)
Right things are enjoyed (ma'ruf)
Prevent which is not right (munkar).
Ethics can be defined as principles which can make someone able to differentiate between right and wrong, which one should not only understand properly with appropriate meaning but also try to inculcate such principles in their each and every step of life .A person following such morals and lessons would definitely one day live a successful and prosperous life .But business ethics is limited to management ethics or rather it can be assumed that it is only confined to ethics which are particular for an organization which is necessary for its skyrocketing growth. (khan)
In Islamic culture, term which is very close to ethics in the Qur'an is khuluq . Qur'an describes goodness in following different names: birr (righteousness), khayr (goodness), 'adl (equilibrium and justice), qist (equity), ma'ruf (known and approved), taqwa (piety) and haqq (truth and right).
Factors shaping Islamic ethical behavior
Ethical behavior depends on following factors which really shapes and defines what points should be remember in mind to behave ethically in every situation .This factors are shown with the help of following figure to make it easier to understand.
Legal interpretations are based on present scenario and often ephemeral values and standards in some societies; but in Islamic culture such values and standards are defined by the Shari'ah and the collection of previous fiqh judgments. The result of inculcating such values and standards in lives is amazing and very astonishing too .Some time before, in USA it was acceptable and legal to discriminate against women and low standard people .But now after protesting such illegal rules in the country and injustice for women, it has become illegal to discriminate against women .On the other side ,in Islamic culture women and other low standard people are provided with permanent equal rights as others, discrimination word is nowhere, it is totally regarded as illegal. In Islamic culture, whatever the morals and principles used, are similar for all, no differentiation. What Prophet said to Abu Dharr is a great example:
"You are not good than those whose skins are red or black colored"
Islamic culture does not believe on caveat emptor concept which is considered as valid according to western culture. In Islamic culture, people used to practice the teachings and principles of their divinity, Allah. The Hanafis' meaning by Islamic law
"If the vendor wants to sell some property of a certain desirable quality and if the property proves not to achieve what is actually requires, the purchaser either can cancel the sale, or can accept the thing which need to be sold for the whole of the fixed price. This is named as "miss description".
Anas Ibn Malik describes the following hadith. Haidth is the way of life prescribed as normative for Muslims which is based on the practices and teachings of Muhammad and interpretations of the Qur'an.
Allah's (peace be upon him) messenger forbade the sale of fruits till they are almost ripe. And Anas asked the Allah what is the meaning of "are almost ripe." so than he replied "Till they become red." Messenger of Allah further said that if Allah spoiled the fruits than what right would one's have to take the money of the brother. (khan)
The organization also affects individual's ethical behavior. This is the only factor which is powerful enough to take the organization to the unexpected level of success .The overall ethical environment depends on the sincerity and commitment of the organization's manager or rather leader towards business ethics .This sincerity and commitment can be shown through speeches, ethics codes and publications, so that organization's other employees will also learn and follow similar principles of business ethics which will lead the organization to zenith of success and achievements etc., up to where no one can compete.
For example, Xerox corporation release a15 pages of ethics code, a small part of which is mentioned as following
According to them they are really honest to their customers. There are no bribes of any kind; no other kind of deal, there is no fooling around with money and prices, no other secrets. A kickback of any other form can easily kick out anybody.
Ethical behavior is assumed to be taken as a serious matter to think about, because it is the key factor to success .The code of ethics are developed by various organizations and people there are expected and required to follow them sincerely and with full commitment ,only legal approaches are valued, and if an organization started believing on ethics code then there should be no place for illegal doings .Some organizations are trading or selling, which can be assumed as fake products or services ,are
actually applying illegal methods to grow and also having code of ethics .This practice is seriously not appreciated .Organizations which are conducting illegal work ,and also maintaining ethics code is erroneous for them as Allah Subhanahu wa ta'ala has said in the Qur'an:
They ask you for any wine and gambling. He answered that there is great sin in them and some profit for men but the sin is larger than the profit. (Reh.)
The companies and organizations which are generally involved in the illegal kind of business can generally really promote the behavior and ethical values through code of ethics.
Individual's have their own different ethical values and they behave accordingly .These individual factors and their ethics affects whole organization and affect the whole bunch .So, it should not be taken for granted, rather it should be handle with care and hence taken with sincerity.
Factors affecting Islamic ethical behavior include:
Moral development stages
Personal values and morals
Stages of Moral Development
Individual have two phases of moral development:
The prepubescent stage
The adulthood stage
The Allah's Apostle said:
According to them generally there are always three kind of situations in which action of person are not recorded when a sleeper sleeps until he awakes, an idiot, and when a boy till reaches puberty.
So according to that point is quite clear from the above point that people are never held responsible for their own actions when they are feeling Sleepy, child before puberty and Lunatic .Because in that situations he is not assumed to be in his own senses, what he does in that situations is unconsciously and unknowingly.
Islamic scholars describes following stages of development of soul of a human being, except his physical and mental development:
1) ammara which is related to malign and if it is not controlled then it can lead to hell
2) lawwama which is related to consciousness of evil and person feels his wrongdoings and have chances to lead to redemption.
3) The highest phase, where soul of person achieves full satisfaction and not at all linked to any evil and misconducts. (khan)
Personality and Personal Values
A person who has his own ethical values and morals will behave differently from others and he will be treated everywhere in a quite different manner from non-ethical person .His ethics and personal values will affect his personality and ethical standards."Honesty is a best policy" is a great say and if someone actually believes on the fact he can easily make himself unique from the bunch and will be treated as an ethically behaved and respected person everywhere.
Abu Hurayrah describes:
When the Prophet was delivering something, a Bedouin asked him, "When will the Hour (Doomsday) take place probably?" Allah's Apostle continued his talk, so some people said that Allah's Apostle (peace is upon him) had heard the question, but did not like what that Bedouin had asked. Allah apostle not heard it said by some of them.
When the Prophet done with his speech, he said where the person, who questioned about the Hour (Doomsday), is? The Bedouin said to him that I am here O Allah's Apostle after that the Prophet (peace be upon him) said to him that when honesty is lost then wait for the Hour (Doomsday). Than Bedouin said, "How that is would be lost? " , and after some times the Prophet (peace is upon him) said that when the power or authority comes in the hands of useless persons, then only wait for the Hour (Doomsday)."
A person's ethical behavior depends on his locus of control .A locus of control measures how much a person believes that his ethical behavior influences his life .If a person starts thinking so, he can increase his locus of control and hence his life can become comparatively beautiful .Locus of control can be defined in two ways: Internal locus of control and External locus of control .In Internal locus of control, person believes that he is only one who can control his events of life and his own internals affects his life and hence the outputs .And then accordingly he starts to change himself rather than blaming others for his own action .But in the external locus of control, a person believes that luck and divinity etc. are affecting his life and his outcomes .So, leaving everything in the god's hand and blaming others for his own outputs, he starts believing that these are the things which are forcing him to behave as ethically or unethically .So, internal locus of control is far better than external locus of control. (Reh.)
Individual starts learning ethical values from his childhood only .Prophet explains family influence on a child as following: Command your children to pray when they become seven years old, and discipline them for it (prayer) when they become ten years old; and arrange their beds (to sleep) separately. First teacher for a child is his own family .According to Islamic culture ,if you wants your child to be a good muslin , you must try to teach him good and valuable lessons and try to inculcate good ethical values in him from his childhood only .Not only this, a child learns more from watching your actions rather than listening you, so it is better if you also try to inculcate same values in you also .Keep in mind that if they are rewarded for their good ethical values than they should also be punished for their unethical actions .Sometimes mixed messages from parents lead to their child's unethical behavior and even they are not able to understand that what is actually happening .For example, on one side you are telling him something is wrong and on the other side you are yourself unknowingly engaging him in the same task in some other manner.
As the child grows and started going to school, where they are greatly influenced by their peers with whom they interact daily have also a major role in maintaining child's ethical behavior .Child has a great power to imitate what they see in their surroundings .So, if their company is ethically behaved then they will also learn to behave in the same manner .On the other side, opposite is also possible if peers are not well behaved.
Here every positive and negative experience of life affects the further life and also person's ethical behavior .A person always learns from his experience and from the people surrounding him, but it really matters how he is taking his experience positively or negatively. For example: Malcolm X's Hajj experience actually affects his later years as a Muslim. There were so many pilgrims, all over the world. They were of different colors, ranges from blue-eyed to black-skinned Africans. But we tried to participate in the same ritual, displaying a spirit of unity and brotherhood that my America experience forced me to believe that it is impossible to have something between the white and the non-white.
America should understand Islam, because this is the only religion that erases race problem from its society. I have never seen such brotherhood and sincerity practiced together by all colors, irrespective of their color. You may be shocked by listen my words. But, what I have experienced, and seen on this pilgrimage has forced me to re-arrange much of previously held thought-patterns, and to toss aside some of my previous conclusions. (Mcgill, 2010)
Person's behavior sometimes depends on the situations also .And it is accepted that people starts behaving unethically in some situations, viz. when the situation is not according to them .For example: A manager mostly behave illegally when they are going in losses .So, sometimes it is all about situations to situations .In Islam, debt is the main reason for a person to behave unethically.
In a hadith by Aisha:
Somebody said to [the Prophet], "Why do you seek refuge with Allah so frequently from being in debt?" The Prophet replied, "A person who is in debt tells lies whenever he speaks, and he usually breaks promises whenever he makes (them)." (McNamara, 2010)
Discussion of Business Ethics of UAE
Politics: UAE is the one of the liberal countries on the Gulf and its first elections held in December 2006.
Economy: These people have generally higher standard of living, they have a rich market in the oil trade, so people enjoy rich economy there. Tourism and regional trading are two other factors for which UAE economy is highly popular and increases the living standard of people in the region providing them employment in the various public and private sectors.
International: As far as international issues are concerned, there is always stress remains in between UAE and Iran over some Gulf islands and as a result of this US describes UAE as "war on terror"
Specifics of business ethics in U.A.E
The major concept in UAE is of CSR which is related to young field of interest, which is very different from western business ethics. Muslim have the majority there and people really value their family which is a very important regarding ethical values .Family should be on priority anytime, any situation .UAE business ethics concerns about highly control on the people where there is matter of criticism on government .Government is a body which controls the whole nation, so it is better to avoid any criticism on it, to make it work more effectively. They have minimum regulation for business and adopts policy of individualistic .They have a vast advancement in the financial sector and banking services, and in the Arab world too rise to economy also. Integration between Western modernity and deeply rooted cultural traditions and religious beliefs, this great combination develops a unique business culture. It is nothing new for them to help poor and have active participation in the charity. Business is not assumed only for their own profit but they try to help the society and other shareholders.
There is a requirement of CSR practices to establish local firms and also develop mutual understanding between the international firms operating. Islam has high influence on businesses that proves to be a strong foundation to develop CSR practices and policies. Economy which is dependent on foreign labor businesses try to increase competition by improve quality, reducing cost, and maintain a free economic atmosphere and social responsibility. (Reh.)
Some CSR Hot topics in the UAE
There is a trade of formation and regulation of unions.
There is great problem with female employees in UAE.
Fight happens due to corruption. Results: 2008 position of the Emirates on Transparency International's CPI list: 35th of 180 countries, better than most new EU member states. (Reh.)
In today's modern scenario organization and other business communities are moving on the path of ethical values .They are highly building tree of ethical values and developing ethical codes for deeply indulging such values in their employees for their overall personality development .The Western business ethical values are considered as to be as relative, situational and utilitarian .On the other side, Islamic ethics code are humane, not relative or utilitarian unlike western ethical values .Islamic ethical values are part of their faith for a happy life forever .Islamic people promise to always follow the path of legal and ethical values and hence they create confidence and surety , and responsibility towards ethics in the minds of their followers and that is how they always have been successful in gaining people's confidence and guide them to always remain true whatever the situations confront them. Islamic ethical values are highly far reaching, comprehensive and multidimensional. The fundamental factors like trustworthiness, truthfulness, contracts and strictness towards business commitments, leniency and treating workers very nicely, try to avoid evil practices (such as cheating, fraud, exploitations, deceit etc.) are key factors which exactly defines Islamic business ethics.