Session Agenda

• What is Ethical Decision Making?
• Steps in making Ethical Decision
• Ethical Decision Making Process
• Indian Companies that follow ethical values.
• Ethisphere Ethical Global Ranking Framework
• Coca Cola, a case study
• Ethics and Ecolab, US, a case study

 What is Ethical Decision Making?

• Ethical decisions inspire trust and with it fairness, responsibility and care for others. 
• The ethical decision making process recognizes these conditions and requires reviewing all available options, eliminating unethical views and choosing the best ethical alternative.
• Good decisions are both effective and ethical. In professional relationships, good decisions build respect, trust, and are generally consistent with good citizenship.
• Effective decisions are effective when they achieve what they were made for. A choice that produces unintended results is ineffective and therefore not a good decision making.
• The key to making good decisions is to think about the different choices that lie ahead in order to achieve the objectives. For that reason, it is also very important to understand the difference between short-term vs. medium to long term objectives.
• Making ethical decisions requires a certain sensitivity to ethical issues and a method of examining all the considerations associated with a decision. Having a method or structure for making ethical decisions is therefore essential. After this process has been performed a few times, the method is trusted and it is easier to walk through the steps.
• Description of ethical decision-making methods is given in the next slide.

Framework for ethical decision making:

• If ethics is not based on religion, feelings, law, social practices or science, what is it based on? Countless philosophers and ethicists have attempted to answer this critical question. At least five different ethical norms or standards have been proposed. The most important are explained below.

1. The Utilitarian Approach:

• This approach dictates that the action that is the most ethical is the action that produces the most good and causes the least harm. In other words, the decision that strikes the greatest balance between good and evil.
• In a business environment, it is therefore the decision that yields the most benefits and causes the least damage to customers, employees, shareholders, the environment, etc.

2. The Right Approach:

• The right approach suggests that the most ethical decision is the one that best protects and respects the moral rights of all concerned. This approach argues that people have a dignity based on human nature or their ability to freely choose what they want to do with their lives.
• Based on that dignity, they have the right to be treated equally by others and not just as a means to an(other) end.

3. The Fairness or Justice Approach:

• All equals should be treated equally. The Greek philosopher Aristotle and others contributed to that idea. Today, this idea is used to indicate that ethical decisions treat everyone equally. If not equal, this must be based on a standard that is explainable.
• People are paid more for their hard work when they contribute more to the organization. That is fair. But many wonder whether the salaries of CEOs, some 100 times higher than others, are fair. Is this standard defensible?

4. The Common Good Approach:

• The Greek philosophers also contributed to the idea that living in a community is a good thing. This approach suggests that relationships within society are the basis of ethical reasoning and acting. Respect and compassion for all others, especially the vulnerable, are prerequisites for maintaining an ethical way of life.

5. The Virtue Approach

• An ancient approach to ethics is the belief that acting ethically must be in accordance with certain virtues that ensure the development of humanity in general. Virtues are tendencies and habits that enable man to act with the highest potential of human character.

Ethical decision-making process and roadmap

Below is a summary of the roadmap for the ethical decision-making process.

1. Gather the facts: Don’t jump to conclusions until the facts are on the table. Ask yourself questions about the issue at hand, such as the 5 whys method. Facts are not always easy to find, especially in situations where ethics plays an important part. Some facts are not available or clearly demonstrable. Also indicate which assumptions are made.

2. Define the ethical issue: Before solutions or new plans can be considered, the ethical issue is clearly defined. If there are multiple ethical focal points, only the most important should be addressed first.

3. Identify the stakeholders: Identify all stakeholders. Who are those primary stakeholders? And who are the secondary stakeholders? Why are they interested in this issue?

4. Identify the effects and consequences: Think about the possible positive and negative consequences associated with the decision. What is the magnitude of these consequences? And what is the probability that these consequences will actually occur? Distinguish between short-term and long-term consequences.

5. Consider integrity and character: Consider what the community thinks would be a good decision in this context. How would you like it if the national newspaper wrote about your decision? What is public opinion? How does your character and personality influence the decision to be made?

6. Get creative with potential actions: Are there other choices or alternatives that have not yet been considered? Try to come up with additional solutions or choices if a small number is considered.

7. Decide on the right ethical action: Consider the options based on each option’s consequences, duties, and character aspects. Which arguments are most suitable to justify the choice made.

 Ethical Decision Making Process

• It's often clear what's right and wrong in a situation, but occasionally, the lines can get a little blurry.
• When you encounter so many diverse viewpoints on a daily basis, your wrong can seem right to someone else, and vice versa. In these instances, it's critical you and your team know how to make ethical decisions for the company.
• Ethical decision making is the process in which you aim to make your decisions in line with a code of ethics. To do so, you must seek out resources such as professional guidelines and organizational policies, and rule out any unethical solutions to your problem.
• Making ethical decisions is easier said than done. Maybe your co-worker lied to a client about a deal, but you personally like this colleague and want to give him the benefit of the doubt. 
• Or, perhaps you're tempted to lie to your boss to avoid admitting your team missed a deadline. 
• Whatever the case, it's critical that you have a tangible set of steps to follow the next time when you need to apply your ethical decision making skills at work. 
• Let's take a look at those steps now.
• When you're making a major decision for your company, it can be tempting to choose the easiest or most cost-effective course of action -- even if that option isn't the best from an ethical standpoint. 
• The PLUS model, derived by some ethical management experts, is a set of questions designed to help you make a decision from an ethical point of view and it can ensure you're doing the right thing.
• The PLUS model may not especially focus on revenue or profit, but rather urges leaders to take a legal and fair approach to a problem.
• The components of PLUS Model are:
  • P = Policies and Procedures (Does this decision align with company policies?)
  • L = Legal (Does this decision violate any laws or regulations?)
  • U = Universal (Is this decision in line with core values and company culture? How does it relate to our organizational values?)
  • S = Self (Does it meet your standards of fairness and honesty?)
• Once you've considered potential solutions using these questions as a guide, you're ready to implement the six necessary steps to make your decision.

 Ethical Decision Making Examples

1. Your team misses an important deadline, and you're tempted to tell your boss you reached it anyway.

• Likely Impact:
• It might seem like a good idea to tell your boss your team is on-track, and then work quietly to make sure that becomes a reality, but in the long-run this will only hurt you and your team.
• First, if you don't examine why your team missed the deadline, you won't know how to fix the problem moving forward.
• Additionally, your boss is meant to be a helpful resource for you, and could help you combat the issue. Lying could destroy your reputation as a leader and employee if your team or boss finds out, and it will be difficult to then prove your integrity. 
• It means short run, you are the winner but in the long run, you are the loser, that is, you may win a battle but not a war.

2. Your coworker is giving her sister a major discount on your product and it is not permitted in the company’s policy.

• It makes sense -- family is important, after all. But it's not fair or ethical if some of your customers are receiving discounts simply because of who they are, and can even be seen as a form of discrimination. 
• If the public finds out you don't follow fair rules when it comes to pricing and discounts, your entire company's integrity is at risk. 
• Either mention to your coworker that you don't feel it's fair, or report the issue to your team leader.

3. You're close to finalizing a deal when you find out some of the information you've provided to the client isn't true.

• You've worked so hard to form a relationship with your client and provide them with persuasive and helpful information, and you've finally reached the end. 
• Just when they're ready to sign the deal, though, your coworker takes a look at your slides and lets you know some of the information is outdated and is no longer applicable to the deal. 
• It's especially difficult because your job relies on you on achieving the target allotted, and you also know your boss and team will be incredibly impressed with this deal when you close it.
• Unfortunately, you could get into legal trouble for lying in a contract, and you don't want to set a precedent of lying and essentially stealing from clients to close deals. 
• Be upfront and own up to the misinformation, and then work with the client to create a new deal. Ideally, the client will appreciate your honesty. If not, at least you didn't win a deal through false measures, which might've gotten you into bigger trouble down the road.
• Using the PLUS model and the seven steps discussed already, as well as your own judgment and the opinions of your team, should arm you with all the information you need to make ethical decisions at work even when they're difficult. 

 Indian Companies that follow ethical values

• For the last 15 years, Ethisphere releases a list of the most ethical companies yearly. It picks the companies from different sectors on the basis of plenty of criteria. In 2021, the organization has recognized 135 companies from worldwide as the most ethical companies. Infosys, Wipro, and Tata Steels are the three Indian companies that featured in this prestigious list.

How Ethisphere Selected Infosys, Tata Steel, and Wipro?

• This year (2021), Ethisphere had extensive research to shortlist these companies on the basis of major criteria like the Ethics and Compliance Program of the company and Culture of Ethics in the workplace. It also considers the leadership and reputation of the company worldwide.
• In the remaining criteria, the organization goes through the governance model of the companies. Ethisphere prepares its questionnaire to get stakeholders’ feedback. It also checks the reputation of the company through media reviews. The process also considers the public domain documents to know about the companies. To prepare the current list, the data was collected till December 31, 2020.
• Wipro is one of the most reputed IT services companies in India. It has a total of 1,80,000 employees. On the other hand, Tata Steel, another selected company from India, operates in the field of Metals, Minerals, and Mining. It exports steel products to other countries as well. Tata Steel is one of the most profitable Tata group companies. Currently, it has an employee base of 32,364.
• Infosys, one of the oldest software and related services firms, is another company that joined the prestigious list of 135 countries worldwide. It is known for its cutting-edge technological solution globally. Infosys has a huge employee base of 2,43,000. Infosys employees consider the company’s work environment as one of the best globally. The company is also known for the charity works it conducts in India.
• Infosys on 23/02/2021 said that it has been recognized as the global leader in defining and advancing the standards of ethical business practices, as one of the world's most ethical companies for 2021 by Ethisphere Institute.
• Infosys was distinguished for its undiluted commitment towards integrity and making value-based decisions.
• With this, Infosys has become one of only four honorees in the Software and Services Industry globally, and one of the only three honorees in India.
• As stated already, in 2021, as many as 135 honorees were recognized spanning 22 countries and 47 industries.
• This year, the process was streamlined, and the question set expanded to gauge how companies are adapting and responding to the global health pandemic, environmental, social and governance factors, safety, equity, inclusion, and social justice. 
• Infosys showcased a strong connection between ethical practices and solid performance in the global market.
• The recognition additionally spotlighted Infosys in the areas of ethics and compliance, diversity, governance, and social initiatives.
• "2020 ushered many hardships for the world, putting us through one of the most difficult tests of all times. While addressing various tough challenges, we saw companies not just working towards earning the trust of stakeholders through resilience and a commitment to ethics, transparency, and integrity but advancing their corporate cultures for the greater good," Timothy Erblich, Chief Executive Officer of Ethisphere, said
• Timothy added: We are delighted to acknowledge Infosys for its firm commitment to creating the highest value for the communities they serve while prioritizing social imperatives. We would like to congratulate everyone at Infosys for earning this designation."
• Salil Parekh, Chief Executive Officer and Managing Director, Infosys, said, "We are extremely honored to receive this prestigious recognition from the Ethisphere Institute.“
• "Flawless execution with integrity and compliance is the cornerstone of our continued success, and we firmly believe that an integrity-based approach greatly influences business success."
• "Infosys' core values are the foundation on which we have built our success over the years. This acknowledgment further encourages us to stay committed to operating with high ethical standards and transparency, especially in these unprecedented times," he added. 

More on Ethical Values

• So, Business ethics is the foundation of any successful business. Any business organization that seeks to serve the society, its employees, its suppliers, and not merely the promoters or owners, will survive as an institution known for business ethics of a tall order. 
• There are three essential qualities that need to be nurtured by any such business organization and these are: 
  • a) looking at ethics and all that it stands for, as more important than the business itself 
  • b) institutionalizing processes that clearly communicate business ethics as the most important bedrock of the organization, in totality and 
  • c) making business ethics a way of life in the organization.
• There are some superb examples in India. These examples are sought to be discussed in some detail, with reference to the essential qualities outlined above.
• When business ethics becomes more important than the business itself, magic happens. The business organization attains a stature totally unheard of, in the history of business ethics itself.
• Take the Tata group, as an example. Some years ago, the Tata group suffered a set back, when one five star property in Mumbai was caught in the terrorist attack (2008). The Government stepped in and the militants were shot dead. However, the damage to the property ran into several thousands of crores.
• Ratan Tata, the then Chairman, did something that is totally out of the world. He in fact taught the world some lessons in business ethics. Every single person who was affected, including those like the pav bhaji vendor outside the hotel, was offered compensation running into several lakhs of rupees. The education of children of those affected, free medical facilities for those survivors and dependents at Tata hospitals for the rest of their lives, total education of the 46 children who were affected by the bomb blast but survived, to be taken up by the Tata group, in total, and formation of a Trust for the rehabilitation of the families of the victims. 
• Tata himself visited the families of each of the 80 employees affected by the bomb blast, and offered compensation running into several lakhs of rupees.

 Ethical Values in TVS Group

• Institutionalizing processes that clearly communicate business ethics is an art, fine tuned by the best companies.
• For instance, in Chennai, a TVS group company called Sundaram Finance would serve all its senior citizen customers in ten minutes flat. No questions asked. Free financial advice is given on tax matters. It has over two thousand crores in fixed deposits, mostly collected from senior citizens. The deposit interest is not high, slightly more than what is offered in banks. Still, the money comes in. The interest is credited one day in advance, if the 1st of the month is a holiday. Not a single amount of interest has ever been unpaid to any customer, at any point in time. 
• The organization has a huge network of borrowers, who also repay dues on time, as they know the value of TVS, which actually stands for Trust, Values and Service.
• The different TVS group companies have one thing in common in all their factories. Each employee carries home a small gift, in the form of something edible, like a small biscuit packet, a packet of banana chips, or potato chips and so on. This is illustrative of the philosophy of the TVS group: care and share. 
• This is also reflected in the fact that there are third generation employees happily working in the same TVS group. 
• The quality of the products of the TVS group is world-class, which itself communicates the best to the best-in-class customers like General Motors and Ford: our ethical standards will always produce such products.

 Ethical Values in Murugappa Group

• The Murugappa group of companies in Chennai is another outstanding example of business ethics. They never bribe a single official. Everything is done in a very transparent manner. The owners are all people well known for their business ethics. In TVS and the Murugappa group, even very small amounts are paid only through cheques or through bank transfers.
• Business ethics also means that the organization's employees pay all their taxes in time, and in total. In each of the aforesaid employees, Income tax is deducted and paid to the Government authorities, right on time.

 Case Study of Coca-Cola

• WITH a brand value worth 56 billion dollars, Coca-Cola-the 4th most valuable brands in the world according to Forbes Magazine, is one of the bestselling carbonated soft drink beverage company in the world. 
• As of March 17, 2016, the Market Cap of Coca-Cola is 195.01 Billion Dollars. 
• John Pemberton, a medicine inventor, and a morphine addict created the formula of Coca-Cola in the late 19th century. But it was businessmen Asa Griggs Candler, whose innovative ideas and marketing tactics led Coca-Cola to dominate the world beverage industries throughout the 20th century and beyond.
• A safely guarded recipe, which produced a distinctive and refreshing soft drink, turned Coca-Cola into a billion-dollar company. 
• The whole business of this company centered around its unique recipe. Thus the company gave tremendous effort in keeping this recipe a secret and till now it is one of the closely guarded and best-kept secrets in the business world. Coca-Cola’s Secret Formula is the lifeblood for their business.
• The Coca-Cola company instead of using patent legislation to protect its business interest opted for trade secret protection and decided to keep the recipe of their product as a secret to safeguard its advantage over other competitors. And this brilliant idea turned the fortunes of the company in a way that very few could have predicted at the time.
• One more disadvantage with the patent is that after some time, the secret of the patent has to be disclosed to the public at large. 
• The scope of trade secrets is much wider compared to that of patents. Unlike patent laws, there is no need to file an application to any government office for keeping a trade secret as it requires less legal formalities. However, in this case, the company must follow certain procedures. It must maintain and make sufficient effort to keep the trade secret a secret. 
• One normal procedure is to make non-disclosure agreements with the employees. But it is a safer option for the companies to keep trade secrets as closely safeguarding as possible.
• The Coca-Cola company put in a lot of effort to keep the formula a secret. One rumor has it that only two Coca-Cola executives know the beverage’s secret formula at a time but each knows only the half and they are never allowed to travel in the same plane. 
• Although the Coca-Cola company has not revealed the number of people that know their secret formula but keeping in mind the amount of production they make, it is unlikely that only two people know this secret at the same time.
• The Coca-Cola company put in a lot of effort to keep the formula a secret. One rumor has it that only two Coca-Cola executives know the beverage’s secret formula at a time but each knows only the half and they are never allowed to travel in the same plane. 
• From the outset, the formula was shared with only a small group and it was never written down. It was only when Ernest Woodruff and a group of investors purchased the company from Candler and his family in 1919, Woodruff insisted Candler’s son write down the formula so that he could use it as collateral for a loan arrangement. 
• The written formula was placed in the Guaranty Bank’s vault in New York until the loan was repaid. 
• Then in 1925 Coca-Cola placed the secret formula in a vault at SunTrust Bank. And in December 2011, at the occasion of its 125th anniversary, the vault was moved to World of Coca-Cola at Atlanta, where the vault can be viewed by the public in a permanent exhibit.
• The logic behind ignoring patent protection was that if patented, it would have got the protection for only 17 years under the Patent Act of 1836 (35 U.S. Code) which was only extended to 20 years in 1995 under The Uruguay Round Agreements Act for bringing conformity with the TRIPs agreement. 
• But trade secrets can be held for eternity. In addition, in the case of patent protection, a detailed description of the invention is mandatory under specifications. 
• So the company would have been forced to reveal its secret recipe and after the expiry of the protection period, any other company would have been able to use the formula to recreate the same drink and sell it in the market. 
• The Coca-Cola company thus felt that keeping the formula as a trade secret would serve its purpose best as they predicted a perpetual demand for their product.  The current formula remains a secret for over a century now and is the best-kept trade secret in the world.
• The biggest controversy was when in 2006 three of its employees tried to sell its secrets to its rival company PepsiCo. 
• Fortunately, PepsiCo immediately notified Coca-Cola about the infringement and later on also reported this to the FBI. All the 3 employees were later punished by the Court with imprisonment. 
• In this case, PepsiCo could have exploited and leveraged the situation but went in the ethical way. 
• At the time of this fraud incident, Mrs. Indra Nooyi was the CEO of PepsiCo.  She continued as CEO from 2006 to 2018.
• After the incident, CEO of Coca-Cola Neville Isdell said in a memo to company employees, “While this breach of trust is difficult for all of us to accept, it underscores the responsibility we each have to be vigilant in protecting our trade secrets. Information is the lifeblood of the company.” 
• So when any of us is drinking a Coca-Cola, we are not only enjoying the refreshing taste of a world famous soft drink but also a secret which is the lifeblood of the company and has been guarded for over a century.

Companies that follow ethical values

More details about Other Companies and Ethisphere’s Ethics Global Ranking:

From the honoree list of 135 companies, some major companies name is given below:

• Dell technologies from the United States
• Genpact from the USA
• Honeywell from the USA
• Intel from the USA
• Loreal from France
• Microsoft from the USA
• Nokia from Finland
• Sony from Japan
• US Bank from the USA
• Hp from the USA
• Salesforce from the USA
• Ecolab, USA

Ethisphere CEO, Timothy Erblich said for the company’s award for the year 2021:

“We continue to be inspired by the actions and initiatives of the World’s Most Ethical Companies honorees. Leadership by this group of companies is a reason that business – above all other institutions – was most trusted during the challenging times of 2020. Honorees integrate ethics and values with corporate strategy. They speak up, are transparent, take action, and look for innovative ways to make a difference. We congratulate them on their efforts.”

 More on Ecolab, US

• Ecolab is one of the companies that has been featured in the prestigious list since 2007. The company’s President Christophe Beck is overwhelmed with the achievement.
• He said that being there on that list for the 15th consecutive year reflects Ecolab values and integrity. I am proud to lead such a company. We at Ecolab provide the best possible service in the right manner. Ethical operations are the main reason behind our success.
• Ecolab Named One of the World’s Most Ethical Companies For 16th Consecutive Year
• One of only six companies to be recognized every year since Ethisphere’s inaugural list in 2007.
• ST. PAUL, Minn. – March 16, 2022 – For the 16th consecutive year, Ecolab, the global leader in water, hygiene and infection prevention solutions and services that protect people, planet and business health, has been named one of the World’s Most Ethical Companies by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices.
• “We are very proud of our commitment to operating responsibly and honored to again be recognized as one of the World’s Most Ethical Companies,” said Ecolab President, Christophe Beck. “We know that to truly be a successful company, we must make ethical decisions and operate the right way, every day.”
• Ecolab has been named one of the World’s Most Ethical Companies every year since the list’s inception in 2007. For 2022, 136 companies were recognized, spanning 22 countries.
• “Today, business leaders face their greatest mandate yet to be ethical, accountable, and trusted to drive positive change,” said Ethisphere CEO, Timothy Erblich. “We continue to be inspired by the World’s Most Ethical Companies honorees and their dedication to integrity, sustainability, governance and community. Congratulations to Ecolab for earning the World’s Most Ethical Companies designation.”
• Ecolab strives to operate ethically, responsibly and sustainably, and the company’s 47,000 associates are driven to uphold the highest legal and ethical standards throughout the world. The Ecolab Code of Conduct outlines the principles and ethics that the company expects all associates to adhere to when acting on its behalf. The values reflected in the Code of Conduct help Ecolab continue to succeed in an increasingly competitive global marketplace.
• Grounded in Ethisphere’s proprietary Ethics Quotient®, the World’s Most Ethical Companies assessment process includes more than 200 questions on culture, environmental and social practices, ethics and compliance activities, governance, diversity and initiatives to support a strong value chain. The process serves as an operating framework to capture and codify the leading practices of organizations across industries and around the globe.
• Ethisphere’s 2022 Ethics Index, the collection of publicly traded companies recognized as recipients of this year’s World’s Most Ethical Companies designation, outperformed a comparable index of large cap companies by 24.6 percentage points over the past five calendar years. The outperformance, which Ethisphere refers to as the “Ethics Premium,” has remained consistent since Ethisphere began tracking the performance of honoree companies.
• About  Ecolab: A trusted partner at nearly three million customer locations, Ecolab (ECL) is the global leader in water, hygiene and infection prevention solutions and services that help protect people, planet and business health. 
• With annual sales of $13 billion and more than 47,000 associates, Ecolab delivers comprehensive science-based solutions, data-driven insights and world-class service to advance food safety, help maintain clean and safe environments, optimize water and energy use, and improve operational efficiencies and sustainability for customers in the food, healthcare, hospitality and industrial markets in more than 170 countries around the world. 
• Ecolab has its presence in our country also with main office located in Mumbai (Vikhroli)

 About Ethisphere

• Ethisphere® is the global leader in defining and advancing the standards of ethical business practices that follow corporate character, marketplace trust and business success. 
• Ethisphere has deep expertise in measuring and defining core ethics standards using data-driven insights that help companies enhance corporate character and measure and improve culture. 
• Ethisphere honors superior achievement through its World’s Most Ethical Companies recognition program and provides a community of industry experts with the Business Ethics Leadership Alliance (BELA). 

 Making Business Ethics a way of life

• Finally, making business ethics a way of life naturally follows. In each of the outstanding examples discussed above, one would notice that it is possible for business ethics to have a continuous flow, as it is built into the DNA of the organization itself. 
• Asian Paints is another organization, well known for its business ethics. Similarly, the Hero group is also well known for its high quality business ethics.
• The outstanding organizations offer such a good variety of experiences in business ethics in a world where values are being eroded all over. However, such short term successes will never stand the test of time. 
• Only those organizations that follow business ethics in every walk of life, like the Tata group, the TVS group, the WIPRO group or the Murugappa group, will continue to survive and grow as highly ethical organizations for generations to come. 
• And be admired for such high class values forever.