What Is Ethical Policy



In recent past so many successful business failed, many profitably running businesses suffered from a downfall and it is said that some effective corporate receives a great fall in their profits and popularity. One of the main reasons behind these surprising happening was lack of business ethics. Thus the ethics can be defined as the ability to distinguish between right and wrong (Buzzle.com, 2009).

For a business to grow and maintain its prosperity, it must be found on certain ethical principals. A business that is based on ethics can run successfully for years (Buzzle.com, 2009). Money makers who do not pay attention to ethical values can only earn a short term success. To last long in the market, ethical business policy is must.

An ethical business policy is important at many levels. It establishes expectations for employees and management as well, and defines the enforcement mechanism and penalty for noncompliance. When the ethical policy is professed as an integral component of the organization’s culture is understood, followed and enforced (Bankers Online, 2010).

An effective ethical policy has number of advantages. Its awareness among employees is a guarantee of proper conduct and doing the right things. They will better understand their responsibilities and expectations and assume the appropriate level of accountability when identifying and managing business risk (Messmar, 2003).

The ethical policy of an organization is more than just a formal document outlining related rules of conduct. It is about integrating positive values throughout an organization (Sethi, 2003). Some key fundamental characteristics of for making ethical policy effective and worth having are (Find Articles, 2008);

· Employees often used to follow the behaviour of their superior executives, managers and others who have succeeded in the company. There fore everyone at every level must stick to the guideline laid down by the ethical policy.

· Companies those are very successful in their business have made ethics a key element of their corporate culture. Conducting business with integrity is considered as important as bottom line results. Ethical standards are applied any time a decision is made or an action is taken, not just during controversial situations (findarticles.com, 2008).

· Many firms make the mistake of asking their legal department to draft their code of ethical practice. As a result the policy may not reflect the challenges employees routinely face on the job. That is why it is valuable to include people from all levels of the organization in discussion about ethical guidelines. Once the ethical policy is implemented, it is equally important to review it periodically to ensure it accounts for current business practices (Find Articles, 2008).

· While deciding for the ethical policy companies should adopt democratic approach despite of giving the task of policy formulation to the legal department firms must include people from all levels of the organization in discussion about ethical guidelines. Once the ethical policy is implemented.

· Management should apply the same ethical standards to everyone in the organization. The consequences for an executive’s dishonest conduct should be consistent with those of a junior staff member. No exceptions should be made (Find Articles, 2008).

· The work environment must be one in which people feel they can deliver bad news to management without fear of repercussions. (Find Articles, 2008).

A good ethical policy will not prevent every crisis, but it will ensure that staff members have a clear understanding of expectations. Collaborate with employees on defining the rules and make sure everyone is aware of the requirements. Then take step to instil core values throughout the organization (Rodgers, 2004). With regular reinforcement, ethics will guide every decision organization makes and become a central element in the way the organization conducts business.


First of all, the ethical policy must reflect organization’s values, controls and processes. Unless the policy, controls and processes adequately reflect that institution is unique organization, the code will not be effective in providing guidance or offering protections (Bankers Online, 2010).

Depending on regulatory requirements the contents of ethical policy vary. In general, the ethical policy should contain rules on; record keeping, information security and privacy, gift and hospitality, cooperation with investigations and audits, conflicts of interests and of course, a “whistleblower” provision, establishes procedures for reporting any suspected illegal or unethical activities by others within the organization (Bankers Online, 2010).


There is no unique style of administration. In some companies legal department has oversight and administrative responsibility. In some, responsibility rests with Human Resources or compliance. Some other organizations have a special ethics committee empowered specifically for purposes of oversight and enforcement (Bankers Online, 2010) (Wood, 2002);

  1. Accountability is clearly defined.
  2. The responsible department or person has the stature necessary to facilitate enforcement,
  3. It is assigned to someone who does not have a propensity to engage in illegal or unethical activities.

Important components of the administration of ethical policy include initial and on going training and awareness effort of receipt, understanding, and compliance with the code; standards for documentation of exceptions; standards for investigation of suspected or reported wrongdoing; consistent enforcement; and finally periodic review of the code to ensure that it is comprehensive and reflects the current organizational structure and business practice (Bankers Online, 2010).


TAJ GROUP OF HOTELS: The Taj Hotels Resort and Palaces is a group of 64 hotels at 45 locations across India with an additional 15 international hotels. The most significant addition to the Taj portfolio has been the iconic landmark hotel in New York, the Taj Boston and the blue in Sydney (Taj Hotel, 2009; Tata.com, 2009).

The Taj Group of hotels is a part of Indian Multinational Group ‘TATA’ which has been respected in India for 140 years for its adherence to strong values and business ethics. TATA’s vision is to attain leadership through business excellence in the sectors that they operate in, while upholding values and integrity, to improve the quality of life of the communities they serve. TATA’s has always been values driven. These values continue to direct the growth and business of TATA companies. The five core TATA values are (Tata.com, 2009); Integrity, Understanding, Excellence, Unity and Responsibility (Tata.com, 2009).Detail analysis of ethical policy of Taj Groups of hotel is as follows.


As a part of TATA group Taj Group has a very comprehensive ethical policy, which gives each and every detail about what the group is intended to do in future. As a part of TATA the Taj group carries a long history of ethical practices. The ethical policy is in real sense an essence of 150 year of ethical and value based business developed by TATAs around the world. As TATA is very big organization they have a very detailed ethical policy for the entire group consisting 25 clauses which focuses on every aspects of ethical practice. The important points of this policy are discussed and analyzed here (Tata.com, 2009).

  1. National interests: the group is committed to benefit the economic development of the countries in which it operates. In the course of its business the company shall respect the culture, customs and traditions of each country and region where it operates.
  2. Financial Reporting of reports: The organization shall prepare and maintain its accounts in accordance with the generally accepted guidelines. There shall be no wilful omissions of any company transactions from the books and records. Any wilful, material misrepresentation of and / or misinformation on the financial accounts and reports shall be regarded as a violation of the Code, apart from inviting appropriate civil or criminal action under the relevant laws (Tata.com, 2009).
  3. Competition: As a TATA Group member organization shall fully support the development of open market and shall promote the liberalization of the market. No employee shall engage in restrictive trade practice act.
  4. Equal opportunity Employer: organization shall provide equal opportunities to all its employees and all qualified applicants for employment and shall promote diversity and equality in the workplace.
  5. Gift and Donation: A Tata company and its employees shall neither receive nor offer or make, directly or indirectly, any illegal payments, remuneration, gifts, donations or comparable benefits that are intended, or perceived, to obtain uncompetitive favours for the conduct of its business.
  6. Government Agencies: A Tata company shall comply with government procurement regulations and shall be transparent in all its dealings with government agencies.
  7. Political non alignment: A Tata company shall be committed to and support the constitution and governance systems of the country in which it operates. A Tata company shall not support any specific political party or candidate for political office.
  8. Health, safety and environment: A Tata Company shall strive to provide a safe, healthy, clean and ergonomic working environment for its people. A Tata company, in the process of production and sale of its products and services, shall strive for economic, social and environmental sustainability.
  9. Quality of products and services: The quality standards of the company’s goods and services shall meet applicable national and international standards.
  10. Corporate citizenship: A Tata company shall be committed to good corporate citizenship, not only in the compliance of all relevant laws and regulations but also by actively assisting in the improvement of quality of life of the people in the communities in which it operates. The company shall encourage volunteering by its employees and collaboration with community groups.
  1. Cooperation of Tata companies: In the procurement of products and services, a Tata company shall give preference to other Tata companies, as long as they can provide these on competitive terms relative to third parties.
  2. Public representation of the company and the group: Tata group shall be represented only by specifically authorized directors and employees. It shall be the sole responsibility of these authorized representatives to disclose information about the company or the group.
  3. Group policies: A Tata company shall recommend to its board of directors the adoption of policies and guidelines periodically formulated by Tata Sons.
  4. Shareholders: A Tata company shall be committed to enhancing shareholder value and complying with all regulations and laws that govern shareholder rights.
  5. Ethical conduct: Every member of the organization shall exhibit professionalism, honesty and integrity, while conforming to high moral and ethical standards.
  6. Regulatory compliance: Employees of a Tata company, in their business conduct, shall comply with all applicable laws and regulations.
  7. Conflict of interest: An employee or director of a Tata company shall always act in the interest of the company, and does not involve a conflict of interest with the operations of the company.
  8. Integrity of data furnished: Every employee of company shall be entirely responsible in ensuring that the confidentiality of all data is retained and in no circumstance transferred to any outside party in the course of normal operations.
  9. Reporting concerns: Every employee of a Tata company shall promptly report to the management, any actual or possible violation of the Code or an event of misconduct, not in the company’s interest.

Analysis of ethical policy:

Customer Focus: Customer relationship is of utmost importance for a business to achieve long-term profits. To gain a long term relationship with customers and achieve customer return for the business, the business needs to be based on ethics. The trustworthiness of a business, its customer service, its customer care, its way of dealing with customers and its urge to retain its old customers, is a part of business ethics. Businesses ethics leave a long lasting impression on their minds builds trust, fetching a business more customers while retaining the older ones (Buzzle.com, 2009) (BIZ ethics, 2009).

Legalities: Most of us are concerned about making money for our business and we cater to the legalities in business but we seldom bother to base our business on ethics. At times, ethical duties of a businessmen and project managers could be more abiding then even the business laws. Ethics is a far reaching concept and goes beyond the idea of making money legally. Ethical values are way ahead of earning money. Ethics is more about the earning long lasting relationship in business (BIZ ethics, 2009) (Buzzle.com, 2009).

Ethical Practice: People who seek motivation behind being ethical should understand that they are ethical by definition. Ethics is an integral part of running business and hence ethical values accompany business by default. Without following certain ideals in business, one cannot become successful. Success that is attained without a foundation of strong ethics is bound to be short lived. A business can not continue to prosper without an ethical base. A few successes can be coincidence or flukes but persistent success can only be a result of strong foundation of ethics (BIZ ethics, 2009) (Buzzle.com, 2009).

Human resource: Organisational benefits should not be used in an unfair manner. The use of company resources for personal benefits and taking an undue advantage of business resource is completely unethical. Using the wealth of the business for personal reasons is not ethical. Using company fund for personal reason is unethical. A thoughtful and careful utilization of company resources is a part of business ethics. A vigilant and prudent use of resources is an essential component of ethics in business (Buzzle.com, 2009).

Hospitality & Bribe: Accepting bribes, pleasing the so called important clints, favouring a part of the customers while being unfair towards the others is against business ethics the primary aim is not just to maximise profits. It is rather to cater the needs of the society and work towards benefiting the masses.


Hilton world wide is a multinational hospitality company started in 1919 in Cisco Texas. Today Hilton is expanded in 79 countries and operates around 3400 hotels world wide. Hilton world wide offers business and leisure travels the finest accommodations, service, amenities and values. The values of Hilton group are incorporated in its name that is HILTON where (Hilton Hotel, 2010);

  • H – Hospitality – passionate about delivering exceptional world class services.
  • Integrity – doing right things all the time.
  • Leadership – leading the industry and community.
  • Teamwork – team work in every thing done.
  • Ownership – owner of action and decision.
  • Now – operate with the sense of urgency and discipline.

The vision of Hilton group is “to fill the earth with the light and warmth of hospitality”.


Hilton Group’s ethical policy is brief but comprehensive in nature. It clearly explain what is expected from the employee while performing their duties. Main points of Hilton group’s ethical policy are discussed here as under (Hilton Group, 2010).

  • Promote honest and ethical conduct, including fair dealing and the ethical handling of conflicts of interests.
  • Promote compliance with applicable law and governmental rules and regulations.
  • Promote prompt internal reporting of violation of this ethical policy.
  • Insure the protection of the company’s legitimate business interests, including corporate opportunities , assets and confidential information; and
  • Deter wrong doing.

As there is no standard format to draft the ethical policy for all the organization, in other words we can say that the ethical policy of the organization depends on the vision , mission and the core values of the company. Therefore two ethical code of conducts could not be compared point to point basis but their impact on the success of business could be. Here an attempt is being made to compare the ethical policy of the Taj Groups of hotel with the leading multinational player in hospitality industry The Hilton Group.

  • In the Taj Group’s ethical policy the national interests is at the top shows that TATA’s believe that interests of the nation where they operates are of utmost important and shows their commitment to economic development of that nation and respect for the local culture tradition and values but this thing is not mentioned clearly in the ethical policy of Hilton group of hotels.
  • Hilton group emphasis on corporate opportunities that for its entire group the business interests of the group are of utmost importance than any other thing. In case of Taj corporate opportunities are not discussed in detail, as Taj is a member of a well diversified industrial group it is been said that while working with other organisation group companies must be favoured.
  • The Taj and Hilton are regarded very successful organization in hospitality industry, their success id simple reflection of the values and principal they follow in routine as well as strong adherence to their ethical policies respectively.
  • Both the organisation emphasised on the transparent financial reporting system. Timely disclosure of all the transaction, prohibition of creative accounting, miss appropriation of financial information is regarded as the violation of ethical policy and punishable too.
  • The ethical conduct is at the centre of the policy for both the organisation. Both the organisation put great emphasis on the professionalism, honesty and integrity while exhibiting high moral standard on work.
  • Conflicts of interests is been recognized by both the organisation, it is clearly defined that if there exist any conflict, in that situation all the employees of the organisation will uphold the company’s interest first.
  • Hilton group is specially a hospitality company which has its interest in expanding world over and they are successful in achieving their objective, their policy of joining hands with other similar organisation for the expansion is paying them in better way. Taj group has to work on its expansion strategy that how they will realize the dream of being worlds best hospitality company.
  • Taj group has to work on the application of technology to their counter part is using. Hilton group’s web portal is more customer friendly than any other similar organisation.
  • As Hotel Taj was the main target of Mumbai terror attack in India, Taj group has to come out with the clear policy with regard to the security of their guest because one incident in Mumbai degraded the image of the Group hotels and specially to attract the international customers more in number they have to concentrate on their marketing strategy too. In case of Hilton customers security policy is not clearly defined in their ethical policy thus they also required to work on it without waiting for any unpleasant event.

Experts in business management and researchers have certified the need for businessman and company professional to study ethics. They have asserted the importance of founding business on ethical values and following them. They have urged management professionals to adhere to ethics and accept it as a part of business. Ethics remain being important in business and strong ethical values shall take the business a long way! (Biz Ethics, 2009) (Buzzle.com, 2009)




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