All India Management Association (AIMA) 2007 M.B.A Marketing Management Business Ethics

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part C: Applied Theory
7. The principal of ethical selection: the most important step in hiring is selecting the person who should be hired. Whatever the p[purpose of the business, the right principle of selection would be to hire that individual who is perceived as having the ability to contribute most to the long-term owner value. This principle of selection applies to other activities of personnel management like promoting able employees and deciding who should be fired.
Ethical selection is all about acting in a way that is honest, fair, non-coercive and legal. An ethical personnel officer evaluates the candidates for a provided post based on the identical criteria. He ensures that all the requirements and benefits of a job are clearly conveyed to the applicants. When the principle of ethical selection is not followed, a wrong candidate may be hired for the job. This breeds dissatisfaction among employees. Dissatisfied employees waste the valuable resources of the organization, as their contribution either to the current business or for its future growth is minimal.
In the selecting the right candidate, the recruiter’s job is not just to eliminate the unsuitable candidates. It is not always possible for a business to obtain the best person for a provided post. Sometimes it is forced to accept the best among the available applicants/candidates. But a business can continue on its search for a suitable candidate if the expected contribution from this candidate is more than the cost of the search.
a few of the unethical practices in hiring are related to:
Discrimination: The 1st step towards ethical selection is to prevent discrimination. elaborate the relevant criteria for ethical selection? The right ans would be the functional qualities or abilities that are needed to do the job: for example, the ability to teach for a teacher, the ability to act for an actor, the ability to paint for a painter, etc. Sometimes the character of a person plays an important role in the process of selection for a job (purchase officer, policemen, etc) that demands a high level of honesty and integrity. Here again, judging a person's functional abilities or qualities on the basis of age, gender, religion, nationality or social background is considered discriminatory. If a business uses such irrelevant criteria for hiring a candidate, it unknowingly limits the pool of talent from which it can choose a candidate who can contribute towards maximizing long-term owner value.
A business frequently rejects candidates who are considered over qualified having too much experience or education, even when hiring them would not cost the business anything more than the less qualified candidates. This form of discrimination is unethical as it goes against the very principle of ethical selection, i.e. hiring the right person for maximizing long-term owner value. The primary cause for a business rejecting overqualified applicants is that a candidate with superior qualifications and expectations may not feel comfortable in his job and may end up disrupting the balance of the business/firm. Besides, managers sometimes fear that subordinates with greater experience and expertise pose a threat to their own positions. These arguments do not sound reasonable to maximize long-term owner value.
Ageism: Ageism is a different basis of discrimination, which restricts certain applicants from applying for a job. Business considers age as a factor to gauge a person's functional abilities. Young employees are perceived to be more capable of adapting to new circumstances, and more willing to learn new skills. On the other hand, older employees are considered for jobs that demand experience and responsibility. This practice of correlating age to functional abilities may sometimes be counter-productive. An applicant rejected for being above a particular age may master a new skill faster than his juniors. Age criterion is a highly unreliable measure of an applicant's ability to contribute towards maximizing owner value. Hence using it as a recruitment criterion is unethical.
An in-depth assessment of every candidate who applies for a job is not always feasible. In these circumstances, businesses often base their appraisal of candidates on their credentials and objective tests. But this is a short-cut employed to screen out the lowest capable applicants and whether this method aids ethical selection is debatable.
Credentials: Credentials are the qualifications and experience a person has. Recruiters generally rely on these credentials to screen out applicants who do not possess the needed academic or vocational qualifications. Although this method simplifies the job of a recruiter, it fails to differentiate ranging from academic qualifications and intelligence, and, vocational qualification and expertise in a particular field. These credentials may not always reflect an applicant's functional abilities to do a job. While businesses have every right to look for highly-qualified people, they must also look for characteristics that can help a candidate contribute towards increasing owner value.
Testing: Testing is a relatively better method of assessing an applicant than credentials. Objective tests focus on the specific aptitude or psychological characteristics that are needed to perform the job most effectively. Though these tests directly test the applicants proficiency in the job,(typing, writing, programming etc.) they are only the next best option to good judgment in hiring. The result of tests may be deceptive, unless they are well designed and their outcomes interpreted and translated to just hiring decisions. Tests that challenge the applicant's right to privacy are considered unethical. However intrusive they may seem, psychometric tests, which attempt to measure personality traits such as extroversion and stability, can help businesses to identify traits that help maximize long-term owner value. < TOP >

8. The importance of external stakeholders of Knight Restaurants are:
Consumers – Consumers/customers exchange resources for the products of the firms and thus give the firm with revenues. Since corporations reinvest these earnings, customers can be stated to be paying indirectly for the development of new products and services. The responsibilities of business corporations towards consumers are summed up by the 5 Rs’:
• Right volume - Producing goods according to the specific needs of consumers, their purchasing power etc.
• Right price - Offering quality goods at reasonable prices.
• Right time - Providing prompt and adequate service to consumers.
• Right quality - Improving the standard of residing by producing goods and services of high quality. Ensuring the health and safety of customers. Treating customers fairly in all aspects of business transactions.
• Right place -
Suppliers – Suppliers play a pivotal role in the success of any business since raw materials they supply will determine the final product’s quality and price. Good relationships with suppliers can decrease costs, which is the key to profitability. A company’s relationship with suppliers and subcontractors must be based on mutual respect. When dealing with the suppliers, organizations must
• Seek fairness and truthfulness in all activities, including pricing and licensing
• Ensure that business activates are free from coercion and unnecessary litigation.
• Foster long-term stability in the supplier relationship in return for value, quality competitiveness and reliability.
• Share info with suppliers and integrate them in the planning posses.
• Pay suppliers on time and in accordance with agreed terms of trade; and
• Seek, encourage and prefer suppliers and subcontractors whose employment practices respect human dignity.
Creditors – Usually organizations buy goods on credit from suppliers. Although suppliers have an important stake in a business, they may cease to fill orders if a company is unable to pay the amount due, or takes too long in making the payment. It is the responsibility of organizations to make timely payments to creditors for goods that have already been delivered.
Competitors – Business entities are equally obliged to other business firms as they are towards stakeholders. Fair economic competition is 1 of the basic requirements for increasing the wealth of nations. Therefore, the responsibilities of the organization towards the competitors are:
• Foster open markets for trade and investment
• Promote competitive behavior that is socially and environmentally beneficial and demonstrates mutual respect among competitors
• Refrain from either seeking or participating in questionable payments or favors to secure competitive advantage
• Respect both tangible and intellectual property rights
• Refuse to acquire commercial info by dishonest or unethical means such as industrial espionage.
Community – The community provide the business the right to build or rent facilities, benefits from the tax revenues raised in the form of local services, infrastructure etc. In return for their services, the firm should act in a responsible way. The firm cannot expose the community to unreasonable hazards in the form of pollution and toxic waste. A forms responsibilities towards the society include:
• Respecting human rights and democratic institutions
• Supporting public policies and practices that promote human development through harmonious relations ranging from business and other segments of society.
• Collaborating with such activities that aim at improving the standards of health, education, workplace safety and economic well being.
• Promoting and stimulating sustainable development and playing a leading role in preserving and enhancing the physical environment and conversing the earth’s resources.
• Supporting peace security, diversity and social integration; respecting the integrity of local cultures
• Encouraging charitable donations educational and cultural contributions and employee participation in community and civic affairs.

Earning:   Approval pending.