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BusinessEthicsNoClip2.pptxDiscussion of Issues Raised in Clip
“Ethics is about how we meet the challenge of doing the right thing when that will cost more than we want to pay”
The Josephson Institute of Ethics
What is Ethics?
How people try to live their lives according to a standard of “right” or “wrong” behaviors -- in both how we think and behave toward others and how we would like them to think and behave toward us.
What is Ethics? (2)
Ethics is the branch of philosophy that focuses on morality and the way in which moral principles are applied to everyday life.
Ethics has to do with fundamental questions such as “What is fair?” “What is just?” “What is the right thing to do in this situation?”
Ethics involves an active process of applying values, which may range from religious principles to customs and traditions.
What is Business Ethics?
Business ethics focuses on what constitutes right or wrong behavior in the world of business.
Corporate business executives have a responsibility to their shareholders and employees to make decisions that will help their business make a profit.
But in doing so, businesspeople also have a responsibility to the public and themselves to maintain ethical principles.
What is Business Ethics? (2)
Although ethics provides moral guidelines, individuals must apply these guidelines in making decisions.
Ethics that applies to business (business ethics) is not a separate theory of ethics; rather, it is an application of ethics to business situations.
Although all people have ethical responsibilities, higher ethical standards are imposed upon professionals who serve as social models, such as physicians, attorneys, and businesspeople.
Relationship between Law & Ethics
The law is an expression of the ethical beliefs of our society.
Law and ethics are not the same thing. The question, “Is an act legal?” is different from the question, “Is an act ethical?” The law cannot codify all ethical requirements. Therefore, an action might be unethical, yet not necessarily illegal. For example, it might be unethical to lie to your family, but it is not necessary illegal.
Similarly, just because an act is illegal does not necessarily mean it is immoral. Rosa Parks was acting illegally when she refused to give up her seat on the bus to a white male, but that does not necessarily mean she was acting unethically.
Should an individual obey the law even if it would be unethical to do so?
Under the theory of civil disobedience espoused by Martin Luther King, Mahatma Ghandi and others, an immoral law deserves to be disobeyed.
Can you think of any examples of acts that would be illegal, yet arguably ethical?
Understanding Right & Wrong
We are instructed to:
developing our own ‘Moral Compass’
do what is “right”?
follow our values
Intrinsic value – pursued for its own sake: ex. Health/happiness instrumental
Instrumental value – pursued to help reach another value Ex: work to buy things to be “happy”
follow The Golden Rule
Ethical Theories
Virtue Ethics – living to achieve a “clear” ideal
Utilitarianism (Ethics for the Greater Good)
Universal Ethics – certain universal principles should apply to all ethical judgments (Ex. Never kill, lie, steal)
Weaknesses exist in each theory
Theories of Ethics
Theories of ethics present standards by which a person can analyze and evaluate his or her own moral conduct.
Over the centuries, two different philosophical frameworks developed: ethical standards based on universal duties (deontology)
and ethical standards based on consequences (utilitarianism).
Deontology
Deontology is the philosophical practice of defining and adhering to an absolute set of standards by which ethical behavior can be measured. It tries to define universal duties that serve as moral guides to decision making. When a moral dilemma arises, a person can apply these universal standards to determine a course of action that is good.
In deontology, a person fulfills absolute moral duties regardless of whether good comes from the actions. A person decides upon actions by asking if a particular action is morally right or wrong. The act of carrying out that duty is important rather than the consequences of the act. An example of a set of deontological rules would be the Ten Commandments.
The Rights Model
The rights model analyzes ethical issues by focusing on an action’s impact on human rights. Under this model, human rights are the rights all people have. An action that maximizes respect for human rights and minimizes their violation is morally correct. When encountering ethical dilemmas, a person applying the rights model selects the action that minimizes the violation of stakeholder’s rights.
The two necessities to be fully human are freedom and well-being. Thus, two basic categories of human rights exist within the model: (1) rights of liberty, and (2) rights of well-being.
Rights of Liberty
Privacy
Free consent
Free speech
Freedom of conscience
Right to life
Rights of Well Being
Employment
Food
Housing
Education
Under the rights model, each person possesses certain fundamental human rights because of the fact that they are a human being. Each person’s life has an infinite value.
Utilitarianism
Utilitarianism is an approach to establishing ethical standards based on the consequences of an action. In an ethical dilemma, a person selects the action that brings about the greatest amount of good for the greatest number of people. The model determines correctness in terms of social benefit. Many business people favor the “cost/benefit” approach of utilitarianism.
Applying the Rights Model
Identify the facts.
Identify the ethical issues.
Identify the alternative courses of action.
Identify the stakeholders.
Determine to which extent each alternative respects the dignity and fundamental rights of stakeholders or violates their rights.
Choose the alternative that maximizes the dignity of stakeholders and minimizes the violation of their rights.
Applying Utilitarianism
Identify the facts.
Identify the ethical issues.
Identify the alternative courses of action.
Identify the stakeholders.
For each alternative, calculate the costs and benefits (identify who would be harmed and who would benefit).
Choose that alternative which results in the greatest amount of good for the greatest number of stakeholders.
Ethical Relativism
Where the traditions of your society, your personal opinions, and the circumstances of the present moment define your ethical principles.
This offers a degree of flexibility for different circumstances.
Ethical Dilemmas
Sometimes the decision you must make requires you to make a ‘right’ choice knowing full well that you are:
Leaving an equally ‘right’ choice undone.
Likely to suffer something bad as a result of that choice.
Contradicting a personal ethical principle in making that choice.
Abandoning an ethical value of your community or society in making that choice.
Applied ethics is putting theory into practice. It becomes a question of what will/did you do instead of what would you do.
Consider the following example
A secretary who has worked for your corporation for fifteen years is involved in a accident in which she permanently loses the use of her left hand. Thus, she can no longer effectively type, file, or perform many of the other functions that she previously had performed and that are included in her job description.
Your corporation has a very tight budget and does not have sufficient funds to pay for an additional secretary without reallocating budget funds. The injured secretary has been very loyal to your corporation, and you have been very satisfied with her work and dedication. She wants to remaining working at her job. Furthermore, she does not believe that she could find other employment at this time.
Should your corporation fire her, lay her off with compensation, or find a way to retain her? In resolving this dilemma, apply:
Utilitarianism
The Rights Model
Your own personal opinion
Resolving Ethical Dilemmas - I
Step One: Analyze the consequences.
Consider short vs. long run
Consider benefit vs. harm
Step Two: Analyze the actions.
Are they fair, equal, honest, respectful?
Step Three: Make a decision.
Can you live with the outcome?
Resolving Ethical Dilemmas - II
What are the facts?
What can you guess about the facts you don’t know?
What do the facts mean?
What does the problem look like through the eyes of the people involved?
What will happen if you choose one thing rather than another?
What do your feelings tell you?
What will you think of yourself if you decide one thing or another?
Can you explain and justify your decision to others?
This method assumes you have time to contemplate the decision, enough information, and alternative actions to choose from.
Ethical Reasoning
The Role of Ethics in Business
Unethical and/or Illegal
Accounting fraud
Deceptive advertising
Unfair competitive practices
Internet theft
Ethical Conduct
Builds trust
Promotes confidence
Validates relationships
Recognising Ethical Issues in Business
Ethical issue –
an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical.
How to judge the ethics of a situation –
examine the situation from your stakeholders’ position, including customers and competitors
Recognising Ethical Issues in Business (2)
Sources of Unethical Behaviour in Organisations
Conflict of interest
the most common ethical issue identified by employees.
Advance personal interests over others’ interests
Benefit self at the expense of the company
Survey on Ethics and Workplace Findings of Deloitte&Touche 2007
Survey on Ethics and Workplace Findings of Deloitte&Touche 2007
Survey on Ethics and Workplace Findings of Deloitte&Touche 2007
Survey on Ethics and Workplace Findings of Deloitte&Touche 2007
Survey on Ethics and Workplace Findings of Deloitte&Touche 2007
Code of Ethics
All organizations, regardless of their mission (e.g., profit oriented, nonprofit) and size (large vs. small), should establish an “Organizational Ethical Culture.” that means: (1) Organization, which is defined as a group of individuals or entities bound to achieve a shared goal;
(2) Ethics, which is honorable behavior conforming to the norm of the group;
(3) Culture, which is a pattern of shared beliefs adopted by the group in dealing with its internal and external affairs.
Business Ethics
Four different levels of business ethics have been identified based on what type of business and how their actions are evaluated.
1. The society level, which defines ethical behavior and assesses the effect of business on society.
2. The industry level, which suggests that different industries have their own set of ethical standards (e.g., chemical industry vs. pharmaceutical industry)
3. The company level, under which different companies have their own set of ethical standards
4. The individual manager level, at which each manager and other corporate participants are responsible for their own ethical behavior
CONSEQUENTLY, one feasible way to judge ethical behavior is to focus on determinants of business ethics and behavior such as corporate culture, incentives, opportunities, and choices.
| Corporate Culture | Companies should promote a spirit of integrity that goes beyond compliance. |
| Incentives | Individuals within the company tend to act according to incentives provided to them in terms of rewards and the performance evaluation process. |
| Opportunities | Effective corporate governance, internal controls, and enterprise risk management can reduce the opportunity for unethical conduct. |
| Choices | Individuals, in general, are given the freedom to make choices and usually choose those that will maximize their well-being. |
Business Ethics (2)
Sense of employee responsibility.
Freedom to raise concerns without fear of retaliation.
Managers modeling ethical behavior and expressing the importance of integrity.
An understanding by leadership of the pressure points that drive unethical behavior.
Processes to find and fix these areas of pressure.
What are the attributes of an ethical culture?
Comply with a written code of business conduct.
Provide sufficient training to all personnel within their organization regarding personal responsibility under the code.
Encourage internal reporting of violations of the code with the promise of no retaliation for such reporting.
Self-govern their activities by implementing controls to monitor compliance with all applicable laws and regulations.
Share their best practices in implementing the DII principles through participation in an annual Best Practices Forum.
Be accountable to the public, particularly through the completion of an annual Public Accountability Questionnaire.
What are the six principles of business ethics and conduct?
Task to Complete before next Class
Go to the homepage of a Fortune 500 company that has published its code of ethics on the World Wide Web.
What ethical concerns does it cover?
Is it a detailed document or general in its terms?
42
Chart1
| management behavior |
| direct supervisors behaviour |
| positive reinforcement |
| compensation (bonus +salary) |
| behaviour of peers |
Sheet1
| Key factors in promoting ethical workplace | |
| management behavior | 42 |
| direct supervisors behaviour | 35 |
| positive reinforcement | 32 |
| compensation (bonus +salary) | 29 |
| behaviour of peers | 23 |
| To resize chart data range, drag lower right corner of range. |
Chart1
| lack of personal integrity |
| job dissatisfaction |
| financial rewards |
| pressure to meet goals |
| ignorance of code of conduct |
Sheet1
| Reasons why people make unethical decisions | |||
| lack of personal integrity | 80 | ||
| job dissatisfaction | 60 | ||
| financial rewards | 44 | ||
| pressure to meet goals | 44 | ||
| ignorance of code of conduct | 33 | 33 | |
| To resize chart data range, drag lower right corner of range. |
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| high levels of stress |
| long hours |
| fast-paced environment |
| inflexible schedule |
| highly competitive environment |
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| Aspects that cause incentives conflicts | |||
| high levels of stress | 28 | ||
| long hours | 25 | ||
| fast-paced environment | 14 | ||
| inflexible schedule | 13 | ||
| highly competitive environment | 9 | 9 | |
| To resize chart data range, drag lower right corner of range. |
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| stealing petty cash |
| cheating on expense reports |
| taking credit for another person’s accomplishment |
| lying on time sheets about hours worked |
| other results |
Sheet1
| results pertaining to questionable behavior in the workplace environment | |
| stealing petty cash | 99 |
| cheating on expense reports | 95 |
| taking credit for another person’s accomplishment | 94 |
| lying on time sheets about hours worked | 92 |
| other results | |
| To resize chart data range, drag lower right corner of range. |
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| use company technology for personal use |
| take a sick day when not actually ill |
| date a subordinate |
| ask a collegue for personal favour |
Sheet1
| Majority believes that following actions are acceptable | |
| use company technology for personal use | 72 |
| take a sick day when not actually ill | 66 |
| date a subordinate | 57 |
| ask a collegue for personal favour | 63 |
| To resize chart data range, drag lower right corner of range. |
