ethics and governance.

Module 02: Personal Ethics ACCT20080: Governance & Ethics

1 Created by Dr G. L. Ilott, CQUniversity Australia

Learning Objectives

After completing this module, you should be able to:

1. Explain the difference between an ethical issue and an ethical dilemma 2. identify and explain the major types of moral philosophies that are

related to ethical decision-making in business 3. understand how moral philosophies and values influence individual

and group ethical decision-making in business 4. recognise the stages of cognitive moral development.

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Ethical issue vs. Ethical dilemma An ethical issue arises when there is a problem to be solved when there is at least one clear ethical outcome available. An ethical dilemma exists when there is no clear ethical outcome available. Essentially, this is a difference between win/lose and lose/lose.

By the way, if the problem has a win/win possibility, it is not an ethical issue nor an ethical dilemma; it is a just a (important) decision.

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Examples of ethical issues

An ethical issue has at least one ethical alternative. It just might not be the easiest or most popular outcome.

• Should you revalue your assets to allow the company to meet profit projections, or devalue your assets to comply with accounting standards?

• Should you allow your work colleagues to continue falsifying their time sheets so that they can go home early every day?

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Examples of ethical dilemmas

• Should you shut a factory down and sack the workers, or risk the company going broke?

• Should you blow the whistle on what you think is fraudulent behaviour even if you suspect that the following scandal will shut down the company?

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What is goodness?

What is "good"? What is "bad"? The theories or philosophies we meet in this unit help us to at least understand where goodness can be found.

Goodness theories focus on the end result of a decision and the goodness or happiness it creates.

Obligation theories focus on the means and motives that justify the actions.

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Time to review the theories relevant to this unit! • Teleology

• Egoism • Utilitarianism

• Deontology • Relativism • Virtue Ethics • Justice Ethics

• Distributive • Procedural • Interactional

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Teleology: Categories Egoism

• Right or acceptable behaviour is defined in terms of consequences to the individual.

• Maximizes personal interests. • Enlightened egoists take a longer term perspective and allow for the

well being of others.

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Utilitarianism

• Concerned with consequences • Considers a cost/benefit analysis • Behaviour based on principles of rules that promote the greatest

utility • Greatest good for greatest number of people.

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Deontology

• Focus on the rights of the individual, not consequences • believe in equal respect and views certain behaviors as inherently

right • Proposes that individuals have certain inherent freedoms

• Example: conscience, consent, privacy, speech and due process.

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Rule deontologist

Rule Deontologists

• Conform to general moral principles.

Act deontologists

• Goodness is found in the act.

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Relativist perspectives

Ethical behaviour is relative to what the individual finds from the experiences of individuals and groups. It is entirely subjective and relative to the individual's lived experience.

Relativists acknowledge that we live in a society in which people have different views and there are many different bases from which to justify a decision as right or wrong.

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Virtue Ethics

Virtue ethics is based on the ideal of having a virtuous character rather than being focused directly on outcomes.

Virtues include: Truthfulness, trust, self control, empathy, and fairness.

Virtues do not tend to include: Lying, cheating, fraud, and corruption.

However, what an individual considers to be "virtuous" could be relative to their own character and experiences.

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Justice

"Justice" is a concept of moral rightness.

Fair treatment and due reward is an outcome of ethical or legal standards. However, ethical and legal standards are not always the same.

There are three types of justice: distributive, procedural and interactional.

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Three types of justice:

Distributive justice is an evaluation of the outcomes or results of a business relationship.

Procedural justice is based on processes and activities that produce the outcomes or results.

Interactional justice is based on an evaluation of the communication processes used in business relationships.

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Applying moral philosophy to ethical decision making • Use different moral philosophies depending on the context ie

personal versus work decisions • Work and personal pressures are different • Corporate culture affects decision making • Moral philosophies should be assessed on a continuum.

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Kohlberg’s model consist of 6 stages:

1. Punishment and obedience 2. Individual instrumental purpose and exchange 3. Mutual interpersonal expectations, relationships, and conformity 4. Social system and conscience maintenance 5. Prior rights, social contract or utility 6. Universal ethical principles.

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Kohlberg’s 6 stages reduced to 3 levels of ethical concern:

1. Concern with immediate interests and with rewards and punishments

2. Equates right with conformity to expectations of good behaviour to society or a significant group

3. See beyond the norms, laws, and authority of groups or individuals.

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White collar crime

White collar crime refers to an individual or group committing an illegal act in relation to his/her employment.

Perpetrators are usually highly educated, in a position of power, trust, respectability, and responsibility.

Abuses of the trust and authority normally associated with the position are for personal or (maybe also for) organisational gains.

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The role of individual factors in business ethics

• A personal moral compass is important, but it is not sufficient to prevent ethical misconduct in business.

• The strength of our abilities to use ethical reasoning to resolve complex ethical dilemmas should lead to more ethical business decisions.

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To paraphrase Marcus Aurelius, Roman Emperor No more discussion of what makes a good professional.

Be that professional!

21 Created by Dr G. L. Ilott, CQUniversity Australia