PHI 4301 III Article Review

PHI 4301, Business Ethics 1

Course Learning Outcomes for Unit II Upon completion of this unit, students should be able to:

1. Analyze philosophical ethical concepts. 1.2 Discuss the three fundamental concepts in business ethics.

Required Unit Resources Chapter 3: Philosophical Ethics and Business In order to access the following resources, click the links below. CrashCourse. (2016, November 14). Kant & categorical imperatives: Crash Course philosophy #35 [Video].

cielo24. https://c24.page/4kag3edwtd7jsvfwfucn3c4vkf A transcript and closed captioning are available once you access the video. CrashCourse. (2016, November 21). Utilitarianism: Crash Course philosophy #36 [Video]. cielo24.

https://c24.page/527uykdpd9xmfmzuuv8xupkqva A transcript and closed captioning are available once you access the video. CrashCourse. (2016, December 5). Aristotle & virtue theory: Crash Course philosophy #38 [Video]. cielo24.

https://c24.page/wm5fkn848d95tkhfns6xyd3n6x A transcript and closed captioning are available once you access the video.

Unit Lesson This unit introduces three fundamental concepts in business ethics and, indeed, ethics in general. Everything we do in this course depends on these three concepts, so it is important to understand them clearly. They are consequence, principle, and character. These concepts are the main foundation of all ethical reasoning applied to business and to life. That is, when we make moral judgments about rightness or wrongness, we are often saying something about consequences, principles, or character. Often, our moral judgments are a mix of all three, which is the primary source of moral confusion.

UNIT II STUDY GUIDE

Philosophical Ethics and Business

PHI 4301, Business Ethics 2

UNIT x STUDY GUIDE

Title

Consequence The concept of consequence encompasses the desirable or undesirable outcomes of an action. We all make moral decisions based on the consideration of pleasures and pains, benefits and harms, pros and cons, profits and losses, advantages, and disadvantages, and so forth. We intuitively believe that moral actions are those that bring about most outcomes on the positive side of the ledger compared with the negative side. The ethical theory of utilitarianism, which is rooted in scholarly studies from the 18th and 19th centuries, says that outcomes are what matter, and people should determine what they should do by considering the consequences of the actions they take (Hartman et al., 2024). Later, other scholars suggested a variation called egoism that said the morally right action will produce the greatest happiness for the moral agent (i.e., the “me” doing the acting). Between utilitarianism and egoism lies a profound tension that so often plays out in business. When making a decision, is it ethical for a business to consider only its own interests, or ought it consider the interests of others? Whatever the answer is, the question itself presupposes a commitment to getting the consequences right.

Principle The concept of principle is, in some ways, the opposite of consequence. Moral principles (also called duties) are the rules we refer to when making moral decisions. We do this because there are moral rules that apply to everyone—that is, they are absolute—such that following them will always be the right thing to do regardless of the consequences. The history of business ethics, for example, is replete with tales of heroes who “speak truth to power” in the face of corporate corruption. We admire such people precisely because they relentlessly adhere to the principle that one should always tell the truth, even at the risk of retaliation for speaking out. Although the idea of moral principles is as old as humanity itself, it was Immanuel Kant who gave logical structure to it. In philosophy, it is known simply as Kant’s ethics, which gives you an idea of how influential his theory became (Hartman et al., 2024). The details are rather complicated (some might say overcomplicated), but the gist of Kant’s ethics is that we should always act for the sake of moral principles. We can understand these principles through reason alone, much like we understand the principles of mathematics. For his theory, Kant drew upon the intellectual tradition of natural law, which evolved on a somewhat different path to become the theory of natural rights (Hartman et al., 2024). Quite a bit of our moral discourse these days involves the assertions of rights by persons, corporations, communities, states, and other moral agents. Rights and principles are two sides of the same coin. Both are moral absolutes and must be respected regardless of the consequences. The hero speaking truth to power is also exercising the right to freedom of speech; certain acts of retaliation would amount to a violation of that right.

Character The concept of character approaches morality from a different angle. Consequences and principles are mostly concerned with the nature of the action itself. Morally, from this perspective, it does not matter who is doing the acting if the right action is being done; however, this analysis leaves something out, namely, the nature of the person acting. After all, the idea of good and bad applies to people as much as it does to the actions they perform. We could try to reduce the idea of a good person to someone who performs good actions, but then we are left with the problem that sometimes good people do bad things and vice versa. We are clearly talking about properties that people have in and of themselves, which we intuitively grasp as a person’s character. Aristotle was the first to apply philosophical rigor to the concept of character, which he described in terms of virtues and vices (Hartman et al., 2024). Virtues are the habits of good character, like courage and humility. Like all good habits, virtues can be improved upon and require more self-discipline than vices like cowardice and conceit. Virtuous people will make the right moral choices as natural emanations from the virtues they possess. For those of us with less-than-perfect character, we can always ask ourselves “What would the virtuous person do?” for guidance on difficult moral situations. Throughout this class, we will encounter business situations that invite ethical analysis. The purpose of this unit is to bring the concepts of consequence, principle, and character to the forefront of our minds, understanding their contours so that we can see our way clearly through moral conflicts that inevitably arise in business contexts. You will notice that we almost always fall back on considerations of consequences, principles, and character in our moral reasoning. The challenge here is that, in any particular business case, consequence, principle, and character are likely to point in different directions. For example, during the economic recession of 2008–2009, several banks said to

PHI 4301, Business Ethics 3

UNIT x STUDY GUIDE

Title

be too big to fail received huge financial bailouts from the federal government (Hartman et al., 2024). As far as consequences were concerned, the bailout was the morally right choice given the alternative of global economic collapse; however, to many, it felt as if the bailout broke the moral principle that people (and institutions) should get what they deserve, and there were many people (and smaller institutions) undeservedly suffering while the banks took free money they did not deserve. Add to this the clear impression that selfish and unrepentant bank chief executive officers (CEOs) were utterly deficient in virtue, and you have all the elements of a moral conundrum. You will experience the challenge of conflicting moral intuitions about consequence, principle, and character arise consistently in business and life.

Reference Hartman, L. P., DesJardins, J., and MacDonald, C. (2024). Business ethics: Decision making for personal

integrity and social responsibility (6th ed.). McGraw-Hill Education. https://online.vitalsource.com/#/books/9781265810153

PHI 4301, Business Ethics 1

Course Learning Outcomes for Unit III Upon completion of this unit, students should be able to:

2. Explore the responsibilities of moral agents involved in all aspects of business. 2.1 Describe the impact of corporate culture on ethical decision-making.

3. Examine the ethical foundations for controversial issues in business.

3.1 Discuss the role of corporate leadership in establishing organizational culture.

5. Formulate ethical solutions for real-world situations using ethical theories and concepts. 5.1 Explain the real-world application of ethics and corporate culture information.

Required Unit Resources Chapter 4: The Corporate Culture—Impact and Implications In order to access the following resources, click the links below. Johnson & Johnson. (n.d.). Our credo. https://www.jnj.com/credo/ Zenger, J., & Folkman, J. (2020, December 30). Research: Women are better leaders during a crisis. Harvard

Business Review. https://libraryresources.columbiasouthern.edu/login?url=https://search.ebscohost.com/login.aspx?dire ct=true&db=bsu&AN=148025137&site=ehost-live&scope=site

Unit Lesson In Unit I, we looked at the Wells Fargo scandal and noted the cultural shift that prioritized sales over customer service, leading to overzealous and fraudulent cross-selling. It is obvious that something went very wrong with the Wells Fargo corporate culture. On the other hand, it is equally obvious—from our own experiences as employees and as customers—that getting corporate culture right is not easy. So, in this unit, we are going to focus on the concept of corporate culture and how it works, for good or for evil. The concept of culture is fundamental to our lives. Whenever a group of human beings organize themselves for whatever reason, a culture for the organization comes into existence. Hartman et al. (2024) describe culture as “a shared pattern of beliefs, expectations, and meanings that influences and guides the thinking and behavior of the members of a particular group” (p. 408). We intuitively think of an organization’s culture as something that depends on its individual members but also as a separate attribute of the organization itself. In other words, it makes sense to say members of an organization can influence its culture and vice versa. Corporate culture is no different. Every business has shared beliefs, expectations, and meanings when it comes to problem-solving, work-life balance, deference to authority, and so forth. Our concern here is corporate culture as it relates to shared ethical beliefs, expectations, and meanings. We commonly refer to these as corporate values. It is now common practice for businesses to declare their values openly. Consider USAA (originally called the United Services Automobile Association), an insurance and financial services company that appears regularly on “Best Places to Work” lists. USAA (n.d.) asserts its values as

UNIT III STUDY GUIDE

Corporate Culture

PHI 4301, Business Ethics 2

UNIT x STUDY GUIDE

Title

service, loyalty, honesty, and integrity and details the elements of The USAA Standard of Conduct on its website. Statements like these tell us a lot about a company’s culture. Importantly, they signal whether company culture centers on compliance or on values. A compliance-based culture is primarily concerned with steering clear of legal and regulatory rule violations. Anyone who takes annual “compliance training” on subjects like Title VI, Title IX, Health Insurance Portability and Accountability Act (HIPPA), International Organization for Standardization (ISO), Sarbanes-Oxley, anti-harassment, diversity, workplace safety, etc. will understand what this means. If this is the extent of a company’s commitment to ethics, then it is fair to say it has a compliance-based culture. A values-based culture sees adherence to the rules as superficial evidence of its deeper moral commitments to good consequences, principles, and character. The USAA example is illustrative of a values-based culture, as it embraces being compliant while aspiring to a more expansive ethical culture. An ethical corporate culture does not happen by itself; ultimately, it is the responsibility of senior leaders to set a consistent moral tone throughout the company culture. This has important implications for ethical leadership. Leaders must establish clear moral guidance in the form of mission statements, codes of ethics, core values, and similar commitments. Further, good leaders will act, publicly and privately, for the sake of the companies they represent and in accordance with company values. All too often, however, senior corporate executives display indifference to values, resulting in toxic corporate cultures. Most high-profile corporate ethical scandals like Wells Fargo and, more recently, Theranos, have in common a corporate culture with absent or corrupted values demonstrated at the highest level. In the absence of ethical leadership, it falls to others inside the company to take ethical action. Certain individuals, known as whistleblowers, bring the wrongdoing to the attention of the authorities or the public. The whistleblower is an indispensable—and sometimes heroic—figure in business ethics. An ethical company will implement layers of accountability that prevent or mitigate ethical lapses, thereby forestalling the necessity of whistleblowing as a last resort. It will not only communicate its corporate values but also provide incentives, like awards and training, for following them. Ethics hotlines, ombudspersons, and other reporting mechanisms will encourage employees to share concerns about unethical behavior. Some companies take this a step further by setting up systems for continuous monitoring, assessing, and auditing the ethics of their corporate cultures. As challenging as it is to create and maintain, an ethical culture is one of the most valuable assets a company can have.

References Hartman, L. P., DesJardins, J., and MacDonald, C. (2024). Business ethics: Decision making for personal

integrity and social responsibility (6th ed.). McGraw-Hill Education. https://online.vitalsource.com/#/books/9781265810153

United Services Automobile Association. (n.d.). Code of business ethics and conduct: Inspiring trust.

https://content.usaa.com/mcontent/static_assets/Media/USAA_code_of_conduct.pdf?cacheid=47233 1104_p&_ga=2.135338993.1393249540.1638201483-1056091997.1638201483

PHI 4301, Business Ethics 1

Course Learning Outcomes for Unit I Upon completion of this unit, students should be able to:

1. Analyze philosophical ethical concepts. 1.1 Describe qualities necessary in an ethical leader.

Required Unit Resources Chapter 1: Ethics and Business Chapter 2: Ethical Decision Making: Personal and Professional Contexts In order to access the following resource, click the link below. The following video is provided by Ethics Unwrapped and is a free educational resource from the University of Texas at Austin. McCombs School of Business. (2019, February 19). Moral myopia | Concepts unwrapped [Video]. cielo24.

https://c24.page/rpcwnb3nabk7zwsq3uzahxm3hk A transcript and closed captioning are available once you access the video.

Unit Lesson In this unit, we will get acquainted with the topic of business ethics. At this point in your educational and personal experience, you undoubtedly know a lot about business as well as ethics. At the intersection of the business and ethics domains, there is a wealth of scholarly thought and practical wisdom. To understand why, we need only to consider one of many ethical scandals that have made headlines in recent history—Wells Fargo and consumer fraud. The seeds of the scandal took root more than a decade earlier when Wells Fargo took up a practice called cross-selling, which incentivized branch employees to convince bank customers to buy multiple financial products (Hartman et al., 2024). Wells Fargo checking account holders, for example, were sold online banking accounts, credit card accounts, mortgages, lines of credit, overdraft protection—as many products as bank employees could push. Of course, the fees associated with these products drove huge profits for Wells Fargo. It also amounted to an important cultural shift for the bank, as employees came to identify themselves less as customer service representatives and more as salespeople. From a moral point of view, the culture at Wells Fargo was questionable. Cross-selling bank customers financial products they probably did not need was shady, but was it unethical? After all, we tend to give businesses some moral latitude when it comes to sales strategies and tactics under the principle of caveat emptor (buyer beware). Since the bank customers consented to signing up for additional products, they would appear to bear at least some of the moral responsibility. This veneer of moral credibility was discarded when, in an effort to satisfy increasingly aggressive cross- selling quotas, Wells Fargo employees started ordering financial products for customers without their consent. The fraud went so far as to involve a practice called pinning that involved setting a customer’s personal identification number (PIN) to 0000, which allowed bank employees to continue setting up fraudulent accounts their customers knew nothing about. The scale of the fraud was staggering; millions of bogus products including credit cards, online bill pay accounts, deposit accounts, lines of credit, and insurance policies were

UNIT I STUDY GUIDE

Business and Ethical Decision Making

PHI 4301, Business Ethics 2

UNIT x STUDY GUIDE

Title

billed to customers without authorization (Hartman et al., 2024). It was only a matter of time before the fraud was exposed, and Wells Fargo faced a legal, financial, and reputational reckoning. It is worth thinking about this scandal because it illustrates so clearly that no one is exempt from ethical decision-making in business. Moral culpability ran up and down the Wells Fargo organization, from front-line workers to managers and executives to board members. Each employee, at every level, made the decision to perpetrate some aspect of the fraud. When the scandal finally became known, however, only some of the perpetrators suffered legal consequences. This illustrates another important point, namely, that morality is more demanding than legality in business. Staying within the bounds of legal rules and regulations does not guarantee that business behavior is morally good—or even morally permissible. Even though the Wells Fargo case shows us what business ethics is not, it does offer some insight into what business ethics is. The concept of ethics, by itself, has something to do with promoting human flourishing (and probably nonhuman). This is something we understand intuitively without studying about it very much. What is interesting about ethics, as a field of study, is that it is both descriptive and normative. Many academic subjects are descriptive in the sense that they describe through different levels of analysis, entities, events, along with their formal and cause-and-effect relationships. Statistics, for instance, describe probabilistic models that link certain types of events (e.g., the likelihood of opening a bank account given the holding of a credit card). It does not say whether opening a bank account is a good idea or, in other words, if people ought to open a bank account if they hold a credit card. When the conversation crosses from the way the world is to the way it ought to be, then we have entered normative territory. Business ethics is inherently descriptive because it involves narratives about actual, historical business decisions and outcomes. Business ethics is also inherently normative because its purpose is to guide our future business behavior toward human flourishing. Again, it is not just about what we do but what we ought to do in business. Unfortunately, the long and less-than-illustrious history of business, which includes the Wells Fargo scandal among countless others, shows us that ethics is not something that comes naturally in business decision- making. This does not mean we are naturally unethical people. It just means that making decisions in accord with business ethics is hard. As any behavioral economist will tell you that we come into this world with a host of cognitive biases that undermine rational (and, by extension, ethical) decision-making. Take change blindness, which occurs when decision makers do not notice how small changes over time have amounted to major ethical problems. The shift at Wells Fargo from cross-selling to consenting customers to foisting new products to nonconsenting customers is a perfect example of this. Change blindness is but one of our many natural inclinations toward simple, myopic, and self-serving decisions that just confirm what we feel like doing in the first place. This is why it is so important not only to study business ethics generally but also to instill in the self-discipline to make ethical business decisions individually. In this class, we will engage in business ethical theory and practice in equal measure.

References Freepik. (n.d.). Business ethics good relationships or profit [Graphic]. https://www.freepik.com/free-

vector/business-ethics-good-relationships- profit_10980278.htm#query=ethics%20business&position=3&from_view=search&track=ais

Hartman, L. P., DesJardins, J., & MacDonald, C. (2024). Business ethics: Decision making for personal

integrity and social responsibility (6th ed.). McGraw-Hill Education. https://online.vitalsource.com/#/books/9781265810153

PHI 4301, Business Ethics 1

Course Learning Outcomes for Unit II Upon completion of this unit, students should be able to:

1. Analyze philosophical ethical concepts. 1.2 Discuss the three fundamental concepts in business ethics.

Required Unit Resources Chapter 3: Philosophical Ethics and Business In order to access the following resources, click the links below. CrashCourse. (2016, November 14). Kant & categorical imperatives: Crash Course philosophy #35 [Video].

cielo24. https://c24.page/4kag3edwtd7jsvfwfucn3c4vkf A transcript and closed captioning are available once you access the video. CrashCourse. (2016, November 21). Utilitarianism: Crash Course philosophy #36 [Video]. cielo24.

https://c24.page/527uykdpd9xmfmzuuv8xupkqva A transcript and closed captioning are available once you access the video. CrashCourse. (2016, December 5). Aristotle & virtue theory: Crash Course philosophy #38 [Video]. cielo24.

https://c24.page/wm5fkn848d95tkhfns6xyd3n6x A transcript and closed captioning are available once you access the video.

Unit Lesson This unit introduces three fundamental concepts in business ethics and, indeed, ethics in general. Everything we do in this course depends on these three concepts, so it is important to understand them clearly. They are consequence, principle, and character. These concepts are the main foundation of all ethical reasoning applied to business and to life. That is, when we make moral judgments about rightness or wrongness, we are often saying something about consequences, principles, or character. Often, our moral judgments are a mix of all three, which is the primary source of moral confusion.

UNIT II STUDY GUIDE

Philosophical Ethics and Business

PHI 4301, Business Ethics 2

UNIT x STUDY GUIDE

Title

Consequence The concept of consequence encompasses the desirable or undesirable outcomes of an action. We all make moral decisions based on the consideration of pleasures and pains, benefits and harms, pros and cons, profits and losses, advantages, and disadvantages, and so forth. We intuitively believe that moral actions are those that bring about most outcomes on the positive side of the ledger compared with the negative side. The ethical theory of utilitarianism, which is rooted in scholarly studies from the 18th and 19th centuries, says that outcomes are what matter, and people should determine what they should do by considering the consequences of the actions they take (Hartman et al., 2024). Later, other scholars suggested a variation called egoism that said the morally right action will produce the greatest happiness for the moral agent (i.e., the “me” doing the acting). Between utilitarianism and egoism lies a profound tension that so often plays out in business. When making a decision, is it ethical for a business to consider only its own interests, or ought it consider the interests of others? Whatever the answer is, the question itself presupposes a commitment to getting the consequences right.

Principle The concept of principle is, in some ways, the opposite of consequence. Moral principles (also called duties) are the rules we refer to when making moral decisions. We do this because there are moral rules that apply to everyone—that is, they are absolute—such that following them will always be the right thing to do regardless of the consequences. The history of business ethics, for example, is replete with tales of heroes who “speak truth to power” in the face of corporate corruption. We admire such people precisely because they relentlessly adhere to the principle that one should always tell the truth, even at the risk of retaliation for speaking out. Although the idea of moral principles is as old as humanity itself, it was Immanuel Kant who gave logical structure to it. In philosophy, it is known simply as Kant’s ethics, which gives you an idea of how influential his theory became (Hartman et al., 2024). The details are rather complicated (some might say overcomplicated), but the gist of Kant’s ethics is that we should always act for the sake of moral principles. We can understand these principles through reason alone, much like we understand the principles of mathematics. For his theory, Kant drew upon the intellectual tradition of natural law, which evolved on a somewhat different path to become the theory of natural rights (Hartman et al., 2024). Quite a bit of our moral discourse these days involves the assertions of rights by persons, corporations, communities, states, and other moral agents. Rights and principles are two sides of the same coin. Both are moral absolutes and must be respected regardless of the consequences. The hero speaking truth to power is also exercising the right to freedom of speech; certain acts of retaliation would amount to a violation of that right.

Character The concept of character approaches morality from a different angle. Consequences and principles are mostly concerned with the nature of the action itself. Morally, from this perspective, it does not matter who is doing the acting if the right action is being done; however, this analysis leaves something out, namely, the nature of the person acting. After all, the idea of good and bad applies to people as much as it does to the actions they perform. We could try to reduce the idea of a good person to someone who performs good actions, but then we are left with the problem that sometimes good people do bad things and vice versa. We are clearly talking about properties that people have in and of themselves, which we intuitively grasp as a person’s character. Aristotle was the first to apply philosophical rigor to the concept of character, which he described in terms of virtues and vices (Hartman et al., 2024). Virtues are the habits of good character, like courage and humility. Like all good habits, virtues can be improved upon and require more self-discipline than vices like cowardice and conceit. Virtuous people will make the right moral choices as natural emanations from the virtues they possess. For those of us with less-than-perfect character, we can always ask ourselves “What would the virtuous person do?” for guidance on difficult moral situations. Throughout this class, we will encounter business situations that invite ethical analysis. The purpose of this unit is to bring the concepts of consequence, principle, and character to the forefront of our minds, understanding their contours so that we can see our way clearly through moral conflicts that inevitably arise in business contexts. You will notice that we almost always fall back on considerations of consequences, principles, and character in our moral reasoning. The challenge here is that, in any particular business case, consequence, principle, and character are likely to point in different directions. For example, during the economic recession of 2008–2009, several banks said to

PHI 4301, Business Ethics 3

UNIT x STUDY GUIDE

Title

be too big to fail received huge financial bailouts from the federal government (Hartman et al., 2024). As far as consequences were concerned, the bailout was the morally right choice given the alternative of global economic collapse; however, to many, it felt as if the bailout broke the moral principle that people (and institutions) should get what they deserve, and there were many people (and smaller institutions) undeservedly suffering while the banks took free money they did not deserve. Add to this the clear impression that selfish and unrepentant bank chief executive officers (CEOs) were utterly deficient in virtue, and you have all the elements of a moral conundrum. You will experience the challenge of conflicting moral intuitions about consequence, principle, and character arise consistently in business and life.

Reference Hartman, L. P., DesJardins, J., and MacDonald, C. (2024). Business ethics: Decision making for personal

integrity and social responsibility (6th ed.). McGraw-Hill Education. https://online.vitalsource.com/#/books/9781265810153