2 case Studies

1. Question on Case Study

· You’re a manager for ABC Company

· Your boss just told you a big secret he wants you to keep that the company will have to lay off 200 workers. Luckily, your job won’t be affected.

· But a rumor is circulating in the company, and one of the workers who will be let go and is an old friend of yours asks the question. “Am I going to lose my job? I’m about to finalize the purchase of a new house. I need to know”.

· What would you say?

2. Business ethics importance –reasons with examples

Importance of Business Ethics:

Ethical behaviour and corporate social responsibility can bring significant benefits to a business. For example, they may:

· attract customers to the firm's products, thereby boosting sales and profits

· make employees want to stay with the business, reduce labour turnover and therefore increase productivity

· attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees

· attract investors and keep the company's share price high, thereby protecting the business from takeover.

Ethical motivation:

· Employees working for an organization will feel better about themselves and therefore more motivated to work hard.

· Ethical employee = happy employee = motivated employee = productive employee

Balance the needs and wishes of stakeholders:

· Business are not just about money they are about giving back to society, the community.

· Those companies that do so will also have an enhanced reputation and be more profitable.

· There is pressure on business to recognize its responsibilities to society. Business ethics requires businesses to think about the impact of its decisions on people or stakeholders who are directly or indirectly affected by those decisions.

Global challenges:

· Need to learn about the different values and cultures of the regions it operates in.

· Don’t want to offend.

· Lose reputation, lose business.

Ethical pay-off:

· Organizations risk not only losing customers and employees, but being exposed to civil and criminal liability.

· Sound ethical policy reduced risk exposure.

Employee Retention:

· Danger of losing employees who don’t want to work for an unethical organization.

· Significant costs involved in replacing key people.

Prevention & Reduction of Criminal Penalties:

· In addition to the loss of reputation and business, nobody really want to end up in court or even worse jail.

The US Sentencing Commission Guidelines state that to receive a 40% reduction in federal penalties, a company must have “an effective program to detect and prevent violations of the law”.

Preventing civil lawsuits:

· In additional to criminal offences, organizations need to be vigilant to civil offences.

· Discrimination, sexual harassment, favoritism big concerns.

· Sound ethical policies can pre-empt unwanted behaviors.

Market leadership:

· Use ethical behavior as a unique selling feature to stand out in the market place.

· Ethical organizations are considered more profitable organizations.

Setting the Example:

· Don’t follow the crowd.

· Be the example that changes the way your industry operates.

3. Business ethics are unnecessary – Argue

The point of a business ethics course is to improve behavior in business, and that an essential ingredient in that improved behavior is knowing what's right or wrong.

· Business ethics deals with values, facts, and arguments.

· Well-reasoned arguments, by reason of their clarity, invite counterarguments.

1. In perfectly competitive markets, the pursuit of profits will ensure members of society are served in the most socially-beneficial way. (the invisible hand of the market)

But:

· Hard to find an example of perfect competition.

· Not all steps to increase profit are socially-beneficial.

2. Business managers should do what is in the best interests of the organization. (loyal agent argument).

· Usually a very short-term view of benefit.

· Usually only a financial view.

· Basically says ethics don’t matter at all.

3. To be ethical, it is enough for business people merely to obey the law. Business ethics is to obey the law.

· Ethics is not limited to what is legal.

· Provides a useful excuse to act “unethically”.

4. Forms of discrimination-Intentional/Institutional aspects with examples

4 Forms: Intention and Institutional Aspects

1. Isolated & Unintentional

2. Isolated & Intentional

3. Institutionalized & Unintentional

4. Institutionalized & Intentional

1. Isolated & Unintentional

· Individual person unknowingly discriminates

· A manager doesn’t bother to send the two employees in his company from country X the information on the new job opportunity because he doesn’t think people from country X like this kind of job.

2. Isolated & Intentional

· Individual person unknowingly discriminates

· I don’t like Klingons work ethic & therefore will never hire one to work in my department.

3. Institutionalized & Unintentional

· Discrimination happening on an organizational level, part of procedures, practices

· Intention of policy not deliberate

· An organization only recruits from certain colleges. These colleges happen to have a majority of white students, making the likelihood of minorities getting employed with company less likely.

4. Institutionalized & Intentional

· Organization knowingly and intentionally acts in a discriminatory manner

· It is company policy not to promote anyone to a managerial position under the age of 50

5. Affirmative action-Justify compensation purposes and achieving social goals

Affirmative Action:

· An attempt to rectify past discrimination against women and visual minorities

· Gives preferential treatment to groups that have experienced discrimination, under-represented in education or employment fields

· Recruit, hire, promote

· In America, some levels of government legally require affirmative action plans

· Some claim this is in fact reverse discrimination against white males.

The Case for Affirmative Action

· Compensation (Compensatory Justice)

· An obligation to compensate those who were wronged in the past.

· Challenges with this?

· Who pays?

· Who receives the benefit?

· Achieving Social Goals

· Promote the public welfare

· Past discrimination has produced a high degree of correlation between race and poverty

· Discrimination leads to inequality

· Inequality leads to poverty

· Poverty leads to discontent

· Discontent leads to social unrest, crime.

6. Duties of employer/obligations of employee

When an employee signs a contract of employment, this is an agreement that the employee will perform various duties that the employer has described. If these duties are not met, the contract can be terminated by the employer.

Main Goal – Duties of an Employee

Work towards the goals of the firm and avoid activities that might harm those goals

You should always read any contract carefully before signing it!

Firm’s Duties to the Employees:

· Fairness of Wages

· Working Conditions

· Job Satisfaction

Employee’s Obligation to the Firm

1. Conflicts of Interest

2. Bribes

3. Theft

4. Insider Trading

1. Conflicts of Interest

· Exists when an individual is carrying out a task on behalf of the company and has a private interest in the outcome.

· To favor a particular supplier

· To favor a particular job candidate

· To choose to disclose confidential information for the benefit of a friend

· Asked to do something you think is morally wrong

Conflicts of Interests? Black, white or grey?

· As dept. manager, you are hosting an informal celebration in the office. The food budget is $200. Your next door neighbor has just started her own catering business and asks to supply the food. Since she is just starting out, she’ll do it at cost and provide extra items at no charge.

· What might you want to consider?

2. Bribes

When something is offered to an employee from a person outside the firm with the understanding that the employee will do something favorable for that person as the employee completes a job task.

· Money

· Favors

· Items

· Gifts?

Gifts or Bribe?

When is it okay to accept a gift without it being considered bribery? Some considerations:

a. What is the value of the gift, and will it influence decision making?

b. What is the purpose of the gift? Was it intended as a bribe?

c. What were the circumstances of the gift? Was it for a special event celebration?

d. What is the position of the person receiving the gift? Are they influential in decision making for the firm?

e. What is the accepted business practice in the area?

f. What is company policy?

g. What is the law?

A supplier sends a basket of expensive foodstuffs to your home at Christmas with a card: "We hope you and your family enjoy the 'goodies.‘".

What action(s) might you want to take?

3. Theft

4. What are the different ways an employee can “steal” from their organization?

7. Ethical approaches-situational analysis

The Seven Step Method for deciding what action to take in a situation.

1. The Facts?

a. What facts make this an ethical situation?

b. What facts are relevant to making an ethical decision?

2. The Ethical Issues?

a. What level of ethical issues are we dealing with: systemic, corporate, or individual?

b. What specific ethical issues does this situation raise?

c. What level of generality is required?

3. The Alternatives?

Given the facts and the ethical issues, what alternative actions are possible in this situation? Initially we should state as many alternatives as possible without making judgments as to their plausibility. Having generated as many as possible, the most plausible should be chosen for further examination.

The corporation can provide no health benefits, co-pay with the employee, provide full benefits for the employee only, provide family benefits, open an HMO, and so on.

4. The Stakeholders?

a. Who will be affected by the alternatives and to what degree?

b. How to rank stakeholder claims?

c. The firm's claim on resources in order to continue as a viable economic unit would have be given the greatest weight, since without the firm none of the other stakeholders could receive any benefit. The competing claims of stockholders and workers would have to be given the next greatest weight since they contribute directly to the value of the firm and have legitimate claims on that value. Deciding on how much weight to give each group's claims would require and understanding of the capital structure of the firm (debt--equity balance, availability and relative cost of debt financing, and so on) and the history of the firm's relations with the employees (degree of worker contribution to finished product, loyalty and productivity of workers, average length of employment and rate of turnover, and so on). Families and the community would have less weight unless they have made equally important contributions to the firm.

5. The Ethics of the Alternatives?

a. Use ethical principles to decide on the best alternative.

b. How to decide when the theories point to different alternatives.

6. The Practical Constraints?

a. Can the best alternative be put into effect?

b. Distinguish ethical from practical constraints.

7. Actions to Take?

a. Implementing the best alternative.

b. A summary of the justification

8. Importance of values-reasons with examples

Values:

· Beliefs, concepts you considered worthwhile

· Impact, priorities, decision-making process in your organization

· What’s important to you? Your organization?

Reason:

· Impact every aspect of your organization

· Shape company vision

· Guidance on where you should prioritize

· Get people on the “same page”

· Gauge success