Business Society
flyingbryan
topic-5__6.pptWeeks 5 & 6 – YOU as a stakeholder
I Morals & Ethical Principles
II Ethical Decision Making in Business
(Why good people do bad things)
Greg Smith
Choice of
Ethical
Perspective
Morality:
The social rules that govern & limit our conduct, especially the ultimate rules concerning right and wrong.
The basic guidelines for cooperative social existence.
Serves to restrain the purely self-interested desires in each of us in order to make it possible for all of us to live together.
When we make a decision or take an action we can be:
Moral - in compliance with moral standards
key operating questions of management is "is this action or decision fair to us and all stakeholders involved?"
Immoral - in opposition to moral standards
key operating question of management is "can we make money with this action or decision regardless of what it takes?"
Amoral - without consideration of moral standards
key operating question of management is "can we make money with this action or decision?"
Nonmoral - outside the sphere of moral concern
Moral standards get confused with:
Law Etiquette
Conscience
Corporate/Professional Codes
Religion
Moral Relativism:
The belief that morality is just a function of what a particular society happens to believe, that what is right is determined by what a society says is right.
abortion is condemned as immoral in Catholic Spain, but is practiced as a morally neutral form of birth control in Japan
Moral relativists believe that there is no absolute moral standard independent of culture, no universal definition of right or wrong.
polygamy, stealing, slavery have all been tolerated by the moral system of one society or another
Moral Universalism is the belief that variations in moral standards reflect different factual circumstances rather than fundamental differences in values.
Which is right?
It is good to emphasize that in viewing other cultures we should keep
an open mind and not simply dismiss their social practices.
Compromise position is Moral Perspectivalism,
the consideration of multiple perspectives while at the same time asserting universal truths.
Kohlberg’s Levels of Moral Development
*
1. Preconventional Level:
- how we behave as infants & children
- emphasis in decisions is on ourselves
Stage 1 - Reaction to punishment - pain avoidance
Stage 2 - Seeking of rewards - praise, candy, trip to a movie
2. Conventional Level:
- child learns the importance of conforming to norms of society
Stage 3 - Good boy/nice girl morality - rewards such as feelings of warmth, loyalty acceptance from family & peers
Stage 4 - Law and order morality - certain norms are expected in society - individual sees himself as part of a larger social system
3. Postconventional Level:
- a more advanced notion of right or wrong than that which is conventionally articulated
- moral principles are internalized, seen as "right"
- focus is on humanity as a whole
- few people reach this level – most remain at Stage 4.
Stage 5 -Social contract orientation - view that individuals have rights given by society as a whole, that personal values are relative, and that consensus should be reached through process
Stage 6 - Universal ethical principle orientation - individual uses his or her self- chosen ethical principles to consistently do what is considered to be universally right
The relationship between morality, ethics and ethical theory
…that can be applied to any situation.
… to produce ethical
theory …
Ethics rationalizes morality …
Morality
Ethics
Ethical theory
Potential solutions to ethical problems
Moral/Ethical decisions have:
- Extended consequences
- Multiple alternatives
- Mixed and complex outcomes
- Uncertain consequences
- Personal implications
*
Ethical Principles/Decision Tools
Profit Maximization/Individualism Approach
Utilitarian Approach
Universalist/Categorical Imperative Approach
Rights/Rule of Law Approach
Justice Approach
Golden Rule Approach
Might = Right Approach
Duty to Care Approach
Organization Ethic Approach
Intuition Approach
Revelation Approach
Hedonistic Approach
Virtue Approach
*
Ethical Principles
People can compare their anticipated actions and decisions with certain principles or belief sets that they hold to be true; most of us tend to pick and choose which principle to we abide, depending on the situation.
Utilitarianism one day, justice the next…depending on to whom we are speaking or what we are doing
It would take an entire philosophy course to fully explain all the various ethical principles and their respective founding philosophers, and so here is an overly-simplified list of some of the more commonly used principles:
Utilitarianism: * seek the greatest good for the greatest number of people
* does the good in this action outweigh the harm?
* if the consequences are good, the action is good
* focus is on the ends, not the means
Individualism: * an act is moral when it promotes the individual's long term interests
* individual’s long-term interests ultimately lead to greater good
Rights: * all individuals have fundamental rights - claims or entitlements
* take an action or make a decision by vowing to respect the rights of others (free consent, privacy, freedom of conscience, free speech, due process, life & safety)
Justice: * individuals must be given what they are due, what they deserve
* act or make a decision that is fair to others (distributive, procedural, interactional, compensatory)
Golden Rule: * "Do unto others as you would have them do unto you"
* rooted in many religious traditions
Might=Right: * what is ethical is what an individual or company has the power to accomplish
Categorical Imperative (Immanuel Kant):
* take an action only if it can be consistently adopted by everyone else
* an action is morally right only when it can be considered a unversal law (can everyone do it?)
Organization Ethic: * the needs of inidividuals should be subordinated to the greater good of the organization (whatever that may be - business, church, school, state)
* this is the age of the large organization - individuals should take actions conistent with the goals of the organization
Intuition: * follow your gut feeling when making moral decisions
Revelation: * prayer or appeal to higher beings will reveal the right thing to do
Hedonistic: * "If it feels good, do it"
Profit Maximization/Individualism
Key Principle
The objective of a decision should be to maximize the corporation’s/individual’s profit and shareholder value in the long term.
“Do what’s best for you/your company”
Profit Maximization/Individualism
Criticisms/Weaknesses
Assumptions of open and free competition often not met.
Can cause undue harm to some stakeholders.
Often does not account for “externalities.”
Puts a great deal of pressure on the law to reflect society’s values.
Biases may affect decision making.
Utilitarianism
Key Principles
The greatest good for the greatest number.
The ends justify the means.
Utilitarianism
Criticisms/Weaknesses
It could be argued that sometimes harm cannot be outweighed by any benefit. That is, sometimes the ends can’t justify the means.
Calculating the harm and benefit can be difficult. Some argue that the ends can never truly be foreseen. So the focus needs to be on the means.
Biases (personal, situational, organizational) can inappropriately affect benefit/harm assessment.
Universalism
Key Principles
Take an action only if you’d get what you want if everyone did it, under equivalent circumstances.
“Do the right thing”
Universalism
Criticisms/Weaknesses
Difficult to “never lie,” yet a pure application of universalism says lying is always wrong.
Some would argue that there aren’t many things that are wrong “no matter what.”
Biases (personal, situational, organizational) can affect how “equivalent circumstance” and “inappropriately” are defined. Could potentially justify any action.
Rights/Rule of Law
Key Principles
Do what you have the right to do, as reflected in our legal system.
“Obey the law.”
Rights/Rule of Law
Criticisms/Weaknesses
What is legal or illegal does not always reflect a society’s moral standards – “moral minimum.”
Not all in society have equal ability to influence the legal system.
What if you intentionally break the law and accept the punishment: Is that ethical?
Hard to always obey every law. Where to draw the line?
Justice
Key Principle
What is fair for one should be fair for all.
“Do what is fair.”
Criticisms/Weaknesses
Treating people equally may not mean treating them the same.
Virtue Ethics
Key Principle
Develop individual character (virtues) and you will necessarily make the right decision.
Virtues: wisdom, prudence, justice, fortitude, courage, liberality, magnificence, magnanimity, temperance
Criticisms/Weaknesses
Assumes “good” people will make “good decisions.
Ethics Check Questions
- Is the action legal? RIGHTS
- Is the action right and fair? JUSTICE
- Does it promote win-win relationships? UTILITARIANISM
- Is it appropriate for both short and long term?
- Does it comply with the firm’s values? ORGANIZATION ETHIC
- Would I want everyone to know about this? UNIVERSALISM/CATEGORICAL IMPERATIVE
- How will I feel about myself? INTUITION
*
THE ALLIGATOR RIVER STORY
There lived a woman named Abigail who was in love with a man named Gregory. Gregory lived on the shore of a river. Abigail lived on the opposite shore of the same river. The river that separated the two lovers was teeming with dangerous alligators. Abigail wanted to cross the river to be with Gregory. Unfortunately, the bridge had been washed out by a heavy flood the previous week. So she went to ask Sinbad, a
riverboat captain, to take her across. He said he would be glad to if she would consent to go to bed with him prior to the voyage. She promptly refused and went to a friend named Ivan to explain her plight. Ivan did not want to get involved at all in the situation. Abigail felt her only alternative was to accept Sinbad’s terms. Sinbad fulfilled his promise to Abigail and delivered her into the arms of Gregory.
When Abigail told Gregory about her amorous escapade in order to cross the river, Gregory cast her aside with disdain. Heartsick and rejected, Abigail turned to Slug with her tale of woe. Slug, feeling compassion for Abigail, sought out Gregory and beat him brutally. Abigail was overjoyed at the sight of Gregory getting his due. As the sun set on the horizon, people heard Abigail laughing at Gregory.
*
Moral/Ethical problems in business:
A conflict between financial performance (revenues, costs, & profits) and social performance (obligations to all stakeholders)
Alayne Fleischmann
- Balancing work & family
- Poor internal communications
- Poor leadership
- Work hours, work load
- Technology and constant access
- Need to meet sales, profit, or budget goals
- Little or no recognition of achievements
- Company politics
- Personal financial worries
- Insufficient resources
Sources of pressure in today's workplace:
Management Pressures
“I am sometimes subject to pressure to compromise personal standards to achieve organizational goals”
- All Management Levels: 64% agree
- Top Management: 50% agree
- Middle Management: 65% agree
- Lower Management: 85% agree
*
Consequences of Pressure
- 60% of workers feel “substantial” amount of job pressure
- 57% of workers feel more pressure than 5 years ago
- 40% of workers feel that pressure has increased in the past year
- Nearly half (48% of workers) reported that they had engaged in one or more unethical or illegal activities during the past year, resulting from job pressure
*
Top five types of unethical or illegal behaviors in response to pressure:
- Cutting corners on quality
- Covering up incidents
- Abusing or lying about sick days
- Lying or deceiving customers
- Putting inappropriate pressure on others
*
Percentage of type of observed misconduct at work:
Unsafe working conditions 56%
Deceptive sales practices 56%
Mishandling proprietary/confidential information 50%
Violations of privacy rights 38%
Shipping low-quality or unsafe products 37%
Employment discrimination 36%
Sexual harassment 34%
Altering product quality or safety test results 32%
Antitrust violations or unfair competitive practices 32%
Environmental breaches 31%
The New Perspective on Organizational Wrongdoing
Wrongdoing as a “normal phenomenon”
- Treats wrongdoing as prevalent rather than rare
- Views wrongful behavior as not much different than rightdoing
- Considers wrongdoers to be ordinary people rather than “bad apples”
- Assumes the causes arise from a plethora of structures, systems and processes
What gives rise to wrongdoing?
- Power structures
- Administrative systems
- Situational social influence
- Accidental wrongdoing and technological systems
Choice of
Ethical
Perspective
“Biases”
individual differences
power structures,
administrative systems,
social influence,
technology =
“ethical breakdowns”
Individual influences on ethical decision-making
http://opinionator.blogs.nytimes.com/2013/10/05/rich-people-just-care-less/?_r=0
Factor |
Influence on ethical decision-making |
|
Age and gender |
Very mixed evidence leading to unclear associations with ethical decision-making. |
|
National and cultural characteristics |
Appear to have a significant effect on ethical beliefs, as well as views of what is deemed an acceptable approach to certain business issues. |
|
Education and employment |
Somewhat unclear, although some clear differences in ethical decision-making between those with different educational and professional experience seem to be present. |
|
Psychological factors: |
|
|
· Cognitive moral development |
· Small but significant effect on ethical decision-making. |
|
· Locus of control |
· At most a limited effect on decision-making, but can be important in predicting the apportioning of blame/approbation. |
|
Personal Values |
Significant influence – some empirical evidence citing positive relationship. |
|
Personal integrity |
Significant influence likely, but lack of inclusion in models and empirical tests. |
|
Moral imagination |
A new issue for inclusion with considerable explanatory potential. |
Situational influences on ethical decision-making
http://www.upworthy.com/take-two-normal-people-add-money-to-just-one-of-them-and-watch-what-happens-next?g=2&c=cd1
Human Behavior Experiments https://www.youtube.com/watch?v=XVpV73wSyG8
|
Type of factor |
Factor |
Influence on ethical decision-making |
|
Issue-related
|
Moral intensity
|
Reasonably new factor, but evidence suggests significant effect on ethical decision-making. |
|
|
Moral framing
|
Fairly limited evidence, but existing studies show strong influence on some aspects of the ethical decision-making process, most notably moral awareness. |
|
Context-related |
Rewards
|
Strong evidence of relationship between rewards/punishments and ethical behaviour, although other stages in ethical decision-making have been less investigated. |
|
|
Authority |
Good general support for a significant influence from immediate superiors and top management on ethical decision-making of subordinates. |
|
|
Bureaucracy
|
Significant influence on ethical decision-making well documented, but actually exposed to only limited empirical research. Hence, specific consequences for ethical decision-making remain contested. |
|
|
Work roles
|
Some influence likely, but lack of empirical evidence to date. |
|
|
Organizational culture
|
Strong overall influence, although implications of relationship between culture and ethical decision-making remain contested. |
|
|
National Context |
Limited empirical investigation, but some shifts in influence likely. |
5 Barriers to an Ethical Organization
Choice of
Ethical
Perspective
“Biases”
individual differences
power structures,
administrative systems,
social influence,
technology =
“ethical breakdowns”
Top Management Leadership
Ethics Programs & Officers
Realistic Objectives
Ethical
Decision
Processes
Codes of Conduct
Ethics Audit
Ethics Training
Whistle-blowing mechanisms
Discipline of Violators
Codes of Conduct
Improving Ethical Climate
Effective Communication
Code of Ethics Topics
- Aspirational and expected conduct
- Conflicts of interest
- Receiving and giving of gifts, gratuities, and entertainment
- Protecting company proprietary information
- Discrimination
- Sexual harassment
- Kickbacks
- Employee theft
- Proper use of company resources
*
Ethics Check Questions at Work
- Is the action legal? RIGHTS
- Is the action right and fair? JUSTICE
- Does it promote win-win relationships? UTILITARIANISM
- Is it appropriate for both short and long term? PROFIT MAXIMIZATION
- Does it comply with the firm’s values? ORGANIZATION ETHIC
- Would I want everyone to know about this? UNIVERSALISM
- How will I feel about myself? INTUITION
*
Why should business behave ethically?
Fulfills public expectation for business.
Prevents harming others.
Improves business relations and employee productivity.
Reduces penalties under Corporate Sentencing Guidelines.
Protects business from others, including government.
Protects employees from their employers.
Promotes personal morality.
Helps profitability.
Factor Influence on ethical decision -making
Age and gender Very mixed evidence leading to unclear associations with ethical decision -making.
National and cultural characteristics
Appear to have a significant effect on ethical beliefs, as well as views o f what is deemed
an acceptable approach to certain business issues.
Education and employment
Somewhat unclear, although some clear differences in ethical decision -making between
those with different educational and professional experience seem to be prese nt.
Psychological factors:
Cognitive moral development Small but significant effect on ethical decision -making.
Locus of control
At most a limited effect on decision -making, but can be important in predicting the
apportioning of blame/approbation.
Personal Values Significant influence – some empirical evidence citing positive relationship .
Personal integrity Significant influence likely, but lack of inclusion in models and empirical tests .
Moral imagination A new issue for inclusion with considerable explanatory potential.
Type of
factor
Factor Influence on ethical decision -making
Moral intensity
Reasonably new factor, but evidence suggests significant effect on ethical decision -
making.
Issue-related
Moral framing
Fairly limited evidence, but existing studies show str ong influence on some aspects of
the ethical decision-making process, most notably moral awareness.
Rewards
Strong evidence of relationship between rewards/punishments and ethical behaviour,
although other stages in ethical decision -making have been less investigated.
Authority Good general support for a significant influence from immediate superiors and top
management on ethical decision -making of subordinates .
Bureaucracy
Significant influence on ethical decision -making well documented, but actually
exposed to only limited empirical research. Hence, specific consequences for ethical
decision-making remain contested.
Work roles
Some influence likely, but lack of empirical evidence to date .
Organizational
culture
Strong overall influence, although implications of relationship between culture and
ethical decision-making remain contested.
Context-
related
National Context Limited empirical investigation, but some shifts in influence likely.
