Response to Research from Peer (Spirituality in the Workplace) John Mureithi

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Chapter 5 Ethics and Ethical Reasoning

§ Defining ethics and business ethics. § Evalua8ng why businesses should be ethical. § Knowing why ethical problems occur in business. §  Iden8fying managerial values as influencing ethical decision making.

§ Recognizing how people’s spirituality influences their ethical behavior.

§ Understanding stages of moral reasoning. § Analyzing ethical problems using generally accepted ethics theories.

Ch. 5: Key Learning Objec;ves

§ Ethics: § A concep8on of right and wrong conduct. § Tells us whether our behavior is moral or immoral. § Deals with fundamental human rela8onships—how we think and behave toward others and want them to think and behave toward us.

§ Ethical Principles: § Guides to moral behavior.

The Meaning of Ethics

§ No8ons of right and wrong come from many sources: § Religious beliefs § Family ins8tu8on § Educa8on § Community/neighborhood § Media influences

§ Acts as a moral compass to guide an individual when ethical dilemmas arise.

Sources of Ethics

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Depends on how you frame the issue & which lens you look through

§ Concept which holds that ethical behavior should be defined by various periods in 4me in history, a society’s tradi4ons, the special circumstances of the moment, or personal opinion. § Rela8ve to 8me, place, circumstance, and the person’s involved

§ No universal ethical standards

Ethical Rela;vism

§ Laws: society’s formal wriRen rules about what cons8tutes right and wrong conduct in various spheres of life.

§ Ethical concepts are more complex than wriRen rules of law.

Are Ethics the Same as Laws?

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§ Business Ethics: the applica8on of general ethical ideas to business behavior.

Business Ethics

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Figure 5.1

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Misconduct at Work, 2000 to 2013

Why Business Should be Ethical? Figure 5.2

Let’s look at each reason in more depth à

1. To enhance business performance. §  Research shows strong link between

ethics and financial performance. §  Ethical ac8ons can directly affect their

organiza8on’s boRom line.

Five Key Reasons Business Should Be Ethical

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The World’s Most Ethical Index versus S&P 500 and FTSE 100, 2005–2010

Figure 5.3

2. To comply with legal requirements. § Two legal requirements provide direc8on for companies interested in being more ethical in their business opera8ons: §  U.S. Corporate Sentencing Guidelines

§  Sarbanes-‐Oxley Act of 2002

Five Key Reasons Business Should Be Ethical

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U.S. Corporate Sentencing Guidelines

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§ Establish standards and procedures to reduce criminal conduct.

§ Assign high-‐level officer(s) responsibility for compliance. § Not assign discre8onary authority to “risky” individuals. § Effec8vely communicate standards and procedures through training.

§ Take reasonable steps to ensure compliance—monitor and audit systems, maintain and publicize repor8ng systems.

§ Enforce standards and procedures through disciplinary mechanisms.

§ Following detec8on of offense, respond appropriately and prevent reoccurrence.

§ Born from the ethics scandals at Enron, WorldCom, Tyco and others.

§ Seeks to ensure that firms maintain high ethical standards.

§ How they conduct and monitor business opera8ons

§ Requires execu8ves to: § Vouch for the accuracy of a firm’s financial reports

§ Pay back bonuses based on earnings that are later proved fraudulent

§ Established strict rules for audi8ng firms.

Sarbanes-‐Oxley Act of 2002

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3. To prevent or minimize harm.

§ Overriding principle that business should “do no harm.”

à Example: Insider trading

Five Key Reasons Business Should Be Ethical

4. To meet demands of business stakeholders. § Consumers are more inclined to purchase the products. § Signaling a long-‐term concern for all stakeholders; a beRer economic performance. § Gain the trust from the investors.

à Example: The Co-‐opera8ve Bank

Five Key Reasons Business Should Be Ethical

5. To promote personal morality. §  Knowing one works in a suppor8ve ethical climate contributes to sense of psychological security.

Five Key Reasons Business Should Be Ethical

§ Four Primary Reasons: §  Personal gain and selfish interest §  Compe88ve pressure on profits §  Conflicts of interest §  Cross-‐cultural contradic8ons

Why Ethical Problems Occur in Business

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Figure 5.4

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Why Ethical Problems Occur in Business

§ Serve as models for others who work at the company.

§ New CEOs tend to be more self-‐interested and short-‐term focused.

§ Recent study: today’s managers place slightly more importance on moral values > competency values.

§ The challenge for many moral managers is ac8ng effec8vely on their beliefs in the day-‐to-‐day life of their organiza8ons.

à Example: “Giving Voice to Values” program

Core Elements of Ethical Character: Managers’Values

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§ Personal belief in a supreme being, religious organiza8on, power of nature or some other life-‐guiding force. §  Organiza8ons accommodate their employees to meet their spiritual and religious needs.

§  Opponents of spirituality at work point argue to keep spirituality out of the workplace.

Core Elements of Ethical Character: Spirituality in the Workplace

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§ Stages of Moral Development: §  From childhood to mature adulthood people move up in their moral reasoning

§  Stage 1: Earliest stages of reasoning are ego-‐centered §  Stage 2: “I’ll let you play with my toy, if I can play with yours” §  Stage 3: Learn the give-‐and-‐take §  Stage 4: Able to focus their reasoning according to law §  Stage 5: Apply their moral beliefs above and beyond specific social custom

§  Stage 6: Emphasize ethical reasoning using broad principles and rela8onships

Core Elements of Ethical Character: Manager’s Moral Development

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§ Most managers make decisions based on criteria in levels 3 and 4.

§ Senior leaders ojen demonstrate higher stages of moral reasoning than typical managers.

§ Company execu8ves’ reasoning has wide implica8ons both inside and outside the organiza8on.

Core Elements of Ethical Character: Manager’s Moral Development

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Figure 5.5

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Stages of Moral Development and Ethics Reasoning

§ A set of decision guidelines that will aid thinking process when on-‐the-‐job ethics issues occur.

§ These guidelines should help them: §  Iden8fy and analyze the nature of an ethical problem

§  Decide which course of ac8on is likely to produce an ethical result

Analyzing Ethical Dilemmas in Business

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Figure 5.6

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Four Methods of Ethical Reasoning

§ Virtue Ethics: Character traits that a good person should posses, theorizing that moral values will direct the person toward good behavior. § Virtue ethics is not a thoroughly developed ethical system of rules and guidelines, but rather a system of values that form good character.

Virtue Ethics: Pursuing a “Good” Life

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List of Moral Values Across Time Figure 5.7

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§ U;litarian reasoning: overall amount of good that can be produced by an ac8on or a decision.

§ Compare benefits and costs of a decision, policy or ac8on.

§ Costs and benefits can be economic, social or human.

§ Drawbacks: §  The difficulty of accurately measuring both costs and benefits §  The majority may override the rights of those in the minority

U;lity: Comparing Benefits and Costs

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Benefits Costs

§ Human Rights: Person or group is en8tled to something or to be treated in a certain way.

à Examples of basic human rights are right to life, safety, and due process

§ Limita8ons:

§  The difficulty of balancing conflic8ng right

Rights: Determining and Protec;ng En;tlements

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§  Jus;ce: benefits and burdens are distributed equally, according to some accepted rule.

§  Social Jus;ce: society’s income and wealth are distributed among the people in fair propor8ons.

§  Fair shares will vary from person

to person and group to group.

Jus;ce: Is It Fair?

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§ Once the ethical analysis is complete, the decision maker should ask the ques8on:

§ Do all of the above ethics approaches lead to the same decision?

§  If all the answers are “Yes”, the proposed ac8on is ethical.

§  If all the answers are “No”, the ac8on is not ethical and needs to be reconsidered.

§  If “Yes” and “No” answers are mixed, you must decide which takes priority.

Applying Ethical Reasoning to Business Ac;vi;es

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