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| a conception of right and wrong conduct. |
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| guides to moral behavior. They are basic rules of behavior – be honest, don’t lie, etc. |
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| he application of general ethical ideas to business behavior. |
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| application of ethical principles to unique industry specific circumstances. |
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| is on type of ethical challenge with specific applications in the field of accounting ethics, for example. |
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| is another example of unethical behavior, found in every sector of the global market. (94) |
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| Why should business be ethical? |
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| Meet demands of stakeholders. Enhance business performance. Ethics pays. Comply with Legal Requirements. One key example is the Sarbanes-Oaxley Act, creating increased regulations for business reporting. Among other things, it regulated conflict of interest by banning an auditing firm from providing the same client with non-audit services. |
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| Why do Ethical Problems Occur? |
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| Personal gain and selfish interest – the ethical egoist. Competitive pressures on profits. Business goals versus personal values. (A supervisor asks you to act in a way that violates your values to further company goals. Cross-cultural contradictions. (How truth is communicated in different cultures, for example.) |
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| Laws and ethics are similar because both define proper and improper behavior. They are different because laws are society’s attempt to reduce to written rules that which a society considers right and wrong. |
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| Ethics goes beyond law in two ways: |
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| Laws are minimum standards of responsibility. Ethics deals with complex human dilemmas that go beyond legal rules. |
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| Each person/manager must be able to list one’s own core values. These are the values that help determine what are one’s priorities and how one aspires to act.They form a key part of virtue ethics (105) which focus on character traits that a good person should possess. |
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| Honesty (truth telling, candid, openness), Integrity (act on convictions, courageous, advocacy, leadership by example), Promise keeping (fulfilling the spirit of commitment), Fidelity (loyalty, confidentiality) Fairness (justice, equal treatment, diversity, independence) Caring (compassion, kindness)Respect (human dignity and uniqueness)Citizenship (respect for law, social consciousness)Excellence (quality of work)Accountability (responsibility, independence) |
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| Stages of Moral Development(106) |
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| How one understands values is based on one’s level of maturity in the stages of moral development. Managers and people are likely to be at different stages of moral development. |
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| Kohlberg’s 6 Stages of Moral Development. |
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| Stage 1 – Childhood Stage 2 – Adolescence, Youth Stage 3 – Early Adulthood, Adolescence Stage 4 – Adulthood Stage 5 – Mature Adulthood Stage 6 – Mature Adulthood Corporate Culture(109) |
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| Comparing Benefits and Cost. Utility = the overall amount of good that can be produced by an action or a decision. |
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| = a cost/benefit analysis of a decision or an action. The costs and benefits can be economic, social, or human. If the benefits are greater than the costs, the action is ethical. |
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| Challenges to Utilitarianism |
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| – (1) It is difficult to measure cost and benefit. (2) It is difficult to establish proper boundaries of measurement. (3) It often fails to consider the means for achieving the beneficial end. |
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| Rights: Determining and Protecting Entitlements |
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| Human Rights = a person or group is entitled to be treated in a certain way. (Note this is principle based reasoning.) This focuses on basic human rights – life, safety, free speech, freedom, to be informed, due process, etc. Decisions that respect these rights are considered ethical. |
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| (1) How to handle conflicting rights. (2) What/Who confers rights – society, political power, God? |
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| Justice, or fairness, exists when benefits and burdens are distributed equitably and according to some accepted rule. |
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| Utility Reasoning = Adding up the costs and benefits to determine if the benefits outweigh the costs. Justice Reasoning = Considering who pays the costs and who gets the benefits. If the shares seem fair (by accepted rules), the action is just. |
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| Equality of Distribution = everyone gets the same thing. Equality of Opportunity = everyone gets the same chance. |
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| Is it ethical to close a plant? Utility |
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| Compares benefits (company’s bottom line, higher ROI for investors, etc.) versus costs (layoffs, reduced economic activity in the local community, etc.) |
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| Is it ethical to close a plant? Human Rights |
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| – Considers the rights of all affected (right to livelihood for workers or employer, right to be informed about layoffs, manager’s right to make a free decision to the benefit of the company, etc. |
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| Is it ethical to close a plant? Justice |
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| Considers the distribution of benefits (firm, investors, etc.) versus the costs (employees, community, etc.) To be just, the firm may assume the costs of employee retraining and may make contributions to the local community to balance the scales of justice in the situation. |
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| Ethical Decision-Making Model (113) |
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| Step 1 – ASK UTILITY – Do benefits exceed costs? Y/N RIGHTS – Are human rights respected? Y/N JUSTICE – Are benefits and costs fairly distributed? Y/N Step 2 – COMPARE RESULTS 3 of 3 YES = Probably Ethical. 3 of 3 NO = Probably Unethical. Mixed Results = Either Ethical or Unethical |
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| How to Frame the Question |
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| A decision making model we use in the EMBA program gives a simple framework for defining the question properly – with 4 basic questions. This is also a good process to use if the results of the text’s process is inconclusive. |
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| Decision Making Model MBA |
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| 1. What are your core values? 2. Who are all the impacted stakeholders? 3. What are all of your possible responses? 4. Given 1-3, what is the most ethical decision? Ethics, Rules, Values, Spirituality How does it all fit together? |
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