BUSINESS ETHICS

What is ethics?
Ethics is the branch of philosophy that focuses

on morality and the way in which moral principles are applied to everyday life. Ethics has to do with fundamental questions such as What is fair? What is just? What is the right thing to do in this situation? Ethics involves an active process of applying values, which may range from religious principles to customs and traditions.

What is business ethics?

Business ethics focuses on what constitutes

right or wrong behavior in the world of business. Corporate business executives have a responsibility to their shareholders and employees to make decisions that will help their business make a profit. But in doing so, businesspeople also have a responsibility to the public and themselves to maintain ethical principles.

Although ethics provides moral guidelines, individuals must apply these guidelines in making decisions. Ethics that applies to business (business ethics) is not a separate theory of ethics; rather, it is an application of ethics to business situations. Although all people have ethical responsibilities, higher ethical standards are imposed upon professionals who serve as social models, such as physicians, attorneys, and businesspeople.

The Relationship Between Law and Ethics

The law is an expression of the ethical beliefs of our society. Law and ethics are not the same thing. The question, Is an act legal? is different from the question, Is an act ethical? The law cannot codify all ethical requirements. Therefore, an action might be unethical, yet not necessarily illegal. For example, it might be unethical to lie to your family, but it is not necessary illegal.

Similarly, just because an act is illegal does not necessarily mean it is immoral. Rosa Parks was acting illegally when she refused to give up her seat on the bus to a white male, but that does not necessarily mean she was acting unethically. Should an individual obey the law even if it would be unethical to do so? Under the theory of civil disobedience espoused by Martin Luther King, Mahatma Ghandi and others, an immoral law deserves to be disobeyed. Can you think of any examples of acts that would be illegal, yet arguably ethical?

THEORIES OF ETHICAL CONDUCT

Theories of ethics present standards by which a

person can analyze and evaluate his or her own moral conduct. Over the centuries, two different philosophical frameworks developed: ethical standards based on universal duties (deontology) and ethical standards based on consequences (utilitarianism).

Deontology
Deontology is the philosophical practice of

defining and adhering to an absolute set of standards by which ethical behavior can be measured. It tries to define universal duties that serve as moral guides to decision making. When a moral dilemma arises, a person can apply these universal standards to determine a course of action that is good.

 In deontology, a person fulfills absolute moral

duties regardless of whether good comes from the actions. A person decides upon actions by asking if a particular action is morally right or wrong. The act of carrying out that duty is important rather than the consequences of the act. An example of a set of deontological rules would be the Ten Commandments.

The Rights Model

The rights model analyzes ethical issues by

focusing on an actions impact on human rights. Under this model, human rights are the rights all people have. An action that maximizes respect for human rights and minimizes their violation is morally correct. When encountering ethical dilemmas, a person applying the rights model selects the action that minimizes the violation of stakeholders rights.

 The two necessities to be fully human are

freedom and well-being. Thus, two basic categories of human rights exist within the model: (1) rights of liberty, and (2) rights of wellbeing.

Rights of Liberty
Privacy
Free consent Free speech Freedom of conscience Right to life

Rights of Well-Being
Employment
Food Housing Education

 Under the rights model, each person possesses

certain fundamental human rights because of the fact that they are a human being. Each persons life has an infinite value.

Utilitarianism
Utilitarianism is an approach to establishing

ethical standards based on the consequences of an action. In an ethical dilemma, a person selects the action that brings about the greatest amount of good for the greatest number of people. The model determines correctness in terms of social benefit. Many business people favor the cost/benefit approach of utilitarianism.

Applying the Rights Model

Identify the facts. Identify the ethical issues. Identify the alternative courses of action. Identify the stakeholders. Determine to which extent each alternative respects the dignity and fundamental rights of stakeholders or violates their rights. Choose the alternative that maximizes the dignity of stakeholders and minimizes the violation of their rights.

Applying Utilitarianism
Identify the facts. Identify the ethical issues. Identify the alternative courses of action. Identify the stakeholders. For each alternative, calculate the costs and benefits (identify who would be harmed and who would benefit). Choose that alternative which results in the greatest amount of good for the greatest number of stakeholders.

Example #1
Cartoon:

The Difference Between Ethics and Business Ethics

Example #2
A secretary who has worked for your corporation

for fifteen years is involved in a car accident in which she permanently loses the use of her right hand. Thus, she can no longer effectively type, file, or perform many of the other functions that she previously had performed and that are included in her job description.

 Your corporation has a very tight budget and

does not have sufficient funds to pay for an additional secretary without reallocating budget items. The injured secretary has been very loyal to your corporation, and you have been very satisfied with her work and dedication. She wants to stay at her job.

 Moreover, she does not believe that she could

find other employment at this time. Should your corporation fire her, lay her off with compensation, or find a way to retain her? In resolving this dilemma, apply:
Utilitarianism The Rights Model Your own personal opinion

CAPITAL PUNISHMENT
Apart from the United States, few countries use the death penalty. Only China and Iran execute more people than the U.S. No member of the European Union uses it. Under the European convention for the Protection of Human Rights and Fundamental Freedoms, it is regarded as a human rights violation, so no nation can be admitted to the European Union if it still has the death penalty on its books.

 When President Bush was elected president, the

federal government had not used the death penalty for 38 years. He reinstated it. When he was governor of Texas, that state had more executions than any other, and Bush signed 152 death warrants more than any previous governor of Texas, or any other American governor in modern times.

 Typically, he made his life-and-death decision

after a half-hour briefing with his legal counsel. Only once, as governor of Texas, did he stop an execution.

 Is it inconsistent to oppose the killing of embryos

or fetuses, yet support the death penalty? Not necessarily. Bush has said: Some advocates of life will challenge why I oppose abortion yet support the death penalty. To me, its the difference between innocence and guilt.

 But to hold the two positions consistently, one

would at least need to be very careful about supporting the death penalty. Since humans are fallible, any legal system that puts large numbers of people to death will risk executing people innocent of the crimes for which they were charged.

 Several studies list people who have been

condemned to death, and in some cases executed, who were later shown to be innocent. The Death Penalty Information Center has a list of 102 people wrongfully sentenced to death in the U.S. between 1973 and 2000.

 An investigation by the Chicago Tribune of all

682 executions in the U.S. between 1976 and 2000 found that at least 120 people were put to death while still proclaiming their innocence, and in 4 of those cases there was evidence supporting their claim of innocence.

 When Florida Supreme Court Justice Gerald

Kogan retired, he said that there were several cases in which he had grave doubts about the guilt of people executed in Florida.

President Bushs attitude about the risk of putting to death innocent people is in sharp contrast to another Republican governor who was once a supporter of the death penalty. In 1999, Gov. George Ryan of Illinois became concerned about the risk of putting innocent people to death when an investigation by a journalism class at Northwestern University proved that another man committed a murder for which Anthony Porter, a deathrow inmate for 16 years, was about to be executed.

 Ryan set up a commission that, over 3 years,

concluded that 13 condemned prisoners were innocent. Ryan stated, Our capital system is haunted by the demon of error, error in determining guilt and error in determining who among the guilty should die.

 Just before he left office, Ryan felt that he could

no longer live with the risk of executing the innocent: he commuted all death sentences in Illinois to terms of imprisonment.

 No matter how careful Bush may have been

after all, he did spend 30 minutes reviewing each case before he signed the death warrant it remains possible, if not probable, that at least one of the people executed during his tenure was innocent.

 Bush has said:

I support the death penalty because I believe, if administered swiftly and justly, capital punishment is a deterrent against future violence and will save other innocent lives.

 In the third of his debates with Al Gore,

moderator Jim Lehrer asked Bush whether he thought that the death penalty actually deters crime. Bush said, I do thats the only reason to be for it. Let me finish that I dont think you should support the death penalty to seek revenge. I dont think thats right. I think the reason to support the death penalty is because it saves other peoples lives.

 The problem with this defense of capital

punishment is that almost all of the evidence is against it. Since it is easy to compare murder rates before and after the abolition or reinstitution of the death penalty, or in different jurisdictions that do or do not have the death penalty, there is plenty of relevant data.

 For example, after the 1976 USSC ruling that the

death penalty is constitutional, a dozen states chose not to enact laws allowing it. These states have not had higher homicide rates than the states that did enact a law. In fact, 10 of them have had homicide rates lower than the national average.

South Dakota has it, North Dakota does not. The homicide rate is higher in South Dakota. Connecticut has it, Massachusetts does not. Again, the homicide rate is higher in the state that has the death penalty. Homicide rates have risen and fallen in roughly symmetrical patterns in states with and without the death penalty, indicating that the death penalty has little effect on the incidence of homicide.

Executing the Mentally Retarded

A person who is seriously mentally retarded is likely to be incapable of understanding right from wrong, and thus is morally innocent, even if he or she did commit the crime. As a national consensus against executing the mentally retarded began to build, Bush, as governor of Texas, came out against a bill prohibiting the use of the death penalty against profoundly mentally retarded criminals (with IQs of less than 65). His explanation: I like the law the way it is.

 Even in Texas, a poll in 1998 showed that 73%

of all Texans were opposed to executing the mentally retarded. In May 1997, Bush denied an appeal for clemency on behalf of Terry Washington, a thirty-three-year-old mentally retarded man with the communication skills of a 7-year-old. Washington was executed.

 In June 2002, the USSC ruled that, given the

growing national consensus, executing retarded persons is cruel and unusual punishment and hence a violation of the 8th Amendment.

Internet Activities and Assignments

1. Go to http://wbl.westbuslaw.com , select Internet Applications, and then click on Chapter 40. Do Activity 40-1, Ethics in Business.
2. Go to the homepage of a Fortune 500 company that has published its code of ethics on the World Wide Web. What ethical concerns does it cover? Is it a detailed document or general in its terms?