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Business Ethics

Business Ethics

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Published by: Bilal Ahmad on May 04, 2010
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12/05/2012

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ethics.

ppt (bus1301)

ethics.ppt (bus1301)
4
Essence of Ethics
4
Morally Questionable Acts
4
Dynamic Relationships that Affect
Ethical Decision Making
4
Factors Affecting Ethical Decisions
4
Norms and Counter-norms
4
Managing Ethics

ethics.ppt (bus1301)
TEXACO TEXACO - - racial discrimination $176 M
MERCURY FINANCE MERCURY FINANCE - - overstating profit $ 2.2 B
ADM ADM - - price fixing $100 M
GENETECH GENETECH - - tying personal loan
to business deal CEO loses job
BANKER’S TRUST BANKER’S TRUST - - deliberately misled or
deceived customers Damaged
image
W.R. GRACE W.R. GRACE - - sexual harassment CEO loses job
BAUSCH & LOMB BAUSCH & LOMB - - manipulation of
accounting data earnings fell 54%

ethics.ppt (bus1301)
1. Responsibility to address corporate
issues (58% Execs)
2. Corp. leaders’ responsibility is to
the greatest good (52% Execs;
35% MBAs)
3. Switch brands (76% consumers)
4. Skepticism about ‘cause’ related
marketing (58% consumers; 21%
today)
5. Do not buy (75% consumers)
58% execs
52% execs
35% MBAs
76% consumers
58% consumers
21% today
75% consumers

ethics.ppt (bus1301)
1. Social responsibility is important (26%
investors)
2. Company image (84% employees)
3. Innovative workplace practices
associated with productivity
4. Employee ownership leads to
productivity (60% companies)
5. Business has too much power (71 %)
6. Corporate role is more than to make a
profit (95%)
1. 26% investors
2. 84% employees
4. 60% companies
5. 71%
6. 95%

ethics.ppt (bus1301)
- Corporate layoffs - theft
- Wall Street sins - selling products that do not meet
specs.
- Pentagon fraud
- age discrimination - retaliation against employees
who exposed unsafe/illegal
practices
- price fixing
- use of banned chemicals
- power in the market place
* Who is responsible? “Captain of the ship?”
* Does profitability excuse questionable behavior?
Profit at Any Cost

ethics.ppt (bus1301)
4
Codes do not produce ethical
behavior.
4
Our ethics tend to flow from our
core values.
4
People have intrinsic worth.

ethics.ppt (bus1301)
Conflicts of interest lead to ethical problems
Individual behavior is strongly influenced by
incentive
Self-regulation and standard setting
organizations fall short

ethics.ppt (bus1301)
4
Get support by CEO for support of key
stakeholders
4
Get stakeholders participation
4
Expand words/ phrases into expectations
4
Establish feedback mechanism
4
Assure implementation/ monitoring of results
4
Reward employees who perform and deliver
on values

ethics.ppt (bus1301)
4Non-job failures:

Cheating on your expense accounts

Stealing supplies

Sandbagging
4Job failures:

Superficial performance appraisal

Not confronting expense account

Cheaters

Falsely praising poor performers

Denial of training opportunities

Undermine management

ethics.ppt (bus1301)
4
Job distortions:
– Bribery
– Manipulation of suppliers/buyers
– Differential pricing
– Falsifying information
4
Job “creation”:
– Bending policies for certain customers
– Bending policies for salespeople
– Caught violating rules
– Arranging for promotions

ethics.ppt (bus1301)
FACTORS AFFECTING
ETHICAL DECISIONS
UNCERTAINTY
OF
INPUTS
CENTRALITY
OF
WORKFLOW
SUBSTITUTABILITY
OF
ACTIVITIES
PREVENTIVE
ROUTINIZATION
COPING
ROUTINIZATION
POWER
CONTROL OF
ETHICAL
CONTINGENCIES
BEHAVIOR

ethics.ppt (bus1301)
A General Framework of the
Ethical Decision-Making Process
ETHICAL
SITUATION
CHARACTERISTICS OF
THE DECISION MAKER
SIGNIFICANT
INFLUENCES
OUTCOMES
DECISION

ethics.ppt (bus1301)
Individual Characteristics of the
Decision Maker that Influence the
Ethical Decision-Making Process
ETHICAL
SITUATION
CHARACTERISTICS OF
THE DECISION MAKER
SIGNIFICANT INFLUENCES
OUTCOMES
DECISION
* Achievement motivation * Knowledge
* Need for affiliation * Experience
* Ego strength * Risk taking
* Locus of control * Machiavellianism

ethics.ppt (bus1301)
Outcomes that Result from the
Ethical Decision-Making Process
ETHICAL
SITUATION
CHARACTERISTICS OF
THE DECISION MAKER
SIGNIFICANT INFLUENCES
OUTCOMES
DECISION
* Performance * Feedback
* Rewards * Promotions
* Satisfaction * Learning

ethics.ppt (bus1301)
Significant Influences on the Ethical
Decision-Making Process
ETHICAL
SITUATION
CHARACTERISTICS OF
THE DECISION MAKER
SIGNIFICANT INFLUENCES
OUTCOMES
DECISION
* The organization * Technology
* Work * Significant others; customers,
* The law peers, immediate supervisor,
* Economics top managers, family, friends,
* Professionalism other “opinion leaders”

ethics.ppt (bus1301)
Elements of the Ethical Situation
ETHICAL
SITUATION
CHARACTERISTICS OF
THE DECISION MAKER
SIGNIFICANT INFLUENCES
OUTCOMES
DECISION
* Opportunity
* Ethical decision history
* Moral intensity of the situation
Elements of the Ethical
Decision-Making Process
Characteristics of
Decision Makers
Significant
Influences
Outcomes
PERCEIVED ETHICAL
PROBLEM
PERCEIVED
ALTERNATIVES,
PRODUCT, PRICE,
PROMOTION,
DISTRIBUTION INFO
PERCEIVED
CONSQUENCES
ELEMENTS OF THE DECISION
Information acquired
Information processed
Ethical decision history
Expectations
Sent and received roles
Ethics norms (personal &
those of others)
Information acquired
Information processed
Probability of consequences
Desirability of consequences
JUDGMENT
DECISION
Ethical
Situation

ethics.ppt (bus1301)
ORGANIZATION A
ORGANIZATION B

ethics.ppt (bus1301)
NORMS
4
LT relationships with customers
4
Objectivity
4
Openness
4
Candor
4
Honesty
4
Flexibility/Adaptability
4
Cost-effectiveness
4
Taking responsibility
4
Customer Service
4
Develop younger salespeople
4
Team effort
4
Consensus
4
Loyalty
COUNTERNORMS
4
Sandbagging
4
Emotional Involvement
4
Secrecy
4
Stonewalling
4
Lying
4
Dogmatism
4
Padding expenses
4
Passing the buck
4
Sales force
4
Look out for “Number 1”
4
Individual goals first
4
Taking unfair credit
4
Criticize the company

ethics.ppt (bus1301)
YThe OLD Ethic Favors
+Work
+Savings
+Responsibility
+Competition
+Sex roles
+Sacrifice
+Equality - Inequality
+Wealth accumulation
+Absolution
+Risk assumption
+Efficiency/Productivity
+Thrift/Investment
YThe NEW Ethic Favors
+Leisure
+Debt
+Rights
+Protection
+Unisexism
+Self-interest
+Equality
+Wealth redistribution
+Situationalism
+Risk aversion
+Quality of life
+Consumerism

ethics.ppt (bus1301)
4
Diagnose the reward system
4
Analyze rules and procedures
4
Training and education
4
Develop investigative structures

ethics.ppt (bus1301)
4
Leaders exhibit moral courage by being
willing to make personal sacrifices
4
Leaders should not become to preoccupied
with pleasing constituents
4
Leaders focus on needs of others - they have
a commitment to serve
4
Business as usual may be evidence of a
leadership failure

ethics.ppt (bus1301)
4
Determination and a winning personality
equal success
4
Employees rarely complain
4
Employees take their cues from
management
4
Top management actions are more
important than codes of ethics
4
Employees wrestle with the short-run vs.
long-run
CEO’S
CEO’S
Set the Tone for How to Handle
Set the Tone for How to Handle
Questions of
Questions of
Ethics
Ethics
(
Hymowitz
Hymowitz)

ethics.ppt (bus1301)
THE ESSENCE OF ETHICS I
(Article by Williams)
4
Codes of ethics do not necessarily lead to
ethical behavior.
4
The core values we profess are not necessarily
those by which we live.
4
There is a place for compassion in leadership.
4
Bureaucracy can come in conflict with ethics.
4
Managers who vent their frustration on
subordinates (who can do little about it) are not
acting ethically.

ethics.ppt (bus1301)
THE ESSENCE OF ETHICS II
(Article by Williams)
4
Study the ethics of organizations which have
reputations for being ethical.
4
Build ethics into organization policies and
practices.
4
Make sure quality and service and integrity
permeate the entire organization.
4
Develop high expectations of all members of
your organization.

ethics.ppt (bus1301)
THE ESSENCE OF ETHICS II
(Article by Williams)
4
Create an organizational culture that
=
encourages...…
=
open and honest communication
=
continual learning
=
personal development
=
respect for people

ethics.ppt (bus1301)
Background
Slides
You will be Responsible for this Material!

ethics.ppt (bus1301)
Company Threats to Ethical Behavior
YA firm that…
+routinely ignores or violates internal codes of ethics
+always looks for simple solutions to ethical problems and is satisfied
with “quick fixes”
+unwilling to take an ethical stand when there is financial cost to the
decision
+creates an internal environment that either encourages unethical
behavior or discourages ethical behavior
+usually sends its ethical problems to the legal department
+looks at ethics solely as a public relations tool to enhance its image

ethics.ppt (bus1301)
Company Threats to Ethical Behavior
Y
A firm that…
+treats its employees differently from its customers
+is unfair or arbitrary in its performance appraisal standards
+has no procedures or policies for handling ethical problems
+provides no mechanisms for internal whistle-blowing
+lacks clear lines of communication within the organization
+is sensitive only to the needs of shareholders
+encourages its employees to leave their personal ethical values
at the door

ethics.ppt (bus1301)
FIVE WARNING SIGNS OF ETHICAL COLLAPSE
(Jennings article)
4
surround yourself with subordinates who are
young, inexperienced, enthralled with power and
deep in debt
4
send a clear message that you expect results at
any cost
4
be certain the CEO is tyrannical and prone to
anger
4
when an employee’s public statements bring
criticism to the company, cut the employee
loose
4
when an ethical lapse is discovered, never admit
anything. Conceal, spin and gloss.

ethics.ppt (bus1301)
Do College Honor Codes Make Moral
Do College Honor Codes Make Moral
Sense on Today’s Campus?
Sense on Today’s Campus?
(Brownfield)
(Brownfield)
Information on College Students
¬
70% have cheated on a test at least once
¬
87% have cheated on some type of written work
¬
49% have collaborated with others on an assignment
¬
52% have copied from someone
¬
87% business majors have cheated at least once
Conclusion: grade > learning short-run > long-run
chaos > standards negligence > integrity
laziness > diligence

ethics.ppt (bus1301)
Is an Honor Code a reasonable ideal for
Today’s students???
Today, we have a…
¬
Questionable moral climate,
¬
Lack of strong, value-based up-bringing, and
¬
Celebration of negative role models
Do College Honor Codes Make Moral
Do College Honor Codes Make Moral
Sense on Today’s Campus?
Sense on Today’s Campus?
(Brownfield)
(Brownfield)

ethics.ppt (bus1301)
Can we arrive at consistency in global
ethics standards?

Companies are identified by their corruption

Who will want to partner with such
companies?

ethics.ppt (bus1301)
PR vs. Performance
Real transformations require a change in core
values, attitudes, relationships, leadership with
experience for change
Sound organizations provide freedom to act, but
also have some controls
A culture built around “star players” cannot foster
teamwork

ethics.ppt (bus1301)
Chapter #5 - Conducting Business
Ethically and Responsible
4
Companies must be
committed to ethics
#
Codes
#
Ethics Programs
#
Ethics Orientation
4
Social
Responsibility
#
Not the same as
ethics
#
Related to ethics
4
Company
Responsibilities
#
Customers
#
Employees
#
Investors
#
Others

ethics.ppt (bus1301)
Chapter #5 - Conducting Business
Ethically and Responsible
4
Can businesses that conduct
themselves in an ethical way be
profitable?
4
How can ethical behavior be
encouraged?
4
What do short-term and long-term
thinking have to do with ethics?

ethics.ppt (bus1301)
You Will be Responsible for
this Material on the TEST

ethics.ppt (bus1301)
ACTIONS ADVANTAGES DISADVANTAGES
Alternative Courses of Action
Available in Ethical Situations
4
NOT THINK
ABOUT IT
4
GO ALONG &
GET ALONG
4
PROTEST
Avoids the danger of
getting into a zero-sum
game with colleagues
Same as “not think
about it”
Individual feels good
about making effort to
stop unethical
behavior
The risk of going in the
wrong direction
Same as “not to think
about it”
Individuals slowly
conform… maybe to the
wrong direction
Organization disregards
protest & punishes
protester

ethics.ppt (bus1301)
ACTIONS ADVANTAGES DISADVANTAGES
Alternative Courses of Action
Available in Ethical Situations
4
CONSCIENTIOUSLY
OBJECT
4
LEAVE
Makes clear statement
that one person feels
that action is unethical
Person feels good
about self for making
effort to stop unethical
behavior
Signals that
organization will lose
good people if unethical
behavior continues
Person who leaves may
join a competitor, feels
better because he/she
did not cooperate with
unethical behavior
Few organizations
recognize individual
rights to object
May hurt chances for
rewards and
advancement
Most people are
replaceable and if
replacement
cooperates with
unethical behavior,
what is gained?

ethics.ppt (bus1301)
ACTIONS ADVANTAGES DISADVANTAGES
Alternative Courses of Action
Available in Ethical Situations
4
SECRETLY BLOW
THE WHISTLE
4
PUBLICLY BLOW
THE WHISTLE
4
SECRETLY
THREATEN TO
BLOW THE
WHISTLE
Can be very effective
If whistle-blower
remains secret,
retaliation cannot
occur
Can be effective
Whistle-blower may
be treated as a hero
by many
Can be very effective
When it works,
organization is not
hurt by bad publicity
- Feelings of cowardice
- Creation of
atmosphere of mistrust
- What
will whistle-blower do if
confronted by firm - tell the
truth or lie?
- Organization may attack the
whistle-blower
- It is difficult to interact
with those one is criticizing
- It may be difficult to
work with those who hold a
grudge
- Does not permit dialogue
between upper&lower
managers
- Might prevent injured
consumers or clients from
receiving remedies

ethics.ppt (bus1301)
ACTIONS ADVANTAGES DISADVANTAGES
Alternative Courses of Action
Available in Ethical Situations
4
SABOTAGE
4
NEGOTIATE
Can be effective
Identity of saboteur
might be protected
Individual action may
lead to small-group
consensus that will be
more effective than
individual action
Win-win solutions are
possible
Sabotage is not dialogue
Retaliation might occur
against the saboteur or
against others
Innocent people may be
fired
Does not work well in
situations that are zero-
sum, lose-win, in nature
Individual who perceives
ethical problem may not
know how to negotiate, my
lose “cool”
SELECTED PRINCIPLES OF
ETHICAL CONDUCT
4
KANT’S CATEGORICAL IMPERATIVE: Act in a way that you
believe is right and just for any other person in a similar
situation.
4
CARR’S CONVENTIONALIST ETHIC: Bluff and take advantage
of all legal opportunities and widespread practices and
customs
4
THE DISCLOSURE RULE: Ask how it would feel to see the
thinking and details of the decision disclosed to a wide
audience
4
THE GOLDEN RULE: Look at the problem from the position of
another party affected by the decision and try to determine
what response the other person would expect as the most
virtuous
SELECTED PRINCIPLES OF
ETHICAL CONDUCT
4
THE HEDONISTIC ETHIC: Do whatever you find to be in
your own self-interest
4
MOORE’S INTUITION ETHIC: Go with your “gut” feeling or
what you understand to be right in a given situation
4
SMITH’S MARKET ETHIC: Take selfish actions and be
motivated by personal gains in business dealings
4
MACHIAVELLI’S MEANS-END ETHIC: Ask whether some
overall good justifies any moral transgression
4
NIETZSCHE/MARX MIGHT-EQUALS-RIGHT ETHIC: Seize
what advantage you are strong enough to use without
respect to ordinary social conventions and laws
SELECTED PRINCIPLES OF
ETHICAL CONDUCT
4 THE ORGANIZATION ETHIC: Ask whether actions are consistent
with organizational goals and do what is good for the organization
4 GARRETT’S PRINCIPLE OF PROPORTIONALITY: Do whatever you
will if there is a proportional reason for doing so
4 THE PROTESTANT ETHIC: Do only that which can be explained
before a committee of your peers
4 THE REVELATION ETHIC: Pray, mediate, or otherwise commune
with a superior force or being
4 BENTHAM / MILL’S UTILITARIAN ETHIC: Determine whether the
harm in an action is outweighed by the good
MORAL TYPES DESCRIPTORS
0
Hedontist
O
Profit-
maximizer
O
Socialite
1. Make physical pleasures the supreme goal in their
lives.
4
KEY QUESTION: Which course of action will yield the
greatest pleasure?
2. Goal of making as much money as possible
4
KEY QUESTION: which course of action will make the
most money?
4
All their feelings and associations can be melted
down to dollars
3. A social butterfly, a party animal
4
KEY QUESTION: Which course of action will help me
best get along with the group?
4
If you want to know what this person thinks, find out
who spoke to him or her most recently
MORAL TYPES DESCRIPTORS
4. Life centers around power and glory.
4
KEY QUESTION: Which course of action will increase
my power and glory?
4
These people have enormous egos, boundless
ambitions, and undertake reckless actions.
5. Spiritual values predominate
4
KEY QUESTION: which course of action will help me
become a better person?
4
These people have new insights, reform old ways,
initiate new ways of thinking, strike out on new paths
6. A technician
4
POSITIVES: Creative, knowledgeable, independent,
self-reliant, hardworking
4
NEGATIVES: Sadistic, forceful, manipulative, non-
trustworthy
O
Politician
O
Self-
actualizer
O
Craftsman
MORAL TYPES DESCRIPTORS
7. Main goal in life to belong to an organization
4
POSITIVES: Service oriented, loyal, responsible,
humble, sensitive to the needs of others,
dependable, pleasant, trustworthy
4
NEGATIVES: Fear, worry, dependency, lacking
vision, risk aversive, low drive, indecisive, change
resistant
8. Dominant goal in life to gain prestige, glory, fame
4
POSITIVES: Inventive, flexible, change oriented,
competitive, team player, independent, risk taker,
impartial, high energy, idealistic
4
NEGATIVES: Lack of conviction, rebellious,
manipulative, lack of intimacy, lonely
O
Company person
O
Gamesman

ethics.ppt (bus1301)
PERSONAL MORAL
DEVELOPMENT
1. Physical consequences
determine moral
behavior. Avoidance of
punishment and
deference to power are
typical of this stage
2. Individual pleasure
needs are the primary
concern and dictate
attitudes toward
behavior
ORGANIZATIONAL MORAL
DEVELOPMENT
1. Social Darwinism - Fear of
extinction and the urgency
of financial survival dictate
moral conduct. The direct
use of force is the
acceptable norm.
2. Machiavellianism -
Organizational gain guides
actions. Successfully
attaining goals justifies the
use of any effective means,
including individual
manipulation
Models of Personal and
Organizational Moral Development

PERSONAL MORAL ORGANIZATIONAL MORAL
DEVELOPMENT DEVELOPMENT

ethics.ppt (bus1301)
PERSONAL MORAL
DEVELOPMENT
3. The approval of others
determines behavior. The good
person is one who satisfies
family, friends, associates.
4. Compliance with authority,
upholding of the social order,
and “doing one’s duty” are
primary concerns
ORGANIZATIONAL MORAL
DEVELOPMENT
3. Cultural conformity - A tradition
of standard operating
procedures and caring groups.
Peer professional pressure to
adhere to social norms dictates
what is the right and wrong
behavior
Allegiance to authority-
Directions from legal authority
determine moral standards.
Right and wrong are based on
the decisions of those with
legitimate hierarchical power
Models of Personal and
Organizational Moral Development
PERSONAL MORAL ORGANIZATIONAL MORAL
DEVELOPMENT DEVELOPMENT

ethics.ppt (bus1301)
ORGANIZATIONAL MORAL
DEVELOPMENT
5. Democratic participation -
Participation in decision-making
reliance on majority rule become
organizational moral standards.
Participative management
becomes institutionalized
Organizational integrity-
Justice and individual rights
are the moral ideals. Balanced
judgment between competing
interests shapes organizational
character which, in turn,
determines the validity of the
behavior
PERSONAL MORAL
DEVELOPMENT
5. Tolerance for rational
dissent and acceptance of
majority rule become
primary ethical concerns
6. What is right and good is
a matter of individual
conscience and
responsibly chosen
commitment. Morality is
based on principled
personal convictions
Models of Personal and
Organizational Moral Development
PERSONAL MORAL ORGANIZATIONAL MORAL
DEVELOPMENT DEVELOPMENT

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