7-step Ethical Decision-Making Process  Legal rules: Does it break the law?

 Legal rules: Does it break the law? Excellence Striving is to do everything to the best of our abilities, giving careful attention to every task
1. Determine the Facts  e.g. Contracts and promises ought to be honoured, even if consequences turn out and relationship; Never give in “That’s good enough” and always desire for perfection
unfavourable Empathy Put aside our ego, step into their shoes and experience their emotions; Consider the feeling
Who Who are the primary people that are involved? Where Where did it happen?
Is Whistleblowing legal in Singapore? of others
What What is happening? What is the situation? Why Why did it happen?
 No universal whistleblower protection legislation, unlike the SOX Act in Unites States which requires Forgiveness Giving up our right to collect on a “debt”; To no longer desire “revenge”; To give someone
When When did it happen? How How did it happen?
publicly listed companies to provide independently operated hotlines which allow anonymous another chance after they have done something wrong; “An eye for an eye will only make
2. Identify ethical issues involved: What are the ethical dilemmas surrounding the issue? the whole world blind,” said Gandhi
reporting
 Is it ethical for (who) to (do what)? Gratitude Consider all the gifts we have been given; Be thankful for what we have been bestowed,
 Whistleblowers of certain offences are protected under specific legislation (e.g. whistleblowers of a
and not what we do not have; Appreciate the little things around us and be contented
3. Identify stakeholders corruption offence under the Prevention of Corruption Act)
Helpfulness Be of service to others; Performing thoughtful acts that can make a difference in their lives;
 Who else will be affected by the decision?  Whistle-blowers risk losing their job and can even be sued for defamation Offer help without waiting to be asked
Can be positive/ negative! Not just negative!
 How are they affected?  Organizational Rules: Does it go against the organization code of conduct? Honesty Free of deceit; Be truthful and sincere; Builds trust
Stakeholders Financial Impacts Non-financial Impacts  Reference the organization code of conduct Honest people are trustworthy and can be relied on to not lie, cheat or steal
Person Decision-maker, Victims, Loss of future earnings Standard of Living, Loss of  Refer to section on Corporate Culture, Code of Ethics, Code of Conduct Humility Consider others as important as yourself; Thoughtful of the needs of others and be willing
Family and Friends life, Psychological trauma,  Role-based rules: Does it go against the fiduciary duties of the role? to be of service to them; Do not expect others to be perfect; Be willing to give away the
Emotional impact  e.g. Gatekeeper functions of lawyers/ accountants/ financial analysts etc. credit when things go well
Firm Firm itself, Shareholders, Gain in profits, Compensation Reputational Damage,  Refer to section on Profession-based Rules: Ethical Duties of Gatekeepers Justice To be fair and impartial; To not hold a prejudice against an individual/ group
Employees, Customers, Local suffered, Loss in income Distrust for the products, Stand up against injustice (e.g. bullying, cheating, lying)
 Professional rules: Does it go against profession’s code of professional conduct?
Community, Government/ among employees, Insurance Livelihoods of Employees Loyalty To stand by their side when they face adversity
 Professionals should not violate their professional duties
Regulators, Suppliers, claims, Cost of regulatory and Suppliers, Never give up on someone, no matter how hard it gets, for as long as it takes
 Refer to ISCA: Code of Professional Conduct and Ethics
Insurance companies enforcement and compliance Patience Quietly hope and trust that things will turn out right; Wait without complaining
o Other “moral law”/ “ethical principles” worth considering Be tolerant and accepting of difficulties and mistakes
4. Consider available alternatives (i.e. using moral imagination)  Kantianism/ Libertarianism/ Egalitarianism Reliability Dependable and Responsible; Keeping to your commitments and giving the best to every
 In light of conflicting stakeholder interests, we shall consider available alternatives that can  Golden Rule: Do unto others was you would have them do unto you job; Others can relax knowing that things are in your reliable hands
o Mitigate, minimize, or compensate for any possible harmful consequences  Descartes’ Rule of Change: If an action cannot be taken repeatedly, it is not right to take at all Respect Honouring the worth or dignity in another person/ process; Speak and act with courtesy;
o To increase and promote beneficial consequences  An action can bring about a small change now that is acceptable, but if it is repeated, it Treat others with dignity; When we respect others, we take their preferences, ideas,
 What are the options/ possibilities available? would bring unacceptable changes in the long run feelings, hopes and dreams seriously even if they are different from our own
 Risk Aversion Principle: Take the action that produces the least harm/ least potential cost Tactfulness Telling the truth kindly; Be considerate of how our words affect the feelings of others
5. Compare and weigh alternatives
 Avoid actions with extremely high failure costs; Try to reduce probability of failure Tenacity Ability to stick it out and never give up; Keep going when things are tough and there is no
 Based on Cost-Benefit analysis: What are the pros and cons of each option?
 No-free-lunch rule: Assume that all tangible and intangible objects are owned by someone. If end in sight
 Based on Consequences: Who would stand to benefit from this alternative?
someone else has created something that is useful to us, it has value and we should assume the Tolerance Accept differences; Don’t expect others to think, look, speak or act like us
o Seek to identify the impact of the alternative course of action for each type of stakeholder
creator wants compensation for his work Accept things we wish were difference with patience
o Key test of ethical legitimacy: Will the decision be accepted from a point of view of all parties o Example of Vices
 Distributive Justice: Requires that society's institutions ensure that benefits and burdens are
involved? Will everyone stand to benefit from the decision? Arrogance Making undue claims in an overbearing manner; (e.g. exorbitant claims of rank, dignity,
distributed among members in ways that are fair and just. If not, they should be changed.
 If so, then the decision will be likely to be fair, impartial and ethical estimation, or power, or which exalts the worth or importance of the person to an
 Retributive/ Corrective: Requires that punishments are fair and just. Punishments are held to
o (Perform analysis of the impact on each stakeholder type) undue degree); Proud contempt of others (i.e. to see others as worthless or beneath
be just to the extent that they take into account relevant criteria such as the seriousness of the
o As we can see, the alternatives too will not be beneficial to all stakeholders and would appear to fail consideration; placing oneself in a ‘superior’ position)
crime and the intent of the criminal, and discount irrelevant criteria such as race.
the key test of ethical legitimacy Disloyalty Violation of allegiance
 Compensatory Justice: Requires that people are fairly compensated for their injuries by those
o But are there consequentialist theories that would lend support to this alternative? Doubt Unhealthy lack of Trust and confidence. To suspect; to fear; to be apprehensive
who have injured them (i.e. proportional to the loss inflicted on a person)
o First, we can apply the theory of egoism in our analysis Envy Feeling of discontent and resentment aroused by and in conjunction with desire for the
o (Limitations of Principle-based Ethics) However deontology has its limitations as well
 Egoism holds that the decision-maker ought to act for his/her own self-interest possessions or qualities of another
 There is simply no agreement on a finite set of “ethical principles” that effectively defines the
 It focuses exclusively on the happiness of decision maker and the seeking of the “greatest good” Greed Excessive desire to acquire or possess more than what one needs or deserves, especially
moral norm
for himself/herself with respect to material wealth
 And even if it did exist, no systematic solution exists to resolve conflicts between “ethical
 It seems that an egoist would (would not) support the alternative when placed in the shoes of Injustice Practice of being unjust or unfair.
principles” that support different alternatives Jealousy Fear of rivalship over matters that will affect one’s happiness (e.g. suspicion of
the decision maker as the would support his/ her personal agenda to… (e.g. pursue greater
 (Give an example of how different principles support different options) faithfulness of lover)
profits/ keep the item for his own pleasure)
 Which ethical principle holds greater weight/ priority and can hence help us to decide Recklessness Wild carelessness and disregard for consequences
o More importantly, we should also approach this from the utilitarian perspective
which option to pursue? No clear answer exists Sloth Aversion to work or exertion; laziness
 The question to ask is: Does the alternative seek to “maximize overall good” or bring the
o Having taken into consideration the consequences and rules behind the competing alternatives, we Untrustworthy Cannot be relied on as honest or truthful; Cannot be depended on
“greatest good for the greatest number”?
also recognise that ethics involves the question of who a person should become – virtue ethics.
 It seems that a utilitarian would (would not) support the alternative as more stakeholders stand o (Limitation of Virtue Ethics) Virtue ethics is not without its limitations
to benefit (suffer)  Based on Implication on one’s integrity, virtue and character: Virtue Ethics  Requires agreement on what we human being has potential to become
o (Limitations of Utilitarianism) But utilitarian ethics is not without its limitations o Decisions are affected by one’s understanding of who they are, what kind of person they want to be  Character traits vary from culture to culture
 For one, we are only able to identify and list the potential impacts on the stakeholders o Emphasizes on one’s character as opposed to duties or rules (deontology) or consequences
 Unable to measure or quantify the magnitude of the impacts 6. Make decision: Which alternative to select?
(consequentialism)
 Hinders us from properly measuring and determining what is the “overall good”  Based on the relevant ethical frameworks, we can come to a decision on which alternative to use
o Consider: (1) What kind of person does he/she we are and want to be? (2) What would a good person
 Relies on consequences, which suggest that “the end justify the means”  An option that maximizes utilitarian benefits, while conforming to the moral norms and aligning to one’s
do?
 But this is not true. The “ends” (or goals) of our actions are not all that matters. The virtues does not exist here for it would not otherwise pose an ethical issue
o Aristotle puts that having virtue means to do the right thing, at the right time, in the right way, in the
means (i.e. how we achieve those ends) also matter right amount, towards the right people  While alternative 1 would maximize utility and benefit the most people, it goes against one’s virtue and
 Regardless of consequences, there are certain things that MUST be done, certain rules o Can simply be explained by “to do otherwise would be wrong” the principle of XXX to do YYY. Alternative 2 however, is more aligned to the virtue of…
that SHOULD be followed (i.e. fundamental ethical principles)  e.g. honest person practices honest dealing as it is the right thing to do and he values honesty  Personal Decision  Give more weight on Virtue Ethics
 For that we turn to principle-based ethics  Not about the consequences of doing (e.g. fear of getting exposed) o As a whole, I am inclined to believe that one’s virtue ought to override the principles and
 Not about rules (e.g. ‘Honesty is the best policy’) consequences as it deals with one’s personal integrity and their “completeness within themselves”.
 Based on Principles, Rights, Duties: Is it aligned with principles-based ethics? o Given that this is a personal decision, we ought to act in a manner that is consistent and aligned with
o A fully virtuous person would do what they should, without a struggle against contrary desires/
o Consequences are not the only means for comparing alternatives, and we should also asses it from one’s deeply held beliefs on who he/she wants to be and what a good person would do
temptations (from perhaps the overwhelming benefits)
the deontological approach
o (For each alternative, explain if a particular virtue supports It/ it goes against a particular virtue) o This is also in line with the 6th stage of Kohlberg’s moral development
o Deontology (and principle-based ethics) holds that some choices cannot be justified by their effects—
o Examples of common virtues 7. Monitor and learn from outcomes
that no matter how morally good their consequences, some choices are morally forbidden
Authentic Being true to yourself; Pull off the mask hiding our flaws; Live in the fullness of who we are  The decision does not mark the end with the decisions
 For deontologists, a “right” choice is one that conforms with a moral norm
Commitment To do what we said we will do without excuse  Thereafter, how can the company and monitor outcomes to ensure that the appropriate lessons are
 Such norms are to be simply obeyed
Courage Bravery in the face of fear; Do the right thing even when it is hard/ scary learned?
 If an act is not in accord with the Right, it may not be undertaken, no matter the Good that it To not give up; To be willing to try new things; To admit mistakes
might produce o Can be achieved through regular stakeholder engagement
Compassion Ability to step outside of yourself and perform an act of selflessness o In the form of ongoing discussion and dialogue, survey and questionnaires, meetings, annual reports
 Creates ethical duties that bind us to act or decide in a certain manner Be understanding and caring when someone is hurt or troubled
o Firstly, we ought to abide by the following social rules or social contract  Based on the evaluation, institute new practices, or revise current policies and procedures to tackle
Courtesy Be polite and have good manners; Give others a feeling of being values and respected
similar challenges in the future
 Pre-conventional: 1. Obedience & Obey rules to avoid punishment; o Remedy: How to eliminate the potential of scripts to result in unethical behaviour?
Limitations of the Decision-Making Process
Moral reasoning Punishment  Keep people out of highly repetitive situations (e.g. use technology to eliminate highly routine
Input (Information) Process Report
based on rewards & 2. Self-Interest Follow the rules out of self-interest; Considers how it can further tasks/ job rotation)
 Availability  Failure to identify the ethical issues due to  Timely Reporting punishment one’s own interests 10. Mindless Treatment of Distractions
 Completeness normative myopia/ inattentional blindness/
3. Interpersonal Try to be a “good boy or girl” to conform to social norms; Evaluate o Inattention to what is happening on the periphery when concentrating on completing a task
 Reliability change blindness# Conventional:
accord & consequences in terms of a person's relationships, which include
 Introduction of biasedness Reasoning based on o To be task focused especially under time pressure/ duress and ignore doing the right things
conformity things like respect, gratitude and the ' golden rule' o Remedy: Build an organizational culture that facilitate activities outside of work (e.g. pursuing work-
# Normative myopia: Tendency to ignore/ inability to recognise ethical issues in decision-making upholding norms,
4. Authority & Recognise importance in obeying laws, dictums and social life balance/ involvement in the community) as opposed to a workaholic culture
Inattentional Blindness: Focus on/ pay specific attention to a particular element of a decision/ event such rules and laws
Social Order conventions because of their importance in maintaining a  May bring experiences that should not be seen as mere distractions onto the centre stage of
that we miss all the surrounding details, no matter how obvious simply
functioning society.
Change Blindness: Decision making omission that occurs when decision makers fail to notice gradual consciousness.
5. Social Respect and honour individuals that hold different opinions and
changes over time 11. Moral Exclusion
Contract/ values; Laws are regarded as social contracts and those that do not
o Human tendency to morally exclude certain persons and hence, exclude being ethical to those outside
Practice promote general social welfare should be changed to meet the
Kantianism Post Conventional:
Mutuality greatest good for the greatest number of people. the group
 Categorical Imperatives: Moral obligations that we must follow, regardless of our desires Reasoning based on o Perceive individuals/ groups as outside the boundary in which moral values and considerations of
6. Universal Adopt one’s moral principles if they conflict with established laws;
 Moral law is binding on all of us personal moral fairness apply
Ethical One acts because it is right, and not because it is instrumental,
standards  e.g. During warfare, citizens of a country perceive their enemies in demonic terms
1st Formulation of Categorial Imperative (CI): Formula of Universal Law Principles expected, legal or previously agreed upon; Laws are valid only
 Kant says that: We should only act according to a maxim (i.e. act in a manner) which we can “will” that it insofar as they are grounded in justice, and a commitment to o Remedy: Promote direct contact between individuals who have been morally excluded
becomes universal law without contradiction justice carries with it an obligation to disobey unjust laws
 To sum up, ethical lapses can be largely attributable to the (1) Prioritizing self-interests over principles
 Universalizability Test and (2) Failure to bother
1. Find the agent's maxim (i.e., an action paired with its motivation)
[Person] What are the causes of Ethical Lapses?
 e.g. "I will lie for personal benefit"  Lying is the action; Motivation is to fulfil some sort of  Ethics is not a panacea (i.e. solution/ remedy for all difficulties) [Organization] What are the Barriers to an Ethical Organization?
desire. Together, they form the maxim  A “good” person can still engage in “bad” acts due to the following reasons:
Barrier Description Remedy
2. Imagine a possible world in which everyone in a similar position follows that maxim 1. Lack of enforcement/ Il-matched punishment Ill-conceived Set goals and incentives to promote Brainstorm unintended consequences when devising
3. Decide if contradictions or irrationalities arise in a world that follows the maxim; Is such a world even o Effective enforcement creates a perception that offenders will be caught and punished Goals a desired behaviour, but end up goals & incentives.
conceivable? o This sense of certainty of being caught can serve as a powerful deterrent as potential offenders encouraging a negative one Consider alternative goals that may be more
4. Ask ourselves whether we would rationally act on the maxim in such a world o Severity of punishment should also correspond to the offence committed for it to act as a deterrent important to reward.
 Only if it passed all 4 steps is the action morally permissible o Should lead the potential offender to conclude that the punishment is so severe, it is not worth the Motivated Overlook unethical behaviour when Root out conflicts of interest. Simply being aware of
 e.g. Kant held that the maxim of committing suicide to avoid future unhappiness did not pass the third Blindness it's in our interest to remain them does not necessarily reduce negative effect on
risk of getting caught.
step, the contradiction in conception test. Hence, one is forbidden to act on the maxim of committing ignorant decision making
2. Succumbing to Temptation/ Ignorance, sometimes wilful and intentional
suicide to avoid unhappiness Indirect Hold others less accountable when When handing off/ outsourcing work, ask whether
o Ignore unethical behaviour and try to put guilty feelings out of your head (through rationalization/
Blindness it is carried out through third parties assignment might invite unethical behaviour and
 Put simply, if we approve the maxim, then what we are actually doing is universalizing the action – that justification) take ownership of the implications
EVERYONE should ALWAYS do the same; We should not make exceptions for ourselves o e.g. Pick up a lost iPod and want to keep it Slippery Slope We are less able to see others Be alert for even trivial ethical infractions and
o Try to justify the decision: “I’m only doing what anyone else would do in this circumstance” unethical behaviour when it address them immediately. Investigate whether a
2nd Formulation of CI: Humanity as an End In Itself Formula
o Rationalize that no one will ever know, no one will be hurt, and the owner deserves it for being so develops gradually change in behaviour has occurred
 We should never act in such a way that we treat humanity as a means to something else, but always as
careless Overvaluing Overlook and give a pass to Examine both "good" and "bad" decisions for their
an end in itself
3. Lack courage to make ethical decision due to what’s at stake outcomes unethical behaviour if the outcome ethical implications. Reward solid decision
o i.e. Should not treat human beings as mere instruments to meet our ends and for our own benefit,
o Might put our income, job, or other valuable components of our life at stake is good processes, not just good outcomes
with no thought given to them
o Easier to sweep the problem under the carpet rather than face it
 Human are not mere objects that exist to be used by others; Humans are their own ends, existing for Corporate Culture, Code of Ethics, Code of Conduct
o Difficult to stand up to peer pressure; Want to “fit in”
themselves  Individuals can be helped or hindered in making the “right” or “wrong” decision (according to their own
o Self-doubt might arise if we see disagreements as a sign that we are wrong
o Ought to recognize that each human has their own goals, values, interests, inherent dignity and are values) by the expectations, values and structure of the organization
o Might even condition our minds to fit the new environment
rational and autonomous (i.e. self-governed with the freedom to make their own decisions)
4. Satisficing: Select alternative that satisfies minimum decision criteria  Corporate Values: Underlying beliefs that cause employees to act or decide one way over another
o Should not manipulate other humans for our own benefits
o Select option that suffices, one that us and relevant others can live with, even if it may not be the best  Corporate Culture: Shared pattern of beliefs, expectations and meanings that influence and guide the
o As a result, it prohibits the sacrifice of human interest in pursuit of “greater good”
o e.g. After spending hours to reach an agreement within a committee, unlikely to re-evaluate their thinking and behaviours of the members of that organization
 E.g. Deception is morally unethical as the other moral agent cannot make an autonomous
decision and come up with a better one o Corporate culture is a set of identifiable values that establish the expectation of what is normal within
decision as it would be based on the false information; The decision-maker is treated as a mere
o Arrival at a consensus indicates that the most reasonable decision has been made, although it clearly the firm
means to accomplish the goals, with no thought to his/her own goals and interests
may not be so o Shapes people (members of organization), but also shaped by people that make up the organization
Libertarianism 5. Consider only limited alternatives  If we join a firm with culture that supports values other than those with which we are comfortable, there
o Only consider the clear alternatives, and fail to consider that other alternatives are possible will be values conflicts
 Fundamental individual right to liberty – right to choose and live freely provide we respect other people’s
right to do the same o E.g. Pick up lost iPod  Only consider 2 alternatives: Either I take it, or someone else would
Impact of Corporate Culture on Ethics: Establish Importance of Corporate Culture
o Responsible decision making requires us to discipline ourselves to explore additional methods of
 Values individual freedom  Ethical corporate culture can empower employees to act in ethically responsible way, even when not
resolution (i.e. Use moral imagination)
o Should not coerce individuals to serve the overall good of society or even their own personal good required by law
 Libertarianism does not support 6. Bad Barrel/ Lucifer Effect  Encourage cultivation of habits and ethical virtue, which can culminate in decisions made
o Paternalistic legislation (e.g. seat belt law) o Good apples placed in a bad barrel will become bad apples o Individuals learn about expected and appropriate behaviours through reward (e.g. promotion) and
o Moral legislation (e.g. no smoking laws) o Evil actions are caused by evil situations punishment (e.g. risk of disciplinary action)
o Redistribution of income from rich to poor (e.g. taxation, economic regulation, welfare state) 7. Broken Window Theory  Without an ethical culture, long-term sustainability in terms of financial performance and employee
 EXCEPT tax to have national defence, police force, judicial system to enforce contracts & o If windows are not attended to, people assume that nobody cares so they can do whatever they like retention/ recruitment will be destroyed
property rights o Visible signs of crime and disorder encourages further crime and disorder
How is corporate culture built?
 Libertarians support free market economy and rights to freedom in their economic affairs 8. Slippery Slope
 Responsibility of top management to steward the creation of an ethical corporate culture
o Relatively small step can lead to a chain of events culminating in a significant effect
Egalitarianism Leaders as Role Models Code of Ethics & Conduct Resource Allocation
 Supports equality of some sort: People should get the same/ be treated the same/ be treated as equals 9. Scripts  Employees are guided by the “tone at the top”; Leaders serve as role model that employees emulate
 Rests on the background idea that all human persons are equal in fundamental worth or moral status o Procedures that experience tells us to use in specific situations; Stored in our memory in a mechanical o Leaders must exhibit good personal behaviour (e.g. keep promise and commitments, encourage staff)
or rote fashion o Leaders must reject conduct that is inconsistent with the organization’s and their own personal values
 Equality of Opportunity
o When we encounter a very familiar situation, we do not actively think about it and rely on scripts o Leaders must also avoid engaging in appropriate behaviour (e.g. misusing corporate assets) to avoid
o e.g. Job openings/ Loan applications should be open to all; Company should be willing to sell goods
instead, behave as though we are cruising on automatic pilot promoting the wrong values
and services to all willing customers
o Cognitive shortcuts that take the place of careful thinking  Leaders need to develop clear principle and rules
o Applicants should be assessed by relevant criteria of merit, with the top-ranked applicant being
o When faced with situations of suffering, scripts permit us to steel ourselves against feelings of o Should start at the mission statement: Sums up the company’s objectives, strategy, and values
offered the opportunity
empathy (e.g. turning down calls for ‘donations’)  (if it has not already been properly defined)
Kohlberg Stages of Moral Development  Allow people to avoid responsibility for the suffering of others when providing help appears  Serves to demonstrate corporate values to employees and the general public
 Answer the question of: How do people develop morality and moral reasoning costly  Represents the fundamental principles that should guide decisions in the company
  Clearly articulated mission statement will inform employees what is expected for them in the
pursuit of company’s goals
Google To organize the world’s information and make it universally accessible and useful
Facebook To give people the power to build community and bring the world closer together
Microsoft To empower every person and every organization on the planet to achieve more
o Code of Ethics: Written set of principles issued to guide behaviour and conduct so that employees
will make the right decisions
 Overarching set of principles and values that can be applied when formulating their judgement
concerning a suitable behaviour in a given situation
 Regulates judgement of the organization
 Resembles a value-based approach to building culture
 Emphasizes values rather than rules, and relies on employee’s personal integrity
o Code of Conduct: Accompanying set of rules/ guidelines with respect to employee practice and
behaviour, in order to comply with and adhere to the principles in the code of ethics
 Sets out the actual rules for behaviour, laying down the do’s and don’ts
 Regulates the actions of employees
 More compliance-based approach to building corporate culture
 Emphasizes obedience to rules and requires monitoring compliance with the code
o Together, the code of ethics and code of conduct are complementary
 When a rule does not apply, we can rely on the personal integrity of employees
 Rules can provide also concrete guidance on how to apply the overarching principles
 Leaders can decide on resource allocation to support and promote ethical behaviour
o Ethics officers that monitor and enforce the code of ethics
 Have in place mechanisms to report and investigate wrongdoing (e.g. whistleblowing/ ethics
hotlines)
 Whistleblowing: Disclosure of unethical or illegal activities to someone who is in a position to
take action to prevent or punish wrongdoing
 Internal mechanisms should be confidential so as to protect the whistleblower
 Should ensure that there is follow up and enforcement after the report is filed
o Ethics programs that communicate ethical culture
 Provide ethics training to enable employees to identify and effectively deal with ethical issues
that they might face at their work
o Incentivise ethical decision making
 Include ethical behaviour evaluation in worker’s performance review
 Reward people for doing right thing through positive appraisals or appropriate honours
 Discipline those that violate the company code
o Assess and monitor corporate culture through internal audits
 Internal auditors can undertake root-cause analysis to identify cultural weaknesses.
 Goes looking beyond non-compliance but into why things happened, positively as well as
negatively
 Measuring, assessing and monitoring culture encourages people to pay attention to ethics
 Board and management would be apprised on the health of the culture
 Early warnings would enable organisations to quickly address the potential risks
 Conclusion: Heathy corporate culture is key to good governance and to a company’s success. History has
revealed a number of high business failures linked to unethical values and practices.
Profession-based Rules: Ethical Duties of Gatekeepers
 Profession: Disciplined group of individuals who adhere to ethical standards. This group positions itself as
possessing special knowledge and skills in a widely recognised body of learning derived from research,
education and training at a high level, and is recognised by the public as such
 Specialized knowledge/skill
 Autonomy (Autonomy to set its own codes of behaviour) Characteristics of a
 Authority (Authority to self‐police its members) profession
 Altruism (Serve the public interest)
 Gatekeepers: Recognise that certain professions play an important role as “watchdogs”, ensuring that
the markets function within the law and are free from fraud and deception
Auditors Verify company’s financial statements so that investor’s decisions are free from fraud and
deception
Analysts Evaluate company’s financial prospects and creditworthiness to allow banks and investors to
make informed decisions
Attorneys Ensure that decisions and transactions conform to the law
Boards Intermediary between company’s shareholders and its executives, ensuring that executives
act in the interest of shareholders
 Professionals must abide by rules and standards that determine how they ought to act
 Refer to section on ISCA: Professional Conduct of Auditors
 Given their unique role, when faced with a conflict of interest, they also have the fiduciary duty
to act on behalf, or in the interest of another stakeholder, overriding their personal interest
 Conflict of interest: Arises when a person holds a position of trust and it requires him/her
to exercise judgement on behalf of others. However, his/her personal interests are in
conflict with those of others (or the ethical obligations of professional duties)
 Appropriately handling real or perceived conflicts of interest is integral as trust is the
 Cronyism may exist in the board due to a conflict of interest between duties of the board and senior
profession’s greatest asset
executives
Corporate Governance and Duties of Board Members o Board is responsible for
 Corporate Governance: Structure by which corporations are managed, directed and controlled to achieve  Ensuring executives receive an adequate and fair, but not excessive, compensation
the objectives of fairness, accountability and transparency  Evaluating executive’s performance
o Defines the relationship between the board of directions, shareholders and firm’s management o But, the
(executives)  Executive being paid and evaluated may be the chair of the board
o Involves issues concerning:  Board members are picked by senior executives like the CEO
 Composition and control by Board of Directors  CEO decides on the compensation of board members
 Functions and roles of Board o As such, there an incentive for directors to approve of the high compensation of the executive officers
 Executive remuneration and Director Fees so as to protect their position
 Rules on disclosures for directors and management
Ethical Issue: Insider Trading
 Communications with shareholders on company’s financial status in annual report, and other
 Insider Trading: Benefit from trading of securities by those who hold private inside information of
reporting requirements
material impact to the share value
 Legal Duties of Board Members
o Applies to anyone that benefit from receiving “tips” (e.g. family members, friends etc.)
1. Duty of Care: Exercise reasonable care to ensure that executives carry out their management
o Private information: Privileged information not yet released to the public
responsibilities and comply with the law, in the best interests of the firm
o Material if it has financial impact on company’s performance, or if it would be important to a prudent
 Directors can rely on information opinions of employees, committee or other professionals IF
investor making an investment decision
the director believes that they are reliable and competent in the subject matter
 Insider trading undermines fairness and integrity of securities market
 Need to use their business judgement as prudent caretakers, and be rationally informed on
o Unfair to others that do not have such information
decisions
o Pure price competition is not possible due to unequal access to information
 Does not need to be an expert or actually run the company
o Breaks faith in the market
2. Duty of Good Faith: Obedient; Be faithful to organization’s missions
 Form of unethical misappropriation of proprietary knowledge
 Make decisions in line with organization’s purpose and direction
o Abuse of private information violates one’s fiduciary responsibilities to the firm
 Cannot act in a way that is inconsistent with the corporate objectives
3. Duty of Loyalty: Faithfulness; Give undivided allegiance when making decisions  Ethical defence for Insider trading
o Ethical to take advantage of private information as he/she has worked hard to obtain the position
 Conflicts of interest resolved in favour of the organization
that would make him privy to such private information
 Cannot use information obtained through his/her position for personal gain
Singapore Institute of Directors: Statement of Good Practice on Conflicts of Interest ISCA: Professional Conduct of Auditors
 Directors owe to their companies the duty to avoid conflicts of interest (i.e. to not place oneself in a Integrity Straightforward, honest, fair dealing in professional & biz r/ships;
position where personal interest may possibly conflict with their duty to the company) Do not approve (i) Materially false/ misleading stmt (ii) Stmt/ info provided recklessly (iii)
o Have direct/ indirect material interest in the transactions that the company enters into Omits/ obscures info such that it is misleading
o Hold position/ offices/ possess property that may result in conflicting duties Objectivity Independent in appearance (i.e. perceived to be) & mind (i.e. not compromise judgment
o Stand to benefit from information received, or opportunities made available to them in their due to bias/ conflict of interest/ undue influence of others)
capacity as directions Professional Attain & maintain professional knowledge, skill & competence; Act diligently (careful,
 Where possible, actual or potential conflicts (i.e. appearance of conflicts) should be avoided competence & thorough, timely basis), complying w technical & professional standards
 Nonetheless, recognise that conflicts are sometimes unavoidable due care
Confidentiality Do not (i) Disclose private info to others (even within firm & after engagement ends) (ii)
 If conflicts exist, must make appropriate disclosure of such conflicts and where required by the law,
Use private info for personal adv/ adv of 3rd parties
obtain shareholder’s approval
Exceptns: Disclosures (i) Required by law (e.g. legal proceedings/ to public authorities) (ii)
 Director might also have to refrain from participating in the debate/ voting on the matter, be absent
Permitted by law & authorized by client/ firm (iii) Permitted by law & professional
from the discussion or in extreme cases, resign from the board duty/right to disclose*
Professional Comply w laws & regulations; Do not bringing disrepute to professions; Do not (i) Make
 Ethical Duties of Board Members
behaviour exaggerated claims (ii) Make disparaging references/ unsubstantiated comparisons to
 Prohibit unethical but legal activities in the company, on the basis of protecting the long-term work of others
sustainability *{Comply with quality review/ Respond to inquiry or investigation} by professional body; Protect professional
 Fiduciary duty of board to protect the firm by holding its executives to a higher standard of ethics than interests of public accountant in legal; Comply w technical standard and ethics requirements
just simply following the law
Potential conflicts of interest (will inappropriately influence professional judgement/ behaviour)
 Ultimately, the board has to provide oversight and control management through appropriate governance
Threats Explanation Examples
Ethical Dilemma: Excessive Executive Compensation Self-interest Influenced by financial/ other interests Direct fin int, Material indirect fin int, Undue
 Excessive executive compensation reflects significant ethical issues of corporate governance of themselves/ close family member dependence on client fees, Fear losing client,
 Justification for Big Compensation Packages Potential employment w client (“jumpship”),
Consequentialist o Incentive for executive performance, to produce greater overall results Contingent fee arrangement (if unmod opinion),
Opinion shopping#
Deontological o Rewards for accomplishment, compensate individuals for what they have earned
Self-review Rely on own previous judgement, or Prior employment w client as accountant, Test
and deserved
activities performed by himself/ operating effectiveness of control after being
o “If you want a government on the cheap, you get a cheap government” – LKY colleague, without appropriate involved in design/ implementation, Partner/
 Rebuttal evaluation employee serve as a director/ officer of audit client
Consequentialist o Heavy reliance on stock options may instead bring about disincentives Advocacy Promote a position/opinion to the Promote shares in listed entity that is an audit client,
 Encourage executive to focus on short-term value, rather than long-term point that subsequent objectivity is Contingent fee arrangement
corporate interests (e.g. employee layoff to decrease expenditures) compromised
 Strong correlation also exists between incentivising with stock options and Familiarity Too sympathetic to their interests/ Close relationship with client (family, past
misstatement/ false reporting of financial results; Incentive to manipulate accepting of their work due to a long or employment), Accept gifts/ pref treatment from
the KPI drivers to earn more money close r/ship w client/ employer client, Long association w client accountants
Deontological o Not a reward for accomplishment as: Intimidation Arising from actual/ perceived pressure Threat of dismissal/ replacement, Threatened w
 No strong correlation between pay and performance exists; Seem to receive (incl attempted to exercise undue litigation
big pay checks regardless of business success influence over accountant)
 No evidence to suggest that generous compensation packages are needed as #Opinion shopping: Search for auditor that will provide favourable opinion and overlook any shortcoming
incentives for performance; Only need to pay sufficiently high salaries to
provide adequate incentive, not excessive amounts
o Goes against distributive justice and fairness
Virtue Ethics o Promotes vice of Greed
 Corporate Social Responsibility
 CSR: Ethical responsibilities business has to the society in which it operates
o i.e. Things that ought to be/ should be done for the sake of society, even if this comes with an
economic cost (i.e. social responsibility)
o Why? Firms should be accountable for their actions and have an obligation to make things right again
 Firms have 3 levels of responsibility
1. Responsibility to not cause harm to others that overrides business’ pursuit of profit
 Mandatory and fundamental duty to exercise due care to avoid causing harm
 Businesses will be held liable legally and ethically if harm that can be avoided is caused
2. Responsibility to prevent harm
 Good Samaritan cases where the firm acts to prevent harm even if there is no strict duty or
obligation to do so
 e.g. Merck pledged to give away Mectizan, a drug that prevents river blindness, for free, forever
even though it would have been a highly profitable drug if brought to market. Merck had no
legal obligation to do so.
3. Responsibility to do good and make society a better place
 Not ethically mandatory
 Arises from altruism and the desire for the business to “give back” to society
 e.g. volunteering, charitable work, corporate philanthropy
What are the 4 Models of CSR?
1. Economic Model: Sole duty to produce goods and services and maximize profits within the law
 Supported by utilitarianism: Pursuit of profit will lead to the overall good
o By maximizing profits, a business manager will allocate resources to their most efficient uses
o Consumers who most value a resource will be willing to pay the most for it
o Hence, profit is the measure of optimal allocation of resources
o As the pursuit of maximum profit will lead to the optimal satisfaction of consumer demand, overall
good is maximized
o Profit can thus be treated as a measure of how well the business serves to maximize the overall good
 Furthermore, social benefits from jobs and wealth created
 Business has no social responsibilities beyond the economic and legal ends for which it was created
2. Philanthropic Model: Businesses are free to contribute to social causes
 No ethical obligations to do (i.e. philanthropy is not done out of duty or social responsibility)
 Motivations for charity work vary and under the
o Philanthropic Model: Acts done out of financial motivations are not fully ethical
 Acts of philanthropy should not have an ulterior motive
 Should be undertaken as it is seen as the good or right thing to do; Not seeking reputational or
any forms of benefit that will result in business or financial payoff
 e.g. Donate to charity anonymously
o Economic Model: Acts done out of financial motivations are ethically responsible
 Acts of philanthropy can be seen as an investment as they seek to reap business benefits from
the social contribution
 e.g. To improve public relations, receive tax deduction, build goodwill/ good reputation within
the community
 Deemed as ethically responsible as business managers are the agents of owners; Managers have
no right to use corporate resources except to earn greater returns on investment for owners
3. Social Web/ Stakeholder Model: Businesses exist to create value for a range of stakeholder
 Recognize that business exists within a web of social relationships
 By the stakeholder theory, managers have responsibilities to all those who have a stake in the company,
not only to investors (e.g. employees, customers, suppliers, local community…)
 Optimally, should try to balance the needs of all stakeholders and ensure that everyone stands to benefit,
without favouring one stakeholder group over another
 However, as it is impossible to satisfy the needs of every stakeholder, organizations have to make
decisions based on their missions, priorities and values
 Decision to prioritize competing/ conflicting responsibilities (i.e. uphold 1 stakeholder group’s benefits at
the expense of another) will be based on utilitarianism, deontology and virtue ethics
4. Integrative Model: Social responsibility is fully integrated with firm’s mission or strategic plan
 Achieved by incorporating social goals into the core business model
 Managerial responsibility to shareholders is to serve the social good
 e.g. Social entrepreneurship, Firms that pursue profits while focusing on sustainability (judge against the
financial bottom line of profitability, and the ecological and social bottoms lines of sustainability)
Business Case of CSR: How can it benefit companies?
 CSR-related activities can improve profitability by enhancing a company’s standing among its
stakeholders (especially customers and employees)
o If a firm creates a good self-image, it builds a type of trust bank
o Consumers/ other stakeholders will give it some slack when they hear something negative
o Studies also show that ethical firms tend to enjoy greater financial performance
o Better operating income growth, return on equity, return on assets etc
 CSR may also pay off in the long run, not be in the form of higher profits but some other long-term value
that may not be evident or obvious and may be difficult to measure
o e.g. Retention of staff while attracting talents
 Aware of the pitfalls to avoid
o Risk of becoming pure social marketing which does not evidence a true commitment to the society
o Reputation management may give rise to a perception-reality gap, whereby the perception of a
company’s CSR is better than a company’s actual CSR
 Face the risk of being confronted with disappointed stakeholders, if they discover that the CSR
initiatives are not up to par with their perception
Environmental Ethics
 Case for Environmental Protection: Why care about the environment?
o Human beings, presently living humans and future generations, depend on the natural environment
to survive
o Contemporary environmental issues (e.g. climate change, species extinction, nuclear waste) are global
in nature and have permanent effects
o Given that natural systems are inter-related, and our dependency on the eco-systems, we ought to
protect the environment
 e.g. Pesticides can accumulate throughout the food chain and post a danger to humans
o Moreover, businesses also have an interest in doing so as the environment, like capital, has the
productive capacity to produce long-term income only if it was managed and used prudently
o Beyond these self-interested reasons, we should also consider that
 Nature provides great aesthetic, spiritual and inspirational value
 Animals, trees and other living beings have moral rights as well
 Deserve to be respected and treated with dignity
 Should not inflict unnecessary pain on animals (utilitarian perspective)
 Animals have the cognitive capacity to possess a conscious life. Hence, we have a duty to
not treat these animals as mere objects or means to our ends (Kantian)
3 approaches to Environmental Responsibility
1. Market Approach
 Stems from the perspective that environmental problems involve the allocation and distribution of
limited resource, and that they can be effectively tackled by efficient markets
 Free markets can serve to
o Achieve the optimal level of pollution that would best serve society’s interests, taking into account
risks and benefits
 e.g. “Pure” air and water would result incur high opportunity costs and “safe” air and water is
sufficient
o Take care of resource conservation
 As all resources are fungible and replaceable, when a resource becomes less available and more
expensive, there is a strong incentive to turn to less costly substitutes
 Limitations: But the market-based approach is not without its inadequacies as market failure may occur
o This may come in the form of externalities
 “Costs” of negative externalities (e.g. air pollution, groundwater contamination, soil erosion,
nuclear waste disposal) typically borne by parties “external” to the economic exchange (e.g.,
people downwind, neighbours, future generations)
 Free-market exchanges cannot guarantee optimal results
o Moreover, no market may exist to create a price for important social goods
 Refers to public goods (e.g. clean air) and environmental goods (scenic vistas, biodiversity)
 Without an established exchange value, the market approach cannot achieve the goal of
efficiently meeting consumer demand
 Markets alone fail to guarantee that such important public goods are preserved and protected
o The distinction between individual decision and group consequences may also give rise to ethical
issues if we leave policy decisions solely to the outcome of individual decisions
 Seemingly insignificant individual decisions can collectively have a significant consequence when
everyone makes the same decision
 What is good and rational for a collection of individuals is not necessarily what is good and
rational for a society
 As such, markets are incomplete in their approach to promoting the overall social good
o Even attempts to respond to market failure are environmentally inadequate as this is a reactionary
strategy
 e.g. Internalizing external costs, assigning property rights to unowned goods such as wild
species
 This is due to First-generation Problem whereby we only learn about market failure when it
occurs
 Responding to prevent harms from recurring comes at the cost of sacrificing the “first
generation”, which is the only means of gaining this information
 Does not effectively prevent the problem from coming up in the first place
2. Regulatory Approach
 Can be achieved through tort law or legislation
 Under tort law,
o Individuals who have been harmed by pollution can raise legal challenges to air and water pollution
o Burden of proof lies on the victim to prove that they had been harmed by the pollution
o Offers limited environmental protection as tort law offers at best, compensation for the harm, but
only after the fact
 Environmental responsibility can also be enforced through legislation
o Governments can establish regulatory standards to try to prevent the occurrence of environmental
issues (e.g. pollution/ species extinction)
o Business was free to pursue its own goals as long as it complied with environmental laws
o Burden shifted from those threatened with harm to those who would cause the harm to ensure
compliance with the regulations
 Society can also play its part in establishing environmental responsibilities on businesses
Singapore Context: NEA is responsible for enacting legislation regarding the environment
 e.g. Carbon Pricing Act
Requires industrial facilities that emit direct greenhouse gases to submit emissions report annually.
Heavy emitters have to pay a carbon tax set at a rate of $5/tonne of greenhouse gas emissions
o Demand environmentally friendly products in the marketplace as consumers, or
o Support environmental legislation as citizens
o Forces businesses to meet environmental responsibilities as they have to respond to the market and
obey laws
 Limitations: Regulatory approach is not without its challenges
o There might be inadequate environmental protection if business successfully influences society and
legislation
 Business can influence legislation by lobbying against new environmental regulations
 Business can influence consumer choice though advertisement to sustain demand for
environmentally harmful products
o Environmental protection only extends as far as the law extends
 When environmental issues extend beyond legal jurisdictions and national boundaries, national
regulations are ineffective for tackling international environmental challenges
 Businesses can also easily circumvent regulations by operating in a less stringent jurisdiction
3. Sustainability Approach
 To pursue sustainable development through sustainable business practices
o Development that meets need of present without compromising ability of future generations to meet
their own needs
o Cannot pursue short-term economic growth at the expense of long-term environmental and
economic sustainability
 Needs to satisfy the Triple bottom line of economic, environmental and ethical sustainability which
measures the full cost of doing business
 Business case for adopting the sustainable approach
o It is a prudent long-term strategy to can help ensure long-term survival
 Adopting sustainable practices help firms to adapt to the decreasing availability of resources,
while meeting increasing consumer demands
o Huge demand from world’s developing economies can only be met in sustainable ways
 Currently, there are insufficient resources to meet these demands with the existing
environmentally damaging industrial practices
 Need to adopt sustainable practices for the demand to be met
o Companies can also enjoy significant cost savings arising from lower energy and material use
 Reduction in waste removal costs as less waste is generated
o Companies can also attain competitive advantage through the sustainable approach
 Appeal to environmentally conscious consumer
o It is also a good risk management strategy
 By adopting a sustainable approach, companies are preparing for and complying with future
government regulation
 Companies might even set standards for best practices and help in shaping government
regulations
 Increased environmental consciousness can also help companies to avoid potential legal
liabilities or consumer boycotts
3 Tools/ Principles for a Sustainable Business
1.Eco-efficiency
 Try to “do more with less” and reduce resource usage by improving energy and materials efficiency
 “Factor Four”: With present technologies, can readily achieve at least a fourfold increase in efficiency
 Companies can quickly recoup environmental investments
2.Biomimicry
 Adopt a “closed loop production” and seek to integrate what is presently waste back into production, so
as to ultimately eliminate (and not just reduce) waste
 Company should aim to shift from a “take-make-waste” model to a “cradle-to-cradle” model, which
would provide incentives to design products that can be recycled efficiently and easily
 Phases of evolution to biomimicry:
o “Take-make-waste”: Take resources, make products and discards left over
 o “Cradle to grave”: Responsible for entire life of its products, including ultimate disposal after sale (aka  Moreover, threat of compensation (if employer found to be liable for causing harm) incentivizes  Regulator Approach: Impose laws that support diversity
“lifecycle responsibility”) employers to maintain a reasonably safe and healthy workplace o e.g. Federal law on gender composition of board of director/ Quotas for number of females on the
o “Cradle-to-cradle”: Responsible for incorporating end results of its products back into productive cycle  Limitations: Market approach is subject to market failure board of directors
3. Shift in business model from products to services (i.e. Service-based economy) o Labour markets are not perfectly competitive and free  Challenges with diversity
 Interpret consumer demand as a demand for services (rather than products)  Employees do not have the free choices required under the free-market theory in order to o Cultural differences may give rise to tension, especially when negative stereotypes used to exist
 Creates an incentive to create durable and easily recyclable products attain optimal satisfactions o Difficult integrating diverse viewpoints into the pre-existing corporate culture
 Companies will benefit from reduced material and energy costs and improved production efficiencies  Instead, they are forced to accept jobs because they lack employment options  Measures
 e.g. Low-skilled/ Low-education individuals are forced to accept risky yet low-paying jobs (e.g. o Check alignment of job applicants to firm values to see if they are a good “fit”
Employee Ethics: Fairness at Work construction worker) o Make efforts to educate and encourage multicultural understanding
What constitutes Employee Fairness? o Employees do not possess perfect, complete information on the job  e.g. Events to celebrate and embrace multiculturalism
 Employee fairness requires that the authority of employers be used in a just manner  Employees that do not know the risks involved in a job are not in the best position to freely  To promote an environment of tolerance and inclusion that supports the co-existence of
 The unjust use of authority harms the employee’s’ job security and can lead to a loss of dignity, bargain for appropriate wage multiple cultures, and yet retaining what is unique or individual to the culture
intimation, fear, loss of morale etc. o First-generation problem  Affirmative Action: Intentional inclusion of previously excluded groups so as to redress past
 Gives rise to the need for due process and just cause  While the market will compensate for such market failures over time, this comes at the cost of discrimination
o Due Process: Requires policies on the application of employer’s authority over employees sacrificing the first generation in order to gain information about safety and health risks For Against
 Come in the form of formal rules on how to handle an employee when they do not comply with  i.e. Employees will learn about the risks and employers will not be able to attract employees o The need to ensure a racial o Gives rise to reverse discrimination against individuals from the
rules and ethnic diversity (due to majority group by intentionally seeking to select a candidate
3. Government Regulated Approach
o Just Cause: Requires employers to have sufficient and fair cause before terminating or disciplining an exposure to potential legal from an underrepresented group
 Government can set mandatory standards based on scientific knowledge that serves to reduce rather
employee liabilities from discrimination) o Creates ill will and poor morale among workers
than eliminate workplace risks
 As a result, there needs to be proper and transparent procedures with respect to monitoring supports affirmative action  Members of the majority group may be denied opportunities
 Under this approach,
and evaluating employee performance policies  Members of the minority group may be seen as less capable,
o Market failures due to insufficient information can be overcome
 Justification for Employee Fairness o Allows the firm to gain a on the presumption that they were chosen on the basis of
o First-generation problem can be addressed as it focuses on prevention rather than correction
Utilitarian o Treat employees well to achieve greater workplace harmony and productivity competitive advantage for affirmative action
o Employees do not have to make a fundamentally coercive trade-off between job and safety
Deontological o Out of a sense of duty and rights firms with diversity as studies o Inappropriately makes up for “past wrongs” with current
 Limitations
o Golden Rule: Ought to treat the employee as he/she would him/herself wish to reveal that diversity is punishment
o Governments have to ensure that companies are made aware of the regulations, monitor compliance
be treated, and have his/her human dignity respected associated with greater  Those who “pay” for the wrongs are unfairly burdened and
and mete our disciplinary sanctions for non-compliance
Virtue Ethics o Treating employees fairly and not taking advantage of them “right thing to do” financial performance should not bear the responsibility for the acts of others
o Government may also face resistance from businesses due to the costs imposed on them
Ethical Issue: Down-sizing Ethical Issue: Global Workforce – Sweatshops & Child Labour Technology & Privacy in the Workplace
 Ought to treat affected with the same respect and interest that was shown when hiring them  Regardless of differences in legal standards between developing and developed nations that serve to
 Privacy: 2 definitions
o When they were hired, they were important to the success of the company protect workers, MNCs should have some form of minimum standard as they have core ethical obligation
o Right to be “left alone”  Establishes the boundary between individuals
o Now they are equally important to the company’s survival as they leave to employees regardless of which country they work in
o Right to control information about oneself  Recognise that some personal decisions and
 Alternatives to downsizing  Ought to adhere to local labor laws, provide decent working condtns and wages above poverty line
information lie in the exclusive domain of the individual
o Freeze hiring/ Introduce voluntary retirement packages/ Reduce hours rather than position/ Delay  Sweatshops
 Privacy arises from the ability to choose to limit/ control personal information to only those whom we
salaries/ Cut benefits (e.g. allowances, bonuses) For Against have a personal relationship with
 How can an organization act ethically when down-sizing? What are some good practices? o Supported by Economic Theory o Kantian’s universal principle
 Privacy is violated when one comes to know the personal information another, when no relationship that
o Communicate and Be Transparent  Exploitation of cheap labour drives the economy and brings  Fundamental moral
would justify the knowledge exist
 Managers need to be highly visible, approachable and candid about state of things to build trust in more jobs minimum set of
and credibility  As the labour market tightens, companies will be forced to standards exists Ethical Justification for Employers to Respect Privacy
o Timing: Ought to announce termination list as early as possible to manage rumours, uncertainty and improve working conditions to retain workers  Should be guaranteed to  Kantianism: It is an individual’s fundamental, universal right to be make decisions about their own
negative feelings  As such, working conditions will improve workers in all countries personal information
Ethical Issue: Health & Safety o Libertarianism: Respect the worker’s freedom to choose to work notwithstanding culture,  Social contract & Reciprocal Obligation
 Health and Safety has both instrumental and intrinsic value to individual in sweatshops stage of economic o For an individual to expect respect for her or his personal autonomy, that individual has a reciprocal
o Instrumental Value: Measurable value from being healthy and safe, which allows us to attain other  Workers see the extreme dangers sometimes associated development, or obligation to respect the autonomy of others
things of value with working in sweatshops availability of resources o By extension, an employee has an obligation to respect the employer’s right to confidentiality. The
o Intrinsic Value: Inherent meaning and value of life which cannot be replaced by financial  But recognise that working in a sweatshop will give them  Factories of MNCs employer also has a reciprocal obligation to respect the employee’s rights to privacy
compensation economic power that they have not accessed previously (including contract  Perspective of Property rights
 As such all workers should be entitled to work in environments where risks to their health and safety are  Respecting worker’s dignity means respecting their factories) should put in o “Property” covers an individual’s life and its derivatives (e.g. thoughts, ideas, personal information)
properly controlled decisions place minimum o Individuals have an exclusive right to their personal information
 To achieve this, there are various approaches to health and safety, each with its pros and cons o Should not harm them as taking away this opportunity is likely to standards
make the workers more worse off Legal Justification for Employers to Respect Privacy
1. “Acceptable Risk” Approach  Child Labour  While no constitutional right to privacy exists in Singapore, there is partial protection under the Personal
 Recognize that employers cannot be responsible for providing a completely safe and healthy workplace For Against Data Protection Act
 Instead, workplace can be considered safe if risks are relatively acceptable o Even if children are not working, their options are not optimistic o Work takes children out of  PDPA requires
o i.e. Prob of harm involved in work activity  Prob of harm of some more common activity  Unavailability of sophisticated education systems or public school; High levels of child o Consent: Organisations may collect, use or disclose personal data only with the individual's
 Limitations schools labour leads to low literacy knowledge and consent (with some exceptions)
o Disrespects employees by ignoring their input as stakeholders and not allowing them to determine for o Takes children out of less hospitable “underground” professions levels o Purpose: Organisations may collect, use or disclose personal data in an appropriate manner for the
themselves the level of risk they are willing to accept  E.g. Drug dealing, prostitution o Poverty and child labour will circumstances, and only if they have informed the individual of purposes for the collection, use or
o Justification based on “relatively acceptable risks” ignores the fundamental deontological right of an  Better to end up in the manufacturing industry be passed on to the next disclosure
employee to have a safe and healthy working environment o Grave financial impact if child leaves his or her job generation o Reasonableness: Organisations may collect, use or disclose personal data only for purposes that
 Income generated may be critical in supporting the entire  Children who work are
o Assumes equivalency between workplace risks and other types of risks when significant differences would be considered appropriate to a reasonable person in the given circumstances
more likely to earn low
exist (e.g. Workplace risks are not chosen by, nor within the control of workers) family’s fundamental needs (food, clothing, and shelter)  PDPA Exception: Data for evaluative purposes or to manage/ terminate an employment relationship
wages as adults
o Risk is within control of employers, but they might not stand to benefit from risk reduction (e.g. cost
increase) Ethical Issue: Diversity & Discrimination
2. Market Control Approach  Legislation prohibits explicit discrimination based on age, religion, race, disability, gender, colour, sexual
 Leave health and safety standards to the market orientation etc. but covert discrimination can still occur in the workplace
 Allow employees to bargain with employers based on the risks they are willing to face and decide how  Market Approach: Can fix discrimination due to opportunity cost of discrimination
much risk they are willing to take for various wages o A firm that hires employees based on prejudices and discriminatory views is limiting its pool of
o Higher safety standards and healthier conditions, lower wages (and vice versa) possible employees
o Another firm that does not discriminate can choose from the larger pool and is more likely to obtain
 Result in optimal distribution of safety and income
the most qualified individual for the job
 Ethical Issue: Employee Monitoring  Bottom-line: Companies need to distinguish between availability of access and the moral right to access  Even if the business issues a disclaimer of liability (e.g., products are sold “as is”), or offer an
 Employee monitoring arises from the potential abuse of technology by employees and not using the information or to use that information in a hiring decision. They ought to use “legitimate business expressed and limited warranty (e.g., the seller will replace the product but offers no other
hours at work as intended purpose” as the guiding principle and should keep in mind that employees should not be punished for guarantees), they cannot completely disclaim the implied warranty of merchantability
For Against information that employers do not legally have the right to have  Tort Law Perspective
o To manage the workplace o Create a suspicious and hostile workplace. o We all owe other people certain general duties, even if we have not explicitly and voluntarily assumed
 Place workers in appropriate positions o Ought to respect the worker’s autonomy and his Marketing Ethics them
 Ensure compliance to organization rules right to control their environment,  4P’s of Marketing o e.g. Duty to not put others at unnecessary and avoidable risk by driving carefully
o To administer workplace benefits o Inherent invasion of privacy that violates the Product Promotion o Negligence: Failure to exercise reasonable care or ordinary vigilance that results in an injury to
o To ensure effective, productive performance fundamental human right to privacy What, how, why, and under what conditions is How can the product be promoted to support, another
amongst employees o Monitoring constrains effective performance something produced? enhance, and maintain sales?  Unethical to harm others when in ways that can reasonably be expected to have avoided
 Prevent loss of productivity to  Causes increased stress and pressure, o Design products that appeal to buyers o Advertising and incentives to attract new  “Reasonable” refers to what we would expect the ordinary, average person to do
inappropriate technology use negatively impacting performance and having potential purchasers
 Businesses should have foresaw these harms, and thus, avoided them
 e.g. Personal uses (calls/ texts), the potential to cause physical disorders Price Placement
 Especially when they possess more expertise than the average consumer
performing internet searches unrelated  e.g. Monitored workers suffer more What price is acceptable, reasonable, fair? Where, when, and under what conditions should the
to work, checking social media depression, extreme anxiety, severe fatigue or  Strict Product Liability Perspective
o Consider: Mutually acceptable price, Production product be placed in the marketplace?
o To protect its other resources exhaustion, strain injuries, and neck problems cost + Reasonable profit, Affordability of buyers, o Consider: Where to sell, How to deliver the o No matter how careful the business is in its product or service, if harm results from use, the
 Protect proprietary information against than unmonitored workers What competitors are charging product to market (direct sales vs channel sales manufacturer is liable
theft, investments in equipment and  Stress may also arise from not having the via retailer), When to sell o No need for negligence to be involved
bandwidth, protect against legal liability opportunity to review and correct  Market exchange is prima facie ethically legitimate because For Against
 E.g. Misuse of social media can bring bad misinformation that misrepresents themselves o It respects consumer’s autonomy  Creates a strong incentive for  Unfair to business because it holds business
reputation to the firm o Impose higher cost to employer when unhappy,  Treat them as autonomous agents capable of pursuing their own ends business to produce safer goods and responsible for harms that were not the result of
disgruntled worker leave the firm or suffer from o Mutual benefit services business negligence
lower productivity
 Agreement between 2 parties proves that both are better off than before the exchange;  Allocates the cost to the party best  Business will not be incentivised to produce safer
 Remedies able to bear the financial burden goods as the harms are not foreseeable in the first
 Can conclude that overall happiness has been increased by any exchange freely entered into
o Give due notice to employees when they are being monitored. Provide options for employees to place
 This is however conditional on the fact that (1) The transaction is truly voluntary (2) There is Informed
avoid being monitored when they are dealing with personal issues  Businesses are not best able to pay for damages as
consent (3) Benefits will occur (4) Other values might conflict many have been bankrupted by product liability
 Drawback: Hawthorne Effect - Knowing one is being studied might make one a better worker
1. Is exchange “voluntary”? It is involuntary if… claims
 By telling the worker which calls are monitored, employees will be on their best behaviour
There are no real alternative Exploit the fact that the product is a necessity
during those calls Ethical Issue: Advertising
choices available More consumers need a product, the less free they are to choose
 Alternative: Random, anonymous monitoring  Advertising serves to inform, advise and persuade consumers to make a purchase
transaction occurred under Exploit the anxiety or fear to sell a product
o Develop a monitoring program according to the mission of the organization and implement it in a anxiety and stress For Against
manner that remains accountable to the impacted employees Subject to price-fixing, Exploit market position to raise prices to a level much higher than is o Utilitarianism: Promotes overall o Principle-based: Violates consumer autonomy
 Codify ethical standards on collection and use of employee personal information exercise of monopoly considered reasonable or fair; Consumers that have no bargaining happiness  Consumers are manipulated by advertising’s ability to
power, price gouging, etc. power are forced to accept the prices  Advertising provides information generate non-autonomous wants
Code of Practice on Protections of Worker’s Personal Data by International Labour Org that is needed for market  Marketing has influenced non-necessity purchases by
2. Is consent to exchange really “informed”? It is not informed if…
 Person who have access to the personal data must handle it confidentially exchanges creating desires in consumers (e.g. Desire to appear
There is a lack of Consumer is denied full information required to make an informed
 Lawful and fair use of data, only for reasons directly relevant to employment Information decision  Consumers can learn about fashionable, for status, to fit in etc)
 Security safeguards are in place to guard against loss, unauthorized use, modification or disclosure There is deception Consumer is misled or deceived about the product products they may need or want  Bypasses their rational decision making
It involved complicated Consumer does not fully understand what they are purchasing  This contributes to market o Principle-based: By manipulating the buyer, they are
 This respects the personal autonomy of the individual worker by providing for personal space efficiency and the overall treated as a means to the manufacturer’s own ends
information Might be exploiting the fact that they lack relevant information or
within the working environment happiness  See buyers as an object to be used rather than as an
understanding
 Also provides notice of where that “personal” space ends o Principle-based: In respecting the autonomous person in his or her own right
3. Are people truly benefitted? They are not benefitted if…
autonomy of consumers, advertising o Utilitarianism: Manipulation furthers the manipulator’s
Ethical Issue: Information Gathering outside of Work Result of impulse buying, Not benefitted if consumers buy in a haste only to regret it later as the
provides the information needed for own ends (one) at the expense of the manipulated (many)
“affluenza” or consumerism product is not suitable for them
For Against autonomous individuals to make  Lessens overall happiness
Consumers only buy as they lack the ability to make good decisions
o Can make o Should not discriminate based on off-duty activities (e.g. political involvement, informed, responsible choices
about their spending choices
better hiring/ religion) and other attributes that are not relevant to the employment (e.g. marital e.g. Sales pitches that hype the latest and trendiest items  Need to differentiation between targeting the considered and rational desires of consumers, and
promotion status, weight…) “Affluenza”: Greater consumption can lead to unhappiness targeting their fears and anxieties
decisions o Undermines the dignity of the individual Product is unsafe Unsafe products that cause injuries do not maximize overall happiness  Should not use market research on the consumer’s psychology to appeal to their non-rational
based on  Treat people as a means to achieving profitable ends without regard for the “Contrived” wants Not benefitted if desires that consumers seek to satisfy are contrived or
motivations
suitability individual as a person valuable in and of him- or herself manipulated by the seller (i.e. created instead of arising naturally) Sustainable Marketing
o Relationship o Creates a climate of suspicion
4. Are there competing values?  Goal: Meet real needs of present and future generations within ecological constraints
exists  Undermines trust and loyalty

Product
between a o e.g. Justice & fairness (e.g. mortgage redlining), Health & Safety considerations, Environmental  How? Identify real needs of consumers and build sustainability into the product design
 Encourages insincerity and people to be two-faced
candidate’s considerations, Market failures/ externalities  Avoid overpackaging or using petroleum-based plastics (alternative: corn-based biodegradable
o Negatively Affects the character of the companies and individuals who work there
ability to  Companies become secretive and manipulative through such information plastics)
Responsibility for Products: Safety & Liability
handle gathering  Set prices that factor in a product’s true ecological cost
 Ethical responsibility to design, manufacture, and promote its products in ways that avoid causing harm
personal o May require government regulation as internalizing such costs places a company at a
 Candidates, in turn, try to conceal potentially unfavourable information (to to consumers
affairs/ competitive disadvantage and hence are unlikely to voluntarily raise prices

Price
their acceptance or advancement)  Contractual Law Perspective
finances and
o Disregards property interests associated with that personal information o Caveat emptor approach (“buyer beware”)  Price sustainable products competitively with other products
the ability to
 • Ignores a person’s ownership of information about him- or herself  Assumes that every purchase involves the informed consent of the buyer and therefore it is o Avoid short-term cost-benefit motivations to quickly recoup initial investments
handle work
commitments o Erodes the privacy expectations a person has in his or her personal information assumed to be ethically legitimate o Justify short-term losses with the goal of a long-term, sustainable yet profitable product
 Buyers need to look out for their own interests and protect their own safety  Can help to shape consumer demand for more sustainable products
 Information gathering on an employee is appropriate only if it is reasonably and rationally related to a  The only duties that the seller has are those freely taken on within a social contract  Serve to educate by creates social meanings and consumer expectation supporting sustainable

Promotion
legitimate business purpose  Hence, unless a seller explicitly warrants a product as safe, buyers are liable for any harm they goals
 In light of that, employers are allowed suffer  Apply green labelling by labelling environmentally sustainable products
o Monitor employee’s social media accounts o Implied warranty of merchantability o But should avoid “green washing”: Mislead consumers by labelling products as
 e.g. Rant about work can damage corporate reputations and bring on legal consequences  In selling a product, a business implicitly offers assurances that the product is reasonably environmentally friendly when the products have little or no environmental benefits
o Monitor work emails and other communications suitable for its purpose and is safe under normal use  Sustainable JIT inventory control, distribution and transportation

Placement
o Refuse to hire/ terminate a worker based on the identity of the spouse  Even without an explicit verbal or written promise or contract o Fuel efficient transportation and alternative fuel technologies
 e.g. Anti-nepotism policy – refuse to hire if spouse is working in the same firm  This approach shifts the burden of proof from consumers to producers o Localised and efficient distribution channels
 e.g. Conflict-of-interest policy – refuse to hire/ terminate if spouse work at competing firm  Consumers can assume that products were safe for ordinary use  Life-cycle responsibility and “take-back” models
o Shift from Caveat Emptor to the Implied warranty of Merchantability approach o Take back the products after their useful life for disposal, recycling or reuse