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Business Ethics Fundamentals

Chapter Outline
Business Ethics and Public Opinion What Does Business Ethics Mean? Ethics, Economics and Law: Venn Model Four Important Ethics Questions Three Models of Management Ethics Making Moral Management Actionable Developing Moral Judgment Elements of Moral Judgment Summary
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Introduction
Business Ethics Publics interest in business ethics increased during the last four decades Publics interest in business ethics spurred by the media

Introduction
Inventory of Ethical Issues in Business Employee-Employer Relations Employer-Employee Relations Company-Customer Relations Company-Shareholder Relations Company-Community/Public Interest
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Publics Opinion of Business Ethics


Gallup Poll finds that only 17 percent to 20 percent of the public thought the business ethics of executives to be very high or high To understand public sentiment towards business ethics, ask three questions
Has business ethics really deteriorated? Are the media reporting ethical problems more frequently and vigorously? Are practices that once were socially acceptable no longer socially acceptable?
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Business Ethics: What Does It Really Mean?


Business Ethics:Today vs. Earlier Period
Societys Expectations of Business Ethics
Ethical Problem Actual Business Ethics

Ethical Problem

1950s

Time

Early 2000s
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Business Ethics: What Does It Really Mean?


Definitions
Ethics involves a discipline that examines good or bad practices within the context of a moral duty Moral conduct is behavior that is right or wrong Business ethics include practices and behaviors that are good or bad
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Business Ethics: What Does It Really Mean?


Two Key Branches of Ethics
Descriptive ethics involves describing, characterizing and studying morality
What is

Normative ethics involves supplying and justifying moral systems


What should be

Conventional Approach to Business Ethics


Conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms
Pitfall: ethical relativism

Decision or Practice

Prevailing Norms

Sources of Ethical Norms


Fellow Workers Fellow Workers

Regions of Country

Family

Profession

The Individual
Conscience Friends Employer

The Law

Religious Beliefs

Society at Large

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Ethics and the Law


Law often represents an ethical minimum Ethics often represents a standard that exceeds the legal minimum
Frequent Overlap

Ethics

Law

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Making Ethical Judgments


Behavior or act that has been committed compared with Prevailing norms of acceptability

Value judgments and perceptions of the observer

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Ethics, Economics, and Law

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Four Important Ethical Questions


What is? What ought to be? How to we get from what is to what ought to be? What is our motivation for acting ethically?

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3 Models of Management Ethics


1. Immoral ManagementA style devoid of ethical principles and active opposition to what is ethical. 2. Moral ManagementConforms to high standards of ethical behavior. 3. Amoral Management
Intentional - does not consider ethical factors Unintentional - casual or careless about ethical considerations in business

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3 Models of Management Ethics


Three Types Of Management Ethics

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Three Approaches to Management Ethics

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Three Models of Management Morality and Emphasis on CSR

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Moral Management Models and Acceptable Stakeholder Thinking

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Making Moral Management Actionable


Important Factors
Senior management Ethics training Self-analysis

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Developing Moral Judgment

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Developing Moral Judgment

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Developing Moral Judgment


External Sources of a Managers Values
Religious values Philosophical values Cultural values Legal values Professional values
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Developing Moral Judgment


Internal Sources of a Managers Values
Respect for the authority structure Loyalty Conformity Performance Results

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Elements of Moral Judgment


Moral imagination Moral identification and ordering Moral evaluation Tolerance of moral disagreement and ambiguity Integration of managerial and moral competence A sense of moral obligation
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Elements of Moral Judgment


Amoral Managers Moral Managers

Moral Imagination Moral Identification Moral Evaluation Tolerance of Moral Disagreement and Ambiguity Integration of Managerial and Moral Competence A Senses of Moral Obligation
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MORAL IMAGINATION
This term refers to the ability of a person to recognize that business, moral or ethical relationships do not exist independent of one another but instead are intertwined. A person with moral imaginations is sensitive to ethical issues as he makes business decisions and thinks of the subtle or unforeseen ways people may be hurt by specific decisions. Those with moral imagination see past the bottom-line mentality and recognize that everyday choices have moral and ethical implications

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MORAL IDENTIFICATION & ORDERING


Once a person recognizes moral issues exist, it is necessary to identify and rank, or prioritize, the issues. A person who can order and identify these ethical problems can distinguish the valid and important from the rhetorical. The person can recognize which moral questions are relevant and know that moral issues can be prioritized and addressed. For example, a leader with this quality can identify the need for worker privacy and worker safety in a particular situation and decide which should take precedence.
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MORAL EVALUATION
The third element of moral judgment is moral evaluation or using analytical skills to reason out practical decisions. Those competent in moral evaluation use consistency and coherence in their ethical decision making develop systems for making moral decisions and understand and identify moral and economic results of decisions. These people have foresight and make decisions based on a concern for others as well as the goals of the organization.

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TOLERANCE OF MORAL DISAGREEMENT & AMBIGUITY


The fourth aspect of good moral judgment is the understanding that there is ambiguity and disagreement in ethical decision making. If a person accepts that disagreement in a discussion of ethics, the person is more likely to make morals a part of the decision-making process. This element says that despite lack of clear-cut answers, people can make decisions that represent the best ethical choice as they understand it, knowing that others may disagree.
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INTEGRATION OF MANAGERIAL AND MORAL COMPETENCE

Most ethical scandals that organizations have are created as the result of economic decisions. Leaders need to recognize that there are business and economic consequences of ethical decisions, and moral competence is an integral part of managerial or leadership competence. Leaders who understand this element can foresee ethical problems and lead ethical decision making.
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MORAL OBLIGATION
This element is foundational to all the other elements. The person with moral obligation feels a necessity or urgency to act with a concern for justice, due process and fairness to all peoples, groups and communities. This sense of integrity or moral urgency is the motivating force to making moral judgments and implementing ethical decisions.
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