Ethics

1st Class after midterm

What have we done to date

 Established what ethics is, and is not.

Considered some of the main approaches to
ethical decision making.
Challenged traditional, limited thinking about
who might have an interest in how companies
operate
Using this knowledge, we considered the ethics
of advertising
Short answers of Mid Term

What are ethics associations ?

What is the difference between moral blindness
and moral recklessness?
If “bait & Switching” is acceptable because it
makes sales, what ethical framework does this
suggest, and what is a criticism of the logic
employed in using that framework.
Group Project – Outline Here

 Analyze how a company has encountered an ethical

challenge, consider the firm’s options, recommend the
best one, build a code of ethics

 INVOLVES
• Familiarize yourself with with firm specific
• Negotiating an ethical framework for the firm that all
the members of the group can support.
• Developing guidelines to help the business function
ethically
Group Project

Why these business?

• Why are you assigned to groups ?

• ….but, you might say someone’s always take
the advantage in groups.

•  Part of group Grade

•  Individual Grade
NEW CHAPTER
What is code of ethics? ( pg. 219-220)
Let’s consider….
 What is the difference between a code of
conduct and a code of ethics?
 Why might good business utilize a code of
ethics ?
Value Systems (pg. 221)

 All the firms have value system, even

if they don’t have codes.
What is the difference between …
 De jure value system
 De jacto value system

What is the relationship between a code of

ethics and value systems?
How do ethics code work? (pg. 221-223)

• They guide, but do not direct decision making.

• Codes should elicit good judgement.
• They are not a substitute for judgement.

BOAMTE- Ethical Empowerment

Idea of ethical empowerment
Codes of Conduct (pg. 223-224)

What is codes of conduct ?

How is it different from a code ?
Code of ethics and conduct

 Consider the distinction between:

 “What action should I take?”
 “What kind of person should I be?”

 Codes of conduct are prescriptive

 They eliminate what code of ethics are build upon?
 Uncertainty
 Variability
 Necessity of judgement and discretion
Continued….
 Any statement that tells somebody to do anything is a prescriptive
 - “Treat people as you did like to be treated.”

 Regulations, laws, or directives are prescriptive in a different sense:

 They prescribe specially what to to
 - “ No smoking allowed within 9 meters.”
 - “ employees must wash their hands before returning.”

 Code of ethics are prescriptive in the first sense.

 They empower people to use their judgements.
Code of Ethics & aspirations

Code of Ethics are also aspirational.

Code of ethics are also aspirational.
Encourage us to strive for highest standards of
judgements.
Code of Conduct & Empowerment

Code of conduct tell employees and the public

of what the company believes is acceptable
behavior
What might be a short coming of code of
conduct
Ethical Empowerment (pg. 228-229)

Ethical empowerment
The delegation of authority for ethical
decision making.
It is a top-down notion
Trust goes in both hands.
Firm trusts managers/employees.
Managers/employees trust firm.
Accountability and Responsibility

What is accountability?
Focuses attention on rules and regulations
rather than judgement.
What do calls for accountability often
produce.
Continued..

Rules and regulation are no replacement for

judgement.
Accountability system signify an environment
of diminished trust.
For better and worse…
Back to Codes

Codes of conduct may not empower, but they

have the advantage of producing uniformity.
Other benefits?
A code of conduct also forces us to think
through what are values are.
Professional & Business Codes (pg. 235)

What is a
Professional Code?
Business Code?
Industry Code?
General Statement of Values & guiding
principals
A code of ethics acts as a unifying device,
An organization commits itself to ethical
principals as a foundation for how it will operate.
Competence And professional Standards

A profession is an enterprise that is socially

justified.
The element of a code of ethics don’t come
after the business activity; they are part of its
foundation.
Personal and Professional behavior.

Code of ethics provides guidance in cases that

are morally complex.

Positive and negative.

Social Responsibility and the environment

A code of ethics specifies the responsibilities an

organization has towards society, not just its
stakeholders and customers.
Business set the parameters of the responsibilities
they have towards society.
Financial ability determines determines the
extent of responsibility
Interpretation, Enforcement and Sanctions

A code is something other than in law.

A law of ethics embodies the objectives of the
business and its considered ways of reaching
than.
Ethical codes must have substance in 2
ways:
The code must prescribe something that is
identifiable.
There must be sanctions attached to the code.
Two brief stories of Industry codes

US legislated incentives to develop ethics

programs and codes.
Federal sentencing guidelines for
organizations.
Canada is historically more principals.
The Banking Industry code of Prestice

 The Canadian Banker’s Association (CBA)

 Voluntary COC
 A set of non-legislated commitments made by a company or
organization to influence or control because behavior in the interest
of protecting the industry, its customers and others stakeholders.

 These codes are not legislated and are not a mandatory

requirement for membership in the CBA; many banks have internally
generated code of conduct.
Summary

 Code of ethics
 Aspirational (virtuous)
 State values and allow for assessment.
 Self-regulation.
 Contribute to empowerment and trust (core ethical
values)
 Made publicly available and thus can contribute to
improved relations with society, not just customers, or
those with a ‘holding’).
Next Week

Chapter 6: Corporate Governed.

What is the principal-agent problem?

Chapter 8: Equal opportunity, discrimination and

affirmative action.
What is the ethical basis for being concerned
with discrimination in the workplace?