BUSINESS AND

PROFESSIONAL ETHICS
Unit 6:
CORPORATE COMPLIANCE
CONTEXT
Approach 1: Changing Organizational
Culture
 Culture – major force that influences ethics in
organizations
 Organizational Transformation

Culture & Ethical Audit

 Information Analysis and Diagnosis
 Specific intervention strategies
Approach 1: Changing Organizational Culture,
Cont’d.
Formal Intervention strategies- focus
• Recruiting and developing ethical leaders
• Formulating and developing ethical structures
• Implementing ethical policies
• Creating and facilitating code of ethics
Approach 1- Changing Organizational
Culture, Cont’d.
Informal intervention strategies- focus
• Norms
• Heroes
• Ceremonies
• Rituals
• Stories
Approach 2- Structuring an Ethical
Programme for the Organization
Creating an Ethical Department or Office with
• Ethical Ombudsman
• Ethics Officer
• Ethics Committee
Approach 2: Structuring an Ethical
Programme for the Organization, Cont’d.
 Communication of Ethics using
oFormal and informal communication channels
oConsider
• Audience (good soldiers, loose canons, grenades)
• Ethical dilemmas/issues
• Ethical channels
Approach 2: Structuring an Ethical
Programme for the Organization, Cont’d.
Mission Statement/ Value Statement
oValue statement
oManual – procedures and practices
oCode of Ethics
oEthics-orientation, training and development
Approach 3: Managing Ethical Conduct in
the Global Environment
Context
• Orientation, training and development
• Language
• Cultural awareness (type-culture)
 Individualism vs collectivism
 Power Distance
 Uncertainty avoidance
 Quantity vs Quality of Life
(Hofstede’s Framework/ Model)
Approach 4: Global Ethical Issues
Human rights
 Child labour
 Low wage

 Price Discrimination
 Dumping
 Price gouging
 Bribery
 Harmful/deceptive products
Approach 5: MNCs; definition,
characteristics –context/ sovereignty
Definition: Corporations that own and control
production or service facilities outside the country in
which they are based
Characteristics: Operating in at least two countries;
earning 25 -45% of their revenue from foreign market;
having common ownership, resources, and global strategies
Benefits: Hire local labour. Create new jobs, provide
business learning skills
Part 5 – MNCs; definition, characteristics –context/
sovereignty, Cont’d.
• Work with integrity
• Respect the human rights of the country
• Work with integrity
• Respect the human rights of the country
• Demonstrate social responsibility/ equity
• Refrain from possible international harm to citizen of the
hose country
• Pay- share of taxes etc.
• Respect local culture
 PROFESSIONALISM:
WHO IS A PROFESSIONAL?
• Professionals - derive their income from their expertise
or specific talents.
• Conforms to and seeks to develop enhance, and enable
Codes of Ethics.
• Character building/enhancement (integrity).
 OBLIGATIONS
Professionals have obligations to their :
• Employer
• Clients/Customers
• Colleagues
• Society
BREACHES TO INDIVIDUAL
RESPONSIBILLITY
Types of breaches:

• Negligence

• Failure to provide competent service and/or information

• Gross negligence
PROFESSIONAL
OBLIGATIONS/STANDARDS:
• Work to the highest standards of professionalism

• Attain highest level of performance

• Not to violate the public/stakeholder’s interest

CHARACTERISTICS OF A/THE
PROFESSION
• Code of ethics & rules

• Disqualifications of unqualified practitioners

• Educational development
CHARACTERISTICS OF A/THE
PROFESSION, Cont’d (Identifiable
adversities):
Failure to apply ethical standards create:

Opportunity for misconduct

Opportunity for misrepresentation

 PROFESSIONAL CODES:-
• Accounting ethics, engineering ethics refer to the
codes that guide the professional conduct of
accountants, engineers medical. Health, teaching
among other professionals
 PURPOSE OF CODES
• Guidance
• Provide standards
• State expectations
 UNIVERSAL ETHICAL
PRINCIPLES
Universal ethical principles form the basis of
professional codes. These include:
• honesty
• trustworthiness
• loyalty
• avoiding harm to others
• accountability cont’d.
Universal ethical principles, cont’d.
• respect for others
• adherence to the law
• doing good
WHO BENEFITS?
Professional codes/conduct benefit:
• Public
• Clients
• Members of the profession
• Profession
• Others interacting with profession
GUIDING PRINCIPLES:
INTEGRITY

PROFESSIONAL COMPETENCE

OBJECTIVITY –

CONFIDENTIALITY
 Corporate Compliance
Summary/Reflections
Prescriptive Approach to Ethical Decision Making in
Business - The following approaches are advised:

Focus on Consequences (Consequentialist Theories)

This theory argues that when a decision is being made
and you are attempting to decide what is right or wrong
you should focus on the result or the consequences of
the decision or action. (Utilitarian Principle)
Focus on Duties, Obligations and Principles (Deontological
Theories)
This theory bases decisions about what is right on moral principles, which
include the following:

a. Honesty
b. Keeping a Promise
c. Fairness
d. Right to Safety and Privacy
e. Justice and respect for all person and property.

This principle argues that some moral principles are binding, regardless of the
consequences. Therefore, some actions would be considered wrong even if the
consequences of the actions were good.
Deontological Theories, cont’d.

 Focus on Integrity (Virtue Ethics) – The Virtue Ethics

approach focuses more on the integrity of the moral actor
than on the moral act itself. This approach considers
primarily the actor’s:
a. Character
b. Motivations
c. Intentions.
Eight Steps to Sound Ethical Decision Making in Business

1.Gather the Facts

a.Ask yourself how did the situation occur?
b.Are there historical facts that I should know
c. Are there facts concerning the present situation that I should
know
Eight Steps to Sound Ethical Decision Making in Business,
cont’d.

2. Define the ethical Issues (There could be multiple issues

to be address)
3. Identify The Affected Parties (be able to see the
situation through others’ eyes). Which one of the stakeholders
is affected?
Eight Steps to Sound Ethical Decision Making in Business,
cont’d.

4. Identify The Consequences (After identifying the

affected parties, think about the potential consequences for
each parties. (Who could be harmed if a decision is taken in a
particular way?). Pay attention to the following:
a. Long-term vs. Short-Term consequences
b.Symbolic Consequences
 Eight Steps to Sound Ethical Decision Making in Business, cont’d.

5. Identify the Obligations – Identify the obligation involved

and the reasons for each (Think in terms of values, principles,
character, or outcomes)

6. Consider Your Character and Integrity – Think about

what you should do in an ethical dilemma, it can also be useful to
consider what your relevant community would consider to be the
kind of decision that an individual or integrity would make in the
situation. Then, you have to determine how community members
would evaluate the decision or action you are considering.
Eight Steps to Sound Ethical Decision Making in
Business, cont’d.
7. Think Creatively about Potential Actions – Before making
any decision, be sure that you have not unnecessarily forced
yourself into a corner. Are you assuming that you have only two
choices?

8. Check Your Gut Feeling.

Practical Preventive Medicine/Measures:-
 Doing your Homework – This involves:
a. Read your Company’s Code of Ethics
b. Ask questions of your managers and executives when you are
not certain what to do.
c. Develop relationships with people who are outside of your
chain of command (get to know people in HR, Legal
Department Audit Department.
When You are asked to make a Snap Decision:
Consider the following when a quick decision must
be made:
a. Do not underestimate the importance of a hunch to alert you that you
are facing an ethical dilemma. (Gut feeling)
b. Ask for time to think it over
c. Find out quickly if the organization has a policy that applies to the
decision.
d. Ask your manager or your peers for advice.
e. Use The New York Times test (If you are embarrassed to have your
decision disclosed to the media or to your family, don’t do it.
DECIDING WHAT IS RIGHT: A
PSYCHOLOGICAL APPROACH

•Moral Awareness and Moral Judgement – If a decision maker is

engaged in moral judgement process (those discussed in
chapters/references 4), he or she must first recognize the ethical
nature of the situation at hand. MORAL AWARENESS - MORAL
JUDGEMENT.

•With moral awareness, a situation or issue is interpreted as a

moral or ethical issue.
•Individual Differences, Moral Judgement and Ethical
Behaviour – When people are hired, they come with different personalities
i.e. individual predisposition to think and behave in certain ways. Research has
shown that individual traits influence the way people think and behave to ethical
dilemmas. These traits are:

 Cognitive Moral Development - Lawrence Kohlberg moral reasoning theory

is a cognitive development theory that focuses primarily on how people decide
what course of action is morally right. The cognitive moral development
theory proposes that moral reasoning develops sequentially through three
broad levels. These are:
Level 1- Pre-conventional

a. Stage 1- Obedience and Punishment Orientation, that is:

Sticking to the rules and avoid physical punishment. Obedience
for his own sake.

b. Stage 2 – Instrumental Purpose and exchange, that is:

Following rules when it is in one’s immediate interest. Right is
an equal exchange, a fair deal.
2. Level 11- Conventional

c. Interpersonal Accord, Conformity, Mutual Expectations -

Stereotypical “good” behaviour. Living up to what is expected
by peers and people close to you.

d. Social Accord and System Maintenance – Fulfilling duties

and obligations of social systems. Upholding laws except in
extreme cases where they conflict with fixed social duties.
Contributing to the society or group.
3. Level 111 – Postconventional or Principled

e. Social Contracts and Individual Rights – Being aware that

people hold a variety of values; that rules are relative to the
group. Upholding rules because they are social contracts.
Upholding non-relative values and rights regardless of the
majority opinion.

f. Universal Ethical Principles – Following self-chosen

ethical principles of justice and rights. When laws violate
principles, act in accord with principles.
 Are Women and Men Different? – Carol Gillian argues
that men focus almost exclusively on justice while female
focus on care.

 Looking Up and Looking Around – It is established that

most adults are at the conventional level of cognitive moral
development i.e. they are highly susceptible to external
influences. Their decision about what is morally right is
linked to what others think or say about them. There, they
look at what their superiors and their peers are doing or
saying and use these as cues to guide their action.
Autonomous Thinking and Action – Higher stage
thinking is more independent of these external
influences. The postconventional principled thinker
(representing a minority of people) has developed his
or her own justice and rights-based principles that
guide ethical decision making.
•Locus Of Control – Locus of control is another individual
characteristic that has been found to influence ethical conduct. Locus
of control refers to an individual’s perception of how much control
he or she exerts over the events in life. There are two types of locus
of control, these are:

1. High Internal Locus of Control – This is where the individual

believes that outcomes are primarily the result of his or her own
efforts.

cont’d.
•Locus Of Control, cont’d.

2. High External Locus of Control believes that life events are

determined primarily by fate, luck or powerful others.

3. Locus of control is not something that someone is born with,

instead it is shaped by one’s environment and can change.

THE END (ADAPTED).