Chapter 7: Business Ethics Fundamentals
Intentional Amoral Management
-*Does not consider ethical factors* -Don't think ethics and business should "mix." -Business and ethics exist in separate spheres. -A vanishing breed.
National Business Ethics Survey Findings
-*Observed ethical misconduct* at work has decreased slightly, from 49% to 45%. -*Reporting bad behavior* (whistle-blowing) is on the rise. from 63% to 65%. -*Retaliation* against those who report misconduct has increased sharply, to 22% experienced retaliation. -*Pressure to compromise* is near the all-time high. -*Weak ethical cultures* - the percentage of companies with weak ethics cultures increased to almost record levels.
Immoral Management
-An approach *devoid of ethical principles* and an active opposition to what is ethical. -The operating strategy of immoral management is focused on exploiting opportunities for corporate or personal gain.
*Conventional Approach* (WILL BE ON TEST)
-Based on how the average person views business ethics, and on common sense. -quick, fast, and fatally flawed -Copy, memic, conform -What do other people do? -No need to think
Unintentional Amoral Management
-Casual or *careless about ethical factors*. -Don't consider the ethical dimension of decision- making. -Don't "think ethically." -Have no "ethics buds." -Well-intentioned, but morally casual or unconscious. -Ethical gears are in neutral.
Characteristics of Moral Managers:
-Conform to the *highest standards* of ethical behavior or professional standards of conduct. -*Ethical Leadership* is commonplace. -Their goal is to *succeed within the confines of sound ethical precepts* -Demonstrate *high integrity* in thinking, speaking and doing. -Follow both the *letter and the spirit of the law* -Possess an *acute moral sense* and moral maturity -Moral managers are *the "good guys"*
Three Major Approaches to Business Ethics
-Conventional Approach -Principles Approach -Ethical Tests Approach
Normative Ethics
-Focuses on *what ought or should be* occurring. -Demands a more meaningful moral anchor than just "everyone is doing it." -is our primary concern in this text
Positive Ethical Behaviors of Moral Leaders
-Giving proper credit where it is due -Being straightforward and honest with other employees -Treating all employees equally -Being a responsible steward of company assets -Resisting pressure to act unethically -Recognizing and rewarding ethical behavior of others -Talking about the importance of ethics and compliance on a regular basis
Is Society Changing?
-History shows that a good number of what are now called unethical practices were at one time considered acceptable. -Or it may be that those practices never were acceptable to the public, but because they were not known, it seemed they were tolerated.
Three Models of Management Ethics
-Immoral Management -Moral Management -Amoral Management
Characteristics of Immoral Managers
-Intentionally do wrong -Are Self-centered and self-absorbed -Care only about self or organization's profits or success -Actively oppose what is right, fair, or just -Exhibit no concern for stakeholders -Are the "bad guys" -*An ethics course probably would not help them*
Descriptive Ethics
-Involves describing, characterizing, and studying morality. -Focuses on *what is* occurring.
Business Ethics
-Is concerned with morality and fairness in behavior, actions, and practices that take place within a business context. -Is the study of practices in organizations and is a quest to determine whether these practices are acceptable or not.
Are the Media Reporting Business Ethics More Vigorously?
-It is sometimes difficult to tell whether business ethics have really deteriorated or whether the media is doing a more thorough job of reporting ethics violations. -There is no doubt that news media outlets are reporting ethical problems more frequently and fervently. -The media had a field day with the Bernie Madoff Ponzi scheme which defrauded thousands of investors out of $50 billion. -Investigate reporting on ethics has been shown on *60 Minutes, 20/20, Dateline NBC, Rock Center and Frontline*.
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
Two Hypotheses Regarding Moral Management Models
-Population hypothesis -Individual hypothesis
*Norms prevalent in business include* (Will be on Test)
-Respect for the authority structure -Loyalty to bosses and the organization -Conformity to principles and practices -Performance counts above all else -Results count above all else
Examples of Immoral Management
-Stealing petty cash -Cheating on expense reports -Taking credit for another's accomplishments -Lying on time sheets -Coming into work hungover -Telling a demeaning joke -Taking office supplies for personal use -Showing preferential treatment toward certain employees -Rewarding employees who display wrong behaviors -Harassing a fellow employee
Making Moral Management Actionable
-The characteristics of immoral, moral and amoral management provide *benchmarks for managerial self-analysis*, and help managers recognize the need to move from the immoral or amoral ethic to the moral ethic. -*Amoral management* is a morally vacuous condition that *can easily be disguised* as an innocent, practical, bottom-line philosophy. But it is the bane of the management profession. -Most managers are not "bad guys," but *managerial decision-making cannot be ethically neutral*. Both immoral and amoral management must be discarded and the process of developing moral judgment begun.
Ethics and the Law
-The law and ethics can overlap in many respects. -The law is a reflection of what society thinks are minimal standards of conduct and behavior.
Business Ethics Scandals
-The public's interest in business ethics is at an all-time high, spurred by scandals. -The Enron scandal impacted business so greatly it is called "*The Enron Effect.*" But then followed more scandals: -Worldcom, Tyco, Arthur Andersen -And then the Wall Street financial scandals: -AIG, Bear Stearns, Lehman Bros, Fannie Mae, Freddie Mac, and Bernie Madoff -Business will never be the same.
The Public's Opinion of Business Ethics
-The public's view of business ethics has never been very high. -Anecdotal evidence suggests that many people see business ethics as an oxymoron, and think that there's only a fine line between a business executive and a crook. -A Gallup poll taken in December, 2012, revealed that only 21 % of the public thought business executives had high or very high ethics.
Habits of Moral Leaders
-They have a *passion to do right*. -They are *morally proactive*. -They *consider all stakeholders*. -They have a *strong ethical character*. -They have an *obsession with fairness*. -They undertake *principled decision- making*. -They *integrate ethics wisdom* with management wisdom.
*Research of illegal corporate behavior* focuses on two questions:
-What leads firms to behave illegally? -What are the consequences of engaging in illegal behavior?
The Danger of Ethical Relativism
A serious danger of using the conventional approach to business ethics is:
Ethical Egoism
An ethical principle based on the idea that the individual should seek to maximize his or her own self interests as a legitimate factor.
Ethical Tests Approach
Based on short, practical questions to guide ethical decision making and behavior and practices.
Principles Approach
Based on the use of ethics principles to justify and direct behavior, actions, and policies.
Moral Management
Conforms to *highest standards of ethical behavior* or professional standards of conduct.
Amoral Management
Different in nature from the others, it has two kinds: -Intentional -Unintentional
Ethical Relativism
One picks and chooses which source of norms one wishes to use based on what will justify current actions or maximize freedom.
Population hypothesis
The distribution of the three models approximate a normal curve, with the amoral group occupying the large middle part of the curve and the moral and immoral categories occupying the tails.
Individual hypothesis
Within the individual manager, these three models may operate at various times and under various circumstances.
The Conventional Approach to Business Ethics
involves a comparison of a decision or practice to prevailing societal norms.
Ethics
is the discipline that deals with moral duty and obligation
Moral Conduct
relates to principles of right, wrong, and fairness in behavior.
