Business Ethics Exam 1

Ethical Decision Making traditions focus on

- Ends (consequentialism): utilitarianism, egoism, enlightened self-interest - Actions-means (deontology): rights, duties, golden rule, categorical imperative - Process (justice-based ethics) - Agents/persons (virtue ethics)

Rights

- Entitlement to do something without interference from other people or entitlements that obligate others to do something positive to assist you

Justice

- Equal or Fair treatment - Consistent Administration of Rules - Restitution

External vs Internal stakeholders

- External: such as government, consumers, the natural environment, community members - Internal: employees, those involves in corporate governance and others.

Behavioral Ethics

- Helps us to understand many of the behavior process that are taking place...

Ethics of Care as Alternative to Kohlberg

- Level 1: Self is sole object of concern - Level 2: Establish connections and participate in social life - Level 3: Recognize their own needs and the needs of others

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

Top management leadership

- The moral tone of an organization is set by top management - top management is like an organizations conscience - look up to managers and bosses to what cues are accpetable

Iron Law of Responsibility

- Those who do not use power in a manner society considers responsible tend to lose it

Ethics Programs include

- Written standards of conduct - Ethics Training - Mechanisms to seek ethics advice or information - Methods for reporting misconduct - Inclusion of ethical conduct in employee performance - Disciplinary measures for employees who violate ethical standards - A set of guiding values/principles

Social Problem

A gap between societal expectations for social conditions and social realities

Sustainable development

A pattern of resource use that aims to meet current needs while preserving the environment for future generations

Ethical Egoism

Every individual should seek maximize his/her self interest

Overconfidence bias

people may be more confident of their moral character than they have reason to be

Ill-conceived goals

poorly set goals that encourage negative behavior

Morals

standards of conduct that originate within the individual

Ethics

- Refers to issues of right, wrong, fairness and justice - standards of conduct, which originate from some external group or source such as society, in general or business in particular

Segments of the Macroenvironment

- Social: Demographics, lifestyles, social values - Economic: Nature and direction of the economy in which business operates - Political: Processes for passing of laws and election of officials. Interactions between firms, politics, and government. - Technological: Changes in technological advancements taking place in society.

Examples of Immoral Management

- Stealing petty cash, cheating on expense reports, taking credit for others accomplishments, coming into work hungover, tell a demeaning joke, taking office supplies for personal use, show special treatment toward certain employees, rewarding employees who display wrong behaviors and harassing employees.

Compliance Programs

- Structure - Oversight - Due Diligence - Communication - Monitoring - Promotion and Enforcement - Response

Moral Equilibrium

A tendency for people to keep an ethical scoreboard in their heads and use this info to make future decisions

Framing

Ethical judgements are affected by how an issue is posed, if posed as an ethical issue

Utilitarianism

Every individual should seek to bring abut the greatest good for the greatest number of people

Prima Facie Principles

Fidelity, reparations, gratitude, justice, beneficence, self improvement, not harming innocent people

Elements in the Social Contract

Laws or Regulations (aka the Rules of the game) are a two-way shared understanding of each other (Business and Society/Societal Stakeholder groups)

Incrementalism

a pre-dispositional toward the "slipery slope"

Role Morality

a tendency to use different ethical standards for different roles in life

Disclosure rule (sunshine law)

can action be justified if it becomes public knowledge

The slippery slope

causes people not to notice others' unethical behavior when it gradually occurs in small increments

Bounded Ethicality

occurs when managers and employees find that behaving ethically is difficult because of various organizational pressures

Indirect Blindness

one holds others less accountable for unethical behaviors when they are carried out through third parties

motivated blindness

overlooking the questionable actions of others when it is in one's own best interest

Overcoming values

the act of letting questionable behaviors pass if the outcome is good, can occur when managers put more emphasis on results rather than on how the results are achieved

Urgent vs Enduring Issues

Short-term: Issues or crises arise on the spur of the moment and management must formulate quick responses Long-Term: Issues or problems are a long-term concern and management must develop a thoughtful organizational response

Moral Management

- Conforms to highest standers of ethical behavior or professional standards of conduct

Amoral Management

- Different in nature from the others, it has two kinds: 1. Intentional (does not consider ethical factors) 2. Unintentional (Casual of careless about ethical factors)

Golden Rule

- Do unto other as you would have them do unto you - Every individual has a right to be consulted on matters that affect them \

The Source of Ethical Norms

- Fellow Workers - Family - Friends - The Law - Religious Beliefs - Local Community - Regions of Country - Profession - Employer - Society at Large

Positive ethical behaviors of moral leaders

- Giving proper credit to where it is is due - Being straightforward and honest with others - 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 we call unethical were at once considered acceptable - or they were tolerated, even is not accepted publically - perceptions and expectations are significantly driving businesses' reputations

Ethical Decision-Making process

- Identify action/decision/behavior - Articulate dimensions of proposal - Ethics screen (Conventional/personal approach, Principles/justice approach, Ethical tests/common sense approach) - Course of action - Engage in course of action - Repeat

Stakeholders

- Individuals or groups with which business interacts and who have a vested interest in the firm

Ethical questions

- Inevitably and continually come into play during business operations - Permeate business's activities as it attempts to interact with major stakeholder groups

Characteristics of Amoral Managers

- Intentionally Amoral Managers: Don't think ethics and business should "mix", business and ethics exist in seperate spheres, a vanishing breed - Unintentionally Amoral Managers: Don't consider the ethical dimension of decision making, don't "think ethically", have no "ethical buds", well intentioned but morally casual or unconscious, ethical gears are in neutral - can easily be disguised and an innocent, practical, bottom-line philosophy

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" - Ethics course would probably not help them

Descriptive Ethics

- Involves describing, characterizing, and studying morality - focuses on *what* is occuring

Kohlberg's Levels of Moral Development

- Level 1: Pre-conventional level (focusing on "the self" by reacting to punishment and seeking rewards) - Level 2: Conventional Level (focusing on others by having a good boy/ nice girl morality and having a law and order morality) - Level 3: Post-conventional, autonomous, or principled level (focusing on humankind by having a social-contract orientation and having a universal ethical principe orientation)

A Managerial Approach

- Managers are practical and have begin to deal with social/ethical concerns in ways similar to those they use to manage traditional business functions such as marketing, finance, operations and risk management - managers have been able to convert unmanageable concerns into ones that can be dealt with in a balances and impartial fashion - Managers have had to integrate traditional economic and financial considerations with ethical and social considerations

Elements of Moral Judgement

- 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

Ethical Relativism

- One picks and chooses which source of norms one wished to use based on what will justify current actions or maximize freedom

A Pluralistic Society

- Prevents power from being in just a few hands - Maximizes freedom of expression/action and strikes a balance between monism and anarchy - The allegiance of individuals to groups is dispersed - Widely diversified set of loyalties to many organizations, and minimizes the danger that a leader of any one organization will be left uncontrolled - provides built-in set of checks/balances in that groups can exert power over one another with no single organization (business or govt) dominating and becoming overly influential

Sustainability Audit

Helps to identify sustainability issues within an organization

The General Criticism of Business

Use and Abuse of Power

Society

- A community, nation, or broad grouping of people with common traditions, values, institutions and collective activities and interests. - is the microenvironment in which businesses operate.

Business Power

- A lot of criticism - the capability of ability to produce and effect, have impact, or to bring influence to bear on a situation or people

Corporate Transparency

- A quality, characteristic, or state in which activities, processes, practices and decisions that take place in companies become open of visible to the outside - The degree to which an organization... provides public access to info, accepts responsibility for its actions, makes decisions openly, establishes incentives for leaders to uphold standards

The Danger of Ethical Relativism

- A serious danger of using the conventional approach to business ethics

Factors in the Social Environment

- Affluence and Education: creating higher expectations of major institutions; Growing public awareness through television, movies, the internet and social media. - Revolution of rising expetations: creates a social problem that can lead to entitlement mentality, rights movement, victimization philosophy

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

Duties

- Are obligations to act in a certain way, and they typically arise because people have rights - the existence of a right implies the existence of a correlative duty - can arise from voluntarily assumed obligations ( or from absolute authority)

Factors Affecting Organization's moral climate

- Behavior of superiors: the number one influence on moral - Behavior of one's peers: the second influence; people do pay attention to what their peers in the firm are doing - Industry of professional ethical practices: ranked in the upper half; these context factors are influential - Personal financial need: ranked last

Business and Relationships

- Community: Environmental groups/general public - Owner: Corporate Raiders, private citizens, institutional investors - Consumer: consumer activists, Product Liability threats - Employee: Unions, Older employees, Women, Minorities, Civil Liberties Activists - Government: Local, State, Federal

The Sarbanes-Oxley Act

- Companies are required to protect whistle blowers without fear of retaliation - It is a crime to alter, destroy, conceal, cover up, or falsify documents to prevent their use in a federal gov't lawsuit

Effective Communication of Ethical messages require

- Written, verbal communication, non-verbal communication - Candor (forthright, sincere, and honest) - Fidelity (be faithful to detail, accurate, avoid deception or exaggeration) - Confidentiality (care in deciding what information to disclose to others)

Virtue Ethics

- characteristics or virtues that make you a "good" person - To be virtuous takes practice (aka fake it until you make it)

Normative Ethics

- focuses on *what ought* or *should be* occurring - Demands a more meaningful moral anchor then just "everyone is doing it" - Primary concern in the text

Business Ethics

- focuses on ethical issues that arise in the commercial realm - concerned with rightness, wrongness, fairness, or justice of actions, decisions, policies, and practices that tale place within a business context or in the workplace - study of practices in organizations and is a quest to determine whether these practices are acceptable or not

Sustainability

- has become one of business's most pressing mandates - Embraces criteria which are Environmental, economic, social - concerns the ability of businesses to survive and thrice over the long term

Habits of moral leaders

- have a passion to do right - morally productive - consider all stakeholders - have a strong ethical character - have an obsession with fairness - they undertake principle decision making - they integrate ethics wisdom with management wisdom

The conventional approach to Business Ethics

- involves a comparison of a decision or practice to prevailing societal norms - Decisions/behaviors/practice vs Prevailing norms of acceptability

Special Interest Groups

- make life more complex for business and govt - # in tens of thousands in societies - Pursue their own focused agendas - Are active, intense, diverse, and focused - Can attract significant following - Work at cross purposes, with no unified goals - *A special-interest society is pluralism taken to the extreme*

Realistic Objectives

- managers must be sensitive to the possibility of unintentionally creating situations in which others perceive a need to cut corners or do the wrong thing - Unrealistic: primary driver of employees perceiving excessive pressure to achieve goals

Rights and duties often conflict

- my own duties may conflict - my rights may conflict with your rights - My duties may conflict with your duties

The Publics opinion on business ethics

- never been very high - 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 - only 17% of the public through business execs has high or very high ethics

Norms prevalent in business include

- 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

Characteristics of Moral Managers

- they 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/doing - Follow both the leet and the spirit of the law - Possess an acute moral sense and moral maturity - Moral managers are the "good guys"

Goal of managers

- to create moral decisions, moral managers and more organizations - the ideal is to create a moral organization that is fully populated by moral managers making moral decisions

Spheres of Corporate power

1. Economic 2. Social/Cultural 3. Technological 4. Individual 5. Environmental 6. Political

Ethics, Economics, and Law

1. Ethical Responsibility+Legal Responsibility+Economic Responsible: Profitable, legal, ethical (Go for it) 2. Ethical Responsibility+Legal Responsibility: Legal and ethical but not profitable (find profitable ways first) 3. Economic Responsibility+Legal responsibility: Profitable and legal (proceed cautiously) 4. Ethical Responsibility+Economic Responsibility: Profitable and Ethical.. probably legal too (proceed cautiously)

Compliance vs Ethics Orientation

1. Ethics thinking is principles based, compliance thinking is rule-bound and legalistic. A compliance orientation can undermine ethical thinking 2. Compliance can squeeze out ethics 3. Managers many not consider tougher issues that a more ethics-focused approach might require.

The 3 Models of Management Ethics

1. Immoral Management 2. Moral Management 3. Amoral Management

Ethical Issues and how they arise at different levels

1. Personal Level: situations faced i our personal lives outside the context of our employment 2. Managerial and Organizational levels: Workplace situations faced by managers and employees 3. Industry or profession: A manager or organization might experience business ethics issues at the industry or professional level 4. Societal and global levels: Managers acting in concert through their companies and industries can bring about constructive changes

Key elements that must exist is an ethical organizational culture is to be developed and sustained

1. The continuous presence of ethical leadership 2. The existence of a set of core ethical values 3. A formal ethics program which includes a code of ethics, ethics training, and an ethics officer

Levels of Corporate Power

1. Macro-level (business system) 2. Intermediate Level (Several firms) 3. Micro-level (A single firm) 4. Individual Level (A single executive)

Two pillars of Leadership

1. Moral Person: Traits, behaviors, decision making 2. Moral Manager: Role Modeling, Ethics communication, Effective rewards and discipline

Why managers and employees behave ethically

1. Most of us: do it to avoid some punishment and to receive some reward 2. Many of us: do it to be responsive to family, friends and superiors, and to be a good citizen 3. Very few of us: do it to do what is right and pursue some ideal

Two Hypotheses regarding moral management models

1. 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 2. Individual hypothesis: within the individual manager, these three models may operate at various times and under various circumstances

Types of Ethical Principles

1. Teleological theories: focuses on consequences of results of an action 2. Deontological Theories: focuses on duties, without regard to consequences 3. Aretaic theories: focuses on the virtue of an action

Questions focused from Research of illegal corporate behavior

1. What leads firms to behave legally? 2. What are the consequences of engaging in illegal behavior?

Ethics Audits

Intended to carefully review such ethics initiatives as ethics programs, codes of conduct, hotlines, and ethics training programs

Consequentialist/Teleological Theories

Only consequences matter in determining right and wrong.

Self-serving bias

People may process information in a way that supports their preexisting beliefs and self-interest

Fraud Risk Assessment

Review processes that identify and monitor conditions that may pertain to the company's exposure to compliance/misconduct risk and to review methods for dealing with concerns

Nonconsequentialist/Deontological Theories

Right and wrong are determined by more than consequences.

Rights-based ethics

Right of free consent, right of privacy, right of freedom of conscience, right of free speech, right of due process

Conformity Bias

The tendency people have to take their cues for ethical behavior from their peers (rather than exercising their own judgement

Business

The collection of private, commercially oriented organizations ranging in size from one-family proprietorships to multinational corporations.

Macroenvironment

The total environment outside the firm, the comprehensive societal context in which the organization resides.

Managerial Ethics and Ethical Principles

Three major approaches to ethical decision making 1. Conventional Approach:involves a comparison of a decision or practice to prevailing societal norms 2. Principles Approach: Managers desire to make decisions based on a more solid foundation than is provided by the conventional approach to ethics AND a principle of business ethics is an ethical concept, guideline, or rule that assists you in taking the ethical course 3. Ethical tests approach