Ethics Exam 1

Explain and ethical dilemma and apply a process to resolve it

An ethical dilemma is a situation in which there is no obvious right or wrong decision, but rather a right or right answer. In such cases you are required to make a choice even though you are probably leaving an equally valid choice unmade and contradicting a personal or societal ethical value in making that choice. There is no definitive checklist for ethical dilemmas because the issues are often situational in nature. Therefore, the best hope for a "right" choice can often fall to the "lesser of two evils" and an outcome you can live with. Arthur Dorbin offers eight questions that you should be asked to ensure that you have as much relevant information available as possible (in addition to a clear sense of what you don't know) as to the available choices, the actions needed for each choice, and the anticipated consequences of each choice.

Instrumental vs social contact approach to CSR

An instrumental approach to CSR takes the perspective that the only obligation of a corporation is to make profits for its shareholders in providing goods and services that meet the needs of its customers. Corporations argue that they meet their social obligations through the payment of federal and state taxes, and they should not, therefore, be expected to contribute anything beyond that. Critics of the instrumental approach argue that it takes a simplistic view of the internal process of a corporations in isolation, with no reference to the external consequences of the actions of the corporation and its managers. The social contract acknowledges that there is a world outside that is impacted by the actions of the corporation, and since the corporation depends on society for its existence and continued growth, there is an obligation for the corporation to meet the demands of that society rather than just the demands of the targeted group of customers.

Determine potential conflicts of interest within any organizational function

Any situation in which one relationship or obligation places you in direct opposition with an existing relationship or obligation presents a conflict of interest. Selling the product with the highest profit margin of the company rather than the product that best meets the customer's need is one example.

comply or explain

Cadbury report argued for the guideline which gave companies the flexibility to comply with governance standards or explain why they do not in their corporate documents. Critics argue that comply or explain offered no real deterrent to corporations, so a shift occurred.

GAAP

Generally Accepted Accounting Principles - standard operating procedures within the industry

Discuss ethical relativism

In the absence of a truly comprehensive theory of ethics and a corresponding model or checklist to guide them, many people choose to approach ethical decisions by pursuing the comfort of an ethical majority that reflects a combination of the traditions of their society, their personal opinions, and the circumstances of the present moment. This relativist approach offers more flexibility than the pursuit of definitive black-and-white rules. However, the pursuit of an ethical majority in a peer pressure situation can sometimes have negative consequences.

define organizational ethics

Organizational ethics can be considered as an area of study separate from the general study of ethics because of the two distinct issues: - other parties (the stakeholders) have a vested interest in the ethical performance of an organization - in a work environment, you may be placed in a situation where your personal value system may clash with the ethical standards of the organization's operating culture (the values, beliefs, and norms shared by all the employees in that organization).

CRAFTED

good corporate governance is a culture and climate of Consistency, Responsibility, Accountability, Fairness, Transparency, and Effectiveness that is Deployed throughout the organization. While the acronym sets an appropriate tone, it does not offer any specific guidance on setting performance benchmarks or comparative measures of effective governance as compared to other organizations.

ethical dilemma

a situation that requires selecting between conflicting values that are important to the employee or the organization

stakeholders

all people relevant in an organization and their respective interests in the ethical operation of that organization

Corporate social responsibility

also referred to as corporate citizenship or corporate conscience - may be define as the actions of an organization that are targeted toward achieving a social benefit over and above maximizing profits for its shareholders and meeting all its legal obligations

Describe and explain corporate social responsibility

also referred to as corporate citizenship or corporate conscience - may be defined as the actions of an organization that are targeted toward achieving a social benefit over and above maximizing profits for its shareholders and meeting all its legal obligations. Typically, that "benefit" is targeted towards environmental issues, such as reducing pollution levels or recycling materials instead of dumping them in a landfill. For global organizations, CSR can also involve the demonstration of care and concern for local communities and indigenous populations.

The Kyoto Protocol

an agreement between 160 countries that became effective in 2005 (and which the US has yet to sign) - required developed nations to reduce their greenhouse gas emissions either by modifying their own domestic industries or funding projects in developing nations in return for "carbon credits." This has spawned a thriving and unregulated business in trading credits for cold hard cash. Critics argue that this allows corporations to buy their way into compliance rather than changing practices.

code of ethics

an organization's pubic statements of a central guide to support day-to-day decision making at work. It clarifies the cornerstone of your organization - its mission, values, principles - helping your managers, employees and stakeholders understand how these cornerstones translate into everyday decisions, behaviors and actions. While some may believe codes are designed to limit one's actions, the best codes are actually structured to liberate and empower people to make more effective decisions.

globalization

great periods of reform. new stage of capitalist development, this time without public institutions to protect society by balancing private and corporate interests against broader public interests

rules of appropriate individual behavior

idea that moral standards we develop for ourselves impact our lives on a daily basis in our behavior and other types of decisions we make

value chain

key functional inputs that an organization provides in the transformation of raw materials into a delivered product or service

Lawrence Kohlberg 6 distinct stages

level 1: preconventional stage 1 - obedience and punishment orientation stage 2 - individualism, instrumentalism, and exchange level 2: conventional stage 3 - good boy/nice girl orientation stage 4 - law-and-order orientation level 3: postconventional stage 5 - social contract legalistic orientation stage 6 - universal ethical principle orientation

personal integrity

looks at ethics form an external rather than internal viewpoint. i.e. heroes represent the ideal person on integrity where a person lives a life that is true to his or her standards often at cost of personal sacrifice

CSR "carbon neutral"

making your operations "carbon neutral" in such a way as to offset whatever damage you are doing to the environment through your greenhouse gas emissions by purchasing credits from "carbon-positive" projects to balance out your emissions

the failure of the public sector

most developing countries are governed by dysfunctional regimes. citizens expect less of government than they use to, having lost confidence in the public sector as best or most appropriate venue for addressing a growing list of social problems.

moral standards

principles by which judgements are made about good and bad behavior based on: religious beliefs, cultural beliefs, and philosophical beliefs

Corporate governance

process by which organizations are directed and controlled. It is about the way in which boards oversee the running of a company by its managers, and how board members are, in turn, accountable to shareholders and the company.

triple bottom line approach

provide social responsibility and environmental updates alongside their primary bottom-line financial performance

instrumental value

pursuit of one value is a good way to reach another value

Ethical CSR

pursuit or most legitimate type of CSR in which organizations pursue a clearly defined sense of social conscience in managing their financial responsibilities to shareholders, their legal responsibilities to their local community and society as a whole, and their ethical responsibilities to do the right things for all their stakeholders

rules of appropriate behavior for our community

remind us that we must eventually bring our personal value system into a world that is shared with people who will probable have both similar and very different value systems

morality

represents a collection of all these influences as they are built up over your lifetime

corporate governance committee

represents more public demonstration of the organization's commitment to ethical business practices. The committee (staffed by board members and specialists) monitors the ethical performance of the corporation and overseas compliance with the company's internal code of ethics as well as any federal and state regulations on corporate conduct.

Strategic CSR

runs the greatest risk of being perceived of self-serving behavior on the part of the organization. This type of philanthropic activity targets programs that will generate the most positive publicity or goodwill for the organization.

Simple truth

simply doing the right thing

compensation committee

staffed by the members of the board of directors plus independent or outside directors. Primary responsibility of the compensation committee is to oversee compensation packages of the senior executives of the corporation (salaries, bonuses, stock options).

audit committee

staffed by the members of the board of directors, plus independent or outside directors. Primary responsibilities of the audit committee are to oversee the financial reporting process, monitor internal controls, monitor the choice of accounting policies and procedures, and oversee the hiring and performance of external auditors in producing the company's financial statements.

business ethics an oxymoron?

standards of corporate governance are at the lowest level in history with hiding finances, officers falsely using funds, products rushed to market, monopolistic practices, salaries extremely different at senior levels, bonuses in times of hardship

three step process for solving an ethical problem

step 1: analyze the consequences step 2: analyze the actions step 3: make a decision

society

structured community of people bound together by similar traditions and customs

Altruistic CSR

takes a philanthropic approach by underwriting specific initiatives to give back to the company's local community or to designate national or international programs (taking away from shareholders)

Social Contract

the corporation depends on society for its existence and continued growth, the corporation has an obligation to meet the demands of that society rather than just the demands of a targeted group of customers - recognizing all of their stakeholders - must maintain a longer-term perspective than just the delivery of quarterly earnings

comply or else

the failure to comply results in stiff financial penalties i.e. Sarbanes-Oxley Act of 2002

ethics

the study of how we try to live our lives according to a standard of "right" or "wrong" behavior - in both how we think and how we would live them to think and behave toward us

organizational culture

the values, beliefs, and norms shared by all the employees of that organization

applied ethics

theories have to be put into practice

universal ethics

there are certain and universal principles that should apply to all ethical judgements - problems is that the reverse of the weakness in ethics for the greater good, not everyone agrees, grey area

business ethics

application of standards of moral behavior to business situations

instrumental approach

approach to CSR and argue that the obligation of a corporation is to make profits for its shareholders in providing goods and services that meet the needs of its customers by Milton Friedman - unethical to do anything other than deliver profits for which its investors have entrusted their funds

ethical reasoning

attempting to resolve an ethical dilemma, look into information available to us and draw conclusions based on that information in relation to our own ethical standards

define the term business ethics

business ethics involves the application of standards or moral behavior to business situations. The subject can be approached from a descriptive perspective (documenting what is happening) or a prescriptive perspective (recommending what should be happening). In either case, the expectation is that business ethics should not be a separate set of standards from general ethics. Ethical behavior, it is argued, should be the same both inside and outside a business situation.

Transparency

business practices have become increasingly transparent. companies can no longer hide anything from the world

virtue ethics

concept of living one's life according to a commitment to the achievement of a clear ideal, seeking to reach the best virtues you value - problem is that societies can place different emphasis on different virtues

conflicts of interest

conflicts that occur when employees or managers engage in activities on behalf of the company and have a personal interest in the outcome of those activities - generally come from the top of the organization

knowledge

consumers and investors have more information at their disposal. consumers can choose one company over another based around the environmental records or involvement in sweatshop practices overseas

the golden rule

do unto others as you would have them do to you

truth versus loyalty

do you tell the truth or remain loyal to the person or organization that is asking you not to reveal the truth?

short term versus long term

does your decision have short-term consequence or a long-term consequence?

ethical relativism

traditions of their society, their personal opinions, and the circumstances of their present moment define their ethical principals - implies some degree of flexibility as opposed to strict black-and-white rules

auditing function

typically handled by certified professional accountants and auditing specialists

Feduciary Responsibility

ultimately based on trust, which is a difficult trait to test when you are hiring a manager or to enforce once that manager is in place. Enforcement only becomes an option when that trust has been broken. Organizations must depend on oversight and the development of processes and mechanisms to support that oversight - checks and balances.

value

used to denote the worth of an item, a person's values can be said to have a specific worth for them

intrinsic value

value is a good thing in itself and is pursued for its own sake, whether anything good comes form that pursuit or not

rules-based

what would happen if everyone made the same decision as you?

ends-based

which decision would provide the greatest good for the greater number of people?

sustainability

earths systems are in a serious decline. corporations are under increasing pressure from diverse stakeholder constituencies to demonstrate that business plans and strategies are environmentally sound and contribute to sustainable development

board of directors

elected by the owners to represent their interests in the effective running of the corporation. Typically made up of inside and outside members.

three resolution principles in business

ends-based rules-based the golden rule

ethical dilemma

ethical principles are most likely to be tested when you face a situation in which there is no obvious right or wrong decision but rather a right or right answer

Define ethics

ethics is the suited of how we try to live our lives of "right" and "wrong" behavior - in both how we think and how we behave toward others and how we would like them to think and behave towards us. For some, it is a conscious choice to follow a set of moral standards or ethical principles that provide guidance on how they should conduct themselves in their daily lives. For others, where the choice is not so clear, they look to the behavior of others to determine what is an acceptable standard of right and wrong or good or bad behavior.

corporate governance

extent to which the officers of a corporation are fulfilling the duties and responsibilities of their offices to the relevant stakeholders

utilitarianism

focus on the greatest good for the greatest number of people - problem is that idea that ends justify the means, some will be left behind

value system

formalize principles into a code of behavior

ethics in manufacturing

- built fast or right? - which corners can be cut - supply, and delivery problems - quality and financing issues - best quality or fit the price point?

Ethics in human resources

- directly involved with relationship of the company and employee - HR should be at the center of the code of ethics - Should ensure that ethics is a top organizational priority - ensure that leadership selection and development process include an ethics component - is responsible for ensure the right programs and policies are in place - stay abreast of ethics issues (and in particular the changing legislation and sentencing guidelines for unethical conduct)

ethics in marketing

- ensuring the product reaches the customer - manipulative process to induce customers - code of ethics by American Marketing Association - standards for encouraging people to buy things - aligned with debate of universal ethics (selling a product the customer actually needs and a message showing that) or utilitarianism (building a product that you think you can sell providing jobs and profit and focus on marketing what customers may not need)

key functions in value chain

- research and development - manufacturing - marketing - sales - customer service

ethics of R&D

- responsibility of growth of an organization - commitment to product to be highest quality, safety, and reliability - design may not match the manufacturing cost figures - real dilemmas come when decisions are made about product quality - speed and cost of product may short cut the quality

Arthur Dobrin's model is based on the key assumptions of

- sufficient time is there for the degree of contemplation that such questions require - enough information is available to answer the questions - dilemma presents alternative resolutions for one to select from

types of dilemmas in business

- truth versus loyalty - short term versus long term - justice versus mercy - individual versus community

Ethics four basic categories

1. simple truth - right and wrong or good and bad 2. a question of someone's personal character - his or her integrity 3. rules of appropriate individual behavior 4. rules of appropriate behavior for a community or society

Golden rule

Do to others whatever you would have them do to you - problem is that there is an assumption that others would follow the same principles as one would do

Justice versus mercy

Do you perceive this issue as a question of dispensing justice or mercy? (which are you more comfortable with?)

three types of CSR

Ethical CSR Altruistic CSR Strategic CSR

Understand opposing ethical theories and their limitations

Ethical theories can be divided into three categories: virtue ethics (focusing on individual character and integrity); ethics for the greater good, also referred to as utilitarianism (focusing on the choices that offer the greatest good for the greatest number of people); and universal ethics (focusing on universal principles that should apply to all ethical judgements, irrespective of the outcome). Each category is limited by the absence of a clear sense of accountability for the choices being made. As we have seen in this chapter, individual character and integrity can depend on many influences and are therefore unlikely to be a consistent standard. Utilitarianism only focuses on the outcome of the choice without any real concern for the virtue of the actions themselves, and human history has produced many atrocities that have been committed in the name of the "end justifying the means." At the other end of the scale, staying true to morally pure ethical principles without considering the outcome of that choice is equally problematic.

Explain Corporate Governance

Process by which organizations are directed and controlled. Using a series of boards and committees, corporate governance is designed to oversee the running of a company by its managers and to ensure that the interests of all the stakeholders are fairly represented and treated.

Significance of "king I" and "king II" reports

Published as the "King Report of Corporate Governance" in 1994, Mervyn King's report changed the emphasis on corporate governance from internal governance of corporate operations to practices that looked beyond the corporation itself and included its impact on the community at large. A second report released eight years later (king II) formally recognized the need to incorporate all stakeholders and consider a triple bottom-line approach to corporate performance and profitability.

5 trends of CSR

Transparency Knowledge Sustainability Globalization The Failure of the Public Sector

Explain the role of values in ethical decision making

Values represent a set of principles by which you aim to live your life. Those principles are most often based on religious, cultural, or philosophical beliefs that you have developed over time as a collection of influences from family, friends, school, religion, ethnic background, the media, mentors, and role models. When you try to formalize these principles into a code of behavior then you are seen to be adopting a value system that becomes your benchmark in deciding which choices and behaviors meet the standard of "doing the right thing."

Arthur Dobrin eight questions for resolving an ethical dilemma

What are the facts? What can you guess about the facts you don't know? What do the facts mean? What does the problem look like through the eyes of the people involved? What will happen if you choose one thing rather than another? What do your feelings tell you? What will you think of yourself if you decide one thing or another? Can you explain and justify your decision to others?

Individual versus community

Will your choice affect one individual or a wider group or community?