Ethics Final
Harvard Business Review article
Driving competitive advantage through stakeholder engagement arguing that businesses can generate economic value by identifying and addressing social problems that intersect with their business. When firms fail to establish good relationships with their stakeholders, it can lead to increased conflict and reduced stakeholder cooperation. Improving risk management Fostering innovation Improving financial performance Building customer loyalty Attracting and engaging employees
UN Global Compact calls business to
Embed UNGC principles into strategy and operations Take a bold, innovative steps towards SDGs and Paris Agreement Advocate and inspire others to join the movement
What happens after the decision?
Ethical implications become clear as we gain distance from decisions Have self serving biases Try to "spin" our role by rationalizing our behavior Deflect blame
Deontology is based on
Ethics should be based on unwavering rules Four of these rules: Universal principles Rights Reversibility Justice
Why is GDP an incomplete measure of a country's prosperity
Fails to account for well being Does not give insight in to the sustainability of the wealth Need more comprehensive measures (including sustainability considerations)
Virtue Ethics tests
Mirror test Pillow test Sunshine / disclosure / newspaper test
What is motivated reasoning
Motivated reasoning is one of the main reasons good people make unethical choices. Motivated reasoning occurs when we use reasoning not to discover what's really true but to justify the conclusion we prefer.
Characteristics of sustainable business leaders
Multi-level systems thinking Stakeholder influence Disruptive innovation Long-term activation
suspicions without evidence challenge
Need to find out if you need to intervene You believe something is wrong, but you're not sure
Case for business sustainability
Reduces costs - Eco -efficiency - Asset efficiency - Insurance costs Risks - Supply chain reliability - Business continuity Revenue - Product innovation - Increased market share Intangible - Product differentiation - Customer loyalty - Attracting and retaining talent
Ethics pays
Research shows that an organization that commits to ethical business practices reaps a wide range of benefits. Illegal can be costly Highlight efforts to promote ethics within the firm
How does an ethical leader differ from a moral person?
Role modeling Communicating Accountability
______ models of business are the dominant paradigm and ______ align more with ethical leadership
Shareholder dominant, stakeholder model more ethical
What are two key factors that determine punishment?
The group membership of the individual in charge of punishment, and what type of cover-up occurred he authors' analysis revealed that in-group third parties punished relational cover-ups significantly less severely than out-group third parties.
Deontology challenges
There are exceptions Ex: telling a white lie In service to truth, are you creating a greater harm?
Universal Principles
Universal principles (universalizability) If everyone made the same decision I would, would the world be a better place? Ex: telling the truth or lying
What shares a similar pitfall with consequentialism?
Utilitarianism
true or false: Internal locus of control leads to increased unethical behavior
false
Principle of Reversibility is reflected in the ...
golden rule
being a moral manager
having ethical role models consistent communication consistent accountability
UN Global Compact has Ten Principles centered around
human rights, environment, labor, anti corruption All of these principles are working together to end extreme poverty and fight inequality Trying to inspire others to engage in more sustainable business practices that work to protect all people and the environment
To enhance ethical business decision making, need to focus on all three levels. What are they?
individual and interpersonal (micro-), organizational (meso-) and systemic or societal (macro-) levels
Catholic Church teaching on sustainability
intergenerational justice: leave a world that is habitable for the generations that come after us Social justice: the people who are the most vulnerable are the ones who are most impacted by environmental degradation
moral manager
make good ethics visible (be a role model, communicate, etc)
is signing on to the PRI mandatory?
no
is signing onto the UN global compact mandatory?
no
Is being a moral person enough for ethical leadership?
no need to demonstrate: Role Modeling Consistent communication Consistent accountability
Social contracts
obligation to contribute to a harmonious society
Loyalty typically emerges from two types of relationships:
one where you have benefitted from someone's generosity or one where you share identity with someone
What is utilitarianism
people should attempt to maximize social welfare and happiness The ends justify the means Challenge: difficult to measure costs and benefits → outcomes unknown
Actual wrongdoing matters as much as _____ of wrongdoing
perception
UN guiding principles to human rights three pillars
protect, respect and remedy Protect: states most protect against human rights abuses Responsibility to respect all human rights When a right is violated, victims must have access to an effective remedy
Loyalty dilemmas arise from ____ we have towards others
relationships / obligations
Ethical dilemmas are often described as _____ vs ______ dilemmas
right vs right
Enron case prompted the passage of
sarbanes oxley
Vocation of the business leader three stages
seeing, judging, acting
civil disobedience is related to what dilemma?
skirting the rules
Neutralization techniques
strategies we use to construe our unethical behavior as somehow ethical ex: Denial of responsibility Denial of injury Denial of the victim Condemnation of the condemners Appeal to higher loyalties Moral ledger
what is logo therapy
striving to find meaning in one's life is the primary most motivating and driving force in human beings
What is nepotism?
the appointment of family members to important positions of authority despite qualifications engaging in this is bad
Freedom and responsibility are inextricably (always) linked
true
True or false: optimal decision making should be considered from multiple perspectives
true
deontology is concerned with ....
universability
consequentialist perspective is similar to ...
utilitarianism
problem with this ethical perspective is that ends justify the means
utilitarianism
Character formation, traits, and role modeling are part of which perspective
virtue ethics
perspective focuses on reflecting and cultivating good character
virtue ethics
What is ethical fading ?
we think about ethical implication pre and post decision, these usually fade into background at the time of the decision
meaning and value of work big question
why should I be ethical? Or why should I always be ethical?
Business case for sustainability reminds us about benefits. Which is not always a benefit?
you Will always have short term savings (this is false --> not always)
Pitfalls of skirting the rules
Signaling disregard Be thoughtful so your signals aren't encouraging everyone to break the rules Leaning on loopholes Look for loophole to justify your behavior Skirting the punishment Letting rules define your ethics Rules can be poorly drafted or have unintended. consequences
Intervention pitfalls
Signalling acceptance Acting without information Communicating harshly Demonizing wrongdoers Discounting culture Ignoring expertise
Faith, flourishing, and finance
So began my efforts to study how finance contributes to human flourishing, which in turn led to a deeper conviction that faith is an essential compass. Put another way: Faith helps us to see more clearly the intrinsic dignity of everyone affected by financial decisions and to see that everyone in finance has a responsibility to ensure that others — especially those with the greatest needs — also benefit, such that finance truly contributes to human flourishing.
Primary Embedding Mechanisms
Specific leadership actions that signal organization priorities what leaders pay attention to if its being done by leaders personal actions it is considered primary how leaders allocate resources and rewards
secondary embedding mechanisms
Structures, systems, and processes; physical space ; organizational communications (formal and informal) that signal culture focused on design of space
Sugihara
The Japanese Man who saved 6,000 Jews with his handwriting ambassador who helped them escape the nazis example of moral hero
why should I be ethical?
The cost of doing (unethical) business Might have short term benefits but bad long term results → Unethical behavior hurts your reputation Personal harmony --> Unethical choices conflict with how you see yourself Ethical self-defense Sometimes you lose (but so does everyone) Conviction, not conversion
Reversability
The golden rule Treat others the way you want to be treated
Suspicions without evidence pitfalls
Acting hastily → don't act too fast Delaying action → don't act too slow Appearing overly biased Not gathering sufficient information Not reporting appropriately
Challenges of loyalty
Arise from unwritten obligations we have for others, usually because of a special connection that we have Often relationships where you have benefitted from someone's generosity or one where you share identity with someone Loyalty to a principle rather than loyalty to a person
What philosopher is most associated with virtue ethics?
Aristotle
Virtue Ethics challenges
Assumes everyone is / wants to be a virtuous person With disclosure, saying what others want to hear
Utilitarian consequentialist perspective
Decide if something is right or wrong based on consequences and result of the actions Decision is right if it maximizes the good and happiness of the people it effects Think about the stakeholders
Internal Dangers example
Denial of injury Denial of responsibility internal euphemisms
Three primary ethical perspectives
Deontology Utilitarianism Virtue ethics
Biases in our thought process happens in the decision making process (what happens before and during?)
Before: forecast that our behavior is going to be better than it is Decision time: want self vs. should self
How to plan ahead with standing up to power
Build friendships Be ethical in the little things Work on creating an ethical culture
According to logo therapy, we can discover the meaning of life in three different ways:
By creating work or doing a deed By experiencing something or encountering someone → loving each other unconditionally By the attitude we take towards unavoidable suffering
what is external locus of control
Destiny is controlled by factors they can't influence leads to more unethical behavior
what is internal locus of control
Destiny is controlled by own actions
Vocation of a business leader is concerned with integrating _____ into corporate business leadership?
Catholic social teaching
Standing up to power pitfalls
Charging the hill (Going in and aggressively accusing someone of being unethical) Acquiescing too quickly (Giving in too quickly) Gossiping Not protecting yourself Assuming too much
Right vs Right challenge
Choosing between competing values
how to move from a lower level position to a higher level
Clarifying where you stand to other people Acknowledge other people's beliefs that might contradict your own
Ethical Perspectives
Competing frameworks to determines what is "right" or "good" Each approach has strengths and challenges Need to be fluent in each to make robust decisions
What happens at decision time?
Conflict between "want self" and "should self" ethical fading occurs
why don't people speak up at work?
Fear and feeling of futility
Sacrificing personal values pitfalls
Forgetting your family
Pitfalls of sacrificing personal values
Forgetting your family Seeing only yourself
Mendoza motto
Grow the good in business
Two ways to improve speak up culture?
Having frequent reviews for feedback Having open moral conversations Deliberately ask to speak up Set an example Never tolerate retaliation
What happens before you make a decision (what kind of error)?
Human tendency to make inaccurate predictions about our own behavior
Ethical Decision Model (8 steps)
Identify the important facts Identify the ethical issues Identify the stakeholders Identify potential solutions Asses solutions Asses any new solutions Act in accordance with your ethical analysis Asses your action and the outcomes
some benefits for implementing sustainability
Improving risk management Foster innovation Build customer loyalty
Conflict of interest
Inevitable in professional and personal life Multiple roles put you or your company at cross purpose
What philosopher is associated with Deontology?
Kant often called Kantianism
What is the skirting the rules dilemma
Keep a rule for a worse outcome, or bend it to achieve good
"man's search for meaning"
Man can live by looking to the future... and this is his salvation in the most difficult time Every individual has a precious obligation to the world
Civil disobedience key principles
Nonviolence Disobeyed as a last resort, when legal options are unavailable or exhausted Disobedience was particular and proportional Submissive to the penalties of breaking the law, recognizing the importance of rule of law
Pitfalls of conflict of interest
Not recognizing the conflict Running from or hiding the conflict Assuming disclosure is enough Pretending objectivity
External Dangers examples
Obedience to authority Role taking Diffusion of responsibility Group norms Psychological distance Societal culture
Pitfalls of loyalty
Offloading accountability Trusting blindly Taking advantage
Ethics of care
Our duties to every person are not necessarily equal → special obligations to those closest to u
Challenges to the Utilitarian Perspective
Outcome unknown Ignores the actions taken to get to the outcome
interpretive guide to human rights
People have a right to be treated with dignity
Three aspects of fraud triangle
Perceived pressure Perceived opportunity Rationalization
Deontology strengths
Principle based People deserve to be treated well (with justice, according to their rights, etc) Hard and fast principles → ex: be honest
how does the UN Global Compact support business
Providing principle based, public platform for engagement, communication on progress and commitments Access-world class tools, expertise, resources Allow for global reach, multi-stakeholder connections
Universally admired character traits are called ____
Virtues
conflict between want self and should self
Want self impulsive and emotional (actual behavior that usually disregards ethical considerations) Often wins in the moment of decision Should self rational and thoughtful (includes our ethical intentions) Dominates before or after we make a decision
Key finding of Kundro research
Ways companies respond to wrongdoing varies tremendously based on relationships they have with people involved
What is the challenge of sacrificing personal values
What do you do when your values don't align with your bigger group?
what are some strategies to manage motivated reasoning
You can avoid motivated reasoning by imagining your decisions will be made public or by bringing others into your decision-making process. Four ways to avoid motivated reasoning "Front page" test: "Would I be comfortable having this choice published on the front page of a local newspaper?" Dont go it alone Surround yourself with the voices of those you trust, and make sure you're prepared to listen and acknowledge your limitations. Avoid ambiguity Motivated reasoning can run wild when the rules are fuzzy or vague. Stay humble
Intervention challenge
You see something wrong and are not sure how to proceed If intervention, how?
moral person
being a good person
Which deals with incrementalism and moral muscle
being ethical in the little things
Which is not a focus of vocation of business leader
business primary responsibility is to the shareholder (this is false, also have responsibility to stakeholder)
In standing up to power pitfall ____ is when you directly question morality of leader's actions
charging the hill
pitfalls of standing up to power
charging the hill, not protecting yourself, gossiping
what is the most frequently excused dilemma in business world?
conflict of interest
what is it called when our moral implications recede into background
ethical fading
what is it called when there is a moral fading during decision time
ethical fading