Business Ethics

Definition of ethics Ethics is the discipline dealing with what is good or bad, or what is right or wrong or specifically with moral duty and obligation. Ethics has been defined as “Inquiry into the nature and grounds of morality where the term morality Is taken to mean moral Judgment, standards and rules of conduct. It has also been called the study and philosophy of human conduct with an emphasis on the determination of right and wrong”.

The American Heritage dictionary offers this definition of ethics as “the study of the mineral moral choices, moral philosophy and the rules or standards governing the conduct of members of a profession”. Ethics could also be described as the study of how our decisions affect other people or as the study of people’s rights and duties and the rules that people apply in making decisions. In business we cannot avoid ethical issues just like in other areas of our lives.

Ethics Involves learning what Is right or wrong, and then doing the right thing but “the right thing” is not nearly as straightforward as conveyed In a great deal of business ethics literature. Most ethical dilemmas In the workplace are not simply a matter of “Should Bob steal from Jack? ” or “Should Jack lie to his boss? (Many ethicists assert there’s always a right thing to do based on moral principle, and others believe the right thing to do depend on the situation – ultimately it’s up to the individual. Many philosophers consider ethics to be the “science of conduct. ” Ethics includes the fundamental ground rules by which we live our lives. Values which gulled how we ought to behave are considered moral values, e. G. , values such as respect, honesty, fairness, responsibility etc. Tenements around how these values are applied are sometimes called moral or ethical principles. Business Ethics Business ethics also called managerial ethics is the application of ethical principles to business relationships and activities.

Managers who run businesses are human beings who despite the laws set cannot behave the same regardless of the circumstances, Managers face many ethical dilemmas (two or more situations where both seem right but which are conflicting). Business ethics could apply In these areas. A) relationships of the firm to the employees: how they are to be treated What are fair wages, fair dismissals etc. B) relationship of the employee to the firm ; how should they behave when faced with Issues of competing loyalties, e. G. Honesty in small items; pens, paper, telephone etc. ) relationship of the firm to the environment Ethical issues arise in how the firm relates to the various elements of the environment e. G. Customers, competitors, stockholders, dealers and the community. Many industries and organizations companies have formal, written codes of ethics that provide specific guidelines for managers and other employees. But the question s whether when individuals violate the code of conduct, the organization enforces it. Many companies in an attempt to manage ethics have developed specific codes of ethics. These establish guidelines for ethical decision making in business.

Areas covered may be: ; truthfulness in advertising, improper use of company assets, political contributions, payments in connection with business transactions, conflicts of interest, Trade secrets etc. There are advantages for organizations to form industry associations to develop and promote improved codes of ethics. It is difficult for a single firm to pioneer ethical raciest if its competitors undercut them by taking advantage of unethical shortcuts. If ethics are to be improved, it is very important for top executives to support, and emphasize ethical behavior by adhering to ethics themselves and also to train their staff in ethics.

Levels of Ethics In business most of the ethical issues will fall into one of the following four levels. I. Societal Level This level deals with the basic institutions in society. E. G. Issues on the role of the government in the market place and merits or demerits of political parties or political ideologies. Managers of organizations have an obligation to shape debates on social welfare. It. Stakeholders Level This level deals with employees, suppliers, customers, shareholders, etc. Certain ethical considerations affect this group of people.

A company must deal with the issue of how its decisions affect all those groups of people e. G. What obligations does a company have to its suppliers, to its customers, or even to its owners? Iii. Internal Policy Level At this level the question of interest is the nature of a company’s relationship with its employees and managers. What kind of contract is fair? What rights should employees have? ‘v. Personal Level This level deals with how people treat one another within a corporation, honesty with one another and obligations of employees to their bosses, to subordinates or to peers.

Ethical questions are everywhere, at all levels of business activity. Ethical issues concern the ground rules of individuals, companies and social behavior. Being ethical calls for people to examine their actions and be critical of the ground rules they apply in their activities. A seller for example should ask such questions as the clerk he gave me too much change? ” A model of Ethics It can be seen that ethics consist of two relationships, indicated by arrows in the figure above. A person or organization is ethical if these relationships are strong and positive.

There are a number of sources that one might use to determine what is right or wrong, good or bad, immoral or moral behavior. These include the Bible, the Koran and a number of other holy books. They also include that “still small voice” referred to as the conscience. Another source of guidance is the behavior of what psychologists call the “significant” others – our parents, friends, role models, associates, peers etc. The laws of the country prohibit any acts that are sufficiently hurtful to others and therefore laws offer guides to ethical behavior.

But distinction must be made between what is illegal and what is unethical. Not everything that is unethical is illegal. For example the law has limits regarding honesty. If one picks a lost item and keeps it, he probably has not done anything illegal but his act is unethical. If a clerk Steals from his company in order to feed the poor, he has done an illegal thing but for ethical reasons. Decisions of ethics are quite difficult but all managers need to now is that ethics goes beyond the minimum requirements by law and by market economy.

There are so many unethical things that can be done in business, yet there is no law against them! Simply having strong beliefs about what is right and wrong and basing them on the proper sources does not make one ethical. Behavior should conform to what we believe about right and wrong. Type I ethics refers to the strength of the relationship between what an individual or organization believes and what the sources of guidance suggest is morally correct. Type II ethics is the strength of the relationship between what one believes and how en behaves. To do what one believes is wrong is unethical.

But to be ethical one must have both types of ethics. The Tools of Ethics I. Ethical Language The key terms of the ethical language are values, rights, duties and rules. Values are permanent desires that seem to be good in themselves like peace. Values are the answers of questions of Why’; Why for example should managers behave ethically? “. A right is a claim that entitles a person to something. Laws that guide us through situations where competing interests collide. It. Common Morality This is the body of rules covering ordinary ethical problems I. . Ales that we live by most of the time. Examples include: – promise keeping benevolence (kindness, compassion, generosity, goodwill ) mutual aid respect for persons and respect for property WEEK 2- SCOPE AND OBJECTIVES OF ETHICS Benefits of Managing Ethics in the Workplace Ethics programs help maintain a moral course in turbulent times. ; Ethics programs cultivate strong teamwork and productivity ; Ethics programs support employee growth and meaning. Ethics programs are an insurance policy; they help ensure that policies are legal. Ethics programs help manage values associated with quality management, strategic lancing and diversity management; this benefit needs far more attention. ; Ethics programs promote a strong public image. 1) Attention to business ethics has substantially improved society A matter of decades ago, children worked 16-hour days. Workers’ limbs were torn off and disabled workers were condemned to poverty and often to starvation. Trusts controlled some markets to the extent that prices were fixed and small businesses stifled/choked out. Price fixing crippled normal market forces. Employees were terminated based on personalities.

Influence was applied through intimidation and harassment. Then society reacted and demanded that businesses place high value on fairness and equal rights. Antitrust laws were instituted. Government agencies were established. Unions were organized. Laws and regulations were established. 2) Ethics programs help maintain a moral course in turbulent times Attention to business ethics is critical during times of fundamental change times much like those faced now by businesses, both non-profit and for-profit. During times of change, there is often no clear moral compass to guide leaders through complex conflicts about what is right or wrong.

Continuing attention to ethics in the workplace minimizes leaders and staff to how they want to act consistently. 3) Ethics programs cultivate strong teamwork and productivity Ethics programs align employee behaviors with those top priority ethical values preferred by leaders of the organization. Usually, an organization finds surprising disparity between its Ongoing attention and dialogue regarding values in the workplace builds openness, integrity and community critical ingredients of strong teams in the workplace. Employees feel strong alignment between their values and those of the organization.

They react with strong motivation and performance. ) Ethics programs support employee growth and meaning Attention to ethics in the workplace helps employees face reality, both good and bad in the organization and themselves. Employees feel full confidence they can admit and deal with whatever comes their way. 5) Ethics programs are an insurance policy they help ensure that policies are legal There is an increasing number of lawsuits in regard to personnel matters and to effects of an organization’s services or products on stakeholders.

Ethical principles are often state- of-the-art legal matters. These principles are often applied to current, ajar ethical issues to become legislation. Attention to ethics ensures highly ethical policies and procedures in the workplace. It’s far better to incur the cost of mechanisms to ensure ethical practices now than to incur costs of litigation later. A major intent of well-designed personnel policies is to ensure ethical treatment of employees, e. G. , in matters of hiring, evaluating, disciplining, firing, etc. ) Ethics programs help avoid criminal acts “of omission” and can lower fines Ethics programs tend to detect ethical issues and violations early therefore; they can be reported or addressed. In some cases, when an organization is aware of an actual or potential violation and does not report it to the appropriate authorities, this can be considered a criminal act, e. G. , in business dealings with certain government agencies, such as the Defense Department. However, the guidelines potentially lower fines if an organization has clearly made an effort to operate ethically. ) Ethics programs help manage values associated with quality management, strategic planning and diversity management Ethics programs identify preferred vale uses and ensuring organizational behaviors are aligned with those values. This effort includes cording the vale u developing policies and procedures to align behaviors with preferred values, and then training all personnel about the policies and procedures. This overall effort is very useful for several other programs in the workplace that require behaviors to be aligned with values, including quality management, strategic planning and diversity management.

Total Quality Management includes high priority on certain operating values, e. G. , trust among stakeholders, performance, reliability, measurement, and feedback. Ethics management techniques are highly useful for managing strategic values, e. G. , expand market share, reduce costs, etc. Ethics management programs are also useful in managing diversity. Diversity is much more than the color of people’s skin; it’s acknowledging different values and perspectives. Diversity programs require recognizing and applying diverse values and perspectives.

These activities are the basis of a sound ethics management program. Attention to ethics is also strong public relations admittedly, managing ethics should not be done primarily for reasons of public relations. The fact that an organization regularly gives attention to its ethics can portray a strong positive image to the public. People see those organizations as valuing people more than profit, as striving to operate with the utmost of integrity and honor. Aligning behavior with values is critical to effective marketing and public relation programs.

Ethical values, consistently applied, are the cornerstones in building a commercially successful and social lye responsible business. 9) Overall benefits of ethics programs Managing ethical values in the workplace legitimates managerial actions, strengthens the coherence and balance of the organization’s culture, improves trust in relationships between individuals and groups, supports greater consistency in tankards, qualities of products and cultivates greater sensitivity to the impact of the enterprise’s values and messages.

Core values in business ethics Accept responsibility and be accountable for actions. ; Respect and promote human rights in all our dealings Honor agreements and commitments Treat everyone being dealt with fairly, honestly and with dignity and respect ; Conduct business in an environmentally responsible manner in accordance with the principles of sustainable development. ; Obey all laws that govern business ; Manage activities for the benefit of stakeholders

Communicate to all stakeholders in honest and straightforward manner ; Carry out activities in a socially responsible manner that benefit the local community in which the business operates ; Select and treat employees in a fair and equitable Establish a work environment that is free from discrimination, manner. ; harassment, intimidation and hostility of any kind. ; Respecting privacy of employees and their families.

Characteristics of highly ethical organizations They are at ease interacting with diverse internal and external stakeholder They are obsessed with fairness. Their ground rules emphasize that the roofs. ; other persons’ interests count as much as their own. ; Responsibility is individual rather than collective, with individuals assuming personal responsibility for actions of the organization. ; There exists a clear vision and picture of integrity throughout the organization. The vision is owned and embodied by top management, over time.

The reward system is aligned with the vision of integrity. ; Policies and practices of the organization are aligned with the vision; no mixed messages. ; It is understood that every significant management decision has ethical value dimensions. WEEK 3: MANAGERIAL ETHICS Organizations can manage ethics in their workplaces by establishing an ethics management program. Typically, ethics programs convey corporate values, often using codes and policies to guide decisions and behavior, and can include extensive ethical dilemmas.

All organizations have ethics programs, but most do not know that they do. A corporate ethics program is made up of values, policies and activities which impact the propriety of organization behaviors. Balancing competing values and reconciling them is a basic purpose of an ethics management program. Business people need ore practical tools and information to understand their values and how to manage them. There are numerous benefits in formally managing ethics as a program, rather than as a one-shot effort when it appears to be needed.

Ethics programs: Establish organizational roles to manage ethics Schedule ongoing assessment of ethics requirements Establish required operating values and behaviors Align organizational behaviors with operating values Develop awareness and sensitivity to ethical issues ; Integrate ethical guidelines to decision making Structure mechanisms to resolving ethical dilemmas Facilitate ongoing evaluation and updates to the program ; Help convince employees that attention to ethics is not Just a knee-Jerk(automatic/thoughtless) reaction done to get out of trouble or improve public image Guidelines for Managing Ethics in the Workplace The following guidelines ensure the ethics management program is operated in a meaningful fashion: Recognize that managing ethics is a process Ethics is a matter of values and associated behaviors. Values are discerned through the process of ongoing reflection. Therefore, ethics programs may seem more process- oriented than most management practices. Managers tend to be skeptical/ doubtful of process- oriented activities, and instead prefer processes focused on deliverables with measurements.

However, experienced managers realize that the deliverables of standard management practices (planning, organizing, motivating, controlling) are only tangible representations of very process-oriented practices. For example, the process of strategic planning is much more important than the plan produced by the process. The same is true for ethics management. Ethics programs do produce deliverables, e. G. , codes, policies and procedures, budget items, meeting minutes, authorization forms, newsletters, etc. However, the most important aspect from an ethics management program is the process of reflection and dialogue that produces these deliverables.

The bottom line of an ethics program is accomplishing preferred behaviors in the workplace The most important outcome is behaviors preferred by the organization. The best of ethical values and intentions are relatively meaningless unless they generate fair and Just behaviors in the workplace. That’s why practices that generate training that translate those values to appropriate behaviors. Action indeed is the ole medium of expression for ethics. Jane Addams The best way to handle ethical dilemmas is to avoid their occurrence in the first place That’s why practices such as developing codes of ethics and codes of conduct are so important. Their development sensitizes employees to ethical considerations and minimizes the chances of unethical behavior occurring in the first place.

Make ethics decisions in groups, and make decisions public as appropriate This usually produces better quality decisions by including diverse interests and perspectives, and increases the credibility of the decision process and outcome by educing suspicion of unfair bias (synergy) Integrate ethics management with other management practices When developing the values statement during strategic planning, include ethical values preferred in the workplace. When developing personnel policies, reflect on what ethical values you’d like to be most prominent in the organization’s culture and then design policies to produce these behaviors Use cross-functional teams when developing and implementing the ethics management program It’s vital that the organization’s employees feel a sense of participation and ownership in the program if they are to adhere to its ethical values.

Therefore, include employees in developing and operating the program (participative management) Value forgiveness The most important ingredient for remaining ethical is trying to be ethical. Therefore, help people recognize and address their mistakes and then support them to continue trying to operate ethically. Note that trying to operate ethically and making a few mistakes is better than not trying at all. Some organizations have become widely known as operating in a highly ethical manner. Unfortunately, it seems that when an organization achieves this strong public image, it’s placed on a pedestal by mom business ethics writers. All organizations are comprised of people and people are not perfect. However, when a mistake is made by any of these organizations, the organization has a long way to fall.

In our increasingly critical society, these organizations are accused of being hypocritical and they are soon pilloried/ ridiculed/ scorned by social critics. Consequently, some leaders may fear sticking their necks out publicly to announce an ethics management program. This is extremely unfortunate. It’s the trying that counts and brings peace of mind not achieving a heroic status in society. WEEK 4: BUSINESS ETHICS THEORIES Ethical Theories are principles or rules that people use to decide what is right or other theories are the Classical Theories which includes: Utilitarianism Theory Utilitarian theory was developed by John Stuart Mill (1806-1873) along with Jeremy Beneath (1748-1832).

Utilitarian theories hold that the moral worth of actions or practices is determined solely by their consequences. An action or practice is right if it leads to the best possible balance of good consequences over bad consequences for all the parties affected. In taking this perspective, utilitarian’s believe that the repose or function or morality is to promote human welfare by minimizing harms and maximizing benefits. Mills discusses two foundations or sources of utilitarian thinking: a normative foundation in the principle of ‘utility and psychological foundation in the human nature. He proposes the “greatest happiness principle” as the foundation of normative ethical theory.

Actions are right in proportion to their tendency to promote happiness or absence of pain, and wrong in so far as they tend to produce pain or displeasure. Mill’s second foundation derives from his belief that cost persons, and perhaps all, have a basic desire for unity and harmony with their fellow human beings. Just as the people feel horror at crimes, they have basic moral sensitivity to the needs of others. The purpose of morality is therefore tapping natural human sympathies to benefit others, while controlling unsympathetic attitudes that cause harm to others. The principle of utility is conceived as the best means to these basic human goals. The name of utilitarianism is derived from the Latin ‘utility’, meaning ‘useful’.

In utilitarianism, the consequences of actions are measured against one value. This ‘useful’ value can be something like happiness, welfare or pleasure. It should be maximized. It’s a moral theory that dictates that people must choose the action or follow the rule that provides the greatest good to society. However, there are several downsides to utilitarianism. Of course it is very hard to determine how much pleasure an action will actually give. Also, to find the total amount of pleasure, we need to consider all individuals that are involved and add up their pleasures. But how do we quantify pleasure? And has the pleasure of one person the same value as the pleasure of another?

Also, how do we decide whether one action gives more pleasure than another? Answering these questions is difficult. Demonology Theory Deontological theory was advanced by a German Philosopher, Emmanuel Kant (1724-1804). His influential work on ethics is entitled Fundamental Principles of the Metaphysic of Ethics, first published in 1785. According to Kant, an action is right if it is in accordance with a moral rule or principle. A moral rule is one that is required by rationality. According to Kant: I) The universal rule is to respect human dignity because human beings are rational beings. Cant’s respect for human beings says persons should be treated as ends and never purely as means.

For example, manipulative advertising attempts to make sales by interfering with the potential buyer’s reflective choice violate the principle of respect for persons. I’) Human beings possesses a moral dignity and therefore should not be treated as if they had merely the conditional value possessed by machines, industrial plants, robots and capitals. Iii) Cant’s principle finds motives for actions morally important, in that, it respects right thing only when (and for the reason) that it is profitable or when it will enjoy DOD publicity, its decision is prudential not moral. Duty ethics is also called Kantian or deontological theory and was founded by Emmanuel Kant hence the name.

It’s a moral theory that says people owe moral duties that are based on universal rules. It is based on the premise that people can use reasoning to reach ethical decisions. This theory would have people behave according to the categorical imperative: “Do unto others as you would have them do unto you. ” Demonology focuses on the rights of the individual and on the intentions associated with behavior not on the consequences. It holds that there are some things we should not do regardless of the utility. A criticism of this theory is that it is hard to reach a consensus as to what the universal rules should be. There are several downsides to the Kantian theory. In Cant’s theory, rules cannot be bent.

This reminds us of absolutism. So, the question arises whether all the moral laws form a consistent system of norms. Another downside is that Kantian theory prescribes to rigidly adhere to the rules, irrespective of the consequences. But in real life, following a rule can of course have very negative consequences. Cant’s theory does not deal with these exceptions. Virtue Theory Virtue theory was developed by a Greek philosopher, Aristotle ((384 BC – 322 SC)). His theories are mainly found in a collection of his writings known as Noncompliance Ethics. Aristotle looks at ethics in terms of Moral Virtues. The moral virtues are the character traits necessary to acting rightly.

They are consistent with daemonic (human flourishing) and ensure that the chosen course of action is not only appropriate in the given circumstances, but also motivated by the most genuine and well meaning intentions. There are four moral virtues advanced by Aristotle namely: ; Justice – Justice ‘demands that the claims of the institution serve both the common good and the rights of individuals. Justice is not only about promoting equity and equality of opportunity but also about educating children in a way that ensures that just people emerge and contribute to the creation of a Just society. ; Care – The virtue of agape can be roughly interpreted as love for a fellow human being in the Christian sense of the term.

It encompasses a wide range of other regarding virtues, including the three Co’s of caring, concern and connection. The irate of care transcends that of Justice through benevolence and compassion, especially in supporting the weak and the disadvantaged. ; Harmony – The virtue of harmony or concord has received little if any attention in the discourse of authentic leadership, and yet it provides the basis for a shared vision, unity of purpose and collaboration in problem solving. The virtue of harmony is dependent on at least two other virtues of moral leadership. The first is gentleness or good temper, essential to promoting good feeling and self esteem in others. The second is that of liberality or generosity, in empowering and building the confidence

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