Ethics in Business. Arif Altaf. Ethics SWH 1

Transcription

1 Ethics in Business What is ethical behavior? How do ethical dilemmas complicate the workplace? How can high ethical standards be maintained? What is social responsibility and governance? Ethics SWH 1

2 Study Question 1: What is ethical behavior? Ethics Code of moral principles. Set standards of good or bad or right or wrong in one s conduct. Ethical behavior What is accepted as good and right in the context of the governing moral code. Ethics SWH 2

3 Study Question 1: What is ethical behavior? Law, values, and ethical behavior: Legal behavior is not necessarily ethical behavior. Personal values help determine individual ethical behavior. Values broad beliefs Terminal values Instrumental values Ethics SWH 3

4 Study Question 1: What is ethical behavior? Law, values, and ethical behavior: Values underlying beliefs and attitudes that help determine individual behavior Terminal values - preferences about desired ends Instrumental values preferences regarding the means to desired ends Ethics SWH 4

5 Study Question 1: What is ethical behavior? Utilitarian view of ethics greatest good to the greatest number of people. Individualism view of ethics primary commitment is to one s long-term selfinterests. Moral-rights view of ethics respects and protects the fundamental rights of all people. Justice view of ethics fair and impartial treatment of people according to legal rules and standards. Procedural justice policies and rules fairly applied Distributive justice equal treatment for all people Interactional justice people treated with dignity and respect Ethics SWH 5

6 Ethics SWH 6

7 Study Question 1: What is ethical behavior? Cultural issues in ethical behavior: Cultural relativism Ethical behavior is always determined by cultural context. Cultural universalism Behavior unacceptable in one s home environment should not be acceptable anywhere else. Considered by some to be ethical imperialism Ethics SWH 7

8 The extremes of cultural relativism and ethical imperialism in international business ethics. Source: Developed from Thomas Donaldson, Values in Tension: Ethics Away from Home, Harvard Business Review, vol. 74 (September-October 1996), pp Ethics SWH 8

9 Study Question 1: What is ethical behavior? How international businesses can respect core or universal values: Respect for human dignity Create culture that values employees, customers, and suppliers. Keep a safe workplace. Produce safe products and services. Respect for basic rights Protect rights of employees, customers, and communities. Avoid anything that threatening safety, health, education, and living standards. Be good citizens Support social institutions, including economic and educational systems. Work with local government and institutions to protect environment. Ethics SWH 9

10 Study Question 2: How do ethical dilemmas complicate the workplace? An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical. Ethical dilemmas include: Discrimination Sexual harassment Conflicts of interest Customer confidence Organizational resources Ethics SWH 10

11 Study Question 2: How do ethical dilemmas complicate the workplace? Factors influencing ethical behavior include: Situational context ethics intensity or issue intensity indicates the degree to which a situation is recognized to pose ethical challenges The person Family influences, religious values, personal standards, and personal needs. ethical framework is a personal rule or strategy for making ethical decisions Kohlberg s stages of individual moral development pre-conventional stage conventional stage Ethics SWH 11

12 Kohlberg s stages Ethics SWH 12

13 Study Question 2: How do ethical dilemmas complicate the workplace? Factors influencing ethical behavior Internal environment and the organization Supervisory behavior, peer group norms and behavior, and policy statements and written rules. External environment Government laws and regulations, societal norms and values, and competitive climate in an industry. Ethics SWH 13

14 Study Question 2: How do ethical dilemmas complicate the workplace? Checklist for dealing with ethical dilemmas: Recognize the ethical dilemma Get the facts Identify your options Test each option: Is it legal? Is it right? Is it beneficial? Decide which option to follow Double-check decision by asking spotlight questions: How would I feel if my family found out about my decision? How would I feel about this if my decision were in the local news? Take action Ethics SWH 14

15 Study Question 2: How do ethical dilemmas complicate the workplace? Ethical behavior can be rationalized by convincing yourself that: Behavior is not really illegal. Behavior is really in everyone s best interests. Nobody will ever find out. The organization will protect you. Ethics SWH 15

16 Study Question 3: How can high ethical standards be maintained? Whistleblowers Expose misdeeds of others to: Preserve ethical standards Protect against wasteful, harmful, or illegal acts Laws protecting whistleblowers vary Ethics SWH 16

17 Study Question 3: How can high ethical standards be maintained? Barriers to whistleblowing include: Strict chain of command Strong work group identities Ambiguous priorities Organizational methods for overcoming whistleblowing barriers: Ethics staff units who serve as ethics advocates Moral quality circles Ethics SWH 17

18 Study Question 3: How can high ethical standards be maintained? Ethics training: Structured programs that help participants to understand ethical aspects of decision making. Helps people incorporate high ethical standards into daily life. Helps people deal with ethical issues under pressure. Ethics SWH 18

19 Study Question 3: How can high ethical standards be maintained? Codes of ethics: Formal statement of an organization s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas. Areas often covered by codes of ethics: Bribes and kickbacks Political contributions Honesty of books or records Customer/supplier relationships Confidentiality of corporate information Ethics SWH 19

20 Study Question 3: How can high ethical standards be maintained? Ethical role models: Top managers serve as ethical role models. All managers can influence the ethical behavior of people who work for and with them. Excessive pressure can foster unethical behavior. Managers should be realistic in setting performance goals for others. Ethics SWH 20

21 Study Question 3: How can high ethical standards be maintained? Social entrepreneurship: a unique form of entrepreneurship that seeks novel ways to solve pressing social problems at home and abroad Housing and job training for homeless Bringing technology to poor families Improving literacy among disadvantaged youth Offering small loans to start minority-owned businesses Ethics SWH 21

22 Study Question 3: How can high ethical standards be maintained? Criteria for evaluating corporate social performance: Social responsibility audit assesses organization s accomplishments in areas of CSR Is the organization s Economic responsibility met? Legal responsibility met? Ethical responsibility met? Discretionary responsibility met? Ethics SWH 22

23 Study Question 3: How can high ethical standards be maintained? Strategies for pursuing social responsibility: Obstructionist meets economic responsibilities. Defensive meets economic and legal responsibilities. Accommodative meets economic, legal, and ethical responsibilities. Proactive meets economic, legal, ethical, and discretionary responsibilities. Ethics SWH 23

24 Study Question 3: How can high ethical standards be maintained? Perspectives on social responsibility: Classical view Management s only responsibility is to maximize profits. Socioeconomic view Management must be concerned for the broader social welfare, not just profits. Ethics SWH 24

25 Study Question 4: What is social responsibility and governance? Corporate social responsibility and governance: Looks at ethical issues on the organization level. Obligates organizations to act in ways that serve both its own interests and the interests of society at large. Ethics SWH 25

26 Study Question 4: What is social responsibility and governance? Organizational stakeholders Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance. Typical organizational stakeholders Employees Customers Suppliers Owners Competitors Regulators Interest groups Ethics SWH 26

27 Study Question 4: What is social responsibility and governance? Arguments against social responsibility: Reduced business profits Higher business costs Dilution of business purpose Too much social power for business Lack of public accountability Arguments in favor of social responsibility: Adds long-run profits Improved public image Avoids more government regulation Businesses have resources and ethical obligation Ethics SWH 27

28 Criteria for evaluating corporate social performance. Ethics SWH 28

29 Study Question 4: What is social responsibility and governance? Corporate governance: The oversight of the top management of an organization by a board of directors. Corporate governance involves: Hiring, firing, and compensating the CEO. Assessing strategy. Verifying financial records. Ethics SWH 29

30 Four strategies of corporate social responsibility from obstructionist to proactive behavior. Ethics SWH 30

31 Study Question 4: What is social responsibility and governance? How government influences organizations: Common areas of government regulation of business affairs: Occupational safety and health Fair labor practices Consumer protection Environmental protection Ethics SWH 31

32 Centrality of ethics and social responsibility in leadership and the managerial role. Ethics SWH 32

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