Professional Ethics. Lecture 5. Shahid Iqbal
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1 Professional Ethics Lecture 5 Shahid Iqbal 1
2 Ethics in the World of Business Ethical dilemma Benefits of business ethics Ethical behavior 2
3 Ethics: A Common-Sense Definition Ethical behavior is what you do when no one is looking Will you do the right thing even when it is not in your best interest? 3
4 Ethical Dilemmas On the weekend, you stop at an ATM for Rs The machine dispense Rs 2000 to you, but only debit your account for the Rs 1000 you requested. What do you do now? You are going home at 2:00 am and stop for a red light. Looking around, you see no one in any direction as far as the eye can see. What do you do now? What do you do now? The auto body repairman offers to fix damages not caused by your recent collision as part of your insurance claim. What do you do now? 4
5 The reputation of a thousand years may be determined by the conduct of one hour. Japanese proverb 5
6 To see what is right and not to do it is want of courage. (Confucius) 6
7 Why Business Ethics? A business that makes nothing but money is a poor kind of business Avoiding that kind of poverty is where ethics begin A business that makes nothing but money (mostly) does not make it for long A boom is followed by a bust 7
8 Benefits of Business Ethics Linkage between business ethics and financial performance Building an ethical reputation amongst:- Employees Customers General public 8
9 Role of Organizational Ethics in Performance Employee Commitment and Trust Ethical Climate Investor Loyalty and Trust Profits Customer Satisfaction and Trust 9
10 Benefits of Business Ethics Ethics Contribute to Employees Commitment Beliefs that their future is tied to that of organization Willingness to make personal sacrifice Fostering Factors Safe work environment Competitive salaries Fulfillment of contractual obligation 10
11 Benefits of Business Ethics Ethics Contribute to Employees Commitment Programs to improve ethical climate Work-family programs Stock ownership Positive perception about ethical environment leads to:- Performance-enhancing outcomes Higher level of trust Companies viewed highly ethical enjoy six time more worker s loyalty 11
12 Benefits of Business Ethics Ethics Contribute to Customer Satisfaction Important factor of successful business strategy Development of long term relationship with customers & employees Examples: Exxon Valdez The Gap Nike 12
13 Exxon Valdez 13
14 The Gap 14
15 Nike 15
16 Benefits of Business Ethics Ethics Contribute to Profits Direct impact on employees and customers Companies convicted of misconduct experience decline in profits Examples: BCBS Healthcare: overcharging the Govt Sears: selling auto parts not needed by customers Beech-Nut: selling chemical equivalent instead of claiming 100% pure juice 16
17 BCBS Healthcare 17
18 Sears Richard Warren Sears was a manager, businessman, and the founder of Sears, Roebuck and Company 18
19 Beech-Nut 19
20 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 s long-term sacrifice of self-interests. Moral-rights 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. 20
21 Four Views of Ethical Behavior 21
22 What is ethical behavior? Cultural issues in ethical behavior: Cultural relativism Ethical behavior is always determined by cultural context. Cultural universalism Behavior that is unacceptable in one s home environment should not be acceptable anywhere else. 22
23 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
24 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. 24
25 What is ethical behavior? How international businesses can respect core or universal values: 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 25 protect environment.
26 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 Conflicts of interest Customer confidence Organizational resources 26
27 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 s best interests. Nobody will ever find out. The organization will protect you. 27
28 How do ethical dilemmas complicate the workplace? Factors influencing ethical behavior include: The person Family influences, religious values, personal standards, and personal needs. The organization Supervisory behavior, peer group norms and behavior, and policy statements and written rules 28
29 How do ethical dilemmas complicate the workplace? Factors influencing ethical behavior include: The environment Government laws and regulations, societal norms and values, and competitive climate in an industry. 29
30 30
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