Transcript topic-5__6 - Homework Market

Weeks 5 & 6 – YOU as a stakeholder
I Morals & Ethical Principles
II Ethical Decision Making in Business
(Why good people do bad things)
Greg Smith
Choice of
Ethical
Perspective
Morality:
The social rules that govern & limit our conduct, especially the
ultimate rules concerning right and wrong.
The basic guidelines for cooperative social existence.
Serves to restrain the purely self-interested desires in each of
us in order to make it possible for all of us to live together.
When we make a decision or take an action we can be:
Moral - in compliance with moral standards
key operating questions of management is "is this action or decision fair to us and all
stakeholders involved?"
Immoral - in opposition to moral standards
key operating question of management is "can we make money with this action or decision
regardless of what it takes?"
Amoral - without consideration of moral standards
key operating question of management is "can we make money with this action or decision?"
Nonmoral - outside the sphere of moral concern
Moral standards get confused with:
Law
Etiquette
Conscience
Corporate/Professional Codes
Religion
Moral Relativism:
The belief that morality is just a function of what a particular society
happens to believe, that what is right is determined by what a society
says is right.
abortion is condemned as immoral in Catholic Spain, but is practiced as a morally neutral form of
birth control in Japan
Moral relativists believe that there is no absolute moral standard
independent of culture, no universal definition of right or wrong.
polygamy, stealing, slavery have all been tolerated by the moral system of one society or another
Moral Universalism is the belief that variations in moral standards
reflect different factual circumstances rather than fundamental differences in
values.
Which is right?
It is good to emphasize that in viewing other cultures we should keep
an open mind and not simply dismiss their social practices.
Compromise position is Moral Perspectivalism,
the consideration of multiple perspectives while at the same time asserting
universal truths.
Kohlberg’s Levels of Moral
Development
The relationship between morality,
ethics and ethical theory
Ethics
rationalizes
morality …
Morality
Ethics
… to
produce
ethical
theory …
…that can be
applied to any
situation.
Ethical theory
Potential
solutions to
ethical
problems
Moral/Ethical decisions have:
•
•
•
•
•
Extended consequences
Multiple alternatives
Mixed and complex outcomes
Uncertain consequences
Personal implications
Ethical Principles/Decision Tools
Profit Maximization/Individualism Approach
Utilitarian Approach
Universalist/Categorical Imperative Approach
Rights/Rule of Law Approach
Justice Approach
Golden Rule Approach
Might = Right Approach
Duty to Care Approach
Organization Ethic Approach
Intuition Approach
Revelation Approach
Hedonistic Approach
Virtue Approach
Profit Maximization/Individualism
Key Principle
The objective of a decision should be to maximize the
corporation’s/individual’s profit and shareholder value in
the long term.
“Do what’s best for you/your company”
Profit Maximization/Individualism
Criticisms/Weaknesses
Assumptions of open and free competition often not met.
Can cause undue harm to some stakeholders.
Often does not account for “externalities.”
Puts a great deal of pressure on the law to reflect society’s
values.
Biases may affect decision making.
Utilitarianism
Key Principles
The greatest good for the greatest number.
The ends justify the means.
Utilitarianism
Criticisms/Weaknesses
It could be argued that sometimes harm cannot be
outweighed by any benefit. That is, sometimes the ends
can’t justify the means.
Calculating the harm and benefit can be difficult. Some
argue that the ends can never truly be foreseen. So the
focus needs to be on the means.
Biases (personal, situational, organizational) can
inappropriately affect benefit/harm assessment.
Universalism
Key Principles
Take an action only if you’d get what you want if everyone
did it, under equivalent circumstances.
“Do the right thing”
Universalism
Criticisms/Weaknesses
Difficult to “never lie,” yet a pure application of universalism
says lying is always wrong.
Some would argue that there aren’t many things that are
wrong “no matter what.”
Biases (personal, situational, organizational) can affect how
“equivalent circumstance” and “inappropriately” are defined.
Could potentially justify any action.
Rights/Rule of Law
Key Principles
Do what you have the right to do, as reflected in our legal
system.
“Obey the law.”
Rights/Rule of Law
Criticisms/Weaknesses
What is legal or illegal does not always reflect a society’s
moral standards – “moral minimum.”
Not all in society have equal ability to influence the legal
system.
What if you intentionally break the law and accept the
punishment: Is that ethical?
Hard to always obey every law. Where to draw the line?
Justice
Key Principle
What is fair for one should be fair for all.
“Do what is fair.”
Criticisms/Weaknesses
Treating people equally may not mean treating them the
same.
Virtue Ethics
Key Principle
Develop individual character (virtues) and you will necessarily make
the right decision.
Virtues: wisdom, prudence, justice, fortitude, courage, liberality,
magnificence, magnanimity, temperance
Criticisms/Weaknesses
Assumes “good” people will make “good decisions.
Ethics Check Questions
Is the action legal? RIGHTS
Is the action right and fair? JUSTICE
Does it promote win-win relationships? UTILITARIANISM
Is it appropriate for both short and long term?
Does it comply with the firm’s values? ORGANIZATION ETHIC
Would I want everyone to know about this?
UNIVERSALISM/CATEGORICAL IMPERATIVE
• How will I feel about myself? INTUITION
•
•
•
•
•
•
THE ALLIGATOR RIVER STORY
There lived a woman named Abigail who was in love with a man named Gregory. Gregory lived on
the shore of a river. Abigail lived on the opposite shore of the same river. The river that separated
the two lovers was teeming with dangerous alligators. Abigail wanted to cross the river to be with
Gregory. Unfortunately, the bridge had been washed out by a heavy flood the previous week. So
she went to ask Sinbad, a
riverboat captain, to take her across. He said he would be glad to if she would consent to go to
bed with him prior to the voyage. She promptly refused and went to a friend named Ivan to
explain her plight. Ivan did not want to get involved at all in the situation. Abigail felt her only
alternative was to accept Sinbad’s terms. Sinbad fulfilled his promise to Abigail and delivered
her into the arms of Gregory.
When Abigail told Gregory about her amorous escapade in order to cross the river, Gregory cast
her aside with disdain. Heartsick and rejected, Abigail turned to Slug with her tale of woe. Slug,
feeling compassion for Abigail, sought out Gregory and beat him brutally. Abigail was overjoyed
at the sight of Gregory getting his due. As the sun set on the horizon, people heard Abigail
laughing at Gregory.
Moral/Ethical problems in business:
A conflict between financial performance
(revenues, costs, & profits) and social
performance (obligations to all stakeholders)
Alayne Fleischmann
Sources of pressure in today's workplace:
•
•
•
•
•
•
•
•
•
•
Balancing work & family
Poor internal communications
Poor leadership
Work hours, work load
Technology and constant access
Need to meet sales, profit, or budget goals
Little or no recognition of achievements
Company politics
Personal financial worries
Insufficient resources
Management Pressures
“I am sometimes subject to pressure to compromise
personal standards to achieve organizational goals”
•
•
•
•
All Management Levels:
Top Management:
Middle Management:
Lower Management:
64% agree
50% agree
65% agree
85% agree
Consequences of Pressure
• 60% of workers feel “substantial” amount of job pressure
• 57% of workers feel more pressure than 5 years ago
• 40% of workers feel that pressure has increased in the past
year
• Nearly half (48% of workers) reported that they had
engaged in one or more unethical or illegal activities during
the past year, resulting from job pressure
Top five types of unethical or illegal
behaviors in response to pressure:
•
•
•
•
•
Cutting corners on quality
Covering up incidents
Abusing or lying about sick days
Lying or deceiving customers
Putting inappropriate pressure on others
Percentage of type of observed misconduct at work:
Unsafe working conditions
Deceptive sales practices
Mishandling proprietary/confidential information
Violations of privacy rights
Shipping low-quality or unsafe products
Employment discrimination
Sexual harassment
Altering product quality or safety test results
Antitrust violations or unfair competitive practices
Environmental breaches
56%
56%
50%
38%
37%
36%
34%
32%
32%
31%
The New Perspective on Organizational Wrongdoing
Wrongdoing as a “normal phenomenon”
• Treats wrongdoing as prevalent rather than rare
• Views wrongful behavior as not much different than rightdoing
• Considers wrongdoers to be ordinary people rather than “bad apples”
• Assumes the causes arise from a plethora of structures, systems and processes
What gives rise to wrongdoing?
• Power structures
• Administrative systems
• Situational social influence
• Accidental wrongdoing and technological systems
Choice of
Ethical
Perspective
“Biases”
individual differences
power structures,
administrative systems,
social influence,
technology =
“ethical breakdowns”
Individual influences on ethical decision-making
Factor
Influence on ethical decision-making
Age and gender
Very mixed evidence leading to unclear associations with ethical decision-making.
National and cultural characteristics
Appear to have a significant effect on ethical beliefs, as well as views of what is deemed
an acceptable approach to certain business issues.
Education and employment
Somewhat unclear, although some clear differences in ethical decision-making between
those with different educational and professional experience seem to be present.
Psychological factors:

Cognitive moral development

Locus of control

Small but significant effect on ethical decision-making.

At most a limited effect on decision-making, but can be important in predicting the
apportioning of blame/approbation.
Personal Values
Significant influence – some empirical evidence citing positive relationship.
Personal integrity
Significant influence likely, but lack of inclusion in models and empirical tests.
Moral imagination
A new issue for inclusion with considerable explanatory potential.
http://opinionator.blogs.nytimes.com/2013/10/05/rich-people-just-care-less/?_r=0
Situational influences on ethical
decision-making
Type of
factor
Factor
Influence on ethical decision-making
Moral intensity
Reasonably new factor, but evidence suggests significant effect on ethical decisionmaking.
Fairly limited evidence, but existing studies show strong influence on some aspects of
the ethical decision-making process, most notably moral awareness.
Strong evidence of relationship between rewards/punishments and ethical behaviour,
although other stages in ethical decision-making have been less investigated.
Good general support for a significant influence from immediate superiors and top
management on ethical decision-making of subordinates.
Issue-related
Moral framing
Rewards
Authority
Contextrelated
Bureaucracy
Work roles
Significant influence on ethical decision-making well documented, but actually
exposed to only limited empirical research. Hence, specific consequences for ethical
decision-making remain contested.
Some influence likely, but lack of empirical evidence to date.
Organizational
culture
Strong overall influence, although implications of relationship between culture and
ethical decision-making remain contested.
National Context
Limited empirical investigation, but some shifts in influence likely.
http://www.upworthy.com/take-two-normal-people-add-money-to-just-one-of-them-and-watch-what-happens-next?g=2&c=cd1
Human Behavior Experiments https://www.youtube.com/watch?v=XVpV73wSyG8
5 Barriers to an Ethical Organization
Choice of
Ethical
Perspective
“Biases”
individual differences
power structures,
administrative systems,
social influence,
technology =
“ethical breakdowns”
Improving Ethical Climate
Ethics Programs &
Officers
Realistic
Objectives
Ethical
Decision
Processes
Codes of Conduct
Effective
Communication
Top
Management
Leadership
Discipline of
Violators
Ethics Audit
Ethics Training
Whistle-blowing
mechanisms
Code of Ethics Topics
•
•
•
•
•
•
•
•
•
Aspirational and expected conduct
Conflicts of interest
Receiving and giving of gifts, gratuities, and entertainment
Protecting company proprietary information
Discrimination
Sexual harassment
Kickbacks
Employee theft
Proper use of company resources
Ethics Check Questions at Work
•
•
•
•
•
•
•
Is the action legal? RIGHTS
Is the action right and fair? JUSTICE
Does it promote win-win relationships? UTILITARIANISM
Is it appropriate for both short and long term? PROFIT MAXIMIZATION
Does it comply with the firm’s values? ORGANIZATION ETHIC
Would I want everyone to know about this? UNIVERSALISM
How will I feel about myself? INTUITION
Why should business behave ethically?
• Fulfills public expectation for business.
• Prevents harming others.
• Improves business relations and employee productivity.
• Reduces penalties under Corporate Sentencing Guidelines.
• Protects business from others, including government.
• Protects employees from their employers.
• Promotes personal morality.
• Helps profitability.