BUSINESS & SOCIETY Ethics and Stakeholder Management Chapter 6 BUSINESS & SOCIETY Ethics and Stakeholder Management Carroll & Buchholtz 6e BUSINESS’S ETHICS FUNDAMENTALS Prepared by Deborah Baker Texas Christian University Chapter 6- Business and Society: Ethics and Stakeholder Management, 6e • Carroll & Buchholtz Copyright ©2006 by South-Western, a division of Thomson Learning.  All rights reserved

Chapter 6 Learning Outcomes Describe how the public regards business ethics. Define business ethics and appreciate the complexities of making ethical judgments. Explain the conventional approach to business ethics. Analyze economic, legal, and ethical aspects of business using a Venn Model. Enumerate and discuss the four important ethics questions. Identify and explain three models of management ethics. Describe Kohlberg’s three levels of developing moral judgment. Identify and discuss the elements of moral judgment. Chapter 6- 2

Quote for the Day Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws. Plato Chapter 6-

Introduction to Chapter 6 Business Ethics Public’s interest in business ethics increased during the last three decades Public’s interest in business ethics has been spurred by the media The Enron scandal has come to define modern ethics scandals Chapter 6-

Introduction to Chapter 6 2000 National Business Ethics Survey Findings One in eight employees feel pressure to compromise their organization’s ethics standards Two-thirds attribute this pressure to internal sources One in three employees observes misconduct at work Misconduct observed most include lying, withholding information, abusive behavior toward employees, misreporting time worked, and discrimination One in three employees fears retaliation Employees say that their organizations’ concern for ethics is a reason they continue to work there Chapter 6-

Business Ethics: What Does It Really Mean? involves a discipline that examines good or bad practices within the context of moral duty and obligation Moral conduct relates to principles of right and wrong in behavior Business Ethics concerned with good and bad or right and wrong behavior and practices that take place in business Chapter 6-

Business Ethics: What Does It Really Mean? Descriptive Ethics involves describing, characterizing and studying morality focuses on “What is” Normative Ethics involves supplying and justifying moral systems focuses on “What should be” Chapter 6-

Conventional Approach to Business Ethics The conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms Decision or Practice Prevailing Norms of Acceptability Chapter 6-

Question ?? How ethical are you??? Bank teller (human) gives you an extra $20 when you cash a $100 check. Chapter 6-

Sources of Ethical Norms Fellow Workers Family Friends The Law Regions of Country Profession Employer Society at Large Local Community Religious Beliefs The Individual Conscience Chapter 6-

Ethics and the Law Overlap Law often represents an ethical minimum law reflects society’s codified ethics Ethics often represents a standard that exceeds the legal minimum Ethics Law Overlap Chapter 6-

Making Ethical Judgments Behavior or act that has been committed Prevailing norms of acceptability Value judgments and perceptions of the observer compared with Chapter 6-

Ethics, Economics, and Law Chapter 6-

Four Important Ethical Questions What is? What ought to be? How to we get from what is to what ought to be? What is our motivation for acting ethically? Chapter 6-

Three Models of Management Ethics Immoral Management A style devoid of ethical principles and active opposition to what is ethical Moral Management Conforms to high standards of ethical behavior Amoral Management Intentional: does not consider ethical factors Unintentional: casual or careless about ethical factors Chapter 6-

Characteristics of Immoral Managers Intentionally do wrong Self-centered and self-absorbed Care only about self or organization’s profits Actively oppose what is right, fair, or just Exhibit no concern for stakeholders Are the “bad guys” An ethics course probably would not help them Chapter 6-

Characteristics of Moral Managers Conform to high level of ethical or right behavior Conform to high level of personal and professionals standards Ethical leadership is commonplace Goal is to succeed within confines of sound ethical precepts High integrity is displayed Embrace letter and spirit of the law Possess an acute moral sense and moral maturity Are the “good guys” Chapter 6-

Characteristics of Amoral Managers Intentionally Amoral Managers: Don’t think ethics and business should “mix” Business and ethics are existing in separate spheres A vanishing breed Unintentionally Amoral Managers: Don’t consider the ethical dimension of decision making Don’t “think ethically” Have no “ethics buds” Well-intentioned, but morally casual or unconscious Ethical gears are in neutral Chapter 6-

Three Models of Management Morality and Emphasis on CSR Chapter 6-

Making Moral Management Actionable Senior management leads the transition from amoral to moral management Business ethics training Codes of conduct Mission/Vision statements Ethics officers Tighter financial controls Ethically sensitive decision-making processes Leadership by example Recognize that amoral management exists Chapter 6-

Developing Moral Judgment Kohlberg’s Levels of Moral Development Level 1 Preconventional Level Level 2 Conventional Level Level 3 Postconventional Level Chapter 6-

Developing Moral Judgment Chapter 6-

Why Managers Behave Ethically Most of Us Many of Us Very Few Of Us 1. To avoid some punishment 2. To receive some reward 3. To be responsive to family, friends, or superiors 4. To be a good citizen 5. To do what is right, pursue some ideal Chapter 6-

Feminist Views of Kohlberg’s Research Recognize their own needs and needs of others Establish connections and participate in social life Sole Concern for Self Level 3 Level 2 Level 1 Chapter 6-

External Sources of a Manager’s Values Philosophical values Cultural values Legal values Religious values Professional values The Web of Values Chapter 6-

Internal Sources of a Manager’s Values “Norms” shape business ethics Respect for the authority structure Loyalty to bosses and the organization Conformity to principles and practices Performance Results Chapter 6-

Elements of Moral Judgment Moral imagination Moral identification and ordering Moral evaluation Tolerance of moral disagreement and ambiguity Integration of managerial and moral competence A sense of moral obligation Chapter 6-

Next Time Case: Martha Stewart (#5) DUE – Outline for paper (one page) – use roman numerals and bullet points. 5 points for outline, 5 points for citations (10+) Google for an outline sample http://www.ccc.commnet.edu/mla/outlines.shtml Chapter 6-