Ethical Decision Making

Consider This: “You and Al” You are the manager for Big-Mart, a large discount retailer. You recently fired Al, a sales clerk, after Al punched a customer during a dispute in the store(Al admitted this after the customer complained). Sue, manager of your competitor, Mega-Mart, calls you to tell you that Al has applied for a job at Mega-Mart, and to ask you whether Al is “good with customers.” WHAT DO YOU DO ?

WHAT IS ETHICS? (class discussion)

What is Ethics? Ethics: The study of right and wrong “in action” Learning Objective: Be able to effectively resolve “ethical dilemmas” in business Moral philosophy: tools for this process “Values:” principles that are important to individual, group

Legal Responsibilities & Ethical Dilemmas Legal duties may be clear Is the decision the RIGHT action to take? Making a business decision can involve ethical dilemmas

“An Ethical Dilemma?” Choice to be made Implicates competing values, rights, & goals Potential harm to decision maker? Potential harm to others? “Ripple effect:” long-term, far reaching implications of decision to be made.

LAW & ETHICS With an Emphasis on Ethics A COMPARISON

Is “legal” the same as “ethical?” YES or No or Maybe, or I Don’t Know?

Is “legal” the same as “ethical?” YES? If one is acting within the law presumably one is acting ethically. The law defines specific duties. Some conduct is allowed – some not. Balance competing values. Compliance – no further action Formal punishment of illegal conduct.

Is “legal” the same as “ethical?” NO? Ethics offers guidance on how one should act. Addresses situations where competing values clash. Action or inaction may be controlled by formal or informal process. Action beyond mere compliance to legal duty.

How to Evaluate Solutions: Some Theories Stakeholder/Utilitarian Theory: greatest good to the greatest number Rights Theory: Respecting and protecting individual rights to fair and equal treatment, privacy, freedom to advance, etc. Justice Theory: fair distribution of benefits and burdens: can harm to individual be justifiable? Categorical Imperative: “what if everyone took such action?” “Front Page Test:” What if my decision was reported on the front page of the Los Angeles Times?

How to Resolve Ethical Dilemmas in Business Identify relevant facts Identify relevant issue(s) Identify primary stakeholders Identify possible solutions Evaluate each possible solution Compare and assess consequences Decide on solution Take action

Additional Approaches to Ethical Decision Making Five Question Approach (Tucker) Moral Standards Approach (Velasquez) Pastin’s Approach

Practical Approaches to Ethics Five Question Approach (Tucker) Evaluate each alternative on: Profitability (shareholders) Legality (society at large) Fairness Impact on the rights of stakeholders Impact on sustainable development (environment)

Practical Approaches to Ethics Moral Standards Approach (Velasquez) Is the decision: Of net benefit to society Fair to all stakeholders (fair distribution of benefits and burdens) Consistent with each person’s rights

Practical Approaches to Ethics Pastin’s approach (Pastin) Ground rule ethics (organization/individual rules and values) End-point ethics (greatest net good for all concerned) Rule ethics (determine ethical boundaries to take into account – impingement of rights) Social contract ethics (how to move boundaries)

Consider This: “You and Al” You are the manager for Big-Mart, a large discount retailer. You recently fired Al, a sales clerk, after Al punched a customer during a dispute in the store(Al admitted this after the customer complained). Sue, manager of your competitor, Mega-Mart, calls you to tell you that Al has applied for a job at Mega-Mart, and to ask you whether Al is “good with customers.” WHAT DO YOU DO ?

Evaluate “You and Al” in Light of Class Discussion Class Exercise Evaluate “You and Al” in Light of Class Discussion

Legal vs. Ethical “You and Al” Action Legal/Illegal Ethical/Unethical Tell the Truth Lie No Comment Other

End of Ethics Exercise