© Colin Boyd 2006IABC Ethics Presentation A Simple Model of Analysis for Ethical Decision-Making by Colin Boyd Professor of Management University of Saskatchewan

© Colin Boyd 2006IABC Ethics Presentation Oxymorons Jumbo shrimp Military intelligence Postal service Gourmet pizza Business ethics

© Colin Boyd 2006IABC Ethics Presentation Where is the boundary between morality and immorality in the quest for profits? In 1988 the West German newspapers described the activities of a particular businessman. He had been advertising in Pakistan for healthy volunteers to donate one of their kidneys, and several had already come to Germany for the donation operation. The businessman paid the volunteers about $10,000, a large sum in comparison to annual incomes in Pakistan. He also paid the donors’ expenses, and the medical costs involved in the removal of the kidney from each healthy donor. The businessman sold the kidneys for around $30,000 each, for transplant into patients attending a private medical clinic. All of these patients were wealthy, and most were from Arabic countries.

© Colin Boyd 2006IABC Ethics Presentation Social Consensus The Law Should the law be taken as the definition of right and wrong in guiding managers as to the morality of business conduct? If it is legal, then surely it can’t be wrong?

© Colin Boyd 2006IABC Ethics Presentation Everything that is moral Everything that is legal All that is moral and legal at the same time Legal but immoral: discrimination against Jews in Nazi Germany Moral but illegal: exceeding the Speed limit in rural Saskatchewan

© Colin Boyd 2006IABC Ethics Presentation You can't teach me ethics! I learned all my values.....on my mother's knee.....in kindergarten.....at my church You can move from lower to higher levels of moral reasoning "daddy says it is wrong” - fear of punishment "my friends won't like me" - peer pressure "eating meat is wrong” - moral principles

© Colin Boyd 2006IABC Ethics Presentation We spend very little time examining our core values ……and yet they seem to have a great influence on our daily lives ……for example, how much time and money do you spend each week related to your core values regarding PERSONAL HYGIENE ??

© Colin Boyd 2006IABC Ethics Presentation Jane Smith, an old school friend, calls you on the phone to say that she is in town, staying at the Quality Inn for a night while on a business trip for Ajax Limited, her Halifax-based employer. She asks if you would like to get together and talk over old times. You meet in the hotel bar, and later decide to eat together in the hotel restaurant. When the bill comes you offer to pay your share, but Jane says no, she can charge the meal and drinks to her room. Ajax will pay, she says. She will pretend you were a business client. Honesty: Dinner with Jane

© Colin Boyd 2006IABC Ethics Presentation Jane later contacts you to ask if you will give her a reference for a job 2to ask for a reference for a job as a financial controller where she will be handling a lot of cash 3to apply for a job as the financial controller of the company that you own

© Colin Boyd 2006IABC Ethics Presentation the profits of the firm the wellbeing of employees customer satisfaction paying suppliers on time respect for the environment In business, which comes first? Which has priority? What happens when you cannot satisfy these different constituencies?

© Colin Boyd 2006IABC Ethics Presentation ETHICS Greek - “proper conduct” ETHNIC people of one's own kind a community of shared values ETHOS Greek - the essential character or spirit of a person or organization the prevalent sentiment of a community

© Colin Boyd 2006IABC Ethics Presentation Ethical Analysis Or Moral Reasoning Stakeholder identification End-point ethics, Utilitarianism Human Rights Justice or Rule-based ethics

© Colin Boyd 2006IABC Ethics Presentation PRIMARY STAKEHOLDERS (those who have a direct economic stake in the welfare of the organization) SHAREHOLDERS COMPETITORS CUSTOMERS DISTRIBUTORS (WHOLESALERS, RETAILERS) CREDITORS SUPPLIERS EMPLOYEES (UNIONS) MANAGERS Buy products Compete for customers Distribute products Sell raw materials Provide labour Provide admin skills Lend cash Invest capital

© Colin Boyd 2006IABC Ethics Presentation SECONDARY STAKEHOLDERS + future stakeholders? future generations? THE GENERAL PUBLIC NEXT-DOOR NEIGHBOURS THE LOCAL COMMUNITY FEDERAL GOVERNMENT THE MEDIA LOCAL GOVERNMENT BUSINESS LOBBY GROUPS SOCIAL ACTIVIST GROUPS …are affected not so much by the scale of the organization, but more by its existence. These stakeholders are not inferior to primary stakeholders, but have a secondary type of relationship

© Colin Boyd 2006IABC Ethics Presentation A Utilitarian Analysis Total Benefits Total Harms Do the benefits exceed the harms? At the end-point, what is the balance?

© Colin Boyd 2006IABC Ethics Presentation Alternative A Alternative B Stakeholder #1 Stakeholder #2 Stakeholder #3 Stakeholder #4 Stakeholder #5 Do the total benefits exceed the total harms? Net Outcomes End-Point Ethics, or Utilitarianism

© Colin Boyd 2006IABC Ethics Presentation The cost is $11 per car x 11 million Pintos = $121 million The benefit is the saving of 180 $200,000 per life = $36 million Utilitarianism in Action:The Ford Pinto As the cost of $121 million outweighed the social benefit of $36 million, Ford concluded that improving the Pinto design would not be profitable for Ford, or for society in general. Ford managers decided to go ahead with production of the Pinto as designed.

© Colin Boyd 2006IABC Ethics Presentation Global satelite positioning systems (GPS) can now be fitted to automobiles. When combined with data from a CD drive map of a local area, any car can know its own position to within a few meters. It can also know what the maximum speed limit is for that precise location The UK Government is considering a recommendation for making automobiles automatically compliant with local speed limits – your car would not let you drive any faster than the local speed limit. It is estimated that this simple measure would cut road deaths and injuries by around 60% per year. No one would be allowed to speed. Automatic Vehicle Speed Control

© Colin Boyd 2006IABC Ethics Presentation Are Human Rights Protected? Basic Rights LIBERTY RIGHTS Things that I have that no one else should take from me WELFARE RIGHTS Things that I do not have that someone else should give to me

© Colin Boyd 2006IABC Ethics Presentation Are Human Rights Protected? Basic Rights LIBERTY The duty not to remove rights, such as the right to: Privacy Free Speech Free Consent Freedom of Conscience WELFARE The duty to provide rights, such as the right to: Employment Housing Food Education

© Colin Boyd 2006IABC Ethics Presentation Can your employer tell you how to vote? Liberty Rights: The Right to Vote? If an employee is seen advocating gay rights on TV at the weekend, is that relevant to the employer? Can a Christian employee try to convert fellow workers during work hours? Liberty Rights: The Right to Free Speech? Can an employer listen in on phone operators, reservations clerks? Watch you via video camera? Liberty Rights: Do We Have a Right to Privacy?

© Colin Boyd 2006IABC Ethics Presentation Timing Your Visits to the Washroom Workers at the Gainers meat-packing plant in Edmonton lose their pay when they go on bathroom breaks. Company president Larry Harding said the “personal relief” program was instituted in January 1994 because management felt that employees were taking advantage of bathroom and phone privileges. Each of Gainers’ 850 employees must ask a supervisor for permission to leave work outside lunch or coffee breaks. The typical Gainers worker earns $12 an hour and is docked 60 cents for every minute he or she is absent. If the worker is away for more than 20 minutes a week, he or she is temporarily suspended. Liberty Rights: Personal Time at Work?

© Colin Boyd 2006IABC Ethics Presentation Welfare Rights: Do We Have a Right to a Job? Loggers from North Vancouver Island protesting the creation of 23 new parks on Vancouver Island which threaten their right to their jobs Coal miners in Sydney, N.S. argue against the closure of their mines Welfare Rights: Do We Have a Right to an Education? The USSU protesting that increased University of Saskatchewan tuition fees will prevent students from poor families from having access to secondary education. Everyone has a right to an education irrelevant of their economic background.

© Colin Boyd 2006IABC Ethics Presentation Are Other Rights Protected? Future Generations Stakeholders in Different Cultures Animals Plants Ecological Systems The Earth

© Colin Boyd 2006IABC Ethics Presentation Late 20th Century Trends The evolution of rights issues The collapse of paternalism (e.g. not telling someone that they have cancer – “it is best that Aunt Betty not know…”) The emergence of animal rights e.g. the Body Shop, Cirque de Soleil, attacks on animal transport in UK

© Colin Boyd 2006IABC Ethics Presentation Justice or Rule Ethics Are the harms and benefits fairly and justly distributed across the affected stakeholders? Is it fair? RAWL's THEORY of JUSTICE If you were to design a system of distribution of the benefits and harms across the stakeholders without knowing in advance which stakeholder you would be, then how would you want the harms and benefits to be distributed?

© Colin Boyd 2006IABC Ethics Presentation Justice or Rule Ethics Test of Disclosure How will the solution look if headlined in the newspaper? Social Contract Ethics Are the stakeholders willing partners, ready to swap positions with each other? JANE FIDDLES HER EXPENSES AB

© Colin Boyd 2006IABC Ethics Presentation “Its just like money for nothing!” exclaimed Sally with a laugh as she put her glass back on the bar. “I can’t believe my luck. $15,000 for one day’s work, its just crazy!”. Sally was a consultant who writes computer software for accounting systems. She was celebrating after having received a contract to design a new system for a client who was under the impression that such a system takes about 2 months of design work to complete. Sally was jubilant; “They don’t know that I designed an identical system for one of their competitors only a few weeks ago. All I have to do is to dust off that package, change the client’s name, and that’s it. One day’s work at the most! Isn’t it great?” Money for Nothing

© Colin Boyd 2006IABC Ethics Presentation A Framework for Ethical Analysis of Business Decisions Who are the affected stakeholders? What are the outcomes for each stakeholder of the proposed solution to the problem?

© Colin Boyd 2006IABC Ethics Presentation End Point Ethics Do the total benefits exceed the total harms? Rights Are human rights protected? Rule Ethics Are the harms and benefits fairly and justly distributed? Test of Disclosure How will the solution look if headlined in the newspaper? Social Contract Ethics Are the stakeholders willing partners, ready to swap positions with each other?