MBA 740: BUSINESS ETHICS Nicos Rodosthenous PhD Lecture 3 30/6/20151Dr Nicos Rodosthenous

Ethical Theory and its application 1. Key Causes of Unethical Behavior Meeting overly aggressive financial or business objectives meeting schedule pressures helping the organization survive rationalizing that others do it resisting competitive threats saving jobs 30/6/20152Dr Nicos Rodosthenous

Ethical Theory and its application 30/6/20153Dr Nicos Rodosthenous

Ethical Theory and its application People act unethically for a number of reasons. Unethical behavior is defined as behavior that contravenes rules designed to maintain the fairness and morality of a situation. An example of unethical behavior is a representative of a company taking kickbacks from a salesman for preferential treatment. ( Governments or Ministers with army weapons) 30/6/20154Dr Nicos Rodosthenous

Ethical Theory and its application 2. Key Findings The most prevalent types of organizational ethics standards/practice are: 1) Discipline for employees who violate their organization’s ethics standards. 2) A formal ethics program that includes written standards of ethical workplace conduct. 3) A means for an employee to confidentially or anonymously report violations of ethics standards. 4) A written non retaliation policy for employees who report a perceived ethical violation in good faith. 30/6/20155Dr Nicos Rodosthenous

Ethical Theory and its application HR professionals, in general, are in agreement that non management employees, supervisors and top management : 1) support them in following their organization’s ethics standards, 2) talk about the importance of workplace ethics and doing the right thing in the work they do, 3) set a good example of ethical behavior, and 4) are held accountable if they were caught violating the organization’s ethics standards. 30/6/20156Dr Nicos Rodosthenous

Ethical Theory and its application 3. Key Influences On Ethical Behavior. personal values supervisor influence senior management influence internal drive to succeed performance pressures lack of punishment friends/coworker influence 30/6/20157Dr Nicos Rodosthenous

Ethical Theory and its application 4. Why Misconduct Is Not Reported. Fear of not being considered a team player Does not think that corrective action would be taken Fear of retribution (from management) “no one else cares, why should I” Do not trust the organization to keep report confidential. Case study 3- Sexual harassment. 30/6/20158Dr Nicos Rodosthenous

Ethical Theory and its application 30/6/2015Dr Nicos Rodosthenous9

Ethical Theory and its application 5. Classification of Ethical Issues. 1. Conflict of interest 2. Honesty and fairness 3. Communications 4. Organizational relationships 30/6/201510Dr Nicos Rodosthenous

Ethical Theory and its application 5.1. Conflict of Interest exists when an individual must choose whether to advance his or her own personal interests, than those of the organization, or some other group must be able to separate personal interests from business dealings bribery is a significant concern examples include bribes or personal payments, gifts, or special favors intended to influence decision making. i.e. sales persons. 30/6/201511Dr Nicos Rodosthenous

Ethical Theory and its application 5.2. Honesty & Fairness honesty relates to truthfulness, integrity & trustworthiness fairness related to being just, equitable & impartial breaking or bending laws violates trust business should not be played as a “game” lack of rules & poor enforcement leads to unethical behavior i.e. Rules and regulations of airline business. 30/6/201512Dr Nicos Rodosthenous

Ethical Theory and its application 5.3. Communications. issues involved relate to advertising, product safety, pollution, & employee work conditions lies is a major ethical issue with internal & external communications false advertising relates to: – exaggerated claims – concealed facts & ambiguous statements examples: deceptive advertising, product, safety information, & product composition 30/6/201513Dr Nicos Rodosthenous

Ethical Theory and its application Are vitamin and herbal supplements using ‘puffery’ in their advertising?-half of Americans take supplements Organizational Relationships. Relate to behavior of organizational members toward stakeholders, customers, suppliers, subordinates, superiors & others. Includes confidentiality, meeting obligations & deadlines, not pressuring others to behave unethically. Plagiarism is one ethical issue of concern to organizations. 30/6/201514Dr Nicos Rodosthenous

Ethical Theory and its application 6. Ethical Issues Can Relate to All Functional Areas. Accounting Finance Management Marketing 6.1. Ethical Issues Related to Ownership. Owners have an obligation to society as well as their employees & customers. Case study 4- McDonalds fries. 30/6/201515Dr Nicos Rodosthenous

Ethical Theory and its application 30/6/2015Dr Nicos Rodosthenous16

Ethical Theory and its application – minimize pollution – compensate workers fairly – produce safe products Must be sensitive to legal & ethical risks of their industry & region. i.e. factories and heavy industries. 30/6/201517Dr Nicos Rodosthenous

Ethical Theory and its application 6.2. Financial Responsibilities reporting & use of the companies’ finances pricing products/services fairly avoiding any antitrust activities – price fixing/over commissions sensitivity to socially responsible investing 30/6/201518Dr Nicos Rodosthenous

Ethical Theory and its application 6.3. Employees & Management Concerns employee theft, sabotage & competitive intelligence fear of layoffs salary plateaus discrimination privacy & data access health & safety 30/6/201519Dr Nicos Rodosthenous

Ethical Theory and its application 6.4. Consumer & Marketing Issues Must consider consumer feedback – safety – environmental (can lead to boycotts) – maximize positive publicity & avoid negative 7. Personal values in the workplace How our personal values impact the workplace? a) Loyalty and Respect: The fusion of personal values with a company’s expressed work 30/6/201520Dr Nicos Rodosthenous

Ethical Theory and its application ethic may result in the development of greater employee loyalty and respect for the organization. The need to generate employee enthusiasm and dedication to product produced or service delivered, is of utmost concern by the employers. b) History of Fair Dealing: Does the organization have a sound historical record in manufacturing a product or providing a service that provides both desired and necessary assistance to the customer? 30/6/201521Dr Nicos Rodosthenous

Ethical Theory and its application Will the employee’s expectations of fair play and equitable treatment be upheld? c) Building Trust: unethical practices of a number of companies have served the passage of new legislation to demand accountability and as a catalyst for the individual organization to switch to a model of values-based decision-making. d) Basing Decisions on Values Rather Than Beliefs: There are three different ways we can arrive at a decision: 30/6/201522Dr Nicos Rodosthenous

Ethical Theory and its application 1) we can use our beliefs to formulate a response, 2) we can use our values to formulate our response, or 3) we can use our intuition to formulate a response.” (Barrett, 2005, p.1) Beliefs are based in our past histories, habits and traditions. If we use values to make decisions, those decisions will align with the future we want to experience. e) Gain Team Member and Customer Commitment: Shared values build trust. 30/6/201523Dr Nicos Rodosthenous

Ethical Theory and its application Trust is the foundation on which relationships are established, both with team members and customers alike. Values-based leadership is a way of making authentic decisions that build the trust and commitment of employees and customers. f) Stimulate Vision and Inspire Others: “when a truly values-based leader ensures that his organization has an engaging process for the people to explore their personal values, as well as their teams’ and the organizations’ values, there are benefits on many levels: Personal, Team, Organizational, Customers. 30/6/201524Dr Nicos Rodosthenous

Ethical Theory and its application g) Defining Values ‑ Based Leadership: The concept is primarily defined as leading by example, and doing the right thing for the right reasons and not compromising core principles. A leader who embraces this type of thinking can become very successful in fostering strategic vision and gaining the support and partnership of other potential business partners. Steve Jobs, CEO of Apple Computer, Inc., once remarked : 30/6/201525Dr Nicos Rodosthenous

Ethical Theory and its application “The only thing that works is management by values. Find people who are competent and really bright, but more importantly, people who care exactly about the same thing you care about - engage people’s hearts as well as their heads”. h) A model of principled business leadership could be: A. Ethics: Maintain the highest standards with customers, team members, stockholders and our communities: 30/6/201526Dr Nicos Rodosthenous

Ethical Theory and its application 1. Value and reward open, honest, two-way communication. 2. Be accountable for, and proud of, your conduct and your decisions. 3. Only make promises you intend to keep – do what you say you’ll do. 4. If things change, let people know.  Avoid any actual or perceived conflict of interest.  Comply with the letter and the spirit of the law. 30/6/201527Dr Nicos Rodosthenous

Ethical Theory and its application B. Customer Satisfaction: Consider the customer in all we do: 1. Exceed the expectations of internal and external customers – surprise and delight them. – 2. Do what’s right for the customer. – 3. Talk and act with the customer in mind. – 4. Build long-term customer relationships. – 5. Treat customers with care. 30/6/201528Dr Nicos Rodosthenous

Ethical Theory and its application C. Leadership and Personal Accountability: Every team member who contributes to the company’s success should: Take prudent risks. Lead by example. Make decisions locally, close to the customer. Know your numbers. Consider customers, shareholders, team members and community needs when formulating decisions. Care about each other. 30/6/201529Dr Nicos Rodosthenous

Ethical Theory and its application D. Diversity: Respect differences among team members, customers and individual communities: 1. Earn mutual trust by supporting our corporate values for promoting diversity in both the workforce and the company base. 2. Take advantage of and learn from different perspectives presented. 3. Support the diversity of team members, customers and communities. 4. Leverage diversity as a competitive advantage. 30/6/201530Dr Nicos Rodosthenous

Ethical Theory and its application i) The Importance of Maintaining Values ‑ Based Leadership: I am more passionate about the work I do. I am more driven to achieve results. I care more about how my work impacts those around me in the workplace and in the community. Moreover, I have found that the values of my employer fit neatly into the realm of my own established principles, ultimately allowing me to be more effective and successful in the workplace 30/6/201531Dr Nicos Rodosthenous