Ethics Chapter 2

Introduction Ethics are human values that describe how one lives and what we term as “Correct” behavior Ethics are human values that describe how one lives and what we term as “Correct” behavior Ethics has two possible levels Ethics has two possible levels Substantive or Normative Substantive or Normative Meta-ethics Meta-ethics

Continue. Substantive or Normative Substantive or Normative The question is: Is this the right thing to do? The question is: Is this the right thing to do? A question posed against ones own feeling A question posed against ones own feeling Meta-ethics Meta-ethics The question is: How do I know this is the right thing to do? The question is: How do I know this is the right thing to do? What am I gauging this against? (past experience, people around me) What am I gauging this against? (past experience, people around me)

Business Ethics Has become a field of study in its own right, much like ethics in medicine for instance Has become a field of study in its own right, much like ethics in medicine for instance Reason being that businesses do not operate in vacuum Reason being that businesses do not operate in vacuum And that profit is not the sole driving force behind any business although it is important And that profit is not the sole driving force behind any business although it is important Triple bottom line reporting Triple bottom line reporting

Ethical Theories Consequence Based: the consequence of an action determines whether it is right or wrong Consequence Based: the consequence of an action determines whether it is right or wrong Principle Based: one’s own principles or values he/she has been taught or developed will determine right from wrong Principle Based: one’s own principles or values he/she has been taught or developed will determine right from wrong

Continue. Virtue Based: Means that the character of an individual decides right from wrong but leads to problems when looking at different societies Virtue Based: Means that the character of an individual decides right from wrong but leads to problems when looking at different societies Narrative Based: Stories used to describe right from wrong like nursery rhymes or children’s stories Narrative Based: Stories used to describe right from wrong like nursery rhymes or children’s stories

Moral Absolutism Vs Moral Relativism Moral Absolutism: states there is only one ethical solution Moral Absolutism: states there is only one ethical solution Moral Relativism: states that the same problem under different circumstances could dealt with differently Moral Relativism: states that the same problem under different circumstances could dealt with differently More than one “moral” solution to a problem, depending on diff cultures More than one “moral” solution to a problem, depending on diff cultures Diff to set universal code of ethics as values differ from country to country Diff to set universal code of ethics as values differ from country to country

Business Ethics Business ethics could be said to be how one’s own personal values or beliefs are applied in a business context Business ethics could be said to be how one’s own personal values or beliefs are applied in a business context

Basic Moral Questions What does the law say and do we agree with this law? What does the law say and do we agree with this law? What about choices regarding economic and social issues not governed by legislation or where legislation is not enforced? What about choices regarding economic and social issues not governed by legislation or where legislation is not enforced?

Continue. The issue of self-interest Vs the interest of the business. The issue of self-interest Vs the interest of the business.

Some Ethical Issues Employee conflict of interest (moral or unfair treatment) Employee conflict of interest (moral or unfair treatment) Inappropriate gifts Inappropriate gifts Unauthorized payments Unauthorized payments Affirmative Action Affirmative Action Internet, and cell phone issues Internet, and cell phone issues Stealing from the company (Is there a difference between stealing a pencil and a PC?) Stealing from the company (Is there a difference between stealing a pencil and a PC?)

Continue. Firing an employee for “whistle blowing” Firing an employee for “whistle blowing” Other issues such as: Other issues such as: Divulging confidential info or trade secrets Divulging confidential info or trade secrets Terminating employment without following proper procedures Terminating employment without following proper procedures Advertising Advertising Tax evasion (different from tax avoidance but very fine line) Tax evasion (different from tax avoidance but very fine line)

Why Business Ethics Adam Smith: A businesses only aim is to make a profit and that it abide by all relative laws to do so Adam Smith: A businesses only aim is to make a profit and that it abide by all relative laws to do so Incentive programs: These are put in place to motivate employees as well as supply them with adequate training, this gives them meaning in their work Incentive programs: These are put in place to motivate employees as well as supply them with adequate training, this gives them meaning in their work

Continue. A business must sometimes do more than merely follow the law as it is not always sufficient to satisfy the needs of stakeholders A business must sometimes do more than merely follow the law as it is not always sufficient to satisfy the needs of stakeholders Religion has a large impact on the employees ethics that they up hold and managers should be aware of these religions within the business Religion has a large impact on the employees ethics that they up hold and managers should be aware of these religions within the business

Continue. Business should show they able to act as responsible citizens without being forced to act (pro-active rather than reactive) Business should show they able to act as responsible citizens without being forced to act (pro-active rather than reactive) As business are continually becoming more powerfully and influential in society they should try create a good society for all concerned As business are continually becoming more powerfully and influential in society they should try create a good society for all concerned

Continue. Globalization causes business to act not just at a national level but at international level and therefore the business must be aware of ethical behavior across the board Globalization causes business to act not just at a national level but at international level and therefore the business must be aware of ethical behavior across the board

Levels of Business Ethics Individual Level: involves a single person choosing to act in an ethical manner, example: Individual Level: involves a single person choosing to act in an ethical manner, example: Cheat on an expense account Cheat on an expense account Call in sick when one is not Call in sick when one is not Accept a bribe Accept a bribe Plagiarism Plagiarism

Continue. Organizational Structure: top level management put pressure on their own employees to act unethically, example: Organizational Structure: top level management put pressure on their own employees to act unethically, example: Asking an employee to perform an unethical act to increase profit (i.e. telling an employee to put fictitious assets in the balance sheet) Asking an employee to perform an unethical act to increase profit (i.e. telling an employee to put fictitious assets in the balance sheet) Asking employees to overlook wrongdoings of other individuals (i.e. not whistle blowing) Asking employees to overlook wrongdoings of other individuals (i.e. not whistle blowing)

Continue Professional or Association Level: means referring to a Code of Ethics for guidelines. Some questionable actions may be: Professional or Association Level: means referring to a Code of Ethics for guidelines. Some questionable actions may be: An accountant asking an employee to deduct questionable items for tax purposes An accountant asking an employee to deduct questionable items for tax purposes A lawyer offering plea bargain to a client when the result would be beneficial to their own career A lawyer offering plea bargain to a client when the result would be beneficial to their own career

Continue. Societal Level: different actions have different ethical views in different societies, example: Societal Level: different actions have different ethical views in different societies, example: “Go between” payments could be viewed as a bribe in one society and as a way to ensure a transaction runs smoothly “Go between” payments could be viewed as a bribe in one society and as a way to ensure a transaction runs smoothly Trading or playing sport on religious holidays Trading or playing sport on religious holidays

Continue. International Level: examples: International Level: examples: Companies that are connected to countries who grossly violate human rights Companies that are connected to countries who grossly violate human rights Economic sanctions (prevention of trade) may lead to differences of opinions on the ethics thereof Economic sanctions (prevention of trade) may lead to differences of opinions on the ethics thereof