1. Key Topics Ch 7 & 8
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2. Key Topics The Public’s Opinion of Business Ethics
Business Ethics: Meaning, Types, Approaches
Ethics, Economics and Law - A Venn Model
Three Models of Management Ethics?
Ethics Issues Arise at Different Levels
Personal and Managerial Ethics
Managing Organizational Ethics
Best Practices for Improving an Organization’s Ethical Culture
Behavior Ethics – Striving Towards a Deeper Understanding
Moral Decisions, Moral Managers, and Moral Organizations
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3. The Public’s Opinion of Business Ethics (1 of 2)
The public’s view of business ethics has never been very high.
Many people think that there’s only a fine line between a business executive and a crook.
e.g., Enron, Arthur Anderson
According to the recent Gallup poll taken in, only 21 % of the public thought business executives had high or very high ethics.
But still much better than many other counties….
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4. The Public’s Opinion of Business Ethics (2 of 2)
National Business Ethics Survey Findings -
Observed ethical misconduct at work has decreased slightly, from 49% to 45%.
Reporting bad behavior (whistle-blowing) is on the rise. from 63% to 65%.
Retaliation against those who report misconduct has increased sharply, to 22% experienced retaliation.
Pressure to compromise is near the all-time high.
Weak ethical cultures – the percentage of companies with weak ethics cultures increased to almost record levels.
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6. Is Society Changing?
Unethical practices were at one time considered acceptable to the public because, compare to today, public was not well educated and they were not known to public due to much less media coverage.
Paradigm shift & globalization
For example, change of social and ethical norms due to significant development of communication technologies (e.g., SNS)
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7. Business Ethics Today versus Earlier Periods
Ethical Problem
Society’s Expectations of Business Ethics
Actual Business Ethics
1960s
2010
Time
Expected and Actual Levels of Business Ethics
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8. Ethics
Ethics – is the discipline that deals with moral duty and obligation.
Two main Branches (from philosophy)
Descriptive Ethics is about how people do behave, and how they think they should behave. It is grounded in observation of some sort — looking at people as they are, not necessarily as they should be.
What do people think is right?
Normative Ethics is about what actually has overriding importance for determining how we ought to act. It is an instruction according to an established code.
How people should act?
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9. Normative Ethics Examples
It is wrong to kill people just because they make you angry.
We should fight to free slaves when necessary, even when doing so is illegal.
It is reasonable for a person to give charity to those in need, even if no reciprocation should be expected.
Normative Ethics is our primary concern in this text
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10. Business Ethics: Business Ethics –
why business ethics? (1:48)
Is concerned with morality and fairness in behavior, actions, and practices that take place within a business context.
Is the study of practices in organizations and is a quest to determine whether these practices are acceptable or not.
Introduction to Business Ethics (2:07)
Business ethics starting from each individual ethics and morality….
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11. Sources of Ethical Norms
Fellow Workers
Family
Friends
The Law
Regions of Country
Profession
Employer
Society at Large
Local Community
Religious Beliefs
The Individual
One’s Self-Interest and Conscience
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12. Three Major Approaches (to business ethics)
From philosophy as well……personal level
1) Conventional Approach -
Based on how the average person views business ethics. That is, it relies on ordinary common sense.
In other words, it depends on what people thought and what the prevailing standards were at that time.
2) Principles Approach – later (ch 8)
3) Ethical Tests Approach – later (ch 8)
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13. Factors Affecting the Morality of Personal Level
Society’s Moral Climate
Business’s Moral Climate
Industry’s Moral Climate
Individual One’s Personal Situation
Superiors
Policies
Peers
Organization’s Moral Climate
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14. Kohlberg’s Model of Moral Development (4:38) Source of Moral development Theory (personal level) from psychology
The Origins of Morality (13:32) – a video clip from “60 minutes”
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15. Ethics, Economics, and Law for Ethical Decision Making
In many business decisions, the law, ethics, and economics all come into play and overlap in many respects.
Set aside philanthropic expectations in ethical decision making.
Using Venn diagram for analyzing ethical decision makings
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16. A Venn Model for Ethical Decision Making
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17. Three Models of Management Ethics
Immoral Management -
An approach devoid of ethical principles and an active opposition to what is ethical.
The operating strategy of immoral management is focused on exploiting opportunities for corporate or personal gain.
Moral Management -
Conforms to highest standards of ethical behavior or professional standards of conduct.
Amoral Management –
Different in nature from the others, it has two kinds:
Intentional: Does not consider ethical factors.
Unintentional: Casual or careless about ethical factors.
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18. Characteristics of Immoral Managers-
Still not so rare…especially, under-develop and developing countries
These Managers continues to do things even if he/she knows it is really wrong.
Intentionally do wrong
Are Self-centered and self-absorbed
Care only about self or organization’s profits or success
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
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19. Examples of Immoral Manager -
Showing preferential treatment toward certain employees
Rewarding employees who display wrong behaviors
Harassing a fellow employee
Stealing petty cash
Cheating on expense reports
Taking credit for another’s accomplishments
Lying on time sheets
Coming into work hungover
Telling a demeaning joke
Taking office supplies for personal use
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20. Characteristics of Moral Managers
In real world….unfortunately, rare even in developed countries…
These Managers:
Conform to the highest standards of ethical behavior or professional standards of conduct.
Ethical Leadership is commonplace.
Their goal is to succeed within the confines of sound ethical precepts
Demonstrate high integrity in thinking, speaking and doing.
Follow both the letter and the spirit of the law
Possess an acute moral sense and moral maturity
Moral managers are the “good guys”
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21. Examples of moral Manager -
Giving proper credit where it is due
Being straightforward and honest with other employees
Treating all employees equally
Being a responsible steward of company assets
Resisting pressure to act unethically
Recognizing and rewarding ethical behavior of others
Talking about the importance of ethics and compliance on a regular basis
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22. Characteristics of Amoral Managers-
Kind of most popular……
An amoral manager does not care about morality (what is right or what is wrong) mainly because she/he doesn’t understand or doesn’t know what morality is (to begin with). Intentionally Amoral Managers
Don’t think ethics and business should “mix.” and business and ethics exist in separate spheres.
Unintentionally Amoral Managers
Don’t “think ethically.” & Have no “ethics buds.”
Well-intentioned, but morally casual or unconscious. Ethical gears are in neutral.
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23. Examples of Amoral Manager -
Specific height (5’11) and weight (180) requirements for a police force candidate
According to the historian, the protagonist has an amoral stance with regard to slavery – did not care of slavery issue.
Sear auto service quota – force employee to complete a certain quota every month.
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25. Three Models of Management Morality and Emphases on CSR
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26. Three Models of Management Morality And Acceptance or Rejection of Stakeholder Thinking
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27. Put Them Together….
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28. Case 10 Discussion First, read the case! It is about moral dilemma
Describe your process to get to your decision based on each situation;
Situation 1: Jane barely got the job because national unemployment rate is record high.
Situation 2: Inflate 25% expense has been implicit practice for a very long time (it became semi-formal practice).
Situation 3: Her boss and majority of peers seem also very angry with Jane’s intention.
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29. Ethics Issues Arise at Different Levels
Personal level -
Situations faced in our personal lives outside the context of our employment.
Organizational level -
Workplace situations faced by managers and employees.
Industry or profession level -
A manager or organization might experience business ethics issues at the industry or professional level.
Societal and global levels -
Managers acting in concert through their companies and industries can bring about constructive changes.
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30. Personal Level Ethics Principles Approach - Ethical Tests Approach -
Three major approaches to ethical decision making;
Conventional Approach - chapter 7
Principles Approach -
Managers desire to make decisions based on a more solid foundation than is provided by the conventional approach to ethics.
A principle of business ethics is an ethical concept, guideline, or rule that assists you in taking the ethical course.
Ethical Tests Approach -
Practical approach that is based on short questions/"tests" to guide ethical decision making 
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31. Types of Principles From philosophy as well… Teleological theories
Focuses on consequences or results of an action.
Deontological theories
Focuses on duties, without regard to consequences.
Deontological vs Teleological (4:04)
Aretaic (virtue) theories (9:21, 3:21)
Focuses on the virtue of an action.
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32. Major principles of Ethics (from philosophy)
Utilitarianism (10:00)
Kant’s Categorical Imperative (10:26)
Principle of Rights
Principle of Justice
Ethical Due Process
Rawl’s Principle of Justice (3:25)
Ethics of care
Virtue ethics
Servant leadership (2:49)
The Golden Rule (1:59)
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33. Ethical Tests Approach (5:07)
Based on short questions/"tests" to guide ethical decision making 
Test of One’s Best Self
Test of Making Something Public
Test of Ventilation
Test of Common Sense
Test of the Purified Idea
Test of The Big Four (greed, speed, laziness or haziness)
Gag Test
Website for various Ethics Related Terminologies
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34. Managing Organizational Ethics
A manager (and YOU as well!) must monitor the organization's ethical climate as part of its “corporate culture.”
Enron’s culture
An ethical climate is shaped through actions taken, policies established, and examples set.
One must sharpen one’s decision-making skills to avoid amoral thinking, and achieve moral management.
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35. Factors Affecting the Organization’s Moral Climate
Behavior of superiors – the number one influence on moral climate
Behavior of one’s peers – the second influence; people do pay attention to what their peers in the firm are doing
Industry or professional ethical practices – ranked in the upper half; these context factors are influential
Personal financial need – ranked last
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36. Best Practices for Improving an Organization’s Ethical Culture
Three key elements that must exist if an ethical organizational culture is to be developed and sustained:
1. The continuous presence of ethical leadership reflected by the board of directors, senior executives and managers.
2. The existence of a set of core ethical values infused throughout the organization by way of policies, processes and practices; and
3. A formal ethics program which includes a code of ethics, ethics training and an ethics officer.
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37. Improving Ethical Culture
Top Management Leadership Moral Management
Ethics Programs and Officers
Realistic Objectives
Ethical Decision- Making Processes
Codes of Conduct
Effective Communication
Ethics Training
Corporate Transparency
Whistle-Blowing Mechanisms
Ethics Audits and Risk Assessments
Board of Directors’ Oversight
Discipline of
Violators
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38. Top Management Leadership (Moral Management) (1 of 2)
This premise cannot be overstated:
The moral tone of an organization is set by top management (again, Enron Corporation).
In a poll of communication professionals, more than half believed that top management is an organization’s conscience.
Managers and employees look to their bosses at the highest levels for their cues as to what practices and policies are acceptable.
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39. Walmart & Its Associates
Case # 32 on page 655
First, let’s see the video clip on the class website!
Skip question # 9
Lecture slides contiue….
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40. Top Management Leadership (Moral Management) (2 of 2)
Weak Ethical Leadership – led an employee to embezzle $20,000 over a 15 year period, explaining that she thought it was ok because her boss used firm employees for personal needs, took money from the firm’s petty cash box, raided the soft drink machine, and used company stamps. Her boss said it was all true, and that she should not be dealt with too harshly.
Strong Ethical Leadership – When a batch of tubes in production failed a critical safety test, leaving in question the 10,000 already manufactured, the VP, without hesitation, said “scrap them.” That act set the tone for the corporation for years, because everyone present knew of situations in which faulty products had been shipped under pressure of time and budget.
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41. Two Pillars of Leadership
Traits
Moral Person
Moral Manager
Ethical Leadership
Behaviors
Decision Making
Role
Modeling
Ethics Communication
Effective Rewards and Discipline
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42. Effective Communication of Ethical Messages
Requires -
Written and verbal communication
Non-verbal communication
Candor – forthright, sincere and honest
Fidelity – be faithful to detail, accurate, avoid deception or exaggeration
Confidentiality – exercise care in deciding what information to disclose to others. Trust can be shattered if confidences are breached.
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43. Ethics Programs and Ethics Officers
Ethics programs typically include:
Written standards of conduct
Ethics training
Mechanisms to seek ethics advice or information
Methods for reporting misconduct anonymously
Disciplinary measures for employees who violate ethical standards
Inclusion of ethical conduct in the evaluation of employee performance
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44. Setting Realistic Objectives -
Managers must be keenly sensitive to the possibility of unintentionally creating situations in which others may perceive a need or incentive to cut corners or do the wrong thing.
Unrealistic expectations are the primary driver of employees perceiving excessive pressure to achieve goals.
Example: A marketing manager set a sales goal of a 20% increase for the next year when a 10% increase was all that could be realistically and honestly expected, even with outstanding performance. A subordinate might believe he or she should go to any lengths to achieve the 20% goal.
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45. Ethical Decision-Making Processes
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46. Ethics Check - Ethics Check - Is it legal? Is it balanced?
How will it make me feel about myself?
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47. Ethics Quick Test - Is the action legal?
Does it comply with our values?
If you do it, will you feel bad?
How will it look in the newspaper?
If you know it’s wrong, don’t do it.
If you’re not sure, ask.
Keep asking until you get an answer.
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48. Codes of Conduct -
A way of establishing standards of behavior and communicating them to managers and employees.
The single most important element of an ethics and compliance program.
Virtually all major corporations have codes of conduct today.
Many have worldwide codes or standards.
Some codes of conduct are designed around stakeholders, others on conduct.
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49. Content of Codes of Conduct -
Employment practices
Employee, client, and vendor information
Public information and communications
Conflicts of interest
Relationships with vendors
Environmental issues
Ethical management practices
Political involvement
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50. Disciplining Violators of Ethics Standards -
Management must discipline violators of accepted ethical norms and standards.
One reason many question the sincerity of business with regard to codes of conduct is that many business are unwilling to discipline violators, implicitly approving their behavior.
Before disciplining anyone, the firm needs to have communicated its ethics standards clearly and convincingly.
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51. Ethics Hotlines and Whistle Blowing -
An effective ethical culture is contingent on employees having (with support of top management) a mechanism for reporting violations.
78% of companies have anonymous reporting systems (Hotlines).
Among firms subject to Sarbanes-Oxley, 91% have such systems.
Hotlines are the most common way to report corporate fraud.
Can be telephone, web, or -based.
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52. Business Ethics Training -
Goals of Training are to learn:
the fundamentals of business ethics
to solve ethical dilemmas
to identify causes of unethical behavior
about common managerial ethical issues
whistle-blowing criteria and risks
to develop a code of ethics and execute an internal ethical audit
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53. Ethics Audits and Risk Assessments -
Intended to carefully review such ethics initiatives as ethics programs, codes of conduct, hotlines, and ethics training programs.
Sustainability Audit -
Helps to identify sustainability issues within an organization.
Fraud Risk Assessment -
Review processes that identify and monitor conditions that may pertain to the company’s exposure to compliance/misconduct risk and to review methods for dealing with concerns.
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54. Corporate Transparency
A quality, characteristic, or state in which activities, processes, practices, and decisions that take place in companies become open or visible to the outside world.
The degree to which an organization:
Provides public access to information.
Accepts responsibility for its actions.
Makes decisions more openly.
Establishes incentives for leaders to uphold standards.
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55. Board of Director Leadership and Oversight -
Leadership and oversight of ethical initiatives by boards has not been a given.
The Sarbanes-Oxley Act
Companies are required to protect whistle- blowers without fear of retaliation.
It is a crime to alter, destroy, conceal, cover up, or falsify documents to prevent their use in a federal government lawsuit.
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56. Behavioral Ethics – Striving Towards a Deeper Understanding (1 of 3)
Behavioral Ethics helps us to understand many of the behavioral processes that are taking place:
Bounded ethicality – occurs when managers and employees find that behaving ethically is difficult because of various organizational pressures.
Conformity bias – the tendency people have to take their cues for ethical behavior from their peers, rather than exercising their own, independent judgment.
Overconfidence bias –people may be more confident of their moral character than they have reason to be.
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57. Behavioral Ethics – Striving Towards a Deeper Understanding (2 of 3)
Self-serving bias – people may process information in a way that supports their preexisting beliefs & self-interest.
Framing – ethical judgments are affected by how an issue is posed; if posed as an “ethical” issue, they make more ethical decisions.
Incrementalism –a predisposition toward the “slippery slope.”
Role morality – a tendency to use different ethical standards for different roles in life.
Moral equilibrium – a tendency for people to keep an ethical scoreboard in their heads, and use this information when making future decisions, balancing decisions, and avoiding a moral “surplus”.
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58. Behavioral Ethics – Striving Towards a Deeper Understanding (3 of 3)
Ill-conceived goals – poorly set goals that encourage negative behaviors.
Motivated blindness – overlooking the questionable actions of others when it is in one’s own best interest.
The slippery slope – causes people not to notice others’ unethical behavior when it gradually occurs in small increments.
Overcoming values – the act of letting questionable behaviors pass if the outcome is good. This can occur when managers put more emphasis on results rather than on HOW the results are achieved.
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59. Moral Decisions, Moral Managers, and Moral Organizations
The goal of managers should be to create moral decisions, moral managers, and ultimately, moral organizations, while recognizing that what we frequently observe in business is the achievement of moral standing at only one of these levels.
The ideal is to create a moral organization that is fully populated by moral managers, making moral decisions (and practices, policies, and behaviors), but this is seldom achieved.
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