2. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-1 Chapter 7 Personal and Organizational Ethics 1 Personal and Organizational Ethics Search the Web Nortel has posted its ethics policies on the Internet. To read it, navigate your web browser to: http://www.nortelnetworks.comhttp://www.nortelnetworks.com

3. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-2 Chapter 7 Personal and Organizational Ethics 2 Chapter Seven Objectives To understand the different levels at which business ethics may be addressed To appreciate principles of personal ethical decision-making To identify factors affecting an organization’s moral climate Describe actions or strategies to improve ethical climate

4. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-3 Chapter 7 Personal and Organizational Ethics Chapter Seven Outline Levels at which Ethical Issues May Be Addressed Personal and Managerial Ethics Managing Organizational Ethics From Moral Decisions to Moral Organizations Summary

5. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-4 Chapter 7 Personal and Organizational Ethics Introduction to Chapter Seven This chapter focuses on the day-to-day ethical issues that managers face

6. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-5 Chapter 7 Personal and Organizational Ethics Levels at Which Ethical Issues May Be Addressed Personal level—situations faced in personal life (income tax, doing kid’s homework, etc.) Organizational level—workplace situations faced as managers and employees (cutting corners, etc.)

7. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-6 Chapter 7 Personal and Organizational Ethics Levels at Which Ethical Issues May Be Addressed Industrial level—situations confronted as professionals (the practices of stockbrokers, accountants, etc.) Societal and international levels—local-to- global situations confronted indirectly as a management team

8. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-7 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Resolving Ethical Conflicts Three Approaches Conventional (covered in Chapter 6) Principles Ethical tests

9. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-8 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Utilitarianism Rights Justice Caring Virtue ethics Servant leadership Golden Rule Principles Approach Anchors decision making on an ethical principle such as:

10. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-9 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Principle of Utilitarianism focuses on an act that produces the greatest ratio of good to evil for everyone –Consequentialist theory

11. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-10 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Principle of Rights focuses on examining and possibly protecting individual moral or legal rights

12. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-11 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics

13. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-12 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Principle of justice involves considering what alternative promotes fair treatment of people Types of justice –Distributive –Compensatory –Procedural –Rawlsian

14. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-13 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Rawls’ Justice Each person has an equal right to the most basic liberties comparable with similar liberties for others Social and economic inequalities are arranged so that they are both: a)reasonably expected to be to everyone’s advantage and b)attached to positions and offices open to all people

15. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-14 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Principle of caring focuses on a person as a relational (cooperative) and not as an individual –Feminist theory Virtue ethics focuses on individuals becoming imbued with virtues –Aristotle and Plato

16. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-15 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Servant leadership focuses on serving others first such as employees, customers, community and so on

17. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-16 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Listening Empathy Healing Persuasion Awareness Foresight Conceptualization Commitment to the growth of people Stewardship Building community Characteristics of Servant Leaders

18. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-17 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Golden rule focuses on the premise that you should of unto others as you would have them do unto you

19. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-18 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Concerns to be Addressed in Ethical Conflicts Obligations Ideals Effects

20. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-19 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics When Our Obligations, Ideals and Effects Conflicts When two or more moral obligations conflict, use the stronger one When two or more ideals conflict, or when ideals conflict with obligations, honor the more important one When effects are mixed, choose the action that produces the greatest good and the least harm

21. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-20 Chapter 7 Personal and Organizational Ethics Personal and Managerial Ethics Ethics Test Approach Test of common sense Test of one’s best self Test of making something public Test of ventilation Gag test

22. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-21 Chapter 7 Personal and Organizational Ethics Managing Organizational Ethics Superiors Policies Peers Individual (One’s personal situation) Society’s Moral Climate Business’s Moral Climate Industry’s Moral Climate Factors Affecting the Morality of Managers

23. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-22 Chapter 7 Personal and Organizational Ethics Managing Organizational Ethics Factors Influencing Unethical Behavior Behavior of superiors Ethical practices of one’s industry or profession Behavior of one’s peers in the organization Formal organizational policy (or lack of one) Personal financial need

24. Managing Organizational Ethics 6-23

25. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-24 Chapter 7 Personal and Organizational Ethics Managing Organizational Ethics Amoral decision making Unethical acts, behaviors or practices Acceptance or legality as the standard behavior Absence of ethical leadership Questionable Behaviors of Superiors or Peers

26. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-25 Chapter 7 Personal and Organizational Ethics Managing Organizational Ethics Objects and evaluation systems overemphasizing profits Insensitivity toward how subordinates perceive pressure to meet goals Inadequate formal ethics policies Questionable Behaviors of Superiors or Peers

27. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-26 Chapter 7 Personal and Organizational Ethics Improving Ethical Climate Top Management Leadership Ethics Programs & Officers Realistic Objectives Ethical Decision- making Processes Codes of Conduct Ethics Audit Ethics Training Whistle-blowing Mechanisms (“Hotlines ”) Discipline of Violators Effective Communication Codes of Conduct

28. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-27 Chapter 7 Personal and Organizational Ethics Ethical Decision-Making Identify decision you are about to make Articulate all dimensions of proposed decision Conventional Approach Standards/Norms -Personal -Organizational -Societal -International Principles Approach Ethical Principles -Justice -Rights -Utilitarianism -Golden Rule Ethical Tests Approach Ethical Tests -Common sense -One’s best self -Public disclosure -Gag test... Course of action passes ethics screen Engage in course of action Course of action fails ethics screen Do not engage in course of action Identify new course of action

29. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-28 Chapter 7 Personal and Organizational Ethics Ethics Audits and Self-Assessment

30. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-29 Chapter 7 Personal and Organizational Ethics From Moral Decisions to Moral Organizations Moral Decision(s) Moral Manager(s) Moral Organization

31. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 7-30 Chapter 7 Personal and Organizational Ethics Codes of conduct Codes of ethics Compensatory justice Distributive justice Ethical tests Ethical audits Golden rule Legal rights Moral rights Principle of caring Principle of justice Principle of rights Principle of utilitarianism Procedural justice Rights Servant leadership Utilitarianism Virtue ethics Selected Key Terms