© 2005 by Nelson, a division of Thomson Canada Limited. 1 Personal and Organizational Ethics Search...

© 2005 by Nelson, a division of Thomson Canada Limited. 1

Personal Personal and and OrganizatioOrganizational Ethicsnal Ethics

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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 the business moral climate

• To understand the strategies to improve the ethical climate


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


Introduction to Chapter Seven•This chapter focuses on the

day-to-day ethical issues that managers face


Levels at Which Ethical Issues May Be Addressed•Personal level—situations faced

in personal life (income tax and speeding).

•Organizational level—workplace situations faced as managers and employees (illegal dumping and creative accounting).


Levels at Which Ethical Issues May Be Addressed• Industrial level—ethical situations

confronted as professionals •Societal and international levels

—local-to-global situations confronted indirectly or directly by management


Personal and Managerial EthicsResolving Ethical Conflicts

Three Approaches• Conventional (covered in

Chapter 6)• Principles• Ethical tests


Personal and Managerial Ethics

• Utilitarianism• Rights• Justice

• Caring• Virtue • Servant

Leadership• Golden Rule

Principles ApproachThe anchors decision

making



Principle of Utilitarianism focuses on producing the greatest ratio of good to evil for everyone– Consequentialist theory


Personal and Managerial EthicsPrinciple of Rights focuses on examining, and possibly protecting, individual moral or legal rights


Personal and Managerial Ethics• A principle of justice that

involves considering what alternatives promote fair treatment of people

• Types of justice– Distributive– Compensatory– Procedural



Rawls’ Justice• Each person has an equal right to

basic liberties as compared to others• Social and economic inequalities are

arranged so that they are: reasonably expected to be to everyone’s

advantage and attached to positions and offices open to all people


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



Servant leadership focuses on serving others first such as employees, customers, community, and so on



• Listening• Empathy• Healing• Persuasion• Awareness

• Foresight• Conceptualization• Commitment to

the growth of people

• Stewardship• Building a

community

Characteristics of Servant Leaders



Golden rule focuses –do unto others as you would have them do unto you



Concerns to be Addressed in Ethical

Conflicts• Obligations• Ideals• Effects



When Obligations Ideals and Effects Conflict

• When two or more moral obligations conflict, use the stronger one

• When two or more ideals conflict, or conflict with obligations, honour the more important one

• When effects are mixed, choose the action that produces the greatest good and the least harm



Ethics Test Approach• Test of common sense• Test of one’s self• Test of making something

public• Test of ventilation• Gag test


Managing Organizational Ethics

SuperiorsSuperiors

PoliciesPolicies

PeersPeersIndividual

(One’s personal situation)

Individual(One’s

personal situation)

Society’s Moral Climate

Business’s Moral Climate

Industry’s Moral Climate

Factors Affecting the Morality of Managers



Factors Influencing Unethical Behaviour

• Behaviour of superiors• Ethical practices of one’s industry or

profession• Behaviour of one’s peers in the

organization• Formal organizational policy (or lack

of one)• Personal financial need



• Amoral decision making• Unethical acts, behaviours or

practices• Acceptance or legality as the

standard behaviour• Absence of ethical leadership

Questionable Behaviour of Superiors or Peers



• Use of a system that over estimates profits

• Insensitivity towards how subordinates perceive pressure to meet goals

• Inadequate formal ethical policies

Questionable Behaviour of Superiors or Peers


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


Ethical Decision-MakingIdentify decision you are about to make

Articulate all dimensions of proposed decision

Conventional ApproachStandards/Norms-Personal-Organizational-Societal-International

Principles ApproachEthical Principles-Justice-Rights-Utilitarianism-Golden Rule

Ethical Tests ApproachEthical 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


From Moral Decisions to Moral Organizations

Moral Decisions

Moral Managers

Moral Organizations


• 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

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