Ethics and Behaviorin Organizations

Introduction

Inventory of Ethical Issues in Business

• Employee-Employer Relations• Employer-Employee Relations• Company-Customer Relations• Company-Shareholder Relations• Company-Community/Public Interest

Public’s Opinion of Business Ethics• Gallup Poll finds that only 17 percent to 20 percent

of the public thought the business ethics of executives to be very high or high

• To understand public sentiment towards business ethics, ask three questions– Has business ethics really deteriorated?– Are the media reporting ethical problems more

frequently and vigorously?– Are practices that once were socially acceptable no

longer socially acceptable?

Public’s Opinion of Business Ethics

• Gallup opinion polls about ethical behavior (see text book Figure 3.1)– Pharmacists ranked highest– Car salespeople ranked lowest– Business executives ranked near the middle– People in the United States do not have a positive

view of ethics and behavior in organizations

Business Ethics: What Does It Really Mean?

Definitions• Ethics involves a discipline that examines good

or bad practices within the context of a moral duty

• Moral conduct is behavior that is right or wrong• Business ethics include practices and

behaviors that are good or bad

Business Ethics: What Does It Really Mean?

Two Key Branches of Ethics• Descriptive ethics involves describing,

characterizing and studying morality– “What is”

• Normative ethics involves supplying and justifying moral systems– “What should be”

Conventional Approach to Business Ethics

• Conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms– Pitfall: ethical relativism

Decision or Practice Prevailing Norms

Sources of Ethical Norms

Fellow Workers

Family

Friends

The Law

Regions of Country

Profession

Employer

Society at Large

Fellow Workers

Religious Beliefs

The Individual

Conscience

Ethics and the Law

• Law often represents an ethical minimum• Ethics often represents a standard that exceeds

the legal minimum

Ethics Law

Frequent Overlap

Making Ethical Judgments

Behavior or act that has been committed

Prevailing norms of acceptability

Value judgments and perceptions of the observer

compared with

Ethics, Economics, and Law

Four Important Ethical Questions

• What is?• What ought to be?• How to we get from what is to what ought to be?• What is our motivation for acting ethically?

3 Models of Management Ethics

Three Types Of Management Ethics

Three Models of Management Morality and Emphasis on CSR

Making Moral Management Actionable

Important Factors• Senior management• Ethics training• Self-analysis

Developing Moral Judgment

External Sources of a Manager’s Values• Religious values• Philosophical values• Cultural values• Legal values• Professional values

Developing Moral Judgment

Internal Sources of a Manager’s Values• Respect for the authority structure• Loyalty• Conformity• Performance• Results

Can Business Ethics Be Taught And Trained?

• Ethic courses should not:– Advocate a set of rules from a single perspective – Not offer only one best solution to specific ethical

problems– Not promise superior or absolute ways of thinking

and behaving in situations

Can Business Ethics Be Taught And Trained?

• Scholars argue that ethical training can add value to the moral environment of a firm and to relationships in the workplace by:

– Finding a match between employer’s and employee’s values

– Handling an unethical directive– Coping with a performance system that

encourages unethical means

Ethics-Moral Disengagement

• Social Learning Theory– Moral reasoning translates to moral action through

self regulatory processes• You do things that bring you self-worth• You avoid things that avoid self censure

• You have to disengage from your normal internal self sanctions to commit unethical or deviant acts

Moral Disengagement

• Scoring the questionnaire– Moral justification-A– Euphemistic language-B– Displacement of responsibility-C– Advantageous comparison-D– Diffusion of responsibility-E– Distorting consequences-F– Attribution of blame-G– Dehumanization-H

Chapter 3Ethics and Behaviorin Organizations

Ethical andUnethical Behavior

• Ethical behavior is good, right, just, honorable, and praiseworthy

• Unethical behavior is wrong, reprehensible, or fails to meet an obligation

• Judgment of behavior is based on a specific moral philosophy or ethical theory

Ethical andUnethical Behavior (Cont.)

• Nagging issues– Finding a standard of judgment with which all

reasonable people can agree– Defining the meaning of “good,” “bad,” “right”, and

“wrong”– Add the nasty issue of cross-cultural ethical behavior

Ethical and Unethical Behavior (Cont.)

Find 1 cent Find $1

Find wallet with $1,000and no identification.

Find wallet with $1,000and identification.

Ethical dilemmas

Legal Versus Ethical Behavior:The Issue of Lying

Ethical behavior

Legal behavior

Testifying underoath in court.

Lying: deliberate misrepresentation of the truth.

Lying to a customerabout the safety ofa product.

“How does myhair look?”

Theories of Ethics

• Four major theories of ethics in the Western world– Utilitarianism: net benefits– Rights: entitlement– Justice: fairness– Egoism: self-interest

Theories of Ethics (Cont.)

• Utilitarianism– examine an action’s effects to decide whether it is

morally correct– Action is morally right if the total net benefit of the

action exceeds the total net benefit of any other action

– Assumes a person can assess all costs and benefits of an action

Theories of Ethics (Cont.)

• Utilitarianism (cont.)– Assessment of net benefits includes any important

indirect effects– Example: assessing the effects of pollutant

discharge from a factory on the immediate surrounding environment and those down stream or down wind from the factory

– Two forms: act and rule

Theories of Ethics (Cont.)

• Utilitarianism (cont.)– Act utilitarianism asks a person to assess the

effects of all actions– Rejects the view that actions can be classified as

right or wrong in themselves– Example: lying is ethical if it produces more good

than bad

Theories of Ethics (Cont.)

• Utilitarianism (cont.)– Rule utilitarianism asks a person to assess actions

according to a set of rules designed to yield the greatest net benefit to all affected

– Compares act to rules– Does not accept an action as right if it maximizes net

benefits only once– Example: lying is always wrong or “thou shalt not lie”

Theories of Ethics (Cont.)

• Utilitarianism (cont.)– Two main limitations

• Hard to use in difficult to quantify situations• Does not include rights and justice

– Other ethical theories meet these objections

Theories of Ethics (Cont.)

• Rights– Right: a person’s just claim or entitlement– Focuses on the person’s actions or the actions of

others toward the person• Legal rights: defined by a system of laws• Moral rights: based on ethical standards

– Purpose: let a person freely pursue certain actions without interference from others

Theories of Ethics (Cont.)

• Rights (cont.)– Features

• Respect the rights of others• Lets people act as equals• Moral justification of a person’s action

– Examples• Legal right: right to a fair trial in the United States• Moral right: right to due process within an organization

Theories of Ethics (Cont.)

• Rights (cont.)– Rejects view of assessing the results of actions– Expresses moral rights from individual's view, not

society's. Does not look to the number of people who benefit from limiting another person's rights

– Example: right to free speech in the United States stands even if a person expresses a dissenting view

Theories of Ethics (Cont.)

• Rights (cont.)– Types of rights

• Negative rights: do not interfere with another person’s rights

• Positive rights: A person has a duty to help others pursue their rights

Negative: do not stop a person from whistleblowing

Positive: coworker helps another person blowthe whistle on unethical actions

Theories of Ethics (Cont.)

• Justice– Looks at the balance of benefits and burdens

distributed among members of a group– Can result from the application of rules, policies, or

laws that apply to a society or a group– Just results of actions override utilitarian results– Rejects view that an injustice is acceptable if others

benefit the action

Theories of Ethics (Cont.)

• Egoism– Self-centered form of ethics– Two forms of ethical egoism: individual and

universal– Individual ethical egoism

• Judges actions only by their effects on one’s interests• Usually rejected by moral philosophers as a defensible

basis of ethics

Theories of Ethics (Cont.)

• Egoism (cont.)– Universal ethical egoism

• Can include the interests of others when assessing one’s actions

• Still self-centered: pursuing pleasure and avoiding pain• “Enlightened self-interest.” Considers the interests of

others because the person wants others to do the same toward him or her

Theories of Ethics (Cont.)

• Egoism (cont.)– Objections raised by moral philosophers

• Does not resolve conflicts in people’s interests• One party would always have the pursuit of his or her

interests blocked

Theories of Ethics (Cont.)

• Questions from the ethical theories– Utilitarianism: does the action yield the greatest

net benefits?– Rights: does the action negatively affect someone’s

moral rights?– Justice: does the action give a fair distribution of

costs and benefits among those affected?– Egoism: will the action lead to other people

behaving toward me in a way I would like?

International Aspectsof Ethics

• Sharp contrasts exist between U.S. attitudes toward business ethics and those of other countries

• Of the major capitalist nations, the United States has the highest frequency of reporting ethical violations, the toughest laws, and the greatest prevalence of organization codes of ethics

International Aspectsof Ethics (Cont.)

Culturalrelativism

Ethicalrealism

Multinationalorganization

Two ethical views

International Aspectsof Ethics (Cont.)

• Ethical views (cont.) Cultural relativism

• Cultural relativism refers to differences in ethical values among different cultures

• Premise: right and wrong should be decided by each society's predominant ethical values

• Cultural relativists base their argument on three points

International Aspectsof Ethics (Cont.)

• Ethical views (cont.) Cultural relativism(cont.)

• Three points– Moral judgments are statements of feelings and opinions; neither

wrong nor right– Moral judgments are based on local ethical systems; cannot

judge right or wrong across cultures– Prudent approach: do not claim an action is either right or wrong

International Aspectsof Ethics (Cont.)

• Ethical views (cont.) Cultural relativism(cont.)

• Managers should behave according to local ethical systems, even if their behavior violates the ethical systems of their home country

• Many philosophers have rejected cultural relativism's argument that codes of ethics cannot cross national boundaries

• Agree, however, that countries vary in what they define as right and wrong

International Aspectsof Ethics (Cont.)

• Ethical views (cont.)– Ethical realism

• Morality does not apply to international transactions• Because no power rules over international events, people

will not behave morally• Because others will not behave morally, one is not morally

required to behave ethically– See text for a revision to this view of ethical realism

International Aspectsof Ethics (Cont.)

• International ethical dilemmas– Goods made in a country with no child labor laws– Goods made in a country with child labor laws that

are not enforced– Changing the behavior of local people– Making small payments that are allowed under the

FCPA