Ethics 2013 Class notes BCIT

7/28/2019 Ethics 2013 Class notes BCIT

1/48

1

Fundamentals ofBusiness Ethics

BUSA 5200

BCIT

2013


2/48

Ethics in Business

Ethics: systematic thinking aboutthe moral consequences of decisions

(right vs. wrong)

Business ethics: ethics applied tobusiness and managementsituations


3/48

Business ethics issues: some examples

Owners accurate disclosure

Employees

hiring; firing; wages;

privacy; discrimination;honesty; conflicts ofinterest; insiderinformation

Consumers

sales techniques;advertising; productsafety

Competitors unfair competitive

behaviours; industrialespionage

Suppliers kickbacks; gifts; bribes

Government

legal compliance;

unethical lobbying Society

respect for environment


4/48

Why Study Business Ethics?

Not any different than ethics in any other

aspect of life

Business ethics not an oxymoron business is

not only economic-based, but often trust-based

To improve ethicsin business & other

organizations

To remind us that our decisions (in

organizations) have consequences for others

(we are not alone the stakeholderconcept)


5/48

5


6/48

6

What do some Stakeholders see:

Expectations versus Reality

Ethical Problems

EthicalProblems

SocietysExpectations

ActualBusinessEthics

1950s 2010sTime

Ethics Today vs. The Past


7/48

7

Publics Opinion of Ethics in Business

Gallup Poll: only 20% of public thought the

ethics of business executives to be high

To understand public sentiment; Consider: Has business ethics really deteriorated? [probably

not]

Has media reporting become more frequent &vigorous? [yes, very much so]

Are past acceptable practices becoming no longer

socially acceptable? [they are less acceptable now]


8/48

Consequences of

Unethical Decisions

Loss of job/ harm to career (for individuals)Poor public image

Loss of customers

WhistleblowingPotential legal liability

Additional government regulation

Financial lossesUnethical culture develops inside organization

(may harm morale & efficiency)


9/48

Paying Attention to Ethics in Business

Gives individuala good reputation

Provides apositive image for the firm

Improves stakeholder relationsIs an insurance policyagainst

unethical behaviour, poor stakeholderrelations, more govt. regulation, somelaw suits, etc.

Has often improved society


10/48

10

Some Sources of Ethical Norms

FellowEmployees

Friends &Family

Education

ReligiousBeliefs

EmployersFormal Rules

ProfessionalNorms

LocalCommunity

Society atLarge

EmployerExpectations

Laws

The Individual

Conscience


11/48

11

Sources of Influence on Ethics

Sources of influence that affect apersons ethics (approach to ethics &

actual behaviours)

Sources can be categorized as:1. Cultural

2. Legal

3. Organizational

4. Individual


12/48

12

Cultural Influences

Culture (& subcultures in society)

Religion (upbringing & current contact)

Media/Entertainment (TV, movies, videos,books, news, etc. indirectly show what is

considered ethical in the society)


13/48

13

Legal Influences

Laws: (laws prohibiting discrimination, pricefixing, etc. Disclosure requirements in real

estate, stock market, etc.)

Although there is some overlap between the

law (legal/illegal) & ethics (right/wrong), they

are not the same

However, the question Is it legal? is a useful

starting point for ethics analysis; but more is

needed


14/48

14

Organizational Influences are

Critical

Behaviours by organizations leadersOrganizational culture: the way we do things

here

Role models in organization (tendency to copyheroes or exemplary performers)

Perceived pressure for results

What is rewarded/punished? (The folly of

hoping for one thing while rewarding another)


15/48

Organizational Influencescontinued

Corporate codes of conduct/ethics (writtencodes & oral statements by senior executives)

Professional codes of conduct/ethics

(accountants, doctors, lawyers, real estateagents, etc.)

Business/industry groups (e.g., BetterBusiness Bureau)

Behaviour of competing firms (copyingothers, or not)


16/48

16

Organizational Culture & Ethical Climate

Organizational culture: shared values in an organization

about how to think & behave appropriately

Ethical climate:

(1) Self-centered approach values individual self-interest

& economic efficiency of the firm(2) Concern-for-others approach values cooperation &

social responsibility (ethic of care)

(3) Integrity approach values procedures/rules, laws,

codes of conduct (ethic of justice)

Some organizations have aspects of all 3

approaches; others 1 or 2 of the approaches


17/48

17

Organizational Factors Influencing

Ethical Behaviour

How strong is loyalty to the organization?How much respect is there for the authority

structure?

Conformity(Asch Experiment) &Obedience(Milgram Experiment) (how strong is adherenceto corporate culture?)

Expectations regarding performance & results

are ends/results more importantthemeans/methods used to achieve them? Successat all costs?


18/48

Organizational Culture

1. Obedience to authority MilgramExperiment demonstrated howlegitimatepowercan influence behaviours offollowers (read: employee; member of

an organization)

2. Conformity to norms Asch Experiment

demonstrated howpeerscan influenceindividual behaviour (read: behaviour of aorganizational colleague; fellow employee)

18

Th A h E i t C f it t


19/48

The Asch Experiment: Conformity to

the Behaviours of Peershttp://www.youtube.com/watch?v=rPEDS-0jMgs (asch 4:10)

19
http://www.youtube.com/watch?v=rPEDS-0jMgshttp://www.youtube.com/watch?v=rPEDS-0jMgs


20/48

The Milgram Experiment on

Obedience to Authority

20

http://www.youtube.com/watch?v=8g1MJeHYlE0 (zimbardo on milgram / pull either

way 4:40)

http://www.youtube.com/watch?v=0L-hKsjGP1M (milgram anim. 2:53)
http://www.youtube.com/watch?v=8g1MJeHYlE0http://www.youtube.com/watch?v=0L-hKsjGP1Mhttp://www.youtube.com/watch?v=0L-hKsjGP1Mhttp://www.youtube.com/watch?v=8g1MJeHYlE0


21/48

Zimbardo: Behaviour is infectious. We are social models

for both ethical or unethical behaviour.

21


22/48

22

4 2006 The McGraw-Hill Companies, Inc. All rights reserMcShane/ Canadian OB 6e

IndividualBehaviour &

Results

Role

Perceptions

Situational

Factors

Motivation

Ability

Individual

Differences:

ValuesPersonality

Perceptions

Emotions

Attitudes

Stress

MARS Model of Individual Behaviour


23/48

23

Individual Influences

Personality (internal/external locus of control)

Moral principles (stage of moral developmentof

person)

History of reinforcement (how has adherence or

non-adherence to ethics standards affected person

in the past? Did things go well, or poorly?)

Values (unique to each person, but values

influenced by other sources mentioned previously)

Other internal factors operating at the individual

level (family upbringing, education, etc.)


24/48

Why Do Individuals Behave Ethically?

24


25/48

25

Kohlbergs Stages of Moral Development

Pre-conventional: Focus on Self

(1) Avoid punishmentby following rules. Obedience isimportant.

(2) Follow rules only when in your immediate interest (toreceive rewards).

Conventional: Focus on Others(3) Be a good person. Consider welfare of others.

Loyalty is important.

(4) Act right to comply with law/order/norms in

society; fulfill your duties.

Principled: Focus on Humankind

(5) Follow self-chosen ethics principles even if theyconflict with the law.


26/48

26

Kohlbergs Stages of Moral Development

Stages of moral development just described fit

well with an approach to ethics called the ethicof justice (or fairness)

This approach is commonly used in ethicsanalysis

However, it is not the only approach to ethics

Some critics say this is a overly male-orientedview of ethics

Is it overly concerned with justice/fairness/rulesto the exclusion of the important value ofcare/stakeholder relationships?


27/48

27

3 Approaches to Business Ethics

1. Immoral Approach purposely unethical;a style devoid of ethical principles & opposeswhat is ethical

2. Moral Approach conforms to high standards

of ethical behaviour3. Amoral Approach

Intentional doesnt consider ethics;

thinks ethics doesnt fit into business affairs Unintentional casual or careless about

ethics & the resulting consequences


28/48

28

3Approaches to Stakeholder Thinking (SHT)


29/48

Which Approach Do People Use?

Individual Hypothesis: Individuals shiftfrom

one approach (immoral, amoral, moral) toanother depending on the situation or context

they are in (refer to Asch, Milgram, Zimbardo). OR

Population Hypothesis: Individuals tend toadopt one of the 3 approaches on a consistent

basis

Implications: Ethical behaviour of employeescan be influenced (for at least some persons).

The immediate situation does matter and is

important. As does the broader system.29

l h


30/48

Population Hypothesis

30


31/48

Applying the 3 Approaches to Business Ethics

1. Perpetrator of unethical behaviour(immoral approach)

2. Thinker & Doer. Realize that you are in a

Milgram Momentor an Asch Moment.Listen to your intuition & consider ethics &develop other options (moral approach)

3. Passive follower (go along with others orfollow the culture or obey the boss)(amoral approach)

31


32/48

Milgram and Zimbardo

Why do people act unethically?1. The individual (bad apple)

2. The situation (expectations of managers,

behaviours of managers & colleagues,pressure for results, reward structure, etc.)(bad barrel)

3. The system (organizations culture asshaped by executives/leaders, culture of theindustry) (bad barrel maker)

32


33/48

Bad Apples?

From Milgram and Zimbardo:

Bad Systems Bad Situations Bad

Apples Bad Behaviours (even in

otherwise good people)

33


34/48

34

As Leaders/Managers/Colleagues: You Can Help

Pull Others To The Moral End Of The Distribution

H ?


35/48

How? Increasing Ethical Behaviour inOrganizations

1. By focusing on the organization (the immediate

work situation & the broader system of the firm)

e.g., leadership; nature of authority/power

relations; is debate/discussion valued or not;organizations ethics culture; reward structure

2. By focusing on the individual (including

yourself) e.g., ethics training; ethics awareness(being aware of and prepared to deal with thechallenge of the Milgram or Asch momentif & when

it arises)

35


36/48

36

Reinforcing Ethical Behaviour

in Organizations: Behavioural Aspects

Senior & other managers own behaviours setgood examples

Senior & other managers expectations of

employees encourage ethical behaviour

Culture established by leaders in organization

Behaviours offellowemployees set good example

Organizational culture developed by both leaders

& fellow employees encourage ethical behaviour


37/48


in Organizations: Educational Aspects

Ethics education (taught incolleges/universities & professionalassociations to increase ethics awareness)

Ethics training delivered in-house(awareness of typical issues & how to handlethem)

Explanation of firms code of conduct/ethics

Ethical self-awareness & reflection (done onindividual basis & preferably voluntarily)

37



38/48


in Organizations: Other Aspects

Statement of corporate values & philosophy(vision & mission statements)

Executive speech-making

Written code of conduct/ethics(for the firm and/or for particular professions)

Ethics audits (to review ethics

climate/behaviours)

38


39/48

Other Aspects continued

Procedures to handle ethics concerns(Do they exist? Are they used? Are theyeffective?)

Ethics officer/ombudsman (for investigations)Whistleblowing procedure (is a procedure

available to report concerns)


40/48

Ivey Pledge

University of Western Ontario: Richard Ivey

School of Business

http://www.ivey.uwo.ca/alumni/get-involved/ivey-alumni-association/ivey-ring-

tradition.htm

d f d d h
http://www.ivey.uwo.ca/alumni/get-involved/ivey-alumni-association/ivey-ring-tradition.htmhttp://www.ivey.uwo.ca/alumni/get-involved/ivey-alumni-association/ivey-ring-tradition.htmhttp://www.ivey.uwo.ca/alumni/get-involved/ivey-alumni-association/ivey-ring-tradition.htmhttp://www.ivey.uwo.ca/alumni/get-involved/ivey-alumni-association/ivey-ring-tradition.htm


41/48

.

Codes ofConductand Ethics

Codes of conduct: Explicitly state what

appropriate behaviour is by identifying what isacceptable & unacceptable. Tend to bedetailed.

Codes of ethics: Statement ofprinciples/values to guide behaviour bydescribing the general value system within

which organization attempts to operate. Lessdetailed. (Recall the Ivey MBA pledge discussedin class)


42/48

.

Criticisms of CodesOften unenforceable no enforcement mechanism

If enforced, penalties often insignificantMaybe unnecessary (if the organization already

operates ethically)

Often very idealistic

Written in meaningless generalities

Merely to prevent government regulation

Mere response to public criticism

However: As part of a larger effort to reinforceethical behaviour, they have some value

Ethi P i O i ti


43/48

Chapter 6

Ethics Programs in Organizations:

Comparison of 2 Approaches

Compliance-based

Focus on: Rules, laws

To preventillegal/criminal conduct

Lawyer-driven

Employee discretion

is limited

Code of conduct

Integrity-based Values/ethics/principles

To enable responsibleconduct

Management-driven

Employee discretion isincreased

Code of ethics


44/48

44

Making Ethical Judgments

An action ordecision thathas been /

will be taken

Prevailingnormsof

acceptability

J udgmentsof the

observer

(includingthose basedon ethics

tests)

compared with (any discrepancy?)

Characteristics of Ethics Problems: Taking


45/48

Characteristics of Ethics Problems: Taking

Action

1. Awareness of discrepancy? (something thatoffends your sense of right/wrong, your intuition,

firms ethics culture, government laws, etc.)

2. Pressure to act? (based on personal beliefs,corporate culture, professional codes of conduct,

laws, media, stakeholders, etc.)

3. Sufficient resources to do something? (do youhave enough power, influence, knowledge, etc.?)

(Recall the Auditor Case done in lab)

When your intuition tells you to take some


46/48

When your intuition tells you to take some

time to think, think about these:

46

Personal virtues (would this look good on TV?)

Government requirements (is it legal?)

Economic efficiency (dont overuse this ethics test)

Utility (dont overuse this ethics test)

Rights (are rights respected?)

Justice (fair balance of costs & harms/benefits?)

Care (care for stakeholders, but avoid favouritism)

Try to achieve the best aspect of each of theabove to the greatest extent possible

P i lid & CSR P id ti ll th


47/48

Previous slide & CSR Pyramid essentially say the same

thing; CSR is for firms while previous slide applies to

both individuals & firms

Economic Responsibility

Legal Responsibility

Ethical Resp.

Philan-thropic

Be profitable

Obey the law

Be ethical

Be a goodcorporate citizen

Desired

Expected

Required

Required

Source: Archie Carroll, 1991

Integrating Approaches to Ethics


48/48

Integrating Approaches to Ethics

ASK:

Utility (do benefits exceed costs/harms?)

Rights (are rights respected?)

Justice (are costs & benefits fairly distributed?)

Care (are relationships preserved/strengthed?)

COMPARE ANSWERS: If yes is answer to all 4, the action being

analyzed is probably ethical.

If no is answer to all 4, action likely unethical.

If answers are mixed, try to design actions that,as much possible, respect all 4 approaches.

Date post:	03-Apr-2018
Category:	Documents
Upload:	jay-su
View:	216 times
Download:	0 times

Ethics 2013 Class notes BCIT

Documents