End of Chapter 5Ethics of Business: The Theoretical Basis

TypeEgoismLooking out for #1Personal Virtues EthicAppearing to be a good personEthic of CaringReducing harmGovnt Requirements EthicObeying the lawUniversal Rules EthicSet a precedentIndividual Rights EthicUniversal Declaration of Human RightsEconomic EthicProfit by following the rulesEthic of Justice4 kinds (procedural, corrective, retributive, distributive)

Moral Reasoning ProcessDefine moral issue or decisionGather all relevant informationIdentify the stakeholders involved

Moral Reasoning ProcessDevelop possible alternative solutionsConsider applicable value judgments, moral standards, ethical principles

Moral Reasoning ProcessIdentify harms/benefits to stakeholdersDetermine practical constraintsDecide on action

Moral ReasoningRange of perspectivesEthics verses morals and values

Testing Ethical CongruenceThe Butterfly Test Your own personal conscience, typified by a feeling of anxiety (butterflies in your stomach) when you know something is inherently wrong.

Written by: Ken Chapman, I.S.P. Ken Chapman Professional Services IT Management Consulting

Testing Ethical CongruenceAuthority Test Ask yourself the question, would a person in authority approve of this (boss,president, civic leader, religious leader, etc).

Testing Ethical CongruencePublic Scrutiny Test Would it be acceptable to write your actions/decisions in a public forum (newspaper, web site, TV report) where your family and friends would find out about it.

Kohlbergs Stages of Moral DevelopmentPre-Conventional Level (Self)ConsequencesStage 1 Punishment and obedience orientationStage 2 Individual instrumental purpose/exchangeWhats in it for me?

Kohlbergs Stages of Moral DevelopmentConventional Level (Others)Stage 3 Mutual interpersonal expectationsStage 4 Law and order orientation

Kohlbergs Stages of Moral DevelopmentPost-Conventional Level (Humankind)Stage 5 Social contract orientationStage 6 Universal ethical principle orientation

Chapter 6Managing the Ethics of Business

OutlineStatement of ValuesCodes of Conduct and EthicsEthics TrainingEthics Audits and ConsultantsEthics Officers and Ethics CommitteesEthics Reporting Systems and Whistleblowing

Statement of ValuesA description of the beliefs, principles, and basic assumptions about what is desirable or worth striving for in an organization.Key components:Key stakeholder interests to be satisfied and balancedEmphasis on quality and/or excellenceEfficiencyWork climateObservance of codes

Codes of ConductCode of conduct: explicitly states what appropriate behaviour is by identifying what is acceptable and unacceptable

Code of EthicsCode of ethics: a statement of principles or values that guide behaviour by describing the general value system within which a corporation attempts to operate in a given environment.

Distinction between theCodes of Conduct

Imposed by othersWhat must be done or what must not be doneRulesCodes of Ethics

Self-imposedWho we areWhat we stand forGuidelines or guiding principles

Types of CodesCorporate or business enterpriseProfessional organizationsIndustry and sectorSingle issueCodes from national and international bodies

Criticisms of CodesUnenforceableIf enforced, penalties are insignificantUnnecessary, as most corporations already operate ethicallyOften idealisticWritten in meaningless generalitiesMerely to prevent government legislationMere response to public criticism

Ethics TrainingManagers or outside consultantsOnline exercisesPractical checklists and testsIs it legalBenefit/cost testCategorical imperativeLight of day testDo unto othersVentilation testSource: Pagano, 1987

Conflicts of InterestThree types of conflict: (1) real; (2) apparent; (3) potentialExamples: self-dealing; accepting gifts or benefits; influence peddling; using employers property; using confidential information; outside employment or moonlighting; post-employment; personal conduct

Ethics Audits and ConsultantsSystematic effort to discover actual or potential unethical behaviour in an organization.Preventive and remedial purposeUseful in conjunction with a code of ethicsConducted by consultants

Ethics Officers and Ethics CommitteesEthics officers:Independent managerReports to the board of directors or CEOReviews complaints or information from anyone in the organization or any stakeholderStudies situation and recommends actionResponsible for the ethics programEthics committees: Comprising management, employees, and outside stakeholders

Ethics Reporting Systems and WhistleblowingWhistleblowing: an act of voluntary disclosure of inappropriate behaviour or decisions to persons in positions of authority in an organization.Reporting systems (e.g., hotlines)

Whistleblowing: IssuesRemain silent, quit, or disclose wrongdoing?Does obligation to employer supersede obligation to self, profession, or industry?Will whistleblower be believed?Is whistleblower hero or snitch?Who should the whistleblower contact?What will the consequences be?

Whistleblowing and MoviesBoiler Room (2000)A Civil Action (1998)Erin Brockovich (2000)The Insider (1999)The Rainmaker (1997)

Ethics: Who is Responsible?Boards of directors?Management? Three models of moral management:Immoral (devoid of ethical principles)Amoral (without ethics, but not actively immoral)Moral (conform to high standards of ethical behaviour)Source: Carroll, 2002

Ethics Programs: ApproachesFormal approachbased on organizational norms that are written as a code of conductMonological approach allows organizational members (e.g., managers, employees) to determine for themselves what is right or wrongDialogical approachEmphasizes communication before decisions are made and implementedSource: Nijhof et al., 2000

Ethics Programs: Evaluation and BenefitsCompliance-basedRules, lawsPrevent criminal conductLawyer-drivenEmployee discretion limitedCode of conductIntegrity-basedValues/ethics/principlesEnable responsible conductManagement-drivenEmployee discretion increasedCode of ethics

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