ETHICAL ISSUES IN ORGANIZATIONAL

BEHAVIOR

Ethics: The study of Moral Philosophy

• Centuries of examining the basic question of how people should live their lives

• Some specific questions

• Some of he essence of ethics and moral philosophy is its reflective quality – sitting back and looking at the way things are customarily done and asking what is the way they ought to be done. Socrates’ questions: “What we are talking about is how one should live” (as reported by Plato)

• Ethical absolutism and ethical relativism. Only you can decide

• Remember the Golden Rule: “Do unto others as you would have them do unto you”

Ethical behavior is behavior judges as good, right, just honorable, or failing to meet an obligation. The judgment of behavior as ethical or unethical is based on principles, rules, or guides that come from an ethics theory, character traits, or social values. Some ethics scholars have argued that doing business ethically is simply good business.

Moral Philosophy

Moral PhilosophyMoral philosophy, or morality, refers to the concept of human ethics used within three contexts:

1. individual conscience2. systems of principles and judgments shared within a culture or community3. codes of behavior or conduct morality.

Since a single persons moral and ethical judgments are affected by that persons environment (e.g. how one was raised and what one was taught), personal morality distinguishes and defines intentions, motivations or actions as right or wrong. Thus, various individuals may disagree about a certain moral or ethic, even if they share many of the same morals and ethics. In contraposition, individuals may agree about a certain moral or ethic even if they subscribe to different moral codes.Everyone has their own moral philosophy and their own morals. Philosophers probably want to keep this in mind when engaging in philosophy of ethics and philosophy of morality.

Ethical Values (Ethics)

Ethics is the philosophical study of morality and moral values. Ethics deals with the analysis and employment of ideas such as good, evil, right, wrong, and responsibility. Ethics is divided into three primary areas:

Meta-Ethics - Meta-ethics is the study of the concept of ethics itself. Meta-ethics is employed when philosophers seeks to comprehend the nature of ethical attitudes, statements, and judgments, as well as ethical properties.

Normative Ethics - Normative ethics is the study of how to determine ethical values.

Applied Ethics - Applied ethics is the study of the use of ethical values.

Ethical Values of Societies and Individuals

• Ethical values of societies– Variations and similarities among societies– Functions of societal ethical values– Dynamics of societal ethical values

• Ethical values of individuals– Built from societal-level values– Learned from family, including religious training, peers,

education, and life experiences– Dynamics of individual ethical values– Levels of moral judgment

Ethical Theories

Ethical Theories - Utilitarianism

• Utilitarianism - the proper course of action is the one that maximizes the overall “happiness.” It is the “happiness principle.”

Utilitarianism asks a person to examine the effects of his actions to decide whether these actions are morally correct under utilitarian guidelines. An actions morally right if its total net benefits exceeds the total net benefit for any other action.

Utilitarianism has been accused of looking only at the results of actions, and disregarding the desires or intentions that motivate them. Intentions seem somehow important: it seems undesirable to call an action intended to cause harm but that inadvertently causes good "overall good".

Ethical Theories - Right/Relativism• Relativism - right and wrong are determined by what

my society believesMoral relativism may be descriptive, meta-ethical, or normative.Meta-ethical position: the truth or falsity of moral judgments is not objective, “It’s moral to me,

because I believe it is.”• An actions morally right if its total net benefits

exceeds the total net benefit for any other action. A right is a person’s just claim or entitlement. The right can focus on what that person does or on the action of other people toward him.

Ethical Theories - Justice

• Justice - determines just actions to be those that emerge from the correct use of principles that have been agreed to under conditions that are fair.

• Justice-based ethics theories use a comparative process, which looks at the balance of benefits and burdens among members of a group or resulting from the application of laws, rules, and policies.

Ethical Theories – Egoism

• Egoism - a descriptive theory which states that people always act to maximize their self-interest (normative ethical positions).

• Egoism focuses on a person’s self-interests, but can also include the interests of others.

Ethical Theories – Applied Ethics

• Applied ethics is a discipline of philosophy that attempts to apply ethical theory to real-life situations.– Applied ethics is used in some aspects of determining public

policy and by those that face difficult decisions. Questions that are typically addressed by applied ethics include:

– “What are human rights and how do we determine them?” “Do individuals have the right of self determination?” OR on a more personal level, one may ask, “Is lying always wrong?”, “If not, when is it permissible?”

Managing for Ethical Behavior

Modern managers are feeling increasing pressure to promote ethical behavior in their organizations, causing them to look for ways of managing for ethical behavior. Managers can follow three steps to manage for ethical behavior in their organizations:

1. Understand the composition of the present ethical culture of their organizations.

2. Improve that ethical culture.3. Sustain ethical behavior so

that it becomes embedded in their organizations.

Managing for Ethical Behavior

o Want to change an organization’s culture organization. Decisions are not made by the organizations, they are made by the people in them, who are guided by their personal ethical values and their perception of the organization culture’s ethical values that such matters.

o Code of ethics – what is it in your organization, is it up to date and matches all aspects of business (internal, external, local, and international)

Managing for Ethical Behavior - continued

o Policies – based upon the ethical theories; specify what the organization wants to include in decision-making processes, increases the information used to include information tied to the ethical implications of the decision: o Employees’ right of dissent (whistle blowing)o Guidelines for employee privacyo Environmental effects

o Procedures – includes information for members of decision-making groups

Managing for Ethical Behavior - continued

o Standards of ethical performance – what are they, what does it include?

o Ethics training and education – does it exist? If so, does it need to be updated/revised? If not, what is needed to get started?

o Reinforcing ethical behavior – rewards, motivation, standards of behavior

o Peer reporting (whistle blowing) - protocol

International Aspects of Ethics

International Aspects of Ethics

• Interest in ethics in different countries• Legal views

• Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD)

• Foreign Corrupt Practices Act (FCPA)

• Ethical views• Cultural relativism- the principle that an individual’s human beliefs

and activities are understood by others I terms of the individual’s own culture.

• Ethical realism- to see moral truth as grounded in the nature of things rather than in subjective and variable human reactions to things.

Important Terms

act utilitarianismForm of utilitarianism that asks a person to assess the effects of all actions according to their greatest net benefit to all affected.

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention)Twenty-nine members and five nonmembers of the Organization for Economic Cooperation and Development signed an ethics treaty. The treaty has strong sanctions for bribery. The signatories represented economies in the major world regions.

ConventionalOne of three stages of moral development in the ethic of justice theory; attributed mainly to men; characterizes most adolescents and adults. Features a growing awareness of the expectations important to other people and the internalization of the moral norms of the person's group or society.

cultural relativismAn approach to international ethics that considers differences in ethical values among cultures and takes a normative ethical view based on the premise that each society's predominant ethical values decide what is right and wrong.

difference principleSocieties will have inequalities, but must help the disadvantaged (sick, disabled, etc.).

egoismEthical system that has two forms: individual (individuals judge their actions only by the effects on their own interests) and universal (individuals include others' interests when assessing the effects of their actions).

ethic of careA theory of stages of moral development of individuals; attributed mainly to women. Three stages of moral development: self-focused (concerned with survival); focus on others (considers feelings, emotions, and situation); reflective understanding of caring for others (focus on others but has a balanced view of self in moral decisions).

ethic of justiceA theory of stages of moral development of individuals; attributed mainly to men. Three stages of moral development: preconventional (self-centered, obeys rules to avoid punishment); conventional (growing social awareness and less focused on self-interest); principled (behavior guided by freely chosen moral principles).

ethical absolutismHolds that an ethical system applies to all people, everywhere, and always; based on an authority such as a religion, custom, or written code.

ethical behaviorBehavior judged as good, just, right, and honorable based on principles, rules, or guides from a specific ethics theory, character traits, or social values; may vary from person to person or country to country.

ethical realismHolds that morality does not apply to international activities, behavior, and transactions.

ethical relativismHolds that ethical behavior is based on personal feelings or opinions and is whatever a person or society says is ethical; rejects the view that moral judgments have objective validity.

focus on othersOne of three stages of moral development in the ethic of care theory; attributed mainly to women. Consider actions moral that take into account other people involved in the situation; focus on feelings, emotions, and the unique qualities of the situation in which the act happens.

focus on selfOne of three stages of moral development in the ethic of care theory; attributed mainly to women. Features a strong focus on self with the intent of ensuring survival; women often engage in self-criticism for being selfish.

Foreign Corrupt Practices Act (FCPA)A U.S. statute enacted in 1977 that prohibits a company from using bribes to get business in another country or prevent the restriction of its business; allows small payments that are part of the ordinary course of doing business in another country.

individual ethical egoistJudges a person's actions based only on their effects on self-interests. Because this form of egoism never considers other people's interests, moral philosophers usually reject it as a defensible basis of ethics.

“It's good business”The assumption that doing business ethically is beneficial for organizations, especially in the long term.

justiceAn approach to ethics that uses a comparative process that looks at the balance of benefits and burdens that are distributed among group members or that result from applying laws, rules, and policies.

legal rightA person's just claims or entitlements defined by the legal system.

moral rightA person's just claims or entitlements that exist because of ethical standards.

negative rightsA person's duty not to interfere with another person's rights.

objectively ethicalA person acts according to a rule or law.

positive rightsA person's duty to help others freely pursue an interest to which they have a right.

preconventionalOne of three stages of moral development in the ethic of justice theory; attributed mainly to men. In the early period of this stage, the person is self-centered, does not consider anyone else's viewpoint, and obeys rules because they are backed by authority. In the later period of this stage, the person becomes aware of the interests of others and the conflicts that arise among multiple interests.

principle of equal libertyEach person's basic liberties must equal those of others. Those liberties must also be protected from attack by others.

principle of fair equality of opportunityEveryone must have the same chance to gain the best positions offered by society.

principledOne of three stages of moral development in the ethic of justice theory; attributed mainly to men. Features the development of moral principles that guide the behavior of those who reach this stage.

reflective understanding of caring for othersOne of three stages of moral development in the ethic of care theory; attributed mainly to women. Features a strong focus on caring for others as the basis of moral action and a balanced view of the self in moral decisions.

rightsA person's just claims or entitlements; can be legal (defined by the legal system) or moral (universal rights that exist because of ethical standards).

rule utilitarianismForm of utilitarianism in which a person assesses actions according to a set of rules designed to yield the greatest net benefit to all affected.

stages of moral developmentStages in which people shift from an individual understanding of morality to a societal one and then to a universal view. Some persons do not progress through all three stages, and the stages may differ for men and women.

subjectively ethicalA person believes he or she acted ethically.

theory of distributive justiceTheory proposed by John Rawls that is based on three principles: equal liberty for all persons, difference (society should care for its most needy while using its resources as efficiently as possible), and fair equality and opportunity for all.

unethical behaviorBehavior judged as wrong, unjust, dishonorable, or failing to meet an obligation.

universal ethical egoismUniversal ethical egoism, although controversial, can include the interests of others when assessing one's actions. Asks a person to weigh the effects of his or her actions on his or her interests with the assessment based on pursuing pleasure and avoiding pain.

utilitarianismAn approach to ethics that asks people to examine the effects of an action to decide whether its total net benefits exceed the total net benefits of any other action.

Summary• Ethical behavior – behavior judged as good, just, right,

and honorable based on principles, rules, or guides from a specific ethics theory, character traits, or social values; varies from person to person and country to country

• Moral right – a person’s just claims or entitlements that exist because of ethical standards.

• Know your organization’s Code of Ethics• Ethical decision-making is affected by:

– Law– Morality– Values– Professional codes