Business and EthicsSeminar

(March 15, 2013)

Orhun O. MOLYERMSc.IS

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2PARADOX

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• Where the ethics comes in

• Ethics … Some definitions …

• Business Ethics

• Ethical Issues / Dilemmas

• Ethical Norms

• Moral Theories

• How to solve an ethical issue / dilemma

• Code of Ethics, of Conduct, of Practice

PRESENTATION PLAN

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• A father is explaining ethics to his son, who is about to

go into business.

• “Suppose a woman comes in and orders a hundred

dollars worth of material. You wrap it up, and you give

it to her. She pays you with a $100 bill. But as she

goes out the door you realize she’s given you two

$100 bills.

• Should you or should you not tell your partner?”

(Henny Youngman)

WHERE THE ETHICS COMES IN

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• One of your colleagues, a close friend of yours,

told you that her application for a managerial

position in the competitor company was

accepted, and would quit at the end of the

month. You were asked to keep it as a secret.

Afterwards, your boss called you and said that he

was going to get your colleague friend promoted

to the position which you were after.

• What should you do? (1) tell the boss that

she would quit; or (2) keep her secret. Why?WHERE THE ETHICS COMES IN

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• A vast of field of study that really addresses only

one question: How should we live our lives?

(DesJardens)

• Currently a general term for concerns about

what people should do. (Schultz)

• The study of what is good or right for human

beings. It asks what goals people should

pursue and what actions they should

perform. (Hoffman, Fredercik, Schwartz)

ETHICS … SOME DEFINITIONS …

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• Philosophical ethics denies “ethos”.

• Philosophical ethics seeks

– a reasoned analysis of custom and

– a reasoned defense of how we

ought to live

ETHOS vs ETHICS

ήθος• Derived from Greek word “ethos”

(usual/predictable)

• “ethos” is to conform to what is typically

done, to obey the conventions of and

rules of one’s society and religion.

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• Ethos what people DO value

– Sociology, psychology, anthropology

• Ethics what people SHOULD value

– Step back and rationally evaluate the

customary beliefs and values that people

hold!

– Abstract yourself from “what is normally /

typically done”.

– Think deeply upon whether or not “what is

done should be done”, and “what is

valued should be valued”.ETHOS vs ETHICS

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• Etiquette

– Behavior that is considered

socially acceptable, as opposed to

morally right or wrong.

– Politeness, manners, one’s dress; One

to use handkerchief upon sneezing;

one to shake hand of a person one is

meeting for the first time

– Some may cross over the line into the

domain of Ethics: in some countries

acceptance of gifts can be considered

proper etiquette!

WHAT IS NOT ETHICS

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• Law

– Tends to reflect or embody the moral

norms of society.

– Generally what is legal is also ethical.

– Sometimes what is legal may be

unethical (previous apartheid laws in

South Africa, withholding information from

superiors, constantly complain about

others, etc.).

– Breaking the law often starts with

unethical behavior that has gone

unnoticed.

WHAT IS NOT ETHICS

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• Religion

– Many of ethical prescriptions

derive from religious doctrine.

– They may overlap in some

cases (abortion, euthanasia,

the role of women in society).

WHAT IS NOT ETHICS

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• Moral

– Refers to what is good and right in

character and conduct.

– Essentially interchangeable with ethics,

though in common usage, “morality”

often implies particular dogmatic (i.e.

rigid, inflexible) views of propriety (i.e.

decency, politeness), especially as to

sexual and religious matters.

WHAT IS NOT ETHICS

ETHICS

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• Different from ordinary decision

• Surfaced at the point

– where the accepted rules no

longer serve, and

– Where the decision maker is

faced with the responsibility

for weighing values, and

reaching a judgment in a

situation which is not quite

the same as any he or she

has faced before.

ETHICAL DECISIONS

14ETHICAL ISSUES

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• A branch of applied ethics.

• Studies the relationship of what is good and

right to business.

• Refers to values, standards, and principles that

operate within the business.

BUSINESS ETHICS

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• The goal is to focus on the cognitive and

intellectual side of ethics.

• More a matter of ethical reasoning and

thinking than ethical behavior.

• Comprises principles and standards that guide

behavior in the world of business.

BUSINESS ETHICS

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• An individual ‘s personal values and moral philosophies are

only one factor in the ethical decision-making process.

• Being good person and having sound personal ethics

may not be sufficient to handle the ethical issues that

arise in a business organization.

• The values people learn from family, religion, and school

may not provide specific guidelines for complex business

decisions.

THE IMPORTANCE OF BUSINESS ETHICS

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• Helps business people

– Begin to identify ethical issues

– Recognize the approaches

available to resolve them

– Learn about the ethical decision-

making process and ways to

promote ethical behavior

– Begin to understand how to cope

with conflicts between personal

values and organizational

values.

THE IMPORTANCE OF BUSINESS ETHICS

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• 2000 B.C. The code of Hammurabi -

honest prices.

• 400 B.C. Aristotle – Discussions on the

vices and virtues of tradesmen and

merchants.

• The Old Testament and the Jewish

Talmud – discussions on the proper way to

conduct business.

• The New Testament and the Islamic

Koran – business ethics related to wealth

and poverty

EVOLUTION OF BUSINESS ETHICS

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• 1200 A.D. “Ahilik (Brotherhood) – Ahi Evran” code of

business conduct

EVOLUTION OF BUSINESS ETHICS

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• 1920-1960: A moral activity; ethics and social responsibility rarely mentioned.

• 1960s: Civil rights, the environment, safety in workplace, consumer issues

• 1970s: Business ethics in academia

• 1980-85: journals, research centers, and conferences.

• 1985-95: integrated into large corporations, code of ethics, ethics training, ethic hotlines, ethics officers

• 1995-now: issues related with international business activities, bribery and corruption, use of child and slave labor abroad.

EVOLUTION OF BUSINESS ETHICS

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• Cultural initiatives that make ethics part of core organizational values

• Communication core values to the employees by ethics programmes and assigning ethics officers

• Ethical components of a corporate culture: Relates to the values, beliefs, and established and enforced patterns of conduct that employees use to identify and respond to ethical issues

• Ethical culture: Decision making process that employees use to determine whether their responses to ethical issues are right or wrong

CURRENT TREND IN BUSINESS ETHICS

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• Employee Commitment

• Investor Loyalty

• Customer Satisfaction

• Profits

BENEFITS OF BUSINESS ETHICS

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• frequently used as a phrase to refer questions or

dilemmas which involve moral judgment.

• a situation, a problem, or even an opportunity

that requires thought and discussion to

determine the moral impact of the decision.

ETHICAL ISSUE

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• When an issue involves conflicts between

different interests

– that cannot be resolved on the level of

interests alone

• When higher level principles need to be

applied

– that provide a basis for saying “What is right”

and "What is wrong”RECOGNIZING AN ETHICAL ISSUE

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• Sense of discomfort

• Partiality in decisions based on

personal perceptions; “Loaded

(subjective)” words, like “fairness”,

“justice”, “doing right”;

• Conditions preclude (prevent) the

possibility of action

RECOGNIZING AN ETHICAL ISSUE

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• A problem, situation, or opportunity that requires an

individual, group, or organization to choose among

several wrong or unethical actions,

• Where ethical issue is a problem, situation, or opportunity

that requires an individual, group, or organization to

choose among several actions that must be

evaluated as right or wrong, ethical or unethical.

ETHICAL DILEMMA

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• Become visible through stakeholder concerns

about an event, activity, or the results of a

business decision

• Stakeholders

– Employees, Shareholders, Suppliers,

Customers, Government, Community at large

DETERMINING AN ETHICAL ISSUE / DILEMMA IN BUSINESS

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1. Abusive and Intimidating Behavior

2. Discrimination

3. Sexual Harassment

4. Lying

5. Conflict of Interest

6. Bribery

7. Corporate Intelligence

8. Environmental Issues

9. Fraud

10. Consumer Fraud

11. Insider Trading

12. Intellectual Property Rights

13. Privacy Issues

DETERMINING AN ETHICAL ISSUE / DILEMMA IN BUSINESS

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• Due to hardware problems, the mail to your site has to be

re-emailed. (This involves checking each letter in the dead

letter queue, checking to see to whom it should have been

sent, and running a program to put it into the user’s

mailbox.) While doing this you end up seeing the contents

of several messages.

AN EXAMPLE OF A BUSINESS CASE

1. A message seems to be bragging about getting away with

some fraud.

2. A message is giving information you know to be false about

someone you know.

3. A message is telling another user false information about

you.

4. A message seems to be setting up a drug deal.

5. A message that gives you a personal advantage.

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1. Honesty

2. Integrity

3. Promise-keeping

4. Fidelity

5. Fairness

6. Caring for Others

7. Respect for Others

8. Responsible Citizenship

9. Pursuit of Excellence

10. Accountability

11. Reciprocity

12. Optimization

ETHICAL NORMS: REFERENCE POINTS

32MORAL THEORIES

Moral Theories

Goodness

Intrinsic

Monism

Pluralism

Instrumental

Obligation

Teleology

Egoism Utilitarianism

Rule Utilitiarian

Act Utilitarian

Deontology

Rule Deontologist

Act Deontologist

Relative Perspective

Descriptive

Metaethical

Normative

Virtue Ethics Justice

Distributive

Procedural

Interactional

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• What makes a given action right or obligatory?

• Emphasizes the means and the motives by

which actions are justified.

• Teleology

• Deontology

MORAL THEORIES: OBLIGATION THEORY

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• Consequentialism

• An act is considered morally right or acceptable if it produces some desired results.

• Assesses the moral worth of a behavior by looking at its consequences.

• Egoism

– Right or acceptable behavior is defined in terms of consequences for the individual.

• Utilitarianism

– Right or acceptable behavior is defined in terms of the consequences for the greatest number of people.

MORAL THEORIES: OBLIGATION - TELEOLOGY

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• Nonconsequentialism

• Compliance with moral principles = Ethicalness

• Individuals have certain absolute rights:

– Freedom of conscience (sense of right or wrong)

– Freedom of consent (self-authority)

– Freedom of privacy

– Due process (limitation of authority)

• Rightness of an action = f(whether the action is required, prohibited, or permitted by a moral rule)

• Focus on the rights of individuals and on the intensions associated with a particular behavior.

MORAL THEORIES: OBLIGATION - DEONTOLOGY

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• Definitions of ethical behavior are subjectively

derived from the experiences of individuals

or groups.

• They use themselves or the people around them

as their basis for defining ethical standards.

• Descriptive Relativism

• Metaethical Relativism

• Normative Relativism

MORAL THEORIES: RELATIVIST PERSPECTIVE

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• Moral principles -> “what should I do?”

• Virtue ethics -> “what kind of person should I

be?”

• Emphasizes moral education and the

development of moral character

• Tries to understand the traits that enable a person

to lead a full satisfying ethical life.

MORAL THEORIES: VIRTUE ETHICS

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• Involves

– Evaluations of fairness, or

– The nature to deal with perceived injustices of

others

• The decision rules could be based on the

perceived rights and on the intentions.

MORAL THEORIES: JUSTICE

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1. What are the facts?

2. What are the ethical issues?

3. What are the major stakeholders?

4. What are the options?

5. What is the ethicalness of the options?

6. What are the practical constraints?

7. What actions should be taken?

HOW TO SOLVE AN ETHICAL ISSUE: SEVEN-STEP PROCEDURE

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• Code of ethics

– Defines the values that underpin the code

– Describes a company's obligation to its

stakeholders.

• The code

– includes details of

• how the company plans to implement its

values and vision,

• guidance to staff on ethical standards and

how to achieve them.

CODE OF ETHICS

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• Code of conduct

– is generally addressed to and

intended for employees alone.

– It usually sets out restrictions

on behavior,

– Is far more compliance or

rules than value or principle

CODE OF CONDUCT

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• Code of practice

– adopted by a profession or by a governmental

or non-governmental organization to regulate

that profession

CODE OF PRACTICE

43QUESTIONS