“We need a Nobel Prize in business, awarded to organisations that demonstrate how business effectiveness results directly from ethical behavior. A society that is not built on ethics – fairness, freedom, and mature hearts and minds cannot survive for long.”

Peter Koestenbaum, 2002

CHAPTER FOURETHICS

Presented by

Avalene Connelly

Supervisory Training Programme 2009

TURBULENT TIMES Over the last decade, ethical scandals in

business have been on the rise:EnronWorldComTycoAnd locallyHCUClicoUDECOTTUTT

OTHER ETHICAL ISSUES An employee decides not to confront his manager on a company

issue because his performance appraisal is due

A relative of the CEO’s serious disciplinary offence is hushed up, while for the same misconduct, the Industrial Relations Manager institutes an immediate disciplinary enquiry in the case of other staff

An interviewee covers up being fired from a previous job while filling out an application form

Conducting personal business during company time without authorisation

Taking credit for a co-worker’s hard work on a project

DEFINE THE TERM ETHICS

ETHICS DEFINED:

The code of moral principles and values that govern the behaviors of a person or group with respect to what is right or wrong.

INFLUENCES Upbringing (parental, societal,

educational) Media Religion Age Personal experience External pressure Self-interest Political and legal framework

GUIDELINES FOR DETERMINING ETHICAL BEHAVIOR Morning-after test Front-page test Mirror test Role-reversal test Common sense test

ETHICAL DECISION MAKING APPROACHES Utilitarian Approach

Individualism Approach

Moral-Rights Approach

Justice Approach

UTILITARIAN OR BEST RATIO APPROACH

Focus on decisions that optimize the satisfaction for the greatest number of people

INDIVIDUALISM APPROACH

Acts promote the individual's best long-term interests, which ultimately leads to the greater good

MORAL-RIGHTS APPROACH

1. The right of free consent1. The right of free consent

2. The right to privacy2. The right to privacy

3. The right of freedom of conscience3. The right of freedom of conscience4. The right of free speech4. The right of free speech

5. The right to due process5. The right to due process

6. The right to life and safety6. The right to life and safety

JUSTICE APPROACHThree types of Justice Approaches:Distributive JusticeProcedural JusticeCompensatory Justice

BLACK AND WHITE APPROACH Right is right and wrong is wrong

EXERCISERaldian Jemmott faces an ethical dilemna. A corporate buy-

out and restructuring strategy at Coffee Express Limited is going to eliminate three of the ten employees in the Operations department which he supervises.

He has worked with these three employees for years and even knows their spouses and children. On a personal level he considers these workers friends rather than subordinates.

He would like to warn his employees about the upcoming restructuring, but the Managing Director, Mr. Hayden Mitchell, has forbidden “early announcements” under any circumstances. According to Mr. Mitchell, a leak to the press could undermine the buyout that is causing the restructuring. If this “leak” happens, the company’s survival might be in question.

Should Mr. Jemmott forewarn his employees or not???

This is his ethical dilemna.

THE ORGANISATION’S ROLE IN ETHICS Corporate culture provides a framework

of beliefs and behaviors the company supports…or will not tolerate

Values adopted within the organization are highly important

THE ETHICAL ORGANISATIONThe Three Pillars of an Ethical

Organization

CREATING AN ETHICAL ENVIRONMENT Establish policies and procedures that ensure that all

employees are treated ethically. Enforce the policies. Ensure that employees have access to an objective

grievance procedure Health and safety measures are implemented to protect

employees Promotion practices must be fair and objective Appraisal system must reward employees for ethical

behaviour All employees must be protected from harassment based

on age, race, sex, sexual orientation or other reasons Hiring practices must be fair and impartial A Code of Ethics has to be established for the

organisation. How employees are to treat one another How employees are to treat customers and stockholders

EXTERNAL REGULATIONS Sarbanes-Oxley Act (SOX)

Requires CEOs and CFOs to sign statements making them personally responsible for the accuracy of the quarterly financial statements

Knowingly misrepresenting the financials opens them up to punishments including fines and jail time

Protection for whistleblowers Other external regulations include

regulations related to: Minimum wage Overtime compensation Discrimination Health and Safety Privacy

COSTS OF ETHICAL VIOLATIONS Unethical business environments can:

Demotivate individualsMake good employees leave the companyAttract unethical employeesLead to the lack of trust by the employees

for the companyLoss of jobs and company integrity

ETHICAL ADVICE Whenever you are required to make a

difficult decision, especially one that is ethically challenging, select an option that you would be comfortable describing to the nation on the evening news