EthicsEthics

Chapter 2Chapter 2

IntroductionIntroduction

Ethics are human values that Ethics are human values that describe how one lives and what we describe how one lives and what we term as “Correct” behaviorterm as “Correct” behavior

Ethics has two possible levelsEthics has two possible levels Substantive or NormativeSubstantive or Normative Meta-ethicsMeta-ethics

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Substantive or NormativeSubstantive or Normative The question is: Is this the right thing to The question is: Is this the right thing to

do?do? A question posed against ones own feelingA question posed against ones own feeling

Meta-ethicsMeta-ethics The question is: How do I know this is the The question is: How do I know this is the

right thing to do?right thing to do? What am I gauging this against? (past What am I gauging this against? (past

experience, people around me)experience, people around me)

Business EthicsBusiness Ethics

Has become a field of study in its own Has become a field of study in its own right, much like ethics in medicine for right, much like ethics in medicine for instanceinstance

Reason being that businesses do not Reason being that businesses do not operate in vacuumoperate in vacuum

And that profit is not the sole driving And that profit is not the sole driving force behind any business although it force behind any business although it is importantis important

Triple bottom line reportingTriple bottom line reporting

Ethical Theories Ethical Theories Consequence BasedConsequence Based: the : the

consequence of an action consequence of an action determines whether it is determines whether it is right or wrongright or wrong

Principle BasedPrinciple Based: one’s own : one’s own principles or values he/she principles or values he/she has been taught or has been taught or developed will determine developed will determine right from wrongright from wrong

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Virtue Based: Means that the Virtue Based: Means that the character of an individual decides character of an individual decides right from wrong but leads to right from wrong but leads to problems when looking at different problems when looking at different societiessocieties

Narrative Based: Stories used to Narrative Based: Stories used to describe right from wrong like describe right from wrong like nursery rhymes or children’s storiesnursery rhymes or children’s stories

Moral Absolutism Vs Moral Moral Absolutism Vs Moral RelativismRelativism

Moral Absolutism: states there is only Moral Absolutism: states there is only one ethical solutionone ethical solution

Moral Relativism: states that the Moral Relativism: states that the same problem under different same problem under different circumstances could dealt with circumstances could dealt with differentlydifferently

More than one “moral” solution to a More than one “moral” solution to a problem, depending on diff culturesproblem, depending on diff cultures

Diff to set universal code of ethics as Diff to set universal code of ethics as values differ from country to countryvalues differ from country to country

Business EthicsBusiness Ethics

Business ethics could be said to be Business ethics could be said to be how one’s own personal values or how one’s own personal values or beliefs are applied in a business beliefs are applied in a business contextcontext

Basic Moral QuestionsBasic Moral Questions

What does the law say and do we What does the law say and do we agree with this law?agree with this law?

What about choices regarding What about choices regarding economic and social issues not economic and social issues not governed by legislation or where governed by legislation or where legislation is not enforced?legislation is not enforced?

Continue.Continue. The issue of self-interest Vs the The issue of self-interest Vs the

interest of the business.interest of the business.

Some Ethical IssuesSome Ethical Issues

Employee conflict of interest (moral Employee conflict of interest (moral or unfair treatment)or unfair treatment)

Inappropriate giftsInappropriate gifts Unauthorized paymentsUnauthorized payments Affirmative ActionAffirmative Action Internet, email and cell phone issuesInternet, email and cell phone issues Stealing from the company (Is there Stealing from the company (Is there

a difference between stealing a a difference between stealing a pencil and a PC?)pencil and a PC?)

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Firing an employee for “whistle Firing an employee for “whistle blowing”blowing”

Other issues such as:Other issues such as: Divulging confidential info or trade secretsDivulging confidential info or trade secrets Terminating employment without Terminating employment without

following proper proceduresfollowing proper procedures AdvertisingAdvertising Tax evasion (different from tax avoidance Tax evasion (different from tax avoidance

but very fine line)but very fine line)

Why Business EthicsWhy Business Ethics

Adam Smith: A businesses only aim Adam Smith: A businesses only aim is to make a profit and that it abide is to make a profit and that it abide by all relative laws to do soby all relative laws to do so

Incentive programs: These are put in Incentive programs: These are put in place to motivate employees as well place to motivate employees as well as supply them with adequate as supply them with adequate training, this gives them meaning in training, this gives them meaning in their worktheir work

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A business must sometimes do more A business must sometimes do more than merely follow the law as it is than merely follow the law as it is not always sufficient to satisfy the not always sufficient to satisfy the needs of stakeholdersneeds of stakeholders

Religion has a large impact on the Religion has a large impact on the employees ethics that they up hold employees ethics that they up hold and managers should be aware of and managers should be aware of these religions within the businessthese religions within the business

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Business should show they able to Business should show they able to act as responsible citizens without act as responsible citizens without being forced to act (pro-active rather being forced to act (pro-active rather than reactive)than reactive)

As business are continually becoming As business are continually becoming more powerfully and influential in more powerfully and influential in society they should try create a good society they should try create a good society for all concernedsociety for all concerned

Continue.Continue. Globalization causes business to act Globalization causes business to act

not just at a national level but at not just at a national level but at international level and therefore the international level and therefore the business must be aware of ethical business must be aware of ethical behavior across the boardbehavior across the board

Levels of Business EthicsLevels of Business Ethics

Individual Level: involves a single Individual Level: involves a single person choosing to act in an ethical person choosing to act in an ethical manner, example:manner, example: Cheat on an expense accountCheat on an expense account Call in sick when one is notCall in sick when one is not Accept a bribeAccept a bribe PlagiarismPlagiarism

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Organizational Structure: top level Organizational Structure: top level management put pressure on their own management put pressure on their own employees to act unethically, example:employees to act unethically, example: Asking an employee to perform an Asking an employee to perform an

unethical act to increase profit (i.e. telling unethical act to increase profit (i.e. telling an employee to put fictitious assets in the an employee to put fictitious assets in the balance sheet)balance sheet)

Asking employees to overlook wrongdoings Asking employees to overlook wrongdoings of other individuals (i.e. not whistle of other individuals (i.e. not whistle blowing)blowing)

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Professional or Association Level: Professional or Association Level: means referring to a Code of Ethics means referring to a Code of Ethics for guidelines. Some questionable for guidelines. Some questionable actions may be:actions may be: An accountant asking an employee to An accountant asking an employee to

deduct questionable items for tax deduct questionable items for tax purposespurposes

A lawyer offering plea bargain to a client A lawyer offering plea bargain to a client when the result would be beneficial to when the result would be beneficial to their own careertheir own career

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Societal Level: different actions have Societal Level: different actions have different ethical views in different different ethical views in different societies, example:societies, example: ““Go between” payments could be Go between” payments could be

viewed as a bribe in one society and as viewed as a bribe in one society and as a way to ensure a transaction runs a way to ensure a transaction runs smoothlysmoothly

Trading or playing sport on religious Trading or playing sport on religious holidaysholidays

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International Level: examples:International Level: examples: Companies that are connected to Companies that are connected to

countries who grossly violate human countries who grossly violate human rightsrights

Economic sanctions (prevention of Economic sanctions (prevention of trade) may lead to differences of trade) may lead to differences of opinions on the ethics thereofopinions on the ethics thereof