Business Ethics

22 August 2022
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What is ethics?
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The discipline that examines a person's moral standards or the moral standards of society to evaluate their applicability & reasonableness to the situation in an individual's life
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What ethics is NOT
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1.) Feelings: a sensation or an emotional state like joy 2.) Religion: ethics can include religion, but many people are not religious; ethics applies to everyone and isn't confined to religion 3.) Following the law: the law can deviate from what is ethical; the law can become corrupt 4.) Judgment or judging others: not about determining if someone is good or bad; have to solve decisions in a fair manner 5.) Following culturally accepted norms: cultures vary with ethics; some are ethical while others are corrupt 6.) Technology or science: can provide information and data, but it can't provide reason for how humans ought to act
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What is business ethics?
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Specialized study of moral right and wrong that focuses on moral standards as they apply to business organizations and their behavior - Business ethics is about how we behave (the standards by which we hold ourselves accountable) AND about relationships (how we treat others and how we treat each other)
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3 levels that ethical issues can occur
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1.) Individual: how we act as individuals in the workplace; ethical questions about a person's character, behavior, and their actions 2.) Organizational (corporate): how business org. are structured and how they work. Examines policies, climate, norms, etc. of the company 3.) Societal (systemic): very broad perspectives; social, political, and economic systems in which businesses operate
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When examining ethical issues in the workplace...
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1.) We shouldn't hide behind the fiction of the corporation 2.) As humans, we control, decide, and carry out what the corporation does 3.) As individuals, we are influenced by other workers and the organization 4.) We as individuals still make the choice
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3 different management situations with varying ethical considerations
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1: Ethical considerations in each situation --> managing and leading contain many ethical decisions. Every decision effects people, the business environment, and the natural environment. 2: Competing forces --> make ethical decisions between financial performance and social performance. 3: Moral Conflicts --> a moral situation in which a person must choose between 2 equally bad choices or when there are multiple ethical considerations which conflict with each other
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3 steps for managers
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1.) Identify stakeholders 2.) Have a framework to arrive at your decisions 3.) Communicating
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Pressures and Factors affecting the morality of managers
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1.) Individual and cognitive factors: -Ignorance: can account for bad ethical choices; can almost be willful and intentional - Considering limited alternatives: when faced with a situation with 2 clear paths, a person only considers these 2 factors; they don't consider any alternative factors - Simplified decision rules: having a simple rule to follow can be reassuring to decision makers and can appear to relieve us of accountability for the decision - Satisficing: "it's good enough" 2.) Motivational factors: - It's easier to do the wrong thing: it's hard to sometimes do the right thing; it takes time and effort. It will continue to snowball out of control if you let it. - You lack the courage: make decisions you regret later on because you don't have the courage to do it the first time - Peer pressure: you want to fit in and want people to respect you; you will be influenced by others 3.) Organizational factors: - Behavior of supervisors: influence of your supervisors is real and deep reaching - Behavior of peers: people pay attention to and are influenced by others - Personal financial need: personal needs and wants of employees that can cause unethical decisions or justification - Formal organizational policy: some are very elaborate while others are not 4.) Situational factors: - Scripts: situations that are stored in our memory; we recall from memory what you did in the past and make that decision again - Distractions: we don't deal well with these - Moral exclusion: if an individual or group is perceived as outside the boundary in which moral values or considerations of fairness apply
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What is personal ethics?
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Refer to the rules by which an individual lives his or her personal life. - Ethics and business ethics is a two-fold investigation that includes the activity of the investigation and the results. The focus/subject of the investigation is morality
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What are moral standards?
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The norms about the kinds of actions believed to be morally right and wrong, as well as the values placed on what we believe to be morally good and morally bad
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Elements of moral standards
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1.) Personal goals = our expectations of outcomes; these are what we want out of life. Can include personal possessions like cars, homes, etc. They can include family, social justice, etc. 2.) Personal norms = our expectation of behavior; the way we expect others to behave. Norms are not laws; they are not published and may or may not be obeyed. They cannot be enforced. Neither consistent nor universal between groups or countries. 3.) Personal beliefs = our expectation of thought; beliefs support our norms. Norms lead to a person's goal. 4.) Personal values = rankings or priorities that a person establishes Are all goals, norms, and beliefs of equal importance? --> No, some are more important than others
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Influences on elements of moral standards
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- Cultural and religious traditions have variations and this affects GNB&V which affects that individuals MS. - Takeaway points: A,B,C. A: Religious, cultural, economic, and social will affect your moral standards B: People hold their different economic and religious traditions in equally high esteem C: This will create differences in moral standards and affect the way individuals and groups will view an ethical situation in which people can be morally impacted
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Why moral standards are NOT an adequate framework for ethical issues
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1.) Moral standards are subjective; they vary from person to person 2.) Moral standards are variable; they vary by country, time, religion, etc. 3.) Moral standards conflict; one persons will conflict with another person's
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Why should we be moral?
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Amoral person --> an individual who does not stop to think about the rightness or fairness of his/her decisions, but instead concentrates upon profits (or some other goal) for their employer and personal benefits for themselves Ethical relativism: there is no ethical standard that can be applied universally - Whether an action is right or wrong depends on the culture
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Moral responsibility and stakeholders
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Moral responsibility= 1.) a person's moral duty or their moral obligation; the recognition of ethical dilemmas or issues 2.) Affixing or placing blame? --> No - Key managerial function is to recognize that you have moral responsibility
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3 components of the managerial function of moral responsibility
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1.) Realize that others are being morally impacted 2.) We need to be able to identify the groups being impacted (the stakeholders) 3.) Determine, do we have moral responsibility or not?
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Key elements for recognizing moral responsibility
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A. Causality --> an individual caused or helped cause injury or wrong or they failed to prevent it when they could have B. Knowledge --> the individual made the decision knowing what they were doing 2 exceptions: Ignorance (does not relieve of your moral responsibility) & failure to take steps to find out if something is important C. Freedom --> a person is morally responsible when they have acted on his or her own free will; they were not forced to make a specific decision *If you are missing one of these, than you DO NOT have moral responsibility*
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What are mitigating factors?
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Reduce the managers overall moral responsibility A. Degree of contribution/ participation: some actions will involve several parties to determine if something is unethical B. Difficulty due to duress: pressures placed on you to perform an action to determine if its ethical or not
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Corporate and subordinate responsibility
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1.) Corporate: actions and decisions within a company are made by many people; who is responsible when many people are involved? 2.) Subordinate: carries out an act that the supervisor told him to carry out and they both know it's wrong
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What is a stake and what are stakeholders?
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Stake: an interest or share or undertaking Stakeholders: an individual or group who can affect or be affected by the achievement of an organizations actions, activities, decisions, etc. 1.) This concept of stakeholder is a 2 way street; there is an exchange of influence 2.) We are concerned with stakeholders that are morally impacted
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3 organizational views of stakeholders
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1.) Production view: suppliers, organization, customers 2.) Managerial view: suppliers, organization, customers + employees and stakeholders 3.) Stakeholder view: much broader viewpoint of the organization; its concerned with individuals who can be influenced by the org
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What are primary and secondary stakeholders?
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Primary stakeholders: direct influence and stake in the company's success Secondary stakeholders: more removed and indirect influence *Your status as a stakeholder can change*
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NEXT SLIDES ARE THE HILL DISCUSSION
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What approach does Hill take as his primary concern?
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Takes an approach as God as his central interest and primary concern
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Our tipping point as Christians is sin
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Hill says, "sin is the refusal to emulate God and instead set our own and independent agendas"
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3 components of his model?
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Holiness--Justice--Love A business act is ethical if it reflects Gods holy, just, and loving character *Must have all 3 before an action can be considered moral* Ex: 3 legged stool - if one leg is broken, it cannot do its job
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2 takeaway points from Hill as business professionals
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1.) We all have a fundamental flaw....sin 2.) We are all susceptible to the temptation of justifying unethical behavior Key point Hill also makes: he says that most humans are neither wicked or angelic, but we are all somewhere in between
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3 points to Hill's theocentric approach
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1.) Ethics logically follows theology 2.) When we behave in a manner consistent with Gods character, we act ethically 3.) Value is placed on the life that seeks to emulate Gods character
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What is Holiness and list the 4 primary elements of Holiness
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Holiness: the concept of single minded devotion to God and absolute ethical purity 4 primary elements: 1.) Zeal for God: holiness calls us to zealously make God our highest priority. - Holiness is fundamentally about priorities - Holiness abhors when business, or any other human activity becomes an idol 2.) Purity: ethical purity reflects Gods moral perfection and aversion to anything impure - Purity in communication: when personal value is valued over ethical purity, the result is a host of predictable consequences - Purity in sexuality: Base sexual conduct is common in many officesβ€”lewd comments, offensive jokes, and flirting - Purity in purpose: with everything we pursue, we need to act ethically 3.) Accountability: holiness holds us accountable by rewarding moral purity and punishing impurity - Holy living not only honors God but also enables the creation of long term relationships; successful businesses know that earning the trust of employees, suppliers, dealers and customers is critical 4.) Humility: one of the deepest insight of Christian ethics is that we are incapable of making ourselves Holy; holiness gives us a correct self-assessment - Herman Miller argues that humility isn't synonymous with weakness, but rather a prerequisite to accurate self-assessment - Humble leaders listen to their subordinates, build strong teams and are not embarrassed to admit mistakes
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3 erroneous views of Holiness
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1.) Legalism: legalism reduces holiness to rule keeping - Legalists follow policies and keep promises, but show very little emotional sensitivity to others - Companies operated by legalists often become rigid and institutionalized - Workers just learn to follow the rules and not invest much emotionally - Legalism is both self-defeating and morally wrong 2.) Judgmentalism: when legalists fail, they justify themselves by pointing out even greater moral lapses in others - These individuals criticize others in order to inflate their own self-opinions - Judgmental employees have long memories, refusing to forget errors committed by subordinates 3.) Withdraw from society: the only way to attain holiness, according to ascetics is through self-denial and withdrawal from corrupting influences - Holiness is acceptance of, not flight from responsibility - True holiness involves incarnation into the world and its troubles, not abdication from it - The apostle Paul wrote positively about his own business experience; we should use the marketplace as an opportunity both for testing our character and for bringing light into darkness
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NEXT FEW SLIDES ARE LECTURE SLIDES
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What is a right and list the 3 types of rights in the business world
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Right: an individuals entitlement to something. A right enables a person to choose freely whether to pursue certain activities or interests 1.) Legal right: legal claim to be treated in a certain way or to have a particular right protected Ex: right to a minimum wage, right to bargain collectively, equal opportunity 2.) Contractual rights and duties: limited right and correlative duties that arise when one party or person enters into a contract with one party or another person. Ex: employee works for employer so you are entitled to perform - 3 key features of contractual rights a. Includes a specific agreement and specific parties b. Must be a specific agreement (it can't be implied) c. Must be valid under the legal guidelines 3.) Moral rights: rights that all humans have everywhere on the account of us being humans. Dependent on the legal system? --> typically, they are NOT dependent on the legal system - 3 key features of moral rights a.) Correlated duties: somebody with a certain right and the rest of us have a correlated duty to that person based on that right b.) Free pursuit of interest: if we have a person with a moral right, they have the right to freely pursue that interest c.) Provide a basis for justifying ones actions
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Positive and Negative rights
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Negative Rights: duties others have to not interfere in certain activities of the person who holds the right Positive Rights: duties of other agents (it is not always clear who) to provide the holder of the right with whatever he or she needs to freely pursue his or her interests
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3 types of justice
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1.) Distributed justice: concerned with the fair distribution of society's benefits and burdens 2.) Retributive justice: pertains to a situation where a penalty for wrongdoing is considered just and appropriate 3.) Compensatory justice: requires fairly restoring to a person what he/she lost when he/she was harmed by someone else
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Kohlberg's 6 stages of moral development
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1.) Level one= the pre-conventional level --> the focus is on the self - Main behavior reactions are in response to punishment and rewards Stage 1: reaction to punishment Stage 2: seeking of rewards - Many people are at this stage in the business world; they don't "graduate" to the next stage of development 2.) Level two= conventional level --> "self" to "others" - As we mature, we learn that there are others whose ideas or welfare ought to be considered beyond just their own Stage 3: "good boy/ nice girl morality" --> we do what it takes to be a good workers Stage 4: Law and order orientation --> there's laws and norms in society and we need to follow them and behave 3.) Level three = post-conventional level --> focus is on the broad aspect of human kind in general Stage 5: Social contract orientation Stage 6: Universal moral principles orientation
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HILL CHAPTER 3 AND 4 NOTES
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What is justice?
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- Justice provides order to human relationships by laying out reciprocal sets of duties and rights for those living in the context of community - The twin concepts of duties and rights are central to justice: we have been endowed with 2 fundamental rights --> the right to be treated with dignity and the right to exercise free will *One person's right becomes another persons duty*
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What are negative injunctions and affirmative duties?
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Negative injunctions: we are obliged not to injure others Affirmative duties: there is little unanimity about responsibilities toward those whom we have not harmed
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4 basic aspects of justice
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1.) Procedural rights: focus on fair processes in decision making includes due process and equal protection Due process: (1) Requires decision makers to be impartial, to have no conflicts of interest. Impartiality forbids decision makers from having preexisting biases or from reaping personal gain from their decisions. (2) Due process also mandates that fair and adequate evidence be presented. (3) Due process provides those accused of wrongdoing with the opportunity to tell their side of the story before a decision is reached Equal protection --> prohibits discrimination by decision makers; ensures that each individual is treated according to the merits of his or her claim, not on the basis of group membership 2.) Substantive rights: these rights are what procedural rights seek to protect --> these may be universal or they may be unique to a particular society 3.) Merit: merit justifies unequal distribution in many areas of life --> if everyone is given an equal chance to succeed, those who exert greater effort or make better choices will achieve - Merit is like the law of gravity: ignore it at your own risk - Critics say merit isn't fair because it favors those with natural talents --> defenders of merit counter with 2 arguments: (1) If critics are correct, our free will is extremely limited and we have little moral responsibility for our action and (2) Merit provides an incentive to improve our lives 4.) Contractual justice: limited to 3 concurrent duties (1) we must not violate a negative injunction by causing harm to others (2) We must respect procedural justice (3) We must fulfill our contractual promises - Isolated, contractual justice results in extreme individualism - Contractual justice permits people to take on additional duties not owed to the general populace
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What is compensatory justice?
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When any of these 4 are violated, compensatory justice is needed. - Justice tends to be cold and harsh, lacking the emotional heat and relational passion of holy love
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Love= relationships Holiness= purity Justice= rights
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Many consider love to be the centerpiece of Christian ethics - Without a solid relational foundation, no group effort can succeed in the long run
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Christian love has 3 primary characteristics
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1.) Empathy: understanding, kindness, and sensitivity; empathy feels for others. Christian empathy encourages corporate executives to demonstrate heartfelt concern for the less fortunate, to take personal interest in the fate of severely ill associates and to sympathize with sales staff who miss quotas due to unexpected personal problems. It is about reciprocal respect 2.) Mercy: merciful love takes the initiative in forgiving, redeeming and healing - The concept of "enemy love" distinguishes Christianity from other ethical systems - Hill says it's okay to confront someone if they badmouth you; you don't just have to take it on the chin and walk away --> don't sink to the other party's level (enemy love) 3.) Self-sacrifice: frightens us because it appears to be a blank check with no limits - Giving up the rights that justice gave us
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What is altruistic sinning?
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The laying aside of ethical conduct to please another