BUSA 2106 2nd Edition Exam 2 Study Guide Lectures 2 8 14 15 Chapter 2 Ethics and Decision Making Ethics Moral principles and values applied to social behavior Knowing the difference between what you have a right to do and what is the right thing to do The study of ethics includes The process of determining what is and is not a reasonable standard of moral conduct and The process of problem solving to resolve situations in which there is actual or potential physical in mental or economic harm to an individual or group Business Ethics Ethics in business context a consensus as to what constitutes right or wrong behavior in the world of business and the application of moral principles to situations that arise in business editing Moral Minimum The minimum degree of ethical behavior expected of a business firm which is usually defined as compliance with the law Motivation of Unethical Behavior Greed Stress that leads to ethical shortcuts Emphasis on short run profits Rewards of winning Ineffective deterrents Why Do Ethical Problems in Business Occur Culture encourages illegal unethical behaviors Personal and professional ethics are separate Everyone else is doing it or I m a team player Cynicism low morale indifference Inadequate training in ethical decision making Inability to see ethical dimension issue Inability to identify appropriate stakeholders Inability to evaluate alternatives in ethical terms Revolving door between business and regulators How congruent are law and morality Is law a moral minimum Law and morality overlap Morally wrong behavior is also illegal But is what is legal always morally right Law is morally neutral Law is morally repugnant Morality transcends the law Is the Law Always Clear Reasons for lack of legal clarity Overlapping and conflicting regulations Gray areas in the law e g what is reasonable or foreseeable What is the standard of care for handling personal information Ethical Decision Making Models Make Guidelines for Employees Is the action lawful Is the action consistent with company policies and procedures Am I following the spirit as well as the letter of the law or policy Is my conscience clear Am I living up to prior commitments Would my hero make the decision that I am contemplating Law Based Compliance Models Am I violating any laws What does my action contribute to stakeholders What are the consequences of this action to these stakeholders and me Newspaper Test Contemplate the business act Employee should ask themselves whether they would be willing to see it immediately described by and informed and critical reporter in the front page news there to read by their spouse children and friends Mirror Test If I make this decision will I be able to look at myself in the mirror tomorrow morning Variations The tummy test the Mom test GSU Model Utilitarianism Morality is based on consequences or outcomes of the decision not intent of actor Actor balances net social benefits and harms Identify alternatives Determine costs benefits for each stakeholder Select alternative that maximizes benefit Concerns Can we predict all the consequences of an act Does utilitarianism justify sacrificing minority interests to benefit the majority and produce the societal good John Stewart Mill 1806 1873 Deontology or Duty Ethics Moral duties must be Universal consistently applied and reversible Kant s categorical imperative and the Golden Rule Examples Duty to be honest and truthful to obey the law to adhere to contracts etc Duties imply rights Basic rights life rights derived from respect for others privacy impartiality and property right Duty Ethics and Intent Morality is based on intent of actor rather than consequences which may be indefinite and uncertain Choose an action consistent with duties and best respects rights of stakeholders What happens if rights conflict Whose rights are superior Treat every person with respect not as a means to an end Concerns Is an action ethical if your intent is good and you follow your duty but The consequences are not good OR The action doesn t promote the general utility Justice Ethics Essence is fairness Justice principles can resolve conflicts among stakeholders Process justice e g procedural due process ensures fairer and more consistent treatment Outcome justice focuses on a more equitable distribution of benefits and burdens Ex fair day s wage for fair day s work Treat people the same except when they differ in relevant ways e g Needs Characteristics related to the task Develop distribution policies behind a veil of ignorance What does this mean Why did Rawls regard it as beneficial Concerns Does a distributive justice system discourage individual initiative Does it lead to greater social cooperation John Rawls 1921 2002 Virtue Ethics Focus is on moral character and qualities that make us a good person Aristotle s nine virtues included Wisdom prudence justice fortitude courage magnanimity and temperance Modern philosophers often add honesty and compassion Concerns Different cultures may have different views on what is a virtue Difficulty in applying virtue ethics How does focus on character guide actor in determining which actions are morally permitted and which are not Aristotle 384 to 322 BC Social Responsibility of Business Duty owed by business to act in a socially responsible manner in producing and selling goods and services Theories of Corporate Social Responsibility Maximize profits for stockholders Milton Friedman Moral minimum Avoid causing harm and compensate for harm caused Stakeholder approach Consider the interests of all stakeholders e g stockholders employees customers suppliers creditors and community Social Contract and Corporate Citizenship Conform to society s evolving expectations in exchange for benefits of corporate status Do good and solve social problems Promoting Ethical Behavior How can companies promote ethical behavior Commit to ethics from the top down Treat employees fairly Adhere to corporate mission statements Develop and enforce codes of ethics Exercise better oversight Provide ethics training at all levels Conduct corporate social audits Integrate corporate compliance into ethics SOX Corporate Codes of Conduct Reasons to have a code Clarify what is ethically acceptable Provides employees with objective reason for refusing to engage in questionable practices Ideal codes will Be consistent Provide positive and negative guidance Create a sense of individual and collective responsibility