BA 310 Mod 3 Ch 2 The Evolving Complexity of Business Ethics Objectives Explain the global complexity of business ethics 1 2 Describe the historical development of business ethics 3 Define integrity Explain the role of integrity in the corporation 4 Describe some of the tests used for measuring integrity 5 Describe the three ethical tests used in corporate decision making 6 7 Discuss the elements of a cheating culture 8 Explain generational differences in cheating Explain the methods people use to rationalize their unethical behaviors 2 History of Business Ethics Discovery of ethics began with discussion by Aristotle Socrates and Plato The word ethics is derived from the Greek word for character ethos As long as there has been commerce there have been ethical issues about how business is conducted 1960 s Period of social unrest Issues about the environment and drug use among employees were dilemmas for employers This era shows the birth of corporate social responsibility movement Some corporations began to feel they have responsibilities to the broader community and not just themselves Economy suffered long periods of recession Companies began to cover up their wrongdoings rather than deal with the issues head on Lost of trust in government due to Watergate Led to the resignation of President Richard Nixon Some focus on human rights and environment Financial fraud surfaced savings and loan scandal Loyalty to employers decreased dramatically The Ethics Resource Center helped form the first business ethics office at General Dynamics in 1985 Outgrowth of global opportunities for companies Unsafe work practices child labor issues and environmental issues Rise of financial management 1970 s 1980 s 1990 s 2000 s Financial mismanagement problems Intellectual property theft cybercrime and personal privacy issues Passage of the Sarbanes Oxley Act in 2002 was the most significant event in the United States 3 The Role of Integrity integrity firm adherence to a code of especially moral or artistic values Based on the Latin word integri which means wholeness Integrity is based on employees continuous efforts to balance their personal values with the requirements to perform their jobs effectively throughout their careers One of the greatest dangers to an employee s integrity is to have his or her integrity compromised over time Having an employee s individual integrity erode allows potential negative consequences that could include unethical and illegal behavior as well as dysfunction with the professional and personal relationships the individuals has with others 4 Integrity Heuristics Publicity Test Would you be comfortable if actions were publicized in a newspaper or on television Trusted Friend Test Would you be comfortable explaining actions to a close friend or family member Reciprocity Test Golden Rule Do you treat others as you would like to be treated Universality Test Would you consider the actions or behavior acceptable if anyone in the world did the same action Obituary Test Would you be comfortable with the actions looking back on one s career Behaviors of High Integrity Possess humility Be truthful Fulfill commitments Strive for fairness Take responsibility 1 2 Maintain concern for the greater good 3 4 5 6 7 Have respect for the individual 8 Celebrate the good fortune of others 9 Develop others 10 Reproach unjust acts 11 Be forgiving 12 Extend self for others 1 BA 310 Mod 3 Ch 2 The Evolving Complexity of Business Ethics 5 Ethical Manager are Able to Make Their Own Rules Managers have the ability to establish their own rules pertaining to acceptable and unacceptable behaviors within the organization 6 Is Everyone Unethical Realistic evaluation of ethical conduct is based on what is done in everyday actions Unintentional unethical behavior can take place in part due to the illusion of objectivity Four avenues along which unintentional unethical behavior may be developed Implicit prejudice biased based on unconscious beliefs about groups of people gender ethnic or sexual preference In group favoritism favorable biased towards certain individuals in same group as others Claiming credit for others actions feelings of superiority lead to not giving enough credit to the co workers 7 The Cheating Culture Conflicts of interest biased based on if the decision favors the decision maker cheating any action in which an individual breaks the rules to benefit his or her own self interests In a global study measuring different components of cheating it was discovered that the cheating culture is a worldwide phenomenon Cheating occurred regardless of the level of corruption within the country Also found that corruption within countries will lead to more corruption by the citizens of that country Female respondents were less likely to support cheating behavior compared with male respondents 8 Generational Differences Pertaining to Ethics The Role of Trust in Ethical Conduct Trust is an important component in the ability for cooperation to be supported throughout the organization Trust allows employees to believe he or she will be able to blow the whistle on other employees who are performing unethical acts without prejudice 2