Business Ethics

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Business Ethics

• Unit Four

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Individual and the Business Organization

• Values
• Morals
• Ethics

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How good people make toughchoices. Kidder

• Justice versus Mercy
• Short-term versus Long-term
• Individual versus Community
• Truth versus Loyalty

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Belief Systems

• Home
• Religious Affiliations
• School
• Social Organizations

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Personal Moral Philosophy

• Correct Moral Philosophy?
• Different Philosophies in Different Situations?
• People can change their value structure.

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Moral Philosophy

• refers to principles or rules that people use to
  decide what is right or wrong
• presents guidelines for determining how to settle
  conflicts in human interests
• guides businesspeople in formulating strategies
  and resolving specific ethical issues
• There is no one moral philosophy accepted by
  everyone.

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Moral Philosophy Perspectives

• Teleology
• Egoism
• Utilitarianism
• Deontology
• The Relativist Perspective
• Virtue Ethics
• Justice Perspectives
• Distributive
• Procedural
• Interactional

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Teleology

• considers acts as morally right or acceptable if
  they produce some desired result such as
  pleasure, knowledge, career growth, the
  realization of a self interest, or utility
• assesses moral worth by looking
  at the consequences for the
  individual

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Categories of Teleology

• Egoism
• right or acceptable behavior defined in terms of
  consequences to the individual
• maximizes personal interests
• Enlightened egoists take a longer term
  perspective and allow for the well being of
  others.
• Utilitarianism
• concerned with consequences
• considers a cost/benefit analysis
• behavior based on principles of rules that
  promote the greatest utility rather than on an
  examination of each situation (greatest good for
  greatest number of people)

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Deontology

• focuses on the rights of the individual, not
  consequences (considers intentions)
• believes in equal respect and views certain
  behaviors as inherently right
• proposes that individuals have certain inherent
  freedoms
• freedoms conscience, consent, privacy, speech
  due process
• rule deontologist
• conformity to general moral principles
• act deontologists
• evaluate ethicalness based on the act

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The Relativist Perspective

• defines ethical behavior subjectively from the
  experiences of individuals and groups.
• Relativists use themselves or those around them
  as their basis for defining ethical standards.
• A positive group consensus indicates that an
  action is considered ethical by the group.
• acknowledges that we live in a society in which
  people have different views.
• There are many different bases from which to
  justify a decision as right or wrong.

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Virtue Ethics

• What is moral in a given situation is not only
  what conventional wisdom suggests, but also what
  a moral character would deem appropriate.
• Elements include truthfulness, trust, self
  control, empathy, and fairness.
• Attributes in contrast to virtue include lying,
  cheating, fraud, and corruption.

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Three Types of Justice

• Distributive justice
• an evaluation of the outcomes or results of a
  business relationship (evaluating benefits
  derived/equity in rewards)
• Procedural justice
• based on the processes and activities that
  produce the outcomes or results (evaluating
  decision making processes and level of access,
  openness and participation)
• Interactional justice
• based on an evaluation of the communication
  processes used in business relationships
  (evaluating accuracy of information and
  truthfulness, respect and courtesy in the process)

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Applying Moral Philosophy to Ethical Decision
Making

• Evidence suggests that individuals use different
  moral philosophies depending on the context
  (personal versus work decisions).
• Pressures at work are different from personal
  pressures.
• Decision making is affected by the corporate
  culture at work (rules, work group, etc.).
• Moral philosophies should be assessed on a
  continuum.

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Cognitive Moral Development...

• Kohlbergs model consist of 6 stages
• punishment and obedience
• individual instrumental purpose and exchange
• mutual interpersonal expectations, relationships,
  and conformity
• social system and conscience maintenance
• prior rights, social contract or utility
• universal ethical principles

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Kohlbergs Model

• Kohlbergs 6 stages can be reduces to 3 different
  levels of ethical concern
• concern with immediate interests and with rewards
  and punishments
• concern with right as expected by the larger
  society or some significant reference group
• seeing beyond norms, laws, and the authority of
  groups or individuals

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Importance of Kohlbergs Theory

• provides encouragement that individuals in a
  company can change or improve their moral
  development
• supports managements development of
  employees moral principles through
  applicable strategies
• indicates that the best way to improve employees
  business ethics is to provide training for
  cognitive moral development

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Moral Belief Systems, Not Lists

• Each of us has a system of moral beliefs that has
  two functions
• Direct and evaluate our own behavior
• Understand and evaluate the behavior of others
• Our belief system works insofar as it helps us
  understand and act in social institutions

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Levels and Stages of Rational DevelopmentRights

• I. Pre-Conventional Level
• Stage 1 Punishment and Obedience
• Stage 2 Instrumental Relativism
• II. Conventional Level
• Stage 3 Interpersonal Concordance
• Stage 4 Law and Order
• III. Post-Conventional Level
• Stage 5 Social-Contract, Universal Principles

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Mechanics of Moral Development

• Cognitive Disequilibrium Engine of Moral Dev.
• When our moral beliefs do not help us direct our
  own behavior and/or they do not help us
  understand the behavior of others
• we create a new system that helps us understand
  and act more effectively in our institutional
  environments.
• Hierarchical Integration Moral beliefs, not
  systems, are sticky through transitions
• We retain beliefs of early stage we integrate
  them with beliefs of later stages

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Stakeholder Analysis of Kohlbergs System

• Pre-Conventional Level
• Stages 1 and 2
• I am the primary stakeholder
• Conventional Level
• Stage 3
• My family and friends are the primary
  stakeholders

• Stage 4
• My referent group is the primary stakeholder
• Post-Conventional Level
• Stage 5 and 6
• All people, relationships groups are, initially,
  stakeholders of equal standing.

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What to do?

• You have recently been promoted to a director
  position in HR, and have been given the layoff
  list to be issued in 3 days. A good friend of
  yours tells you she is closing on house tomorrow,
  and how excited her whole family is. She is on
  lay-off list. What should you do?

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Responses to Business Case from Different Levels
of Reasoning

• Group work
• Given the stage of moral reasoning assigned to
  your group, what would you do, and why?
• Is the stage of moral reasoning you are working
  with
• Factually comprehensive?
• Ethically comfortable?

Explain
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Understanding Institutions

• Gilligans Care-Based Theory of Moral Development

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Female Moral Development

• Motivated by Selfish Concerns
• Motivated by increasing Recognition
• Making decisions based upon greatest good for
  self and others.

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Care and Rights

• Care
• Relationships
• Responsibility
• Care and Compassion

• Rights
• Individualism
• Duty
• Rights and Reason

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Again, Moral Belief Systems

• We use a system of moral beliefs to
• Direct and evaluate our own behavior
• Understand and evaluate the behavior of others.
• Effectiveness (understanding and behavior) in
  social institutions is test of validity.
• Development is motivated by affective (emotional)
  and rational factors

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Care The Evolution of Reasoning

• Level I
• Relationships are evaluated by how well they make
  me feel
• Level II
• Relationships are evaluated by how well they
  follow social expectations
• Level III
• Relationships are evaluated by how well
  relationships and participants can flourish

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Stakeholder Analysis of Gilligans System

• Self-Oriented Reasoning
• I am the primary stakeholder.
• Social Expectations Reasoning
• I am a secondary stakeholder. My group determines
  which relationships and people are the primary
  stakeholders.
• Self-Determined, Care Grounded Reasoning
• All relationships deserve equal consideration.

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Care, Rights, Both?

• Rights reasoning is grounded on impartial
  reasoning
• Care reasoning is grounded on partial reasoning
• Care and rights are incompatible

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Integrating Care and Rights

• Hypothesis We need both care and rights to
  understand our institutional environment.
• Religion
• Government
• Business
• We can use care and rights reasoning at different
  times

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A Definition of Ethical Business Decision-Making

• Ethical business decision-making creates value by
  promoting sustainable networks of stakeholders
  (individuals, personal relationships, and groups)
  in a context of human dignity and environmental
  integrity.