BUSINESS ETHICS. Copyright

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2 Copyright Notice of Rights All rights reserved. No part of this book may be reproduced or transmitted in any form by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Notice of Liability The information in this book is distributed on an As Is basis without warranty. While every precaution has been taken in the preparation of the book, neither the author nor the publisher shall have any liability to any person or entity with respect to any loss or damage caused or alleged to be caused directly or indirectly by the instructions contained in this book or by the products described in it. Trademarks Many of the designations used by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations appear as requested by the owner of the trademark. All other product names and services identified throughout this book are used in editorial fashion only and for the benefit of such companies with no intention of infringement of the trademark. No such use, or the use of any trade name, is intended to convey endorsement or other affiliation with this book. Page 2

3 TABLE OF CONTENTS BUSINESS ETHICS BASICS... 5 BUSINESS ETHIC FUNDAMENTALS BUSINESS ETHIC CONCEPTS BUSINESS ETHICS UNDERSTANDING BUSINESS ETHICS BUSINESS ETHICS MANAGING BUSINESS ETHICS BUSINESS ETHICS PERFORMANCE, PRINCIPLES & PEOPLE BUSINESS ETHICS DECISION MAKING BUSINESS ETHICS SOCIAL RESPONSIBILITY BUSINESS ETHICS ETHICS AND SOCIAL RESPONSIBILITY BUSINESS ETHICS METHODOLOGIES FOR ADDRESSING ETHICAL PROBLEMS SUPPORTING DOCUMENTS GUIDELINES TO BUSINESS ETHICS BUSINESS ETHICS, CONDUCT, AND LEGAL COMPLIANCE ACME COMPANY, INC. BUSINESS ETHICS POLICY AND PROCEDURES CODE OF BUSINESS ETHICS FOR DIRECTORS INSTITUTE FOR BUSINESS AND PROFESSIONAL ETHICS GLOSSARY Page 3

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5 BUSINESS ETHICS BASICS Who is Responsible for business s being ethical and why? Government? Society? Business? What is an ethical business? Good question Not a science nor a math No exact formula Textbook definition Business Ethics: The concern with good and bad or right or wrong behavior and practices that take place within a business context Ethics: same concern but with moral obligation and duty Page 5

6 Conventionalist Approach Decision or Practice Vs. Prevailing Norms of Acceptability (The Law = The Minimum) Standards and Norms Personal Organizational Societal International Principles Approach Defined: A concept, guideline, or rule that, if applied when you are faced with an ethical dilemma, will assist you in making an ethical decision Various Principles Used Today Utilitarianism Greatest good for all Categorical Imperative Goof faith effort to do the right thing Virtue Ethics Focus on the individual Page 6

7 Continued Servant Leadership Serve others first Disclosure Rule What if the decision was made public? The Golden Rule Do onto others as you would have them do onto you Ethics Test Approach 1. COMMON SENSE 2. Making something public 3. Ventilation 4. Gag Test Common ethical error here Purified Idea -None are full proof. Again, this is not a science Page 7

8 Factors that Influence the Business Discretionary Ethical Legal Economic Page 8

9 Methods for a company to maintain an ethical standard Have written codes of policies and guidelines Distribute policies to all employees Additional training apply policies to everyday work Sources of information - hotlines Reasons to have a code of ethics Protect the firm Increase firm loyalty and trust Increase consumer good will Improve performance Reduce bribery and kickbacks *Foreign Corrupt Practices Act of 1977 Reduce conflicts of interest Reduce discrimination Page 9

10 Benefits of Being an Ethical Business Build relationships of trust with their customers, employees, suppliers, owners and the communities in which they work o -Institute of Business Ethics Higher Profits Business Ethics Magazine Laureate Award Consequences of Not Being Ethical Legal Issues for the Individual o -Martha Stewart Legal issues for the company o -Enron Loss of revenue, customer loyalty, jobs Community Impact Page 10

11 Please see Guidelines to Business Ethics on page 129 within this book. Page 11

12 Ethical Oaths Honesty and integrity are the foundation from which I will measure my actions; I will hold myself accountable to adhere to these standards. -Ohio State Fisher College of Business Oath 2003 Should students be required to take this oath upon graduation? Should CEO s take the same oath? Will this oath do anything and why? Page 12

13 SO Who is responsible for Business being Ethical? YOU Page 13

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15 BUSINESS ETHIC FUNDAMENTALS Objectives Describe how the public regards business ethics Provide a definition of business ethics Explain the conventional approach to business ethics Analyze economic, legal, and ethical aspects of business using the Venn Model Identify four important ethics questions Describe three models of management ethics Discuss Kohlberg s three levels of developing moral judgment Identify the elements of moral judgment Page 15

16 Inventory of Ethical Issues in Business Employee-Employer Relations Employer-Employee Relations Company-Customer Relations Company-Shareholder Relations Company-Community/Public Interest Public s Opinion of Business Ethics Gallup Poll finds that only 17 percent to 20 percent of the public thought the business ethics of executives to be very high or high To understand public sentiment towards business ethics, ask three questions o Has business ethics really deteriorated? o Are the media reporting ethical problems more frequently and vigorously? o Are practices that once were socially acceptable no longer socially acceptable? Page 16

17 Definitions Ethics involves a discipline that examines good or bad practices within the context of a moral duty Moral conduct is behavior that is right or wrong Business ethics include practices and behaviors that are good or bad Two Key Branches of Ethics Descriptive ethics involves describing, characterizing and studying morality o What is Normative ethics involves supplying and justifying moral systems o What should be Conventional Approach to Business Ethics Conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms o Pitfall: ethical relativism Page 17

18 Ethics and the Law Law often represents an ethical minimum Ethics often represents a standard that exceeds the legal minimum Page 18

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20 Four Important Ethical Questions What is? What ought to be? How do we get from what is to what ought to be? What is our motivation for acting ethically? 3 Models of Management Ethics 1. Immoral Management A style devoid of ethical principles and active opposition to what is ethical. 2. Moral Management Conforms to high standards of ethical behavior. 3. Amoral Management Intentional - does not consider ethical factors Unintentional - casual or careless about ethical considerations in business Please see Business Ethics, Conduct and Legal Compliance on page 145 within this book. Page 20

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24 Making Moral Management Actionable Important Factors Senior management Ethics training Self-analysis Page 24