Bcu Op Mahrm (Business Ethics)

BUSINESS ETHICSBUSINESS ETHICS

MA in Human Resource ManagementMA in Human Resource Management

Oliver Parker, MBAOliver Parker, MBA

28th November 200728th November 2007

ContentsContents

Everyday ConceptsEveryday Concepts DefinitionsDefinitions Ethical Philosophy & DilemmasEthical Philosophy & Dilemmas Ethical SystemsEthical Systems Personal Ethical StandardsPersonal Ethical Standards Corporate Ethical Standards Corporate Ethical Standards

Peter Drucker, 1990Peter Drucker, 1990

Ethics: a code of individual behaviour onlyEthics: a code of individual behaviour only Business has no ethical responsibilities Business has no ethical responsibilities

separate from the individualseparate from the individual

““there’s little difference between Lockhheed’s there’s little difference between Lockhheed’s paying (extorted money) to the Japanese airline paying (extorted money) to the Japanese airline and the pedestrian in Central Park handing over and the pedestrian in Central Park handing over his wallet to a mugger.” (p236) his wallet to a mugger.” (p236)

Everyday ConceptsEveryday ConceptsThe ‘Ten Commandments’The ‘Ten Commandments’

l. I am the LORD thy GOD, l. I am the LORD thy GOD, thou shalt NOT have strange gods before me.thou shalt NOT have strange gods before me.

ll. Thou shalt NOT take the name of ll. Thou shalt NOT take the name of the LORD thy GOD in vain. the LORD thy GOD in vain.

Lll. Remember thou keep holyLll. Remember thou keep holythe Sabbath Day. the Sabbath Day.

lV. Honour thy father and thy mother. lV. Honour thy father and thy mother.

V. Thou shalt NOT kill. V. Thou shalt NOT kill.

Everyday ConceptsEveryday ConceptsThe ‘Ten Commandments’The ‘Ten Commandments’

Vl. Thou shalt NOT commit adultery. Vl. Thou shalt NOT commit adultery.

Vll. Thou shalt NOT steal. Vll. Thou shalt NOT steal.

Vlll. Thou Shalt NOT bear false Vlll. Thou Shalt NOT bear false witness against thy neighbour. witness against thy neighbour.

lX. Thou shalt NOT covert thy lX. Thou shalt NOT covert thy neighbour’s wife.neighbour’s wife.

X. Thou shalt NOT covert thy X. Thou shalt NOT covert thy neighbours goods.neighbours goods.

Everyday ConceptsEveryday Concepts CAST NOT THE FIRST BLOWCAST NOT THE FIRST BLOW PRIDE COMES BEFORE A FALLPRIDE COMES BEFORE A FALL JAW, JAW, NOT WAR, WARJAW, JAW, NOT WAR, WAR MAKE LOVE NOT WARMAKE LOVE NOT WAR A MAN IS A MAN IS PRESUMEDPRESUMED INNOCENT UNTIL PROVEN INNOCENT UNTIL PROVEN

GUILTYGUILTY ALL POWER TENDS TO CORRUPT, AND ABSOLUTE ALL POWER TENDS TO CORRUPT, AND ABSOLUTE

POWER TENDS TO CORRUPT ABSOLUTELYPOWER TENDS TO CORRUPT ABSOLUTELY

Everyday ConceptsEveryday Concepts Common ‘Lived’ ValuesCommon ‘Lived’ Values

StrengthsStrengths HonestyHonesty LoyaltyLoyalty HonourHonour InventivenessInventiveness Initiation process for inclusionInitiation process for inclusion TraditionTradition ThriftThrift OptimismOptimism Production Production

One half of these One half of these values are focused on values are focused on protectionprotection

one half are focused one half are focused on on enhanced enhanced interactioninteraction

misapplication misapplication creates creates corruptioncorruption

Jane Jacobs, Systems of Survival

DefinitionsDefinitions

EthicsEthics is about identifying both the rules that govern is about identifying both the rules that govern human behaviour, and the “good values” that are worth human behaviour, and the “good values” that are worth seeking outseeking out

ValuesValues are principles of conduct such as caring, are principles of conduct such as caring, honesty, keeping promises, loyalty, fairness, and so onhonesty, keeping promises, loyalty, fairness, and so on

We can all understand these, and We can all understand these, and mostmost would say that would say that

they try to live by these rules…they try to live by these rules…

DefinitionsDefinitions

But what happens when a situation dictates that one rule But what happens when a situation dictates that one rule must over-rule another?must over-rule another?

Thus, ethics is Thus, ethics is the system of rules that governs the the system of rules that governs the ordering of valuesordering of values

““Ethics is a set of principles often defined as a code that acts Ethics is a set of principles often defined as a code that acts as a guide to conduct. This set of principles provides a as a guide to conduct. This set of principles provides a framework for acting.” framework for acting.” (Lawton, 1968)(Lawton, 1968)

however Farnham (2005) says...however Farnham (2005) says... Morals are concerned with the ‘right’ actions and how we live up to Morals are concerned with the ‘right’ actions and how we live up to

themthem

So YOU maybe aware of ethical principles, but still act immorally!So YOU maybe aware of ethical principles, but still act immorally!

Ethical Philosophy & DilemmasEthical Philosophy & Dilemmas Managers face a range of ethical dilemmas: Managers face a range of ethical dilemmas:

Conflicting objectives, performance data, bribery, Conflicting objectives, performance data, bribery, rationingrationing

Ethical thinkers address questions such as:Ethical thinkers address questions such as: WhatWhat is the meaning of ethical concepts: is the meaning of ethical concepts: goodgood and r and rightight?? HowHow can a person reach a conclusion about an ethical can a person reach a conclusion about an ethical

dilemma? On what can this conclusion be based?dilemma? On what can this conclusion be based? Do ethical dilemmas have answersDo ethical dilemmas have answers that that

would be universally accepted as right, would be universally accepted as right, proper, and appropriate?proper, and appropriate?

E.g. Shareholder vs. StakeholderE.g. Shareholder vs. Stakeholder

Ethical Philosophy & DilemmasEthical Philosophy & Dilemmas Ethical thinking goes back thousands of years.Ethical thinking goes back thousands of years.

Sumer, Babylon, etc. Civilisation began Sumer, Babylon, etc. Civilisation began around 6500BC; 1around 6500BC; 1stst ethics around 3800 BC ethics around 3800 BC

Chinese civilisation goes back to around 5000 Chinese civilisation goes back to around 5000 BC, first writings on ethics about 3500BCBC, first writings on ethics about 3500BC

Egyptian civilisation from c4000 BC, first Egyptian civilisation from c4000 BC, first writings on ethics 2700BCwritings on ethics 2700BC

Ethical Philosophy & DilemmasEthical Philosophy & Dilemmas

Indian sub-continent – Aryan civilisation about 2000 Indian sub-continent – Aryan civilisation about 2000 BC, first writings around 1400 BCBC, first writings around 1400 BC

Greece about 1800 BC, first writings about 1500 BC. Greece about 1800 BC, first writings about 1500 BC. The Iliad (Homer, c850 BC) the first story ever written The Iliad (Homer, c850 BC) the first story ever written down containing an ethical dilemmadown containing an ethical dilemma

Classical Greece, 492 – 323 BC the great writings on Classical Greece, 492 – 323 BC the great writings on Ethics which underpin European civilisation – Ethics which underpin European civilisation – Pythagoras, Socrates, PlatoPythagoras, Socrates, Plato

Ethical DilemmasEthical DilemmasCase Study: The Ford PintoCase Study: The Ford Pinto

$11 for a product improvement, $200,000 for a $11 for a product improvement, $200,000 for a lifelife Ford launch the Pinto in 1970 to compete against small ‘foreign’ carsFord launch the Pinto in 1970 to compete against small ‘foreign’ cars Rear-end crash tests – petrol tank could fail.Rear-end crash tests – petrol tank could fail. Defect found after assembly line tooling had been made.Defect found after assembly line tooling had been made. To change would cost millions (re-tooling and delays).To change would cost millions (re-tooling and delays). 1968, new US safety standard under discussion with auto industry.1968, new US safety standard under discussion with auto industry. Ford lobby to delay introduction and succeed.Ford lobby to delay introduction and succeed. Ford carry out cost-benefit study: into of $11 petrol tank Ford carry out cost-benefit study: into of $11 petrol tank

improvement not economical.improvement not economical. Cost $137M outweighs benefit deaths & injuries of $50M (180 deaths Cost $137M outweighs benefit deaths & injuries of $50M (180 deaths

@ $200,000).@ $200,000). Result: 500-900 suffered death by burning in Pinto crashes. Ford Result: 500-900 suffered death by burning in Pinto crashes. Ford

settle out of court.settle out of court. The Pinto sold at a rate of 500,000 units per year. The Pinto sold at a rate of 500,000 units per year.

Ethical SystemsEthical Systems

Ethical systemsEthical systems Universalism: - holds that there are “universal” Universalism: - holds that there are “universal”

truths, such as honesty, and that these should truths, such as honesty, and that these should be universally adopted because they govern be universally adopted because they govern the “right” behaviourthe “right” behaviour

Utilitarianism: - holds that the individual’s view Utilitarianism: - holds that the individual’s view should be subject to the notion of “the greater should be subject to the notion of “the greater good of society”good of society”

Ethical SystemsEthical Systems UtilitarianismUtilitarianism

Three forms of Utilitarianism:Three forms of Utilitarianism: EgoismEgoism: individuals are allowed to do whatever they : individuals are allowed to do whatever they

wish, so long as it injures or impinges on nobody elsewish, so long as it injures or impinges on nobody else

Rule UtilitarianismRule Utilitarianism: Society makes rules and : Society makes rules and customs which weigh and balance conflicting valuescustoms which weigh and balance conflicting values

Act UtilitarianismAct Utilitarianism: Society chooses whatever brings : Society chooses whatever brings the greatest good for the greatest numberthe greatest good for the greatest number

Personal Ethical StandardsPersonal Ethical Standards

Three forms of Personal Ethical Standards:Three forms of Personal Ethical Standards:

Pre-conventionalPre-conventional – decisions are made on the basis of – decisions are made on the basis of concrete rewards or punishmentsconcrete rewards or punishments

ConventionalConventional – decisions are made based on – decisions are made based on expectations of ethical behaviour held by groups and expectations of ethical behaviour held by groups and institutionsinstitutions

PrincipledPrincipled – follow a pattern of ethical principles, which – follow a pattern of ethical principles, which may or may not correspond with local conventions and may or may not correspond with local conventions and lawslaws

Corporate Ethical StandardsCorporate Ethical Standards Foundations of Business EthicsFoundations of Business Ethics

Charity PrincipleCharity Principle – Wealthier provide for the – Wealthier provide for the poorpoor

Stewardship PrincipleStewardship Principle – strong and rich should – strong and rich should look after resources, to husband and increase look after resources, to husband and increase them for the futurethem for the future

Social Responsibility PrincipleSocial Responsibility Principle – meeting – meeting legitimate expectations of societylegitimate expectations of society

These are socially-derived…These are socially-derived…

Corporate Ethical StandardsCorporate Ethical Standards

Stakeholders ConceptStakeholders Concept – concern for all groups – concern for all groups – Employees, Suppliers, Customers, etc– Employees, Suppliers, Customers, etc

Utilitarian conceptUtilitarian concept – to do the most good for – to do the most good for the most peoplethe most people

Theory of rightsTheory of rights – stresses the basic rights of – stresses the basic rights of all people, including the rights of minoritiesall people, including the rights of minorities

Theory of JusticeTheory of Justice – tries to make decisions – tries to make decisions which offer justice to the majoritywhich offer justice to the majority


Corporate ethical standards seem to fall Corporate ethical standards seem to fall into four groups:into four groups:

““Might equals right”Might equals right” – decisions are based – decisions are based on strength of the manager or organisationon strength of the manager or organisation

““Golden Rule”Golden Rule” behaviour – behaviour – based on the notion:based on the notion:

“ “Do unto others as you would haveDo unto others as you would have them do to you” or, them do to you” or,

““Would you do that if your motherWould you do that if your mother was was here watching you?”here watching you?”


““Do what everyone else does”Do what everyone else does” – decisions – decisions are based on what seems to be currently are based on what seems to be currently accepted business practiceaccepted business practice

Intuitive approachIntuitive approach – decisions are based on – decisions are based on doing “whatever feels ‘right’.”doing “whatever feels ‘right’.”

“ “ Enron believes it has a responsibility to conduct itself to certain Enron believes it has a responsibility to conduct itself to certain

basic tenets of human behavior.”basic tenets of human behavior.”

““This Code of Business Conduct and Ethics applies to all This Code of Business Conduct and Ethics applies to all employees, officers and directors of British Airways.”employees, officers and directors of British Airways.”


Reducing unethical behaviourReducing unethical behaviour:: Consistent leadershipConsistent leadership TraditionsTraditions Written ethical codeWritten ethical code TrainingTraining RewardsRewards Open ClimateOpen Climate ControlsControls PunishmentsPunishments

Does management show moral leadership…

What are the traps?

Leadership - Traps 1Leadership - Traps 1Kathryn Alexander, Ethical Impact Inc.Kathryn Alexander, Ethical Impact Inc.

Command & ControlCommand & Control DirectiveDirective ObedienceObedience Top-downTop-down InflexibleInflexible Fear generatingFear generating DistrustingDistrusting

Malicious Malicious compliancecompliance

Limits risk takingLimits risk taking Limits Limits

inventivenessinventiveness Limits Limits

responsivenessresponsiveness Generates self-Generates self-

protectionprotection


CompetitiveCompetitive Winning most Winning most

importantimportant CreativeCreative Pushes the limitsPushes the limits SecretiveSecretive PoliticalPolitical

Deception toleratedDeception tolerated Self-protectiveSelf-protective CraftyCrafty Inconsiderate of Inconsiderate of

othersothers Ends justify the Ends justify the

meansmeans VindictiveVindictive


RelationshipRelationship CollaborativeCollaborative Quality & learning a Quality & learning a

prioritypriority Experimentation Experimentation

fosteredfostered Group vs. personal Group vs. personal

winwin

Relationship more Relationship more important than truthimportant than truth

Group-thinkGroup-think Assumes others are Assumes others are

like-mindedlike-minded


Innovative - Self Innovative - Self ExpressiveExpressive self-managingself-managing ExperimentalExperimental Inventive & creativeInventive & creative IndependentIndependent

RebelliousRebellious Resistant-to-directionResistant-to-direction Resentful of authorityResentful of authority

Business EthicsBusiness EthicsCase Studies for you…Case Studies for you…

Is there evidence of anyIs there evidence of any Common ‘Lived’ Values Common ‘Lived’ Values within the within the organisation?organisation?

What are theWhat are the Ethical DilemmasEthical Dilemmas within the company?within the company?

Ethical Systems Ethical Systems – Universalism vs. Utilitarianism?– Universalism vs. Utilitarianism?

Does the organisation operate to agreedDoes the organisation operate to agreed Corporate Ethical Corporate Ethical StandardsStandards??

Does the company have any systems in place forDoes the company have any systems in place for reducing reducing unethical behaviourunethical behaviour??

How would you describe theHow would you describe the Management styleManagement style??

Bcu Op Mahrm (Business Ethics)

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