Bernard Edwards

BeforeAfter

UTube

• Bernard Ebbers co-founded the telecommunications company WorldCom.

• In 2005, he was convicted of fraud and conspiracy in one of the biggest accounting scams in the US. WorldCom's false financial reporting resulted in a $11-billion loss to investors. He is currently serving a 25-year prison term.

•http://business.rediff.com/slide-show/2009/may/14/slide-show-1-worlds-20-worst-ceos.htm

EthicsThe study of what is good and evil, right

and wrong, and just and unjust. (p.180)

– Descriptive Ethics deals with what is– Normative Ethics deals with what ought

to be– Business Ethics is the application of

ethics to the business setting.

• Theory of Amorality: The belief that business should be conducted without reference to the full range of ethical standards, restraints and ideals in society.

• Theory of Moral Unity: Business actions are judged by the general ethical standards of society, not by a special set of more permissive standards,

Types of Management Ethics

• Immoral– Recognize the ethical issues involved and

choose to do the wrong thing.• Moral

– Recognize the ethical issues involved and choose to do the right thing.

• Amoral– Do not consider the ethical implications of an

action or believe that ethics are irrelevant.

Major Sources of Ethical Values in Business

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.7-6

The Overlap Model of Law, Ethics and Morals

• While all three approaches of law, ethics, and morals attempt to give us guidance as to the propriety of our conduct, they do not always give us the same answers.

Definitions• Ethics: Rules of conduct based on

consensually-accepted standards of behavior. (Conventional Approach)

• Morals: Absolute Precepts of personal behavior based on religion or philosophy. (Principles Approach)

• Law: Formal standards that permit or forbid certain behaviors.

Approaches to Ethics

• Conventional Approach – Ethical Relativism: Culture

• Principles Approach – Moral Absolutes: Religion and Philosophy

• Law – Codified Ethical Expectations

Conventional Approach: EthicsCulture

• Our pursuit of self-interest ought to be bounded by the standards of society.

• Behaviors are judged right or wrong based on their agreement with prevailing norms of society or consensually accepted standards of behavior

• Because this approach is based on consensus, our notion of what is right or wrong may vary over time and among different societies.

Ethical Universalism

• The theory that because human nature is everywhere the same basic ethical rules are applicable in all cultures.

Ethical Relativism

Ethical relativism is the doctrine that the moral rightness and wrongness of actions vary from society to society and that there are not absolute universal moral standards on all men at all times. Accordingly, it holds that whether or not it is right for an individual to act in a certain way depends on or is relative to the society to which he belongs.

John Ladd

Follow the Law Approach• “Law is the public’s agency for translating morality

into explicit social guidelines and practices for stipulating punishments for offenses.” --Beachamp and Bowie (2001)

• It is not uncommon (especially in business situations) for people to equate law and ethics.

• “…ethical behavior is typically thought to reside above behavior required by the law. This is the generally accepted view of ethics…. we would certainly say that obedience to the law is generally regarded to be minimum standard of behavior.” -- Carrol & Buchholz (2003)

Compensatory Damages

• Payments awarded to redress concrete losses suffered by injured parties

Punitive Damages

• Payments in excess of a wronged party’s actual losses. They are awarded to deter similar actions and punish a corporation that has exhibited malicious and willful misconduct.

Principles Approach: Morals• Right or wrong is a personal choice, based

on unchanging standards of right and wrong (principles) and what society thinks is not relevant to moral decision making.

• A key issue in the principles approach concerns the source of these absolutes.

• Those using this approach to ethics turn to religion, philosophy and their own consciences to answer that question.

Principle Approach: Philosophy• Consequentialist: Ends

– An action is right if its consequences are good.– Utilitarianism

• Deontological: (Deon = Duty) Means– An action is right or wrong in and of itself,

regardless of its consequences.– Rights– Justice

• Virtue: Being, Good Character

The Overlap Model of Law, Ethics and Morals

• “A law-abiding person is not necessarily morally sensitive or virtuous, and the fact that something is legally acceptable does not imply that it is morally acceptable…. A related problem involves the belief that a person found guilty under law is therefore morally guilty. Such judgments are not necessarily correct but rather depend on the moral acceptability of the law on which the judgment has been reached…. Taken together, these considerations lead to the following conclusion: If something is legal, it is not necessarily moral; if something is illegal, it is not necessarily immoral.”

--Beachamp and Bowie 2001

Overlap Model

Ethics

LawMorals

Actions are ethical, moral, and legal

Overlap Model

Ethics

LawMorals

Actions are ethical and legal, but not moral.(e.g. abortion)

Overlap Model

Ethics

LawMorals

Actions are moral and legal, but not ethical.(e.g. laws protecting the privacy of aids patients, Sunday closing laws)

Overlap Model

Ethics

LawMorals

Action is moral and ethical, but not legal.(e.g. Sodomy laws with regard to married couples.)

Overlap Model

Ethics

LawMorals

Actions are ethical, but not moral or legal.(e.g. Gambling (Football pools ))

Overlap Model

Ethics

LawMorals

Actions are moral, but not ethical or legal.(e.g. modern-day polygamy among the FLDS )

Overlap Model

Ethics

LawMorals

Actions are ethical, but not moral or legal.(e.g. Apartheid laws)

Four Internal Forces

• Leader’s Example• Strategies• Organizational Culture• Individual Characteristics

How Companies Manage EthicsSeven Steps: U.S. Sent Comm

• Establish compliance standards and procedures– Code of Conduct

• Ethical oversight occurs at high levels of management

• Do not delegate authority to persons who are prone to engage in criminal behavior– Use background checks

• Communicate standards to all employees– Ethics Training Programs

• Establish Monitoring and ethical auditing systems

• Consistently enforce standards

• Immediately after an offence take steps to prevent future offences

Enron

Enron Valueshttp://www.youtube.com/watch?v=CFk4ivlvvrwhttp://www.youtube.com/watch?v=-2gKv4WaGBw&feature=related