Unit 2 BUSINESS EHTICS Dr. Henry MensahThe Loyal Agent Argument • – • – – The Loyal Agent...

Unit 2

BUSINESS EHTICS

Dr. Henry Mensah

Defining Ethics

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Ethics is the ……Science of MoralBranch philosophy which is concernedwith human character and conductA code of moral standards of conduct forwhat is “good” and “right” as opposed towhat is “bad” or “wrong”.

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Sources of Ethical Norms

Fellow Workers

Family

Friends

The Law

Regions ofCountry

Profession

Employer

Society atLarge

Fellow Workers

ReligiousBeliefs

The Individual

Conscience

Morality

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Morality is used in connection with thepractical application of theories, principles,and standards of human conduct to particularacts or situations. E.g. when we apply a particular ethical theoryto an action and we try to judge whether thataction is right or wrong on the basis of thatethical theory.

The Moral Point of View•

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Business decisions can be made from the moral, economic,and legal points of view. An integration of the three is most appropriate The moral point of view uses reason or logic , not justfeelings or conventional views, to justify decisions QUESTION?????????

Would you feel comfortable if colleagues, friends, andfamily knew about your decision, or if it were reported onTV or in the newspapers??????

© 2012 Pearson Education, Inc. Allrights reserved.

Four morally relevant reasons foracting in a way

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Considering the benefit and harm to all of thedifferent parties involved. Respecting the essential humanity of others. Treating others with equality, fairness, and justice. Caring for other persons in ways that nurturerelationships.


Ethics and the Law

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It is not enough to say that our conduct islawful because ethics go beyond the legalcode. Following ethical standard is not merely thesame as obeying the law. This may be considered the minimumacceptable standard to which companiesmust adhere.


Two Schools of Thought;Ethics & the Law

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Law and ethics govern two differentrealms.

Law prevails in public life, whereas ethicsis a private matter (personal conduct)

Law embodies the ethics of business: Ethicalrules that apply to business have beenenacted by legislators into laws


Why the Law is Not Enough•

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Ethical and legal aspects of a situation need tobe considered in decision making. Ethics applies not only to public matters but alsoshapes the law. Although much that is unethical in business isalso illegal, the law cannot be a complete guideto ethical business practice for many reasons


Why the Law is Not Enough

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The law is:Inappropriate for regulating certain aspects ofbusiness activity (Certain behavior is immoral but

not illegal)Slow to develop in new areas of concern andoften unsettled (the wheel of law grind slowly butbiz decision are quick)Employs moral concepts that are not preciselydefined (how do we measure good faith,reasonableness etc…basis of morality)

Ethics and Culture

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Cultural RelativismSuggest that there is no one right way tobehave; cultural context determines ethicalbehavior

Ethics and Culture

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Excerpt From Universal Declaration of HumanRights

United NationsArticle 1—All human beings are born free andequal in dignity and rightArticle 18—Everyone has the right to freedom ofthought, conscience, and religionArticle 19—Everyone has the right to freedom ofopinion and expressionArticle 23—Everyone has the right to work, to freechoice of employment, to just and favorableconditions of workArticle 26—Everyone has the right to education

Business Ethics•

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What it right or wrong in the workplace anddoing what's right

this is in regard to effects of products/services and in relationships withstakeholders.

involves applying general ethical principlesand standards to business activities, behaviorand decisions Business actions are judged

By general ethical standards of societyNot by more permissive standards

Two Areas of Business Ethics

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Managerial mischief:includes "illegal, unethical, or questionablepractices of individual managers ororganizations, as well as the causes of suchbehaviors and remedies to eradicate them

Moral mazesincludes the numerous ethical problemsthat managers must deal with on a dailybasis, such as potential conflicts ofinterest, wrongful use of resources,mismanagement of contracts andagreements

Ensuring a Strong Commitment to BusinessEthics in Multinational Companies

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Three schools of thought about the extentto which ethical standards apply across

countries and cultures exist:Ethical UniversalismEthical RelativismIntegrative Social Contracts Theory

Concept of Ethical Universalism

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According to the school of ethicaluniversalism . . .

Same standards of what is right and what iswrong are universal and transcend mostcultures, societies, and religions

Universal agreement on basic moral standards allowsa multinational company to develop a code of ethicsthat is applied evenly across its worldwide operations

Concept of Ethical Relativism•

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According to the school of ethical relativism . . .What is ethical or unethical must be judged in light of

local moral standards and can vary from one countryto another

Some Companies code of conduct based uponthe principle of ethical relativism assume that

local morality is an adequate guide for ethicalbehavior

Drawbacks of Ethical Relativism

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The ethical relativism rule of “when in Rome, doas the Romans do” presents problems

It is ethically dangerous for company personnel toassume that local ethical standards are an adequateguide to ethical behavior

What if local standards condone kickbacksand bribery?What if local standards blink at

environmental degradation?

Integrative Social Contracts Theory

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According to the integrative social contractstheory, the ethical standards a company shouldtry to uphold are governed by both

A limited number of universal ethical principles thatput ethical boundaries on actions and behavior in allsituations

andThe circumstances of local cultures, traditions, andvalues that further prescribe what constitutesethically permissible behavior and what does not


Ethics and the Role of Managers•

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Ethical dilemmas: A problem orissue demanding competingdecision or choice all of which areunethical although beneficial Ethical dilemmas for top managersare due to conflicts between threemain roles.

Managers as economic actorsManagers as company leadersManagers as community leaders

Ethical Leadership•

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Managers must provide a good role model by:Being ethical and honest at all times.Telling the truth; don’t hide or manipulate information.Admitting failure and not trying to cover it up.Communicating shared ethical values to employeesthrough symbols, stories, and slogans.Rewarding employees who behave ethically andpunish those who do not.Protecting employees (whistleblowers) who bring tolight unethical behaviors or raise ethical issues.

Factors influencing ethical managerial behavior—the person, organization, and environment.

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How managers act andcommunicate as role models

Immoral managerAmoral managerMoral manager

Ethics mindfulnessEnriched ethical awareness thataffects behavior

Three Models of MoralManagement

The Moralist View cont….

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There are 3 types of moralist – Immoral,Moral & Amoral Biz

Immoral Management -

An approach devoid of ethical principlesand an active opposition to what is ethical.The operating strategy of immoralmanagement is focused on exploitingopportunities for corporate or personalgain. © 2012 Pearson Education, Inc. All

rights reserved.

The Moralist View cont….

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Moral Management -Conforms to highest standards of ethical

behavior or professional standards ofconduct.

Amoral Management –

Indifferent between two aboveAccepts the ethical prescription but sees it as

irrelevant to businessSet their own rules of the gameethical conduct in business is merely strategic

behavior within the rules that government has setAlways have strategic intent to reap profit in the

long run© 2015 Cengage Learning 25


What is Whistle Blowing?

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Whistle-BlowingThe voluntary release of information by amember or former member of an organization

Evidence of illegal and/or immoral conductin the organizationoutside the normal channels of communicationConduct in the organization that is not inthe public interest

Some key highlights of the definition

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A whistle-blower is a member or former member ofan organization and not an outsider. The information that is revealed by the whistle-blower is non-public information and not alreadyknown facts. The information concerns some significantmisconduct by the organization or some of itsmembers.


key highlights cont…..•

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The information is revealed outside of the normalchannels of corporate communication within anorganization. The information is revealed voluntarily and not bya legal mandate. The information is revealed as a moral protest inorder to correct some perceived wrong.



The Loyal Agent Argument

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The Loyal Agent Argument isAn argument against the right of an employee toblow the whistle because

An employee is a legal agent of an employerThe main obligation of an agent is to act in the interest ofthe principal

whistle-blower might appear to be a disloyal agent, theobligations of an agent’s loyalty has limits.


Exit, Voice, and Loyalty

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In Albert O. Hirschman’s book Exit, Voice,and Loyalty , he states

Members of organizations can respond todissatisfaction by

Leaving the organizationSpeaking up and making the dissatisfaction knownin the hope of bringing about change


The Arguments against Whistle-Blower Protection

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Whistle-blowing might be used byemployees to:

Protest company decisions or to get backat their employersCover up their own incompetence orinadequate performance


The Arguments against Whistle-Blower Protection

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Legislation protecting whistle-blowersWould encroach on the right of employersto conduct business as they see fit

Would add another layer of regulation to theexisting legal restraints on business,

Making it more difficult for managers torun a company efficiently


The Arguments for Whistle-BlowerProtection

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If whistle-blowers come forwardDangers to the public will be broughtto light

We have a moral right to the freedom ofspeech and should be protected.

Management 9/e - Chapter 2 36

Whistleblowers cont’

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Barriers to whistleblowing include:Strict chain of commandStrong work group identitiesAmbiguous priorities

Organizational methods for overcomingwhistleblowing barriers:

Ethics staff units who serve as ethicsadvocatesMoral quality circles

Unit 2 BUSINESS EHTICS Dr. Henry MensahThe Loyal Agent Argument • – • – – The Loyal Agent...

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