Business Ethics
Organizational Culture - values, beliefs and norms that are shared by
Ethics - is the field of study on how people try to live their lives
according to a standard of “right” or “wrong” behavior.
Business Ethics - is the application of ethical standards to business
behavior.
How we think and behave towards others.
How we would like them to think and behave towards us.
-it is a conscious choice to follow a set of moral standard or ethical
principles and determine what is acceptable according to:
a. religion
Before 1960, religious leaders raised issues on;
Fair wage, labor practices, morality of capitalism
Workers’ rights
Humanistic values over the materialism
b. traditions/beliefs of the society
Sources of judgement:
 Friends
 Family
 Ethnic background
 Religion
 School The media (television, radio, newspapers, magazines,
internet)
 Personal role models/mentors (How should I live?)
Moral standards are not acquired in the same manner that we learn the
alphabet.
Standards of ethical behaviour - are absorbed as you observe the
examples (positive or negative)
Value system - a set of personal principles formalized into a code of
behaviour.
Intrinsic Value - it is good in itself and is pursued for its own sake.
Instrumental value - the pursuit of a value is a good way to reach
another value. Ex. (money)
The Golden Rule “Do unto others as you would have them do unto
you”
all of the employees.
When does it start to go wrong?
That’s a common practice in this industry.
It’s a tough market out there and you have to be willing to bend the
rules. They are not in my department.
I don’t have time to watch their every move-head office gives me so
much to do to babysit my people.
If I fire them for a policy violation, the Union representative would be
on my back in a heartbeat.
If I fire him for a policy violation, I’d be one short-can you imagine how
long it will take me to look for a replacement and get him trained up?
The bosses know they do it, if they turn a blind eye, why shouldn’t I?
They don’t pay me to be a company spy. I’ve got my own work to do.
PROFIT, is it all there is in Business?
Corporate Social Responsibility - corporate citizenship/corporate
conscience
The organization is run with an awareness of its obligations to society.
Social contract Approach - an outlook that the corporation has an
obligation to society over and above the expectation of its shareholders.
Corporate Governance - is the system by which business corporations
are directed and controlled.
Steps to follow for good governance:
1. Create a climate of trust and Candor (attainment of vision)
2. Foster a culture of open dissent (thorough review of proposals)
3. Mix up Roles (job rotation)
4. Ensure Individual Accountability (total commitment)
5. Let the board assess leadership talent (scout for potential leaders)
6. Evaluate the board performance-(superior Performance from
everyone)
Subjective and Objective Morality
-Moral judgements about the rightness or wrongness of an action
-Moral judgments are important/ they override other considerations
-Moral praise can properly accompany the doing of morally right
actions
-Ethical Decision-making Framework
How the organization Influences Ethical Decision Making
The influence of significant others in the organization
International Business Ethics
Social Responsibility - assumes to maximize its positive effects,
minimize negative effect on society.
Business ethics is a social contract with society to promote the
common good.
Conflict of Interest - (personal, those of the organization, some other
group)
Honesty - truthfulness, integrity trustworthiness.
Fairness - quality of being just, equitable and impartial.
Communication- transmission of information, the sharing of meaning
Ex: advertising (product safety, pollution, employee work condition)
ambiguous word ”helps”
Organizational Relationships - (customers, suppliers, subordinates,
superiors, peers)
Ethics and Globalization - the world has become small and
completely interdependent.
For advocates of global ethics, this means that a flexible solution has
to be found. One that provides standards of practice to guide managers
as they conduct business across national boundaries in the name of
global commerce, while at the same time respecting the individual
customs of the countries in which they are operating.
Richard DeGeorge offers the following guidelines for organizations
doing business in these situations:
-Do no intentional harm.
-Produce more good than harm for the host country.
-Contribute to the host country’s development.
-Respect the human rights of their employees.
-Respect the local culture; work with it; not against it.
-Pay their fair share of taxes.
-Cooperate with the local government to develop and enforce just
background institutions.
 Majority control of a firm includes the ethical responsibility of
attending to the actions and failures of the firm.
 Multinationals that build hazardous plants are obliged to ensure
that the plants are safe and operated safely.
 Multinationals are responsible for redesigning the transfer of
hazardous technologies so that such technologies can be safely
administered in host countries.
The United Nations Global compact (operational, July 2000)
It does not police, enforce or measure the behaviour or actions of
companies.
It relies on Public Accountability, transparency and enlightened self-
interest of companies and civil society.
Human Rights
1. Businesses should support and respect the protection of
internationally proclaimed human rights.
2. Businesses should make sure they are not complicit in human right
abuses.
Labor Standards
3. Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining.
4. Businesses should uphold the elimination of all forms of forced and
compulsory labor.
5. Businesses should uphold the effective abolition of child labor.
6. Businesses should uphold the elimination of discrimination in
employment and occupation.
 Environment
7. Businesses should support precautionary approach of environmental
challenges.
8. Businesses should undertake initiatives to promote greater
environmental responsibility.
9. Businesses should encourage the development of diffusion of
environmentally friendly technologies.
Anticorruption
10. Businesses should work against all forms of corruption, including
extortion and bribery.
Business Ethics
A manager and worker with moral and ethical values has a state of
mind; equanimity. Such a person can mobilize his and other’s energy
and help accomplish wonders.
Our effectiveness at work is tied to exercising intrinsic human values
like moral and ethical values. These human values support established
business values such as service, communication, excellence,
credibility, innovation, creativity, and co-ordination.
The human values help self-development. Managerial functions such
as direction, control, supervision and communication, integration and
coordination are much easier.
The human values also help good interpersonal interactions. They
reduce conflicts and disputes. They enhance reputation and goodwill of
the organization.
Values and Quality of work life
Ethics and values must be an important part of management and work
culture.
Human harmony and happiness are the main objectives of any
enterprise to justify its survival and progress.
Any organization, which cares for its people, should not ignore any
unhealthy development.
People constitute the greatest dynamic inputs in any organization.
Development of people not in skills but also in moral, ethical and
spiritual values now becomes the necessary end itself.
Morality and rationality are combined at the same time in HRD.
Ethics programs cultivate strong teamwork and productivity.
Ethics programs align employee behaviors with those top priority
ethical values preferred by leaders of the organization.
Ongoing attention and dialogue regarding values in the workplace
builds openness, integrity and community -- critical ingredients of
strong teams in the workplace. Employees feel strong alignment
between their values and those of the organization. They react with
strong motivation and performance.
Ethics programs promote a strong public image.
Attention to ethics is also strong public relations admittedly; managing
ethics should not be done primarily for reasons of public relations. But,
frankly, the fact that an organization regularly gives attention to its
ethics can portray a strong positive image to the public.
People see those organizations as valuing people more than profit, as
striving to operate with the utmost of integrity and honor.
Aligning behavior with values is critical to effective marketing and
public relations programs. “Ethical values, consistently applied, are the
cornerstones in building a commercially successful and socially
responsible business. ( Bob Dunn, CEO)
Ethical behaviour and corporate social responsibility can bring
significant benefits to a business. For example, they may:
 attract customers to the firm's products, thereby boosting sales
and profits
 make employees want to stay with the business, reduce labour
turnover and therefore increase productivity
 attract more employees wanting to work for the business, reduce
recruitment costs and enable the company to get the most
talented employees
 attract investors and keep the company's share price high,
thereby protecting the business from takeover.

Unethical behaviour or a lack of corporate social responsibility, by
comparison, may damage a firm's reputation and make it less appealing
to stakeholders. Profits could fall as a result.
Discrimination By law, employers cannot treat employees differently
because of their religions, ethnic backgrounds, genders, ages or
disabilities. However, discrimination and the harassment that often
follows are both examples of business ethics issues.
In a business meeting, business people act ethically when they avoid
jokes or remarks that may be offensive to some and when they give
each person the right to voice her opinion.
Work Safety Issues
Having a workplace that poses a risk to employees is unethical. In
business meetings, business people should notify employees of any
risks and resolve the risks immediately.
If the risks cannot be resolved, employees should be sent home until
the workplace is safe again. Thus, if a concern about employee safety
is raised at a business meeting, ethical behavior would be immediately
assessing the issue and, if the concern is validated, immediately
informing employees, removing them from the dangerous area and
addressing the situation.
Foundations of Business Ethics
Individuals and groups within a company may not have embraced the
same set of values, there is always the possibility of ethical conflict.
Ethical issues in an organizational context are addressed openly
whenever a policy, code or rule is questioned. It may be hard to
distinguish between the ethical issue and the legal means used to
resolve it. All questionable issues need an organizational mechanism
for resolution. Questionable decisions and actions more often result in
disputes that must be resolved.
Ferrel & Thorne) Business Ethics and Social Responsibility
“Codifying ethical standards into meaningful policies that spell out what
is and is not acceptable gives businesspeople an opportunity to reduce
the probability of behaviour that could create legal problems”
Ethical Issues in Business
Abusive and intimidating Behavior - physical threats, false
accusation, annoying a co-worker, harshness.
Lying - to tell the truth to the best of your ability
Joking without malice (white lie)
Commission - creating a perception
Omission - intentionally not informing the receiver of material facts
Conflict of Interest - when an individual must choose whether to
advance his own interest , those of his organization or those of some
other groups.
Fraud - is any false communication that deceives, manipulates or
conceals facts to create a false impression
 Accounting Fraud
 Marketing Fraud
 Consumer Fraud
Discrimination
Sexual harassment
Information Technology issues
-There is no one correct moral philosophy to apply in resolving
ethical and legal issues in the workplace.
-The culture of the organization, as well as superiors, peers and
subordinates, can have a significant impact on the ethical
decision-making process.
-The interaction between corporate culture and executive
leadership helps determine the ethical value system of the firm.