Ethics and Behavior in Organizations

Introduction
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
– Has business ethics really deteriorated?
– Are the media reporting ethical problems more frequently and vigorously?
– Are practices that once were socially acceptable no longer socially acceptable?
• Gallup opinion polls about ethical behavior (see text book Figure 3.1)
– Pharmacists ranked highest
– Car salespeople ranked lowest
– Business executives ranked near the middle
– People in the United States do not have a positive view of ethics and behavior i
n organizations
Business Ethics: What Does It Really Mean?
Definitions
• Ethics involves a discipline that examines good or bad practices within the cont
ext 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
– “What is”
• Normative ethics involves supplying and justifying moral systems
– “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
– Pitfall: ethical relativism
Decision or Practice Prevailing Norms
Sources of Ethical Norms

Ethics and the Law

• Law often represents an ethical minimum
• Ethics often represents a standard that exceeds the legal minimum. Diagram below
Making Ethical Judgments Diagram
Ethics, Economics, and Law
Four Important Ethical Questions
• What is?
• What ought to be?
• How to 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 opposit
ion 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
–
Three Types Of Management Ethics
MORAL
AMORAL
IMMORAL

Making Moral Management Actionable

Important Factors
• Senior management
• Ethics training
• Self-analysis
Developing Moral Judgment
External Sources of a Manager’s Values
• Religious values
• Philosophical values
• Cultural values
• Legal values
• Professional values

Internal Sources of a Manager’s Values

• Respect for the authority structure
• Loyalty
• Conformity
• Performance
• Results
•
Can Business Ethics Be Taught And Trained?
• Ethic courses should not:
– Advocate a set of rules from a single perspective
– Not offer only one best solution to specific ethical problems
– Not promise superior or absolute ways of thinking and behaving in situations
• Scholars argue that ethical training can add value to the moral environment of a
firm and to relationships in the workplace by:
– Finding a match between employer’s and employee’s values
– Handling an unethical directive
– Coping with a performance system that encourages unethical means
Ethics-Moral Disengagement
• Social Learning Theory
– Moral reasoning translates to moral action through self regulatory processes
• You do things that bring you self-worth
• You avoid things that avoid self censure
• You have to disengage from your normal internal self sanctions to commit unethic
al or deviant acts
• Scoring the questionnaire
– Moral justification-A
– Euphemistic language-B
– Displacement of responsibility-C
– Advantageous comparison-D
– Diffusion of responsibility-E
– Distorting consequences-F
– Attribution of blame-G
– Dehumanization-H
Ethical and
Unethical Behavior
• Ethical behavior is good, right, just, honorable, and praiseworthy
• Unethical behavior is wrong, reprehensible, or fails to meet an obligation
• Judgment of behavior is based on a specific moral philosophy or ethical theory
• Nagging issues
• Finding a standard of judgment with which all reasonable people can agree
• Defining the meaning of “good,” “bad,” “right”, and “wrong”
• Add the nasty issue of cross-cultural ethical behavior
Theories of Ethics
• Four major theories of ethics in the Western world
– Utilitarianism: net benefits
– Rights: entitlement
– Justice: fairness
– Egoism: self-interest
• Utilitarianism
– examine an action’s effects to decide whether it is morally correct
– Action is morally right if the total net benefit of the action exceeds the total
net benefit of any other action
– Assumes a person can assess all costs and benefits of an action
– Assessment of net benefits includes any important indirect effects
– Example: assessing the effects of pollutant discharge from a factory on the imm
ediate surrounding environment and those down stream or down wind from the facto
ry
– Two forms: act and rule
– Act utilitarianism asks a person to assess the effects of all actions
– Rejects the view that actions can be classified as right or wrong in themselves
– Example: lying is ethical if it produces more good than bad
– Rule utilitarianism asks a person to assess actions according to a set of rules
designed to yield the greatest net benefit to all affected
– Compares act to rules
– Does not accept an action as right if it maximizes net benefits only once
– Example: lying is always wrong or “thou shalt not lie”

Two main limitations

• Hard to use in difficult to quantify situations
• Does not include rights and justice
– Other ethical theories meet these objections
Rights
– Right: a person’s just claim or entitlement
– Focuses on the person’s actions or the actions of others toward the person
– Legal rights: defined by a system of laws
– Moral rights: based on ethical standards
– Purpose: let a person freely pursue certain actions without interference from ot
hers
– Features
• Respect the rights of others
• Lets people act as equals
• Moral justification of a person’s action
– Examples
• Legal right: right to a fair trial in the United States
• Moral right: right to due process within an organization
• Rejects view of assessing the results of actions
• Expresses moral rights from individual s view, not society s. Does not look to
the number of people who benefit from limiting another person s rights
• Example: right to free speech in the United States stands even if a person expr
esses a dissenting view
– Types of rights
• Negative rights: do not interfere with another person’s rights
• Positive rights: A person has a duty to help others pursue their rights

• Justice
– Looks at the balance of benefits and burdens distributed among members of a grou
p
– Can result from the application of rules, policies, or laws that apply to a soci
ety or a group
– Just results of actions override utilitarian results
– Rejects view that an injustice is acceptable if others benefit the action
• Egoism
– Self-centered form of ethics
– Two forms of ethical egoism: individual and universal
– Individual ethical egoism
• Judges actions only by their effects on one’s interests
• Usually rejected by moral philosophers as a defensible basis of ethics
– Universal ethical egoism
• Can include the interests of others when assessing one’s actions
• Still self-centered: pursuing pleasure and avoiding pain
• “Enlightened self-interest.” Considers the interests of others because the person
ants others to do the same toward him or her
– Universal ethical egoism
• Can include the interests of others when assessing one’s actions
• Still self-centered: pursuing pleasure and avoiding pain
• “Enlightened self-interest.” Considers the interests of others because the person
ants others to do the same toward him or her
– Objections raised by moral philosophers
• Does not resolve conflicts in people’s interests
• One party would always have the pursuit of his or her interests blocked
• Questions from the ethical theories
– Utilitarianism: does the action yield the greatest net benefits?
– Rights: does the action negatively affect someone’s moral rights?
– Justice: does the action give a fair distribution of costs and benefits among t
hose affected?
– Egoism: will the action lead to other people behaving toward me in a way I woul
d like?
• Sharp contrasts exist between U.S. attitudes toward business ethics and those of
other countries
• Of the major capitalist nations, the United States has the highest frequency of
reporting ethical violations, the toughest laws, and the greatest prevalence of
organization codes of ethics
Two ethical views