From Moral Decisions to Moral

Organizations

Publics 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?
2

Business Ethics: What Does It Really Mean?

Business Ethics:Today vs. Earlier Period
Societys
Expectations
of Business
Ethics
Ethical
Problem
Actual
Business
Ethics

Ethical Problem

1950s

Time

Early 2000s
3

Business Ethics: What Does

It Really Mean?
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
4

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

Fellow Workers

Fellow Workers

Family

Regions of
Country

Profession

The Individual
Conscience
Friends

The Law

Employer

Religious
Beliefs

Society at Large

Ethics and the Law

Law often represents an
ethical minimum
Ethics often represents a
standard that exceeds the
Frequent Overlap
legal minimum

Ethics

Law
7

Making Ethical Judgments

Behavior or act
that has been
committed

compared with

Prevailing norms
of acceptability

Value judgments
and perceptions of
the observer

Ethics, Economics, and Law

6-14

Levels at Which Ethical Issues

May Be Addressed
Personal
Level

Organizational
Level

Situations faced in personal lives

Workplace situations faced as

managers and employees

Levels at Which Ethical

Issues May Be Addressed
Personal levelsituations faced in
personal life (income tax, doing kids
homework, etc.)
Organizational levelworkplace
situations faced as managers and
employees (cutting corners, etc.)

Levels at Which Ethical Issues

May Be Addressed
Industry
Level

Societal and
Global Levels

Situations where a manager or

organization might influence
business ethics at the industry level

Local-to-global situations
confronted indirectly as a
management team

Levels at Which Ethical

Issues May Be Addressed
Industrial levelsituations confronted
as professionals (the practices of
stockbrokers, accountants, etc.)
Societal and international levels
local-to-global situations confronted
indirectly as a management team

Personal and Managerial

Ethics
Conventional approach
Resolving
Ethical
Conflicts

Principles approach

Ethical tests approach

Principles Approach to Ethics

Major Principles of Ethics

Utilitarianism
Rights
Justice

Caring
Virtue ethics
Servant
Leadership
Golden Rule

Utilitarianism and Business Ethics

Utilitarianism considers the majority affected by a
certain action general welfare is important, and
this is often seen as good business policy
the general good of the organisation is more
important than that of individuals.
However, the best business transactions are the
ones in which the best result is achieved, when both
business and consumer, employer and employee,
shareholders and stakeholders are considered and
benefited.
This means that when making business decisions all
options need considering no one can just act on
intuition if they wish to maximise utility.

Utilitarianism and Business Ethics

Economically, Utilitarianism would seem to
be a good ethical approach to business,
however, in many cases it is not simple
and clear cut.
For example: closing a polluting factory
may be good for the environment, but not
for the local community who may need the
jobs. Whatever the business does it is
going to upset one group of people or
another. Utilitarianism does not always
help here.

Principle of Utilitarianism
Utilitarianism focuses on acts that produce the
greatest ratio of good to evil for everyone
Strengths

Forces thinking about the

general welfare and
stakeholders

Allows personal decisions to fit

into the situation complexities

Weaknesses

Ignores actions that may be

inherently wrong

May come into conflict with

the idea of justice

Difficult to formulate satisfactory

rules for decision making

Example of Utilitarianism
Daniel Dennett uses the
example of Three Mile
Island to explore the limits
of utilitarianism for guiding
decisions.
Is nuclear power that
occurred at this nuclear
power plant a good or a
bad thing (according to
utilitarianism)?
He points out that its longterm effects on nuclear
policy would be considered
beneficial by many and
might outweigh the
negative consequences.

His conclusion is that it is still too

early (20 years after the event) for
utilitarianism to weigh all the
evidence and reach a definite
conclusion.

Principle of Rights
Principle of Rights focuses on examining and
possibly protecting individual moral or legal rights

Principle of Rights

Principle of Justice
Principle of justice involves considering what alternative
promotes fair treatment of people
Types of justice
Distributive
Compensatory
Procedural
Rawlsian

Rawlss Principles of Justice

Each person has an equal right to the most basic
liberties comparable with similar liberties
for others
Social and economic inequalities are arranged
so that they are both:
reasonably expected to be to everyones
advantage and
attached to positions and offices open to all

Principle of Caring
Principle of caring focuses on a person as a relational
(cooperative) and not as an individual
Based upon Feminist Theory uses terms such as empathy and trust

Discussions around The Principle of Caring often

have to do with dialogue and the importance of
conversations between people in ethical gridlock.
Can you think of examples where a focus on caring, empathy, trust and
conversation might avoid poor ethical decisions in business?

Principle of Virtue Ethics

Virtue ethics focuses on individuals becoming

imbued with virtues
Virtue lies as a mean between extremes of excess and deficiency.
These extremes are vices.

Baes upon the philosophy of Aristotle and Plato

Emphasizes CHARACTER over duty or obligation
(deontology) or outcomes (consequentialism). Can you
think of an example from business ethics where a focus on
being of virtuous character might lead to better, more
ethical decision-making?

The Virtues
Defined / understood in terms of
spheres of human experience
Fear of important
damages

Courage

Bodily appetites and

their pleasures
Distribution of limited
resources
Attitude to slights and
damages

Moderation
Justice
Mildness of Temper

Adapted from Martha C. Nussbaum, Non-Relative Virtues

The Virtues
Intellectual Virtues
Wisdom, Understanding, Prudence
Taught through instruction

Moral Virtues
Prudence, Justice, Fortitude, Temperance
The result of habit
Not natural or inborn but acquired through
practice
Habit or disposition of the soul (our fundamental
character) which involves both feeling and
action
Those strengths of character that enable us to
flourish (Hinman)

Virtues and the Mean

Defined through Reason

Education, contemplation, reflection

Balanced with Other Virtues and applied using

phronesis: To have any single strength of character
in full measure, a person must have the other ones as
well.*
Courage without good judgement is blind
Courage without perseverance is short-lived
Courage without a clear sense of your own abilities is
foolhardy

The virtuous person has practical wisdom, the

ability to know when and how best to apply
these various moral perspectives. (*Hinman)

Virtues and Community

Virtues are defined and lived in community
Sharing a common identity and story
Modelling the Virtues
Importance of Moral Exemplars (Saints and
Heroes)

Practicing the Virtues Habit is Crucial!

In a word, then, like activities produce like dispositions. Hence
we must give our activities a certain quality, because it is their
characteristics that determine the resulting dispositions. So it is a
matter of no little importance what sort of habits we form from the
earliest age it makes a vast difference, or rather all the
difference in the world. (II.i.) (Pojman, 396)

Reinforcing the Virtues

Strengths of Virtue Ethics

Importance of the Person, Motive, Heart,
Conscience
Connection to Community
Realization that morality is not defined by
moments but by a long-term process
Allowance for gray areas, varying
contexts, different levels of moral maturity
and life contexts

Weaknesses of Virtue Ethics

Dependence on strong communities
Not easily applied to ethical issues or to
give us practical solutions
Demands time
Can be turned into a really poor dutybased ethics
Might be taken as situational ethics

Cardinal Virtues
Prudence

Courage

Prudence can
be equated to
good judgment
and right
reasoning

Courage is
the ability to
face and to
overcome
difficult
situations

Copyright Sandeep Singh, SMS

Varanasi

SelfControl
It is the ability
to control the
self and
acquire self
mastery

Justice
Justice could
be described as
the conscious
realization of a
person about
the others
rights and
giving them
what they
deserve

Virtue and Business Ethics

Virtue ethics shows that business cannot be
separated from society

everyone is part of the larger community,

the polis,
the corporation, the neighbourhood, the city,
the country or
the world and virtues are defined by that larger
community.

Business is part of that community.

Virtue ethics focuses on
the character and motivation of the agent and
on the agents ability to pursue eudaimonia.

Virtue and Business Ethics

As far as business is concerned, an individual
cannot be ethical in a vacuum, but always as part
of the ethical community.
This applies to the employers as well as the
employees who must show the virtues of
character such as honesty, prudence, fairness
and courage.
The virtues of co-operation seem to triumph over
competition, but does this mean that the virtuous
person in business will be the good corporate
citizen rather than the high-flier, wheeler-dealer
or the entrepreneurial innovator?

Virtue and Business Ethics

Virtue ethics is interested in the most
general traits that make a harmonious
society possible, so the traits that make
for good business must be the same as
those of a good society;
the virtues of a successful businessman
and those of a good citizen must also be
the same.
Business is an essential part of society,
not separate from it, and, as in society,
living together is central, making a profit
is just a means.

Virtue and Business Ethics

(Trade-off)
Is there any conflict between living well
and Being in Business?
Answer:
There is no inherent conflict between the two.
Aristotle says these two concepts are
embedded in community and the ultimate aim
is to live a good life. The main issues here is
what is that living well amounts to?

Virtue and Business Ethics

(Trade-off)
What should business do being well in
business in terms of Virtue Ethics
Answer:
Virtue Ethics approach to business is that a
good corporation is one that is not only
profitable but also provides a morally
rewarding environment in which good people
can develop not only their skills but, also
their virtues

Virtue and Business Ethics (Today)

Quality
Service
Planning, perhaps long term and holistic
Cooperation, openness, relationships
Consideration, especially of customer/user, own good
less important
Safety, avoiding risk
Fairness, justice, protection of the weak
Legitimacy, genuineness
Critical (and constructive) attitude
Pride tempered with humility (know your limits!)
Creativity
Aestetics

Virtue and Business Ethics (Today)

Quality and service
Meeting customer needs
Within standards and expectations (or exceeding)
No hidden defects or shortcuts
Produced well (non-polluting, stingy on resources, good
materials, good workers)
Interactive, when appropriate
Timely, when appropriate
Safe, accomodating safety, possibly helping safety

Servant Leadership
Servant leadership focuses on serving others
first, such as employees, customers, and community

Servant Leadership
Characteristics of Servant Leaders
Listening
Empathy
Healing
Persuasion
Awareness
Foresight
Conceptualization
Commitment to the
growth of people
Stewardship
Building community

Business Ethics
Bridges
and
Leadership

The Golden Rule

The Golden Rule focuses on the premise
that you should do unto others as
you would have them do unto you
The Golden Rule is

1.
2.
3.
4.

accepted by most people

easy to understand
a win-win philosophy

a compass

Kant and Business Ethics

Kant believed that morality, in all spheres of
human life, including business, should be grounded
in reason.
His Categorical Imperative held that people should
act only according to maxims that they would be
willing to see become universal norms, and that
people should never be treated as a means to an
end.

Kant and Business Ethics

Kants theory implies the necessity of trust,
adherence to rules, and keeping promises (e.g.
contracts).
Kant argued that the highest good was the good
will the importance of acting from duty so, for
example, if a merchant is honest in order to gain a
good reputation, then these acts of honesty are not
genuinely moral.

Kant and Business Ethics

Kants ethics are ethics of duty rather than
consequence: a business behaving morally in order
to impress consumers is not truly moral according to
Kant.
Kants ethical theory applies well to both employees
and consumers as it does not permit people to be
treated as means to an end even if that end is
profit.
Kantian ethics would also see a business as a moral
community employers and employees,
stakeholders and shareholders, standing in a moral
relationship with each other which would influence
the way they treat each other.

Kant and Business Ethics

Kants universalisation means that
business laws would have to be universal,
e.g. no bribery or corruption, and this
would have a beneficial effect on
international business.
However, Kantian ethics has far more to
offer to international business ethics as it
shows how business can contribute to
world peace.

Kant and Business Ethics

In the end war itself will be regarded as
the most dubious undertaking. The impact
of any revolution on all states in our
continent, so clearly knit together through
commerce will be so obvious that other
states will offer themselves as arbiters,
and thus will prepare the way for distant
international government for which there
is no precedent in world history. (Kant)
If business brings people together than
the chance of peace among nations
improves.

Ethical Tests Approach

Test of Common Sense
Test of Ones Best Self
Test of Making Something Public
Test of Ventilation
Test of the Purified Idea
Gag Test

Factors Affecting the

Morality of Managers
Societys Moral Climate
Businesss Moral Climate
Industrys Moral Climate
Organizations Moral Climate
Superiors
Individual
Ones Personal
Situation

Policies

Peers

Factors Affecting the

Organizations Moral Climate
Behavior of superiors
Ethical practices of ones industry or profession
Behavior of ones peers in the organization
Formal organizational policy (or lack of one)
Personal financial need

Questionable Behaviors of Superiors or Peers

Amoral decision making
Unethical acts, behaviors or practices
Acceptance or legality as a standard of behavior
Bottom-line mentality, expectations of loyalty and
conformity
Absence of ethical leadership
Objectives that overemphasize profits
Insensitivity toward how subordinates perceive
pressure to meet goals
Inadequate formal ethics policies

3 Models of Management
Ethics
1. Immoral ManagementA style devoid of
ethical principles and active opposition to
what is ethical.
2. Moral ManagementConforms to high
standards of ethical behavior.
3. Amoral Management
Intentional - does not consider ethical factors
Unintentional - casual or careless about ethical
considerations in business
53

Three Approaches to Management Ethics

6-18

Moral Management Models and

Acceptable Stakeholder Thinking

6-20

Morality and Ethics

Morality is concerned with understanding of
what is right and wrong behaviour.
In the study of business ethics many people
treat the concept of ethics and morality as
same. There is no harm in it.
However treating them as different but
strongly inter-related is a better approach in
enriching the field of business ethics.
Morality could be considered as one of the
subject matter of study in business ethics.
Copyright Sandeep Singh, SMS
Varanasi

Difference between Morality and Ethics

Ethics

Morality

Ethics is the study of

framework such as standards
principles, rules or codes and
traits for ensuring right action,
behaviour or conduct.

Morality is right action,

conduct or behaviour

Ethics is the philosophical

study of morality

Morality is the subject matter

of ethics

Ethics encompasses morality

Morality is the sub-field of

ethics

Ethics tries to systemize and

legitimize morality

Morality becomes systematic

dan legacy through ethics

Ethics attempts to bring

rationalization to morality

Morality gets rationalization

through ethics

Rest Model of Moral Behaviour

Recogni
ze
moral
issue

Make
moral
Judgem
ent

Copyright Sandeep Singh, SMS

Varanasi

Establis
h moral
intent

Engage
in moral
behavio
ur

Kohlberg Model of Moral Development

Improving the Ethical Climate

Ethics Programs
and Officers
Realistic
Objectives
Ethical DecisionMaking Processes
Codes of
Conduct
Chapter 7-27

Effective
Communication

Top
Management
Leadership
Moral
Management

Discipline of
Violators

Ethics Audits
Board of Directors
Oversight

Ethics Training

Corporate
Transparency
Whistle-Blowing
Mechanisms

Strong Ethical Leadership

Traits

Role
Modeling

Behaviors

Ethics
Communication

Decision
Making

Effective Rewards
and Discipline

Moral Manager

Moral Person

Ethical Leadership

Ethical Decision-Making
Process

The
Ethics
Screen

Identify decision you

are about to make

Articulate all dimensions

of proposed decision
Conventional Approach
Standards/Norms
-Personal
-Organizational
-Societal
-International

Principles Approach
Ethical Principles
-Justice
-Rights
-Utilitarianism
-Golden Rule

Course of action passes

ethics screen

Engage in course of
action

Ethical Tests Approach

Ethical Tests
-Common sense
-Ones best self
-Public disclosure
-Gag test . . .

Course of action fails

ethics screen

Do not engage in course

of action
Identify new course of
action

Ethical Decision-Making

Codes of Conduct
Frequently Addressed Topics

Conflicts of interest
Protecting
proprietary
information
Receiving gifts
Giving gifts
Discrimination

Sexual harassment
Kickbacks
General conduct
Employee theft
Proper use of
assets

Board of Director
Leadership and Oversight
The 2002 Sarbanes-Oxley Act

Companies are required to protect whistleblowers without fear of retaliation

It is a crime to alter, destroy, conceal, cover up
or falsify documents to prevent its use in a
federal government lawsuit

From Moral
Decisions to
Moral
Organizations

Moral Decisions

Moral Managers

Moral Organizations

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
Actions are ethical, moral, and legal
Ethics

Morals

Law

Overlap Model
Ethics

Morals

Actions are ethical and legal, but not moral.

(e.g. tax planning)

Law

Overlap Model
Ethics

Morals

Law

Actions are moral and legal, but not ethical.

(e.g. laws protecting the privacy of aids patients, Sunday closing laws)

Overlap Model
Action is moral and ethical, but not legal.
Ethics

Morals

Law

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

Morals

Law

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

Ethics

Morals

Law

Overlap Model
Ethics

Morals

Actions are ethical, but not moral or legal.

(e.g. Apartheid laws)

Law