Business Ethics

Summary of: Sauser, William I., Jr. " Ethics in Business: Answering the Call, Journal of Business Ethics, Vol. 58, No. 4. Badaracco, Joseph L., Jr. "Business Ethics: Four Spheres of Executive Responsibility", California Management Review, Vol 34, No 3.

Ethical vs. Unethical Decision-Making

Hard moral choices are at times the inescapable lot of men and women in positions of power... How do you fire a friend, someone you have worked with for years?

 When is it right to violate an employee's privacy--someone with a drinking problem, for example--to get him help he badly needs? Can you have a clear conscience when your company's product will be misused by some customers and hurt innocent people?

Ethical vs. Unethical Decision-Making

When can an executive wreak havoc on a workforce and a local community by moving an operation to a low-cost, overseas site?

Is it sometimes right to pay a bribe to win a contract and protect jobs?

FOUR SPHERES OF MORALITY:

1. The Commitments of Private Life 2. The Commitments of Economic Agents 3. Commitments as Company Leaders 4. Responsibilities Beyond Firm's Boundaries

1. The Commitments of Private Life:

this realm partly consists of duties and obligations which are usually stated as abstract, universal principles: tell the truth, keep promises, and avoid injuring others.

Individuals disagree about the origins of these duties and the priorities among them, but most people believe that certain fairly clear obligations are binding on everyone. E.g.:
The Golden Rule is often called the ultimate ethical principle.
Do unto others as you would have others do unto you. Treat people as you would want to be treated. Do not do things to other people that you would not want done to yourself.

 In the end, however, the morality of private life differs from person to person, reflecting factors that are individual and often highly particular. Some people are deeply committed to their families, others to their work, or political reform, or strong friendships. For many, the sphere of private morality is suffused with religious belief, while others find ideals and aspirations elsewherein their parents example, in philosophy, literature, the lives of people they admire, or convictions born of their own lives and reflection.

Integrity and character play important roles in the morality most people wonder about questions that ancient philosophers first articulated: What distinguishes a good person from a bad one?

What ways of living, what guidelines, what virtues make for a good person and a good life? What do I want my life to add up to? What abiding aspirations and commitments will give my life purpose and a sense of wholeness, coherence, and integrity?

2. The Commitments of Economic Agents: These obligations are familiar territory for most managers: their job as economists, corporate attorneys, and their superiors often remind them is to serve the interests of the shareholders.

 What is realized less often is that this is not just a legal or practical obligation but also the most visible and familiar elements in a sphere of responsibilities that are deeply moral in character.

For a full-length discussion of the PRINCIPAL-AGENT relationship in business, please click here: Corporate Governance

3. Commitments as Company Leaders:

Responsibilities of employees and managers as: members of semi-permanent human communities, conventionally called companies Work is a powerful source of meaning and valuein this case, self-respectin individuals lives.

Many people realize some of their deepest aspirationsfor a sense of belonging, contribution, and achievementon the job. Workplaces can nurture deep loyalties, strong friendships, and abiding ties among individuals.

4. Responsibilities Beyond Firms Boundaries:

Companies have complex relationships with government agencies, labor unions, or through strategic alliances with customers, suppliers, and even competitors. These firms resemble global networks and their boundaries are blurred.

JBE paper, William I. Sauser, Jr. (2005), Ethics in Business: Answering the Call.

Levels of corporate responsibility:

1. Earning a profit

2. Legal responsibility
3. Ethical responsibility

4. Discretionary responsibility

FOUR ENDURING QUESTIONS:

Mill Consequences? Aristotle Jefferson Rights? Machiavelli

Integrity?

Practicality?

Consequentialist (Teleological) theories of morality

telos = end / terminus (result) Ethics divides into two major views: 1. Consequentialism Concerned with consequences 2. Non-Consequentialism Not concerned with consequences Consequentialism divides also into two major views: 1. Ethical egoism Act out of self interest. 2. Utilitarianism Act for interest of all.

Rights theories
Sources:

Jeffersons Declaration of Independence human beings had inalienable rights to life, liberty, and the pursuit of happiness U.N.s Universal Declaration of Human Rights General: rights to be treated with respect, to have promises kept, to be told the truth, to be spared unnecessary injury Could there be a Declaration of Human Duties?

Deontological Systems
(the act itself is either inherently right or wrong) (often rule-based)
1. Divine Command Theory 2. Natural Law 3. Ethical Rationalism

VIRTUE theories
Virtue Ethics, among the oldest of all ethical theories, has experienced considerable resurgence in popularity over the last several decades. Rather than focus on consequences, rules, and/or intuitions, virtue ethics focuses on the development of human character, the shaping or molding of a good or virtuous person. It is also the locus of fruitful comparative philosophical discussions between West and East

VIRTUE theories
Aristotle is regarded as the main virtue ethicist. Virtue ethics focuses on character and developing this character in accordance with the virtues. Aristotle Ethics is teleological and aims at some end. For Aristotle that end is happiness. To achieve happiness for Aristotle one must live in accordance with reason, which prescribes a virtuous life.

VIRTUE theories
Goodness of Character Natural ethical tendencies in human beings. Following these tendencies with consistency and proportion will lead to goodness of character and aid in living the ethical life. Development of the Good or Virtuous Human Being Goodness of character must be developed by practice and habit. Practicing telling the truth, for example, will make us truthful.

 For a blog on VIRTUE ETHICS (and how it might turn out to be an effective Corporate Governance mechanism), click here: VIRTUE ETHICS.

Creating an Ethical Corporate Culture*

1. 2. 3. 4. 5. 6. 7. 8. Adopt a Code of Ethics Provide Ethics Training Hire and promote ethical people Correct unethical behavior Take a proactive strategy Conduct a social audit Protect whisteblowers Empower the guardians of integrity

*JBE paper, William I. Sauser, Jr. (2005), Ethics in Business: Answering the Call.

Providing servant leadership

The late Robert Greenleaf, founder of the Greenleaf Center for Servant Leadership, is often credited with coining the term, "servant leadership. (1970)

Autry (2002/2003) summarizes six ideas about servant leadership made popular by Greenleaf and his disciples:
1. Leadership is not about controlling people; it's about caring for people and being a useful resource for people. 2. Leadership is not about being a boss; it's about being present for people and building a com munity at work. 3. Leadership is not about holding on to territory; it's about letting go of ego, bringing your spirit to work, being your best and most authentic self.

Contd:
4. Leadership is less concerned with pep talks and more concerned with creating a place in which people can do good work, can find meaning in their work, and bring their spirits to work. 5. Leadership, like life, is largely a matter of paying attention. 6. Leadership requires love.

*JBE paper, William I. Sauser, Jr. (2005), Ethics in Business: Answering the Call.

*JBE paper, William I. Sauser, Jr. (2005), Ethics in Business: Answering the Call.

 What might happen if business leaders across the globe viewed their work as a sacred calling in a religious sense? Might not the world be a far better place? * This slide presentation is entitled:

BUSINESS ETHICS
Its conclusion offers a challenge to business leaders to answer their CALL to business in the truest sense.