Business Ethics Training

8/7/2019 Business Ethics Training

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Business Ethics

Trainer: Dr. Sein Min



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What is ³Ethics´?� Merriam-Webster Definition

± ³The principles of conduct governing an individual or a group; a guiding philosophy.´

� Developing need to better define and regulateethics± Laws

± Statutes

± Codes



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Recent and Continuing Erosionof Ethical Standards

� BUSINESS

± WorldCom� $11Billion Accounting Fraud

± Enron� Loss of thousands of jobs

� $60 Billion in market value

� $2 Billion in pension plans± Tyco International

� CEO and CFO convicted of Grand Larceny and Fraud,total losses of $550 Million.



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Singapore¶s Case� NKF Saga

± July 2005

± Collapse of defamation trial against SusanLong and SPH

± a massive backlash and fallout of donors to

the charity, and± subsequently resulted in the resignation of

CEO (T.T. Durai) and its board of directors.



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Singapore¶s Case (contd.)� Allegations

± the false declarations on how long NKF's

reserves could last± its number of patients

± installation of a golden tap in Durai's private

office suite, his salary, use of company carsand first-class air travel



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In a recent Wall Street Journal

article, Psychology professor Steven

Davis says that cheating by high school

students has increased from about 20 percentin the 1940·s to 75 percent today.

´Students say cheating in high school is for

grades, cheating in college is for a career.µ



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When evaluating one·s goals and

objectives, a vital question mustbe asked: What is your highest

aspiration?

A. Wealth

B. Fame

C. KnowledgeD. Popularity

E. Integrity

When evaluating one·s goals and objectives, avital question must be asked: What is your

highest aspiration?

A. WealthB. Fame

C. Knowledge

D. Popularity

E. Integrity



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If integrity is second to any of the

alternatives, then it is subject to sacrifice

in situations where a choice must be

made. Such situations will inevitably occur

in every person·s life.



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What is BusinessEthics?



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Business Ethics

� The application of general ethical concepts

to the unique situations confronted inbusiness. It asks what is right or wrongbehavior in business and what principles

or rules can be used as guidance inbusiness situations.



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Two Characteristics

� Tells people what they ought to do

� Set of principles or rules



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Business ethics is an opportunity

to differentiate yourself and your

company



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The reputation of a thousand years may be

determined by the conduct of one hour.

Japanese proverb



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Be sure you areright, then go

ahead.Davy Crockett

1786-1836



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Relativism Egoism

Utilitarianism Deontologism

TheThe 44ConceptsConcepts ofofEthicsEthics



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Concepts of Ethics� Developed by moral philosophers over

generations

� Used to distinguish ethical from unethicalbehavior

� Each has problems



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Relativism

� There is no universal standard by whichmorality can be judged

� What is correct for one society may bewrong for another

� Ethics and morality are relative

� What do you think of this?



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Relativism - Problems� There are no absolutes - murder, slavery,

torture, rape OK

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hat is meant by a society?Sub-societies

� Leads to conclusion - each person¶sopinion is correct

� Nothing that anyone does is morally wrong



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Egoism� One ought to act in his or her own self

interest

� Ethical behavior is that which promotesone¶s own self interest

� Does not mean should not obey laws -

only do so if in self interest



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Egoism

� What do you think of this concept?

� Problem - Externalities associated withprivate actions - OK to dump toxic wastes

as long as don¶t get caught



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Utilitarianism

� The morality of an action can be

determined by its consequences� An action is ethical if it promotes the

greatest good for the greatest number



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Benefits and Costs of an Actionto Whomsoever They Accrue

B1+ B

2+ B3 + . .+B

n> C

1+ C

2+ C3 + . . .+C

nThen the Action is Ethical

B1 + B2

+ B3 + . .+Bn< C1 + C2

+ C3 + . . .+Cn

Then the Action is Unethical



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Utilitarianism Example

� Harry Truman and Decision to Drop Bombon Japan



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W

hat do you think of thisconcept?

� How do you quantify benefits and costs?

� How do you value benefits and costs?� Can lead to unjust consequences

� Restrictions against the majority to protect

a minority is not utilitarian



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Deontologism

� Derived from the Greek word for Duty

� Actions are not justified by their consequences. Factors other than goodoutcomes determine the rightness of

actions



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Utilitarianism Vs. Deontologism

� Utilitarianism - The ends justify the means

� Deontologism - It is the means which areimportant



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Catagorical Imperative� Developed by Immuel Kant

� ³I ought never to act except in such a way

that I can also will that my maxim shouldbecome a universal law´

� Are you willing to permit everyone to adoptthe action?

� Yes - Moral No - Immoral



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Guidance in Dealing with People� People should never be treated as a means to

an end, but as ends in themselves

� To treat people as ends requires respect for persons

� Reject slavery

� Deals with murder, rape, etc

� How to deal with employees



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General Ethical Behavior

� Builds security, friendliness, cooperation

and trust in a society� These are public goods created by

generally ethical behavior



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W

hat are Characteristics of Public Goods?

� Not subject to exclusion - cannot exclude

people from consumption even if they donot contribute

� Joint Supply - Provide for one individual,

provide for all� Free Rider Problem





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Examples

� Is it Ethical to Rob Banks?

� Is it Ethical to Give Everyone in this Classan A?



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What Do You Think of Deontologism?

� Conflicts between duties

� Utilitarians argue that secretly appeal toconsequences to demonstrate therightness of actions



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Ethical Tests



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Is It Legal Test?

Quadrant II

Ethical and Illegal

Quadrant IV

Unethical and Illegal

Quadrant I

Ethical and Legal

Quadrant III

Unethical and Legal

Ethical

Unethical

LegalIllegalCorporate

Decisions

Codification

Manifestation



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Ethical Tests1. Is It Legal? I

Ethical - Legal IIEthical - Illegal III

Unethical - Legal IVUnethical - Illegal

I and IV Easy

II and III Difficult



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Ethical Tests2. Benefit Cost Test

Do the benefits exceed the costs towhomsoever they accrue?

3. Categorical ImperativeAre you willing to allow everyone to practice

the proposed action or do you want to be a

special case?



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Ethical Tests4. Light of Day Test

What would be your reaction if theaction were brought out into the open for

public scrutiny?

5. Do Unto Others TestGolden Rule - If you would like others

to do the same to you - passes the test



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Ethical Tests

6. Ventilation Test

Seek out others views. Discuss the 5tests with them. If others feel it is OK -passes the test



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Examples� Robbing a Bank

� Driving Above the Speed Limit

� Cheating on an Exam

� Having Sex with an Intern



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Ethical Dilemmas in Business� Conflict of Interest

Have two interests - cannot purse one

without having negative impact onother

� Two Types

Private Interest Conflicts with corporateBusiness Interest Conflicts with Public



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Conflict of Interest Mini Case� Personnel Director

� Brother - in - law out of work

� Lackluster performer

� Unemployment about to run out - will loosehouse

� Sister asks you to recommend him for job

� What would you do?



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