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Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon University Scotland Presentation given at: University of Bergamo, April 2018
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Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

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Page 1: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Ethics, Governance and Accountability

Professor Louise Crawford PhD CAAberdeen Business SchoolRobert Gordon UniversityScotland

Presentation given at: University of Bergamo, April 2018

Page 2: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Governance - meaning• Governance = to direct, rule or guide; the process of steering/guiding and

organisation towards its goal. It involves:

– determining the objective of the organisation and directing the organisation towards achieving its objective

– Managing the relationships between all of the various stakeholders involved in the organisation

• Captures broad range of activities: leadership; effectiveness; accountability; remuneration; relationship with shareholders

• These responsibilities are locations of ethical conflict; they require decisions to be taken, within a particular context, where the outcome of decisions will impact individuals/society/organisations in different ways.

Page 3: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

How?

Behaviour• Follow codes of conduct/behaviour• Act in your own self-interest?• Act to capture the interests of all society participants affected

by corporate activity

Information• Interpret, decipher, use, conclude….

– Scientific context– Social contructivism context

Page 4: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

“There is no right or wrong”– is this statement right or wrong??

Page 5: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

There is right and wrong – in science

Page 6: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Interpretation; seeking truth?

Elephant parable

Page 7: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

How do you decide what is ethically right and ethically wrong?Principle based decision making; [Immanuel Kant, 1724-1804; John Rawls, 1971]

– “knowing what to do in a situation will be determined by a set of principles that have been established by deductive reasoning, independent of, or before, the specifics of decision in hand have been considered.

– Context and consequences of a decision are irrelevant”– Fisher et al., pg 108– The categorical imperative – unconditional command/principle; universal– “thou shalt not kill”– “do unto others as you would have done unto yourself”– ….. Inflexibility… is it ever OK to lie?

Or …Consequence – utility based decision making; [Jeremy Bentham, 1748-1832; John Stewart Mills, 1806-1873]

Page 8: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

How do you decide what is ethically right and ethically wrong?

Consequence – utility based decision making; [Jeremy Bentham, 1748-1832; John Stewart Mills, 1806-1873]

– Decisions are based on utility – “the greatest happiness of the greatest number is the foundation of morals and legislation”

– A calculative approach, “assumes quality and quantity of happiness can be weighed”

– Need to consider in utilitarianism based decision making• Intensity, duration, • Certainty – the probability of happiness or pain• Extent – the number of people affercted• Closeness – pleasure or pain now or later?• Richness – will it lead to more pleasure?• Purity – is the happiness independent or is it mixed with unhappiness?

Page 9: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

How do you decide what is ethically right and ethically wrong?

Virtues – morality is about good people, regardless of principles being in place or consequences being considered

– Regards each action/decision through the agent’s practical wisdom• The role of the agent’s character in ethical behaviour and moral

judgements• “it is the cultivation of character that counts, long before we rationalise

our action and the formulation of general principles”– Emphasises the importance of the human condition

• Intuition, honesty, kindness, compassion, courage– To become more virtuous and make ethical choices

– Only people with a high degree of practical wisdom can discover what is good and make ethical judgements

• And practical wisdom is acquired by judging well - experientical

Page 10: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Is there right and wrong in ethics? –instinctive….

Page 11: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Is ethical progress possible? Progress towards truth, right and wrong….

Page 12: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Unethical industries?

Who decides what is right or wrong? How do they decide? What do they consider?

Page 13: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Corporate governance and embedded ethical conflicts

Institutional conflicts of an ethical nature• Internal concerns over corporate agency

– Corporate goals?– Individuals and corporate culture?– Conflicts of interest

• Self interests• Intimidation • Positions of power• Notions of accountability – to who, for what, by what means• Long-term or short-term outlook

• Emergent and actual effects on social welfare

Page 14: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Ethics in managerial Decision-Making

Decision-making is generally understood as :• a process in which a problem is defined, • in order to solve it, the decision maker seeks and selects a

goal or set of objectives, • from which a set of action alternatives are generated and

evaluated, and finally one is chosen”

Page 15: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Holistic approach and the primacy of ethics

“…humans have bounded rationality, meaning that humans are limited in their decision-making by limitations on information and time available, and by the information-processing ability of the mind.”

“...holistic decision-making tries to make optimal decisions considering all relevant dimensions and using a multi-criteria approach.”

Page 16: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

A Holistic View of Decision-Making

(i) Formulation of the problem(ii) Outlining a goal and outcome (iii) Generation of alternative courses of actions(iv) Analysis and evaluation of alternatives(v) Election of one alternative(vi) Implementation of the action(vii) Evaluation of the outcome

Think about an ethical conflict affecting society today and work through this decision making process, for example the gender pay gap!

Spider in the urinal

Page 17: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Decision-making: four interrelated dimensions (Mele, p48/49)

The instrumental dimension“…refers to the business results sought in performing an action.”

The relational dimension“...regards the future relations with the people affected by the action..”

The internal dimension“…refers to the learning produced by the internal effects of the decision and the subsequent action..”

Page 18: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

The ethical dimension“…refers to the ethical evaluation of the alternatives by the decision-maker, and its influence on the intentionality of the agent in performing an action.”

These 4 dimensions are interdependent

Page 19: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Fundamental Evaluative Criteria for each Dimension

Instrumental – Cost-benefit analysisRelational – Pros and cons of future relationsInternal – Development and degradation of internal capabilitiesEthical – right and wrong; better or worse.

But we will end up with, within and between individuals and institutions ….

Congruent evaluationsConflicting evaluations

Page 20: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

The Role of the Manager’s Moral Conscience

“…ethics is about virtues, principles and consequences, while moral judgements refer to the ethical evaluation of different alternative courses of actions.”

Practical Rationality“…provides intellectual discernment between good and evil and permits us to make moral judgements. Practical rationality formulates moral judgements regarding particular situations. It requires acquiring ethical knowledge and developing practical wisdom.”

So, Deontology and Consequentialism and Virtue ethics are used together …

Page 21: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon
Page 22: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

The Triple Font of Morality Theory

“Every decision entails the deliberation and election of an end, and an action chosen as a means to achieve that end. Thus, the will of the decision-maker concerns both the end and the means.”

“In addition, sound deliberation cannot ignore the predictable consequences of the action and other morally relevant situational circumstances.”

Page 23: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Three fonts or sources to evaluate morality of a decision

1. Intention 2. Action chosen3. Circumstances - predictable consequences of the actions and

situational factors.

“The Triple Font of Morality Theory holds that a decision is morally good if, and only if, all of these elements are good”

“…the morality of a decision is basically determined by intention and the action chosen and complemented by the consideration of consequences and situational circumstances, which aggravate or attenuate its seriousness.”

Page 24: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Ethical Analysis of the Morality of a Decision with Bad Secondary Effects

Seven stages that can help analyse the morality of a decision (next slide).

Page 25: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon
Page 26: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Now it is your turn: Choose a character from the film Margin Call and

1. Give some background contextual information about the character and their values

2. What decision(s) does your chosen character make?3. Which of these decisions has a fundamental and significant ethical

component, why?4. Work through these seven stages to determine: Was the decision morally

right?5. For each stage, try and give an example and/or a quote that illustrates the

point.6. In what way does your example reflect a corporate governance failure?7. What do you think the character should have done differently.

Work in groups and prepare a short presentation of your answers for Monday.

Page 27: Ethics, Governance and Accountability Governance... · 2018-04-12 · Ethics, Governance and Accountability Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon

Reading References

Business Ethics and Values, 4th Ed. Fisher, Lovell and Valero-Silva. Chapter 3.