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

Aug 14, 2020




  • Ethics, Governance and Accountability

    Professor Louise Crawford PhD CA Aberdeen Business School Robert Gordon University Scotland

    Presentation given at: University of Bergamo, April 2018

  • 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.

  • 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

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

  • There is right and wrong – in science

  • Interpretation; seeking truth?

    Elephant parable

  • 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]

  • 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?

  • 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

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

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

  • Unethical industries?

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

  • 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

  • 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”

  • 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.”

  • 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

  • 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..”

  • 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

  • Fundamental Evaluative Criteria for each Dimension

    Instrumental – Cost-benefit analysis Relational – Pros and cons of future relations Internal – Development and degradation of internal capabilities Ethical – right and wrong; better or worse.

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

    Congruent evaluations Conflicting evaluations

  • 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 …

  • 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.”

  • Three fonts or sources to evaluate morality of a decision

    1. Intention 2. Action chosen 3. 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.”

  • 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).

  • 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