VietBusEthPPCourse09 - Part1

2004 Prentice Hall, Inc. 1

MBA 6301 Business Ethics


Learning Facilitator Charles Brewton Tennessee State University, Ph.D. The University of Memphis, M.B.A. Georgia Institute of Technology, B.S.

Text: Business Ethics Ethical Decision Making and Cases


Course Administration Time Expectations Course Grading

Unit quizzes 24% Section Exam 1

20% Section Exam 2

20% Participation/

Discussion 15% Final Exam 21%

What can I do

What can I do to get an A?to get an A?


One Assignment – Business Ethics

Bring in two (2) documented cases

Source: Newspaper or Internet

Subject: Violation of ethics as it relates to Vietnamese organizations

English language 5% of participation grade


A Review of 286 AACSBMember Schools Reveals...

Required ethics course(s): 40.6% (overall) require an ethics

course 68% of private 30% public

Source: Cheryl L. Buff and Virginia Yonkers (2004) “How Will They Know Right From Wrong? A Study of Ethics in the Mission Statement and Curriculum of AACSB Undergrad. Mkt. Programs, ”Marketing Education Review, Vol. 14, #3 (Fall): 71-79.


In a recent Wall Street Journal article, Psychology professor Steven Davis says that cheating by high school students has increased from about 20 percent in the 1940’s to 75 percent today. “Students say cheating in high school is for grades, cheating in college is for a career.”


TWO KEY ASPECTS OF ETHICS

The first involves the ability to discern rightfrom wrong, good from evil, and proprietyfrom impropriety.

The second involves the commitment to dowhat is right, good and proper. Ethics entailsaction; it is not just a topic to mull or debate.”

(Taken from Maxwell, Ethics 101, p. 18)


STATISTICS, STATISTICS In a recent workplace survey, 43% ofemployees admitted to having engaged in atleast one unethical act in the last year, and75% observed such an act and did nothingabout it. (John Maxwell, Ethics 101, p. 10)

Another recent survey found that 82% ofbusiness executives admitted to cheating atgolf, and 72% believed that actions in businessand golf parallel each other. (John Maxwell, Ethics 101, p. 74)


SURVEY RESULTS ONETHICS IN THE WORKPLACE

Employees want to work for ethical companies.

57% said it was “critical” and 37% said it was “important”, a combined total of 94%.

82% said they would rather work for an ethical company at less pay than an unethical company at higher pay. This was particularly true for professional and managerial employees.

36% have left a job because they disagreed with their company’s ethical practices.


SURVEY RESULTS ONETHICS IN THE WORKPLACE

56% say their companies embrace ethical values in their corporate culture.

However, 30% believe their companies merely follow the letter of the law and company policies.


Principle of Employee Conduct…

10% Follow their own beliefs 40% Try to follow company policies

& rules 40% Go along with the work group 10% Take advantage if the risk is

low


Common Unethical Acts... lying to supervisors falsifying records alcohol and drug abuse conflict of interest stealing gift/entertainment receipt in violation of

company policy 1997 Society for Human Resource Management/Ethics Resource Center, Business

Ethics Survey.


Classification of EthicalIssues...

conflict of interest honesty and fairness communications organizational relationships


Conflict of Interest... exists when an individual must choosewhether to advance his/her owninterests, the organization’s, or others’

examples include bribes or personalpayments, gifts, or special favorsintended to influence decision making


What one might do for $500…

Stop going to movies for 6 months (62%)

Get a tattoo (39%) Cheat on spouse

(4%)

Source: “Anything for Money?” Business Week, August 2, 2004, p. 9. (Progressive Auto Insurance survey of 1,000 adults)


Honesty & Fairness... following applicable laws & regulations& not knowingly harming stakeholders

Is advertising prescription drugs on TVand in magazines fair?

Are long distance information ads thatplace the cost of the call in very smallprint at the bottom of the screen fair?


Do Animals Recognize Fairness?

Research shows people, dogs & monkeys recognize inequities


Communications... refers to the transmission of informationand the sharing of meaning

examples: deceptive advertising, product safety information, & product composition

Are health foods and medicinal supplements using ‘puffery’ in their advertising?


Organizational Relationships... behavior of organizational memberstoward stakeholders

includes confidentiality, meetingobligations & deadlines, not

pressuringothers to behave unethically


What is Ethics? A system of moral principles, rules and standards

of conduct With regard to professions, a code of professional

standards, containing aspects of fairness and duty to the profession and the general public

System or code of morals of a particular religion, group, or profession

The branch of philosophy that deals with issues of right and wrong in human affairs

Personal code of conduct based on respect for one's self, others, and one’s surroundings


Universal Human Values

Love Truthfulness Fairness Freedom Unity Tolerance Responsibility Respect for Life

Rushmore Kidder, The Futurist, 8/94


What is Business Ethics?


General Business Ethics Philosophy of Business

If to maximize the returns to its shareholders, then it should be seen as unethical for a company to consider the interests and rights of anyone else.

Corporate social responsibility Relations between different companies Political contributions Corporate governance.


Business Ethics

Business Ethics is that branch of ethics that examines:

Ethical rules and principles within a commercial context

The various moral or ethical problems that can arise in a business setting

Any special duties and obligations that apply to persons who are engaged in commerce


What is business ethics?(a managerial perspective) defining appropriate behavior establishing organizational values nurturing individual responsibility providing leadership & oversight relating decisions to stakeholder interests developing accountability relating consequences auditing & improvement

Copyright O.C. Ferrell; March 2005


Two Characteristics

Tells people what they ought to do

Set of principles or rules


Relativism

Egoism

Utilitarianism

Deontologism

TheThe 44 ConceptsConcepts ofof EthicsEthics


Concepts of Ethics Developed by moral philosophers

over generations

Used to distinguish ethical from unethical behavior

Each has problems


Relativism There is no universal standard by

which morality can be judged What is correct for one society

may be wrong for another Ethics and morality are relative

What do you think of this?


Relativism - Problems There are no absolutes - murder,

slavery, torture, rape OK Leads to conclusion - each

person’s opinion is correct Nothing that anyone does is

morally wrong


Egoism One ought to act in his or her own

self interest Ethical behavior is that which

promotes one’s own self interest Does not mean should not obey

laws - only do so if in self interest


Egoism What do you think

of this concept?

Typical Problem - OK to dump toxic wastes as long as don’t get caught


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


What do you think of this concept?

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


Utilitarianism Example Harry Truman

and Decision to Drop Bomb on Japan


Deontologism Derived from the Greek word for

Duty Actions are not justified by their

consequences. the act may be considered the right

thing to do even if it produces a bad consequence


Deontology Example Allow or assist

suicide for someone suffering from incurable painful disease

Execution of convicted murderers


Utilitarianism Vs. Deontologism

Utilitarianism - The ends justify the means

Deontologism - It is the means which are important


Business ethics is not likely to succeed as deontological (duty bound) ethics

Has to be based on the utilitarian concept of “greatest happiness or good (and goods too) for the greatest number”(and for the longest possible time)

Upholds the principles of equitable (fair) and consistent distribution of resources and profit among different stakeholders


COMMON RATIONALIZATIONSIN ETHICS DECISIONS

1. If it’s necessary, it’s ethical.2. If it’s legally permissible, it’s

ethically proper.3. I’m overworked and underpaid, so

“I’ve got it coming.”4. It’s all for a good cause.5. I was just doing it for you.


COMMON RATIONALIZATIONS

IN ETHICS DECISIONS

6. I’m just fighting fire with fire.7. It doesn’t hurt anyone.8. Everyone’s doing it

(universalism).9. It’s O.K. since I’m not gaining

anything personally.


Ethical Tests


5 Ethical Tests

1. Is It Legal?I Ethical - Legal

II Ethical - Illegal III Unethical - Legal IV

Unethical - IllegalI and IV EasyII and III Difficult


Ethical Tests2. Benefits Cost Test

Do the benefits exceed the costs to whomsoever they accrue?

3. Equitable & Fair Test Are you willing to allow everyone

to practice the proposed action or do you want to be a special case?


Ethical Tests

4. Light of Day TestWhat would be your reaction if

the action 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


Ethical Tests

6. Ventilation TestSeek out others views. Discuss the 5 tests with

them. If others feel it is OK - passes the test


Examples Robbing a Bank

Driving Above the Speed Limit

Cheating on an Exam

Having Sex with an Intern


Ethical Dilemmas in Business

Conflict of InterestHave two interests - cannot

pursue one without having negative impact on other

Two Types Private Interest Conflicts with

CorporateBusiness Interest Conflicts with

Public


Conflict of Interest Mini-Case Personnel Director Brother - in - law out of work Lackluster performer Unemployment about to run out - will

lose house Sister asks you to recommend him

for job What would you do?


Whistleblowing Act of disclosing wrongdoing in an

organization Like blowing a whistle to call

attention to a thief Types

Internal External


Can Cause Bitterness in Organization

Dissent - Must speak out against others in organization

Breach of Loyalty - Perceived as one who violates confidentiality and loyalty

Accusation - Singles out specific individuals as threats to organization or the public


Possible Retaliation Fired Blacklisted Transferred to undesirable locations Lifestyles, sex lives and mental

stability questioned Physical abuse and murder possible


Failure to Reveal Wrongdoing Severe problems for society or

organization

Can be implicated as an accessory before or after the fact


Ethics of Whistleblowing When is it ethical to reveal

wrongdoing ?

When is it ethical to remain silent?


Whistleblowing Mini-case In charge of Quality

Control Company makes parts for

automobile brakes Find defect in brake part Could cause failure in

brakes Failure not certain May take many years to

develop case


Whistleblowing Example (cont.)

Go to VP of Production, your boss

He tells you to overlook defect - company may lose too much money

What would you do?


Cautious Approach to Whistleblowing

1. Make sure situation involves an imminent threat to society or to the

business2. Document all allegations3. Examine internal whistleblowing

first4. Should you remain anonymous?5. Get another job first!!!


Case: Ford PintoThe Use of Risk/Benefit Analysis Faulty gas tank placement People die in gas tank explosions $11/car to change design 180 less deaths predicted $137 million to change design vs

$49.5 million in wrongful death payouts


1972 Ford Pinto Runabout


Ford Pinto (cont’d) Several Reasons not to use benefit analysis

Unethical to allow people to die ? Negative publicity

Arguments in favor of using benefit analysis Existing case law Encourages precautions & safety Provides precedent for other companies to follow


Bribery A payment, usually to a public

official, to induce that person to either do something improper or to influence decisions or actions

Extortion - same as bribery - recipient of payment initiates transaction


Mini-Case Bribery International consulting firm - designs

and supervises construction of hydroelectric power generating systems

Your proposal is far superior to any other Technically lowest bid

To get job, must deposit $250,000 in official’s personal Swiss bank account


Should you pay the money? Foreign Corrupt Practices Act of

1997 Grease payment allowed Standard Practice in most foreign

countries Results in lost business

opportunities for US companies


Mini-Case: Bluffing and Deception

Negotiating a labor contract Plant has experienced losses over

past several years - not clear why Want concessions from labor Tell labor that plant will be closed if

no concessions are made. In reality , no such plans contemplated

Is This Ethical?


Case: Polaroid in and Out of South Africa

Apartheid System 17% White 70% African Whites only could be in

government, possess firearms Enforced segregation of races Blacks relegated to “native

reserves”


Apartheid (cont.) Blacks allowed to own 13% of land Whites - 87% Black workers paid less than

Whites


US Involvement in South Africa

320 American companies there American companies controlled

43% of petroleum market 23% of auto sales 70 percent of computer business


Polaroid Rumors that products used in Pass Book

System Sent 4 US employees to South Africa –

1970 No sales to government

Improve salaries for Blacks for local distributors and suppliers

Training program so Blacks could take better jobs

Some profits for Black education


Success of Program Improvements in Black salaries,

advancement and benefits Principle of same pay for same job

accepted Ban on direct sales successful Ban on indirect sales not successful


Sales to Government through Frank and Hirsch Secretly selling Polaroid products

to government Billed as shipments through

drugstore in Johannesburg Polaroid terminated its

involvement in South Africa - 1977


Ethical Questions What is the ethics of American

companies doing business in a country with human rights abuses?

Was Polaroid responsible for the use of its products?

Are companies responsible for the use of their products?


Ethical Questions Was Polaroid’s presence a positive

or negative influence on Blacks?

VietBusEthPPCourse09 - Part1

Documents

business ethics survey

violation of ethics

ethics courses

study of ethics

assignment business

key aspects of ethics

recent survey

unethical company