Business Ethics

Introduction Shweta

Introduction to Business Ethics

Ethics The principles of right and wrong that guide an individual in making decisions Business Ethics The use of personal ethics in making business decisions

What is ethics?

Ethics is the branch of philosophy that focuses on morality and the way in which moral principles are applied to everyday life. Ethics has to do with fundamental questions such as What is fair? What is just? What is the right thing to do in this situation? Ethics involves an active process of applying values, which may range from religious principles to customs and traditions.

What is business ethics?

Business ethics focuses on what constitutes right or wrong behavior in the world of business. Corporate business executives have a responsibility to their shareholders and employees to make decisions that will help their business make a profit. But in doing so, businesspeople also have a responsibility to the public and themselves to maintain ethical principles.

Although ethics provides moral guidelines, individuals must apply these guidelines in making decisions. Ethics that applies to business (business ethics) is not a separate theory of ethics; rather, it is an application of ethics to business situations. Although all people have ethical responsibilities, higher ethical standards are imposed upon professionals who serve as social models, such as physicians, attorneys, and businesspeople.

The Relationship Between Law and Ethics

The law is an expression of the ethical beliefs of our society. Law and ethics are not the same thing. The question, Is an act legal? is different from the question, Is an act ethical? The law cannot codify all ethical requirements. Therefore, an action might be unethical, yet not necessarily illegal. For example, it might be unethical to lie to your family, but it is not necessary illegal.

Similarly, just because an act is illegal does not necessarily mean it is immoral. Rosa Parks was acting illegally when she refused to give up her seat on the bus to a white male, but that does not necessarily mean she was acting unethically. Should an individual obey the law even if it would be unethical to do so? Under the theory of civil disobedience espoused by Martin Luther King, Mahatma Gandhi and others, an immoral law deserves to be disobeyed. Can you think of any examples of acts that would be illegal, yet arguably ethical?

Law and ethics: a model

Law is the floor, ethics the ceiling.

Ethics is a higher standard, but without law is unlikely to be effective. Ethics and law are complementary: they cannot substitute for each other.

Ethics and Law go hand in hand

Ethics are rules of conduct. Laws are rules developed by governments in order to provide balance in society and protection to its citizens. 2. Ethics comes from peoples awareness of what is right and wrong. Laws are enforced by governments to its people. 3. Ethics are moral codes which every person must conform to. Laws are codifications of ethics meant to regulate society. 4. Ethics does not carry any punishment to anyone who violates it. The law will punish anyone who happens to violate it. 5. Ethics comes from within a persons moral values. Laws are made with ethics as a guiding principle.

Ethics, Economics, and Law

Figure 7-6

Three Models of Management Ethics

Immoral management Moral management Amoral management

3 Models of Management Ethics

1.

2.

3.

Immoral ManagementA style devoid of ethical principles and active opposition to what is ethical. Moral ManagementConforms to high standards of ethical behavior. Amoral Management

Intentional - does not consider ethical factors Unintentional - casual or careless about ethical considerations in business

Three Models of Management Ethics

Immoral Management
An approach devoid of ethical principles and active opposition to what is ethical

Moral Management

Conforms to high standards of ethical behavior or professional standards of conduct Intentional: does not consider ethical factors Unintentional: casual or careless about ethical factors

Amoral Management

Characteristics of Immoral Managers

Intentionally do wrong

Self-centered and self-absorbed

Care only about self or organizations profits / success Actively oppose what is right, fair, or just Exhibit no concern for stakeholders

Are the bad guys

An ethics course probably would not help them
Figure 7-7

Illustrative Cases of Immoral Management

Stealing petty cash
Cheating on expense reports Taking credit for anothers accomplishments Lying on time sheets

Coming into work hungover

Telling a demeaning joke Taking office supplies for personal use Showing preferential treatment toward certain employees

Rewarding employees who display wrong behaviors

Harassing a fellow employee

Characteristics of Moral Managers

Conform to high level of ethical or right behavior Conform to high level of personal and professional standards Ethical leadership is commonplace Goal is to succeed within confines of sound ethical precepts High integrity is displayed Embrace letter and spirit of the law Possess an acute moral sense and moral maturity Are the good guys

Integrity Strategy

Guiding values and commitments make sense and are clearly communicated. Company leaders are personally committed, credible, and willing to take action on values Espoused values are integrated into normal channels of management decision making The organizations systems support and reinforce its values All managers have the skills, knowledge, and competencies to make ethically sound decisions daily

Ethics Criteria

Be a leader in the company's field, showing the way ethically Sponsor programs that demonstrate sincerity and ongoing vibrancy, and reach deep into the company Be a significant presence on the national scene, so the companys ethical behavior sends a loud signal Stand out in at least one area Demonstrate the ability to face a recent challenge and overcome it with integrity

Habits of Moral Leaders

1. 2. 3. 4. 5. 6. 7.

They have a passion to do right They are morally proactive They consider all stakeholders

They have a strong ethical character

They have an obsession with fairness They undertake principled decision making They integrate ethics wisdom with management wisdom

Positive Ethical Behaviors

Giving proper credit where it is due Being straightforward and honest with other employees Treating all employees equally Being a responsible steward of company assets Resisting pressure to act unethically

Recognizing and rewarding ethical behavior of others

Talking about the importance of ethics and compliance on a regular basis

Characteristics of Amoral Managers

Intentionally Amoral Managers:

Dont think ethics and business should mix

Business and ethics are existing in separate spheres A vanishing breed

Unintentionally Amoral Managers:

Dont consider the ethical dimension of decision making

Dont think ethically

Have no ethics buds Well-intentioned, but morally casual or unconscious

Ethical gears are in neutral

Why Managers / Employees Behave Ethically

1. To avoid some punishment

Most of Us
2. To receive some reward 3. To be responsive to family, friends, or superiors 4. To be a good citizen

Many of Us

Very Few Of Us

5. To do what is right, pursue some ideal