Personal and Organizational Ethics

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 Chapter Seven Objectives
• To understand the different levels at which business
ethics may be addressed
• To appreciate principles of personal ethical decision-
making
• To identify factors affecting an organization’s moral
climate
• Describe actions or strategies to improve ethical
climate

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 Chapter Seven Outline
• Levels at which Ethical Issues May
Be Addressed
• Personal and Managerial Ethics
• Managing Organizational Ethics
• From Moral Decisions to Moral
Organizations
• Summary
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 Introduction to Chapter Seven
• This chapter focuses on the day-to-day
ethical issues that managers face

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 Levels at Which Ethical Issues
May Be Addressed

• Personal level—situations faced in personal

life (income tax, doing kid’s homework, etc.)
• Organizational level—workplace situations
faced as managers and employees (cutting
corners, etc.)

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 Levels at Which Ethical Issues
May Be Addressed

• Industrial level—situations confronted as

professionals (the practices of stockbrokers,
accountants, etc.)
• Societal and international levels—local-
to-global situations confronted indirectly as
a management team

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 Personal and Managerial Ethics

Resolving Ethical Conflicts

Three Approaches
• Conventional (covered in Chapter 6)
• Principles
• Ethical tests

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 Personal and Managerial Ethics
Principles Approach
Anchors decision making
on an ethical principle such as:
• Utilitarianism • Caring
• Rights • Virtue ethics
• Justice • Servant leadership
• Golden Rule

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Personal and Managerial Ethics

Principle of Utilitarianism focuses on an

act that produces the greatest ratio of good
to evil for everyone
– Consequentialist theory

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Personal and Managerial Ethics
Principle of Rights focuses on examining
and possibly protecting individual moral or
legal rights

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Personal and Managerial Ethics

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 Personal and Managerial Ethics
• Principle of justice involves considering
what alternative promotes fair treatment of
people
• Types of justice
– Distributive
– Compensatory
– Procedural
– Rawlsian

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 Personal and Managerial Ethics
Rawls’ Justice
• Each person has an equal right to the most
basic liberties comparable with similar
liberties for others
• Social and economic inequalities are arranged
so that they are both:
a) reasonably expected to be to everyone’s advantage
and
b) attached to positions and offices open to all people

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 Personal and Managerial Ethics
• Principle of caring focuses on a person as
a relational (cooperative) and not as an
individual
– Feminist theory
• Virtue ethics focuses on individuals
becoming imbued with virtues
– Aristotle and Plato

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Personal and Managerial Ethics

Servant leadership focuses on serving

others first such as employees, customers,
community and so on

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 Personal and Managerial Ethics

Characteristics of Servant Leaders

• Listening • Foresight
• Empathy • Conceptualization
• Healing • Commitment to the
growth of people
• Persuasion
• Stewardship
• Awareness
• Building community

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Personal and Managerial Ethics

Golden rule focuses on the premise that

you should of unto others as you would
have them do unto you

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Personal and Managerial Ethics

Concerns to be Addressed in
Ethical Conflicts
• Obligations
• Ideals
• Effects

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 Personal and Managerial Ethics
When Our Obligations, Ideals and
Effects Conflicts
• When two or more moral obligations conflict, use
the stronger one
• When two or more ideals conflict, or when ideals
conflict with obligations, honor the more
important one
• When effects are mixed, choose the action that
produces the greatest good and the least harm
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 Personal and Managerial Ethics

Ethics Test Approach

• Test of common sense
• Test of one’s best self
• Test of making something public
• Test of ventilation
• Gag test
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Managing Organizational Ethics
Factors Affecting the Morality of Managers
Society’s Moral Climate
Business’s Moral Climate
Industry’s Moral Climate

Superiors
Superiors
Policies
Policies

Individual
Individual
(One’s Peers
Peers
(One’s
personal
personal
situation)
situation)

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 Managing Organizational Ethics
Factors Influencing Unethical Behavior
• Behavior of superiors
• Ethical practices of one’s industry or profession
• Behavior of one’s peers in the organization
• Formal organizational policy (or lack of one)
• Personal financial need

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Managing Organizational Ethics

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 Managing Organizational Ethics

Questionable Behaviors of Superiors or Peers

• Amoral decision making

• Unethical acts, behaviors or practices
• Acceptance or legality as the standard
behavior
• Absence of ethical leadership

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 Managing Organizational Ethics
Questionable Behaviors of Superiors or Peers

• Objects and evaluation systems

overemphasizing profits
• Insensitivity toward how subordinates
perceive pressure to meet goals
• Inadequate formal ethics policies

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 Improving Ethical Climate

Ethics Programs Effective

Ethics Audit
& Officers Communication

Realistic
Objectives
Top
Management Ethics Training
Leadership
Ethical Decision-
making Processes

Codes of Discipline of Whistle-blowing

Conduct Violators Mechanisms
(“Hotlines”)

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 Ethical Decision-Making
Identify decision you
are about to make

Articulate all dimensions

of proposed decision

Conventional Approach Principles Approach Ethical Tests Approach

Standards/Norms Ethical Principles Ethical Tests
-Personal -Justice -Common sense
-Organizational -Rights -One’s best self
-Societal -Utilitarianism -Public disclosure
-International -Golden Rule -Gag test . . .

Course of action fails

Course of action passes ethics screen
ethics screen

Do not engage in course

Engage in course of of action
action
Identify new course of
action

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Ethics Audits and Self-Assessment

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From Moral Decisions to Moral
Organizations
Moral Decision(s)

Moral Manager(s)

Moral Organization
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 Selected Key Terms
• Codes of conduct • Principle of caring
• Codes of ethics • Principle of justice
• Compensatory justice • Principle of rights
• Distributive justice • Principle of utilitarianism
• Ethical tests • Procedural justice
• Ethical audits • Rights
• Golden rule • Servant leadership
• Legal rights • Utilitarianism
• Moral rights • Virtue ethics

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