A Simple Model of Analysis for
Ethical Decision-Making
by
Colin Boyd
Professor of Management
University of Saskatchewan
IABC Ethics Presentation
© Colin Boyd 2006
Oxymorons
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IABC Ethics Presentation
Business ethics
Jumbo shrimp
Military intelligence
Postal service
Gourmet pizza
© Colin Boyd 2006
Where is the boundary between morality
and immorality in the quest for profits?
In 1988 the West German newspapers described the activities of a
particular businessman. He had been advertising in Pakistan for
healthy volunteers to donate one of their kidneys, and several had
already come to Germany for the donation operation. The
businessman paid the volunteers about $10,000, a large sum in
comparison to annual incomes in Pakistan. He also paid the
donors’ expenses, and the medical costs involved in the removal
of the kidney from each healthy donor. The businessman sold the
kidneys for around $30,000 each, for transplant into patients
attending a private medical clinic. All of these patients were
wealthy, and most were from Arabic countries.
IABC Ethics Presentation
© Colin Boyd 2006
Social Consensus
The Law
Should the law be taken as the definition
of right and wrong in guiding managers
as to the morality of business conduct?
If it is legal, then surely it can’t be wrong?
IABC Ethics Presentation
© Colin Boyd 2006
Everything that is moral
Legal but immoral: discrimination
against Jews in Nazi Germany
All that is moral and
legal at the same time
Moral but illegal: exceeding the
Speed limit in rural Saskatchewan
IABC Ethics Presentation
Everything that is legal
© Colin Boyd 2006
You can't teach me ethics!
I learned all my values .....on my mother's knee
.....in kindergarten
.....at my church
"eating meat is wrong”
- moral principles
You can move from
lower to higher levels
of moral reasoning
"my friends won't like me"
- peer pressure
"daddy says it is wrong”
- fear of punishment
IABC Ethics Presentation
© Colin Boyd 2006
We spend very little time
examining our core values
• ……and yet they seem to have a
great influence on our daily lives
……for example, how much time
and money do you spend each
week related to your core values
regarding
PERSONAL HYGIENE ??
IABC Ethics Presentation
© Colin Boyd 2006
Honesty: Dinner with Jane
Jane Smith, an old school friend, calls you on the phone to
say that she is in town, staying at the Quality Inn for a night
while on a business trip for Ajax Limited, her Halifax-based
employer. She asks if you would like to get together and talk
over old times. You meet in the hotel bar, and later decide to
eat together in the hotel restaurant. When the bill comes
you offer to pay your share, but Jane says no, she can
charge the meal and drinks to her room. Ajax will pay, she
says. She will pretend you were a business client.
IABC Ethics Presentation
© Colin Boyd 2006
Jane later contacts you.....
1 to ask if you will give her a reference
for a job
2 to ask for a reference for a job as a
financial controller where she will be
handling a lot of cash
3 to apply for a job as the financial
controller of the company that you own
IABC Ethics Presentation
© Colin Boyd 2006
the profits of
the firm
customer
satisfaction
In business, which comes first?
the wellbeing of
employees
Which has priority?
What happens when you cannot
satisfy these different
constituencies?
paying suppliers
on time
IABC Ethics Presentation
respect for the
environment
© Colin Boyd 2006
ETHICS
Greek - “proper conduct”
ETHNIC
people of one's own kind
a community of shared values
ETHOS
Greek - the essential character or spirit
of a person or organization
the prevalent sentiment of a community
IABC Ethics Presentation
© Colin Boyd 2006
Ethical Analysis
Or
Moral Reasoning
• Stakeholder identification
• End-point ethics, Utilitarianism
• Human Rights
• Justice or Rule-based ethics
IABC Ethics Presentation
© Colin Boyd 2006
PRIMARY STAKEHOLDERS
(those who have a direct economic stake in the welfare of the organization)
CUSTOMERS
DISTRIBUTORS
(WHOLESALERS,
RETAILERS)
Buy
products
COMPETITORS
Compete for
customers
Distribute
products
Invest
capital
Sell raw
materials
SUPPLIERS
Provide
labour
EMPLOYEES
(UNIONS)
SHAREHOLDERS
Lend
cash
Provide
admin skills
CREDITORS
MANAGERS
IABC Ethics Presentation
© Colin Boyd 2006
SECONDARY STAKEHOLDERS
…are affected not so much by the scale of the organization, but
more by its existence. These stakeholders are not inferior to
primary stakeholders, but have a secondary type of relationship
THE LOCAL
COMMUNITY
LOCAL
GOVERNMENT
NEXT-DOOR
NEIGHBOURS
THE
GENERAL
PUBLIC
FEDERAL
GOVERNMENT
+
future
stakeholders?
future
generations?
BUSINESS LOBBY
GROUPS
IABC Ethics Presentation
THE MEDIA
SOCIAL ACTIVIST
GROUPS
© Colin Boyd 2006
A Utilitarian Analysis
Total
Harms
Total
Benefits
Do the benefits exceed the harms?
At the end-point, what is the balance?
IABC Ethics Presentation
© Colin Boyd 2006
Do the total benefits exceed the total harms?
Alternative A
Alternative B
Stakeholder #1
Stakeholder #2
Stakeholder #3
Stakeholder #4
Stakeholder #5
Net Outcomes
End-Point Ethics, or Utilitarianism
IABC Ethics Presentation
© Colin Boyd 2006
Utilitarianism in Action:The Ford Pinto
The benefit is the
saving of 180 lives
@ $200,000 per life
= $36 million
The cost is $11 per car
x 11 million Pintos
= $121 million
As the cost of $121 million outweighed the social benefit of $36 million,
Ford concluded that improving the Pinto design would not be profitable
for Ford, or for society in general. Ford managers decided to go ahead
with production of the Pinto as designed.
IABC Ethics Presentation
© Colin Boyd 2006
Automatic Vehicle Speed Control
Global satelite positioning systems (GPS) can now be fitted to
automobiles. When combined with data from a CD drive map of a local
area, any car can know its own position to within a few meters. It can
also know what the maximum speed limit is for that precise location
The UK Government is considering a recommendation for making
automobiles automatically compliant with local speed limits – your car
would not let you drive any faster than the local speed limit.
It is estimated that this simple measure would cut road deaths and
injuries by around 60% per year. No one would be allowed to speed.
IABC Ethics Presentation
© Colin Boyd 2006
Are Human Rights Protected?
Basic Rights
LIBERTY RIGHTS
WELFARE RIGHTS
Things that I have
that no one else
should take from me
Things that I do not
have that someone
else should give to me
IABC Ethics Presentation
© Colin Boyd 2006
Are Human Rights Protected?
Basic Rights
LIBERTY
WELFARE
The duty not to remove rights,
such as the right to:
The duty to provide rights,
such as the right to:
Privacy
Employment
Free Speech
Housing
Free Consent
Food
Freedom of Conscience
Education
IABC Ethics Presentation
© Colin Boyd 2006
Liberty Rights: The Right to Vote?
Can your employer tell you how to vote?
Liberty Rights: The Right to Free Speech?
If an employee is seen advocating gay rights on TV at the
weekend, is that relevant to the employer? Can a Christian
employee try to convert fellow workers during work hours?
Liberty Rights: Do We Have a Right to Privacy?
Can an employer listen in on phone operators, reservations
clerks? Watch you via video camera?
IABC Ethics Presentation
© Colin Boyd 2006
Liberty Rights: Personal Time at Work?
Timing Your Visits to the Washroom
Workers at the Gainers meat-packing plant in Edmonton lose their
pay when they go on bathroom breaks. Company president Larry
Harding said the “personal relief” program was instituted in January
1994 because management felt that employees were taking
advantage of bathroom and phone privileges. Each of Gainers’ 850
employees must ask a supervisor for permission to leave work
outside lunch or coffee breaks. The typical Gainers worker earns
$12 an hour and is docked 60 cents for every minute he or she is
absent. If the worker is away for more than 20 minutes a week, he
or she is temporarily suspended.
IABC Ethics Presentation
© Colin Boyd 2006
Welfare Rights: Do We Have a Right to a Job?
Loggers from North Vancouver Island protesting the creation of 23 new
parks on Vancouver Island which threaten their right to their jobs
Coal miners in Sydney, N.S. argue against the closure of their mines
Welfare Rights: Do We Have a Right to an Education?
The USSU protesting that increased University of Saskatchewan
tuition fees will prevent students from poor families from having access
to secondary education. Everyone has a right to an education
irrelevant of their economic background.
IABC Ethics Presentation
© Colin Boyd 2006
Are Other Rights Protected?
• Future Generations
• Stakeholders in Different Cultures
• Animals
• Plants
• Ecological Systems
• The Earth
IABC Ethics Presentation
© Colin Boyd 2006
Late 20th Century Trends
• The evolution of rights issues
• The collapse of paternalism (e.g. not
telling someone that they have cancer –
“it is best that Aunt Betty not know…”)
• The emergence of animal rights e.g. the
Body Shop, Cirque de Soleil, attacks on
animal transport in UK
IABC Ethics Presentation
© Colin Boyd 2006
Justice or Rule Ethics
Are the harms and benefits fairly and justly
distributed across the affected stakeholders?
Is it fair?
RAWL's THEORY of JUSTICE
If you were to design a system of distribution of the benefits
and harms across the stakeholders without knowing in
advance which stakeholder you would be, then how would
you want the harms and benefits to be distributed?
IABC Ethics Presentation
© Colin Boyd 2006
Justice or Rule Ethics
Test of Disclosure
JANE FIDDLES
HER EXPENSES
How will the solution look if
headlined in the newspaper?
Social Contract Ethics
Are the stakeholders willing partners,
ready to swap positions with each other?
IABC Ethics Presentation
A
B
© Colin Boyd 2006
Money for Nothing
“Its just like money for nothing!” exclaimed Sally with a laugh as
she put her glass back on the bar. “I can’t believe my luck.
$15,000 for one day’s work, its just crazy!”. Sally was a
consultant who writes computer software for accounting
systems. She was celebrating after having received a contract
to design a new system for a client who was under the
impression that such a system takes about 2 months of design
work to complete. Sally was jubilant; “They don’t know that I
designed an identical system for one of their competitors only a
few weeks ago. All I have to do is to dust off that package,
change the client’s name, and that’s it. One day’s work at the
most! Isn’t it great?”
IABC Ethics Presentation
© Colin Boyd 2006
A Framework for Ethical Analysis
of Business Decisions
Who are the affected stakeholders?
What are the outcomes for each stakeholder
of the proposed solution to the problem?
IABC Ethics Presentation
© Colin Boyd 2006
End Point Ethics
Rule Ethics
Rights
Do the total
benefits exceed
the total harms?
Are the harms and
benefits fairly and
justly distributed?
Are human
rights
protected?
Test of Disclosure
Social Contract Ethics
How will the solution
look if headlined
in the newspaper?
Are the stakeholders
willing partners, ready
to swap positions
with each other?
IABC Ethics Presentation
© Colin Boyd 2006