Section I - What is Ethical Behavior?
A.
B.
C.
Basic definitions.
1.
Ethics can be defined as the code of moral principles that sets standards
of good or bad, or right or wrong, in one’s conduct and thereby guides
the behavior of a person or group.
2.
Ethical behavior is behavior that is accepted as “good” and “right” as
opposed to “bad” or “wrong” in the context of the governing moral code.
Law, values, and ethical behavior
1.
Any behavior considered ethical should also be legal in a just and fair
society.
2.
Legal behavior, however, is not necessarily ethical behavior.
3.
What one considers to be ethical varies according to personal values––
the underlying beliefs and attitudes that help determine individual
behavior.
Alternative views of ethical behavior.
1.
D.
Four views of ethical behavior are:
a.
Utilitarian view––ethical behavior is that which delivers the
greatest good to greatest number of people.
b.
Individualism view––ethical behavior is that which best serves
long-term self-interests….that is you will make the right choice
now to preserve your future image
c.
Moral-rights view––ethical behavior is that which respects the
fundamental rights of all people.
d.
Justice view––ethical behavior is that which is impartial and fair
in treating people according to guiding rules and standards.
(1)
Procedural justice––the degree to which policies and
rules are fairly administered.
Ex – a manager and a subordinate will be treated the
same way if they are caught stealing
(2)
Distributive justice––the degree to which people are
treated the same regardless of individual characteristics
based on ethnicity, race, gender, age, or other
particularistic criteria.
Ex – A male and female will be treated the same
(3)
Interactional justice––the degree to which others are
treated with dignity and respect.
Ex – If you fire someone, explain why so
Cultural issues in ethical behavior
1.
Ethical management in a global environment is challenged by the
complexities of different cultures and value systems throughout the
world.
2.
Cultural relativism is the notion that there is no one right way to behave
and that ethical behavior is always determined by the cultural context.
Ex- If people burp at a meal in another place (even though you wouldn’t
at home) then it is fine.
3.
Universalism is a contrast to cultural relativism and suggests if a
behavior is not okay in one’s home environment, it shouldn’t be
acceptable practice anywhere else.
Ex- No slave labour in Canada therefore there shouldn’t be elsewhere
4.
Ethical imperialism, goes 1 step further where an attempt to externally
impose one’s ethical standards on others is made
Ex – Putting a trade embargo on another country until they change their
practices
5.
Multinational companies can show respect for core or universal values
by:
a.
Respecting human dignity by creating a corporate culture that
values employees, customers, and suppliers; keeping a safe
workplace; and producing safe products and services.
b.
Respecting basic rights by protecting rights of employees,
customers, and communities; and avoiding anything that
threatens safety, health, education, and living standards.
c.
Being good citizens by supporting social institutions, including
economic and educational systems; and working with local
government and institutions to protect the environment.
Section II - How do ethical dilemmas complicate the workplace?
A.
What is an ethical dilemma?
1.
An ethical dilemma occurs when someone must choose whether or not
to pursue a course of action that, although offering the potential of
personal or organizational benefit or both, would/may be considered
unethical.
2.
Potential sources of ethical dilemmas faced by managers include:
a. discrimination
b. sexual harassment
c. conflicts of interest
d. customer confidence – protecting customers private info
e. organizational resources – using business resources for
personal stuff
3.
According to a Harvard Business Review survey, many ethical dilemmas
involve conflicts with superiors, customers, and subordinates.
ENHANCEMENT
A good way to get students thinking about ethical dilemmas and to generate a lively discussion is
to ask students how they would respond to the following three dilemmas. The range of student
responses is likely to be quite broad. Next, you can present the results of the Harvard Business
Review survey from which they were taken.
Case 1: foreign payment. The minister of a foreign nation asks you to pay a $200,000 consulting
fee. In return for the money, the minister promises special assistance in obtaining a $100 million
contract that would produce at least a $5 million profit for your company. The contract will
probably go to a foreign competitor if not won by you.
Survey results: 42% of the responding managers would refuse to pay; 22% would pay, but
consider it unethical; 36% would pay and consider it ethical in a foreign context.
Case 2: competitor’s employee. You learn that a competitor has made an important scientific
discovery. It will substantially reduce, but not eliminate, your profit for about a year. There is a
possibility of hiring one of the competitor’s employees who knows the details of the discovery.
Survey results: 50% would probably hire the person; 50% would not.
Case 3: expense account. You learn that a manager in your company who earns $50,000 a year
has been padding his expense account by about $1500 a year.
Survey results: 89% feel padding is okay if superiors know about it; 9% feel it is unacceptable
regardless of the circumstances.
B.
C.
Rationalizations for unethical behavior
1.
Convincing yourself that the behavior is not really illegal.
This rationalization is particularly common in ambiguous (unclear)
situations. A good rule of thumb is “when in doubt, don’t do it.”
2.
Convincing yourself that the behavior is in everyone’s best interest.
This rationalization involves the mistaken belief that because someone
may benefit, the behavior is also in the interest of others.
3.
Convincing yourself that nobody will ever find out what you’ve done.
This argument assumes no crime is committed unless discovered. To
deter this view, make sure sanctions for wrongdoing are made public and
known.
4.
Convincing yourself that the organization will “protect” you.
This implies the organization will condone the practice, but
organizational norms should not be put above the law or social morality.
Generally the organizational will use you as a scapegoat!
Factors influencing ethical behavior.
1.
2.
The person––in developing ethical frameworks as personal strategies for
ethical decision making, managers are influenced by the following
factors:
a.
Family influences.
b.
Religious values.
c.
Personal standards
d.
Personal needs.
The organization––the organization also plays a key role in shaping
managerial ethics through:
a.
Behavior of supervisors.
3.
b.
Policy statements and written rules.
c.
Expectations and reinforcement of peers, and peer group norms.
The environment––managerial ethics are also shaped by the following
components of the external environment:
a.
Government laws and regulations.
b.
Norms and values of society.
c.
Climate of competition in an industry.
Section III - How can high ethical standards be maintained?
A.
Ethics training
1. Ethics training refers to structured programs that help participants
understand the ethical aspects of decision making, and help people
incorporate high ethical standards into their daily behaviors. Ethics training
helps people deal with ethical issues while under pressure.
2. Checklist for making ethical decisions when encountering ethical dilemmas.
a.
Recognize the ethical dilemma.
b.
Get the facts.
c.
Identify your options.
d.
Test each option: Is it legal? Is it right? Is it beneficial?
e.
Decide which option to follow.
f.
Double-check your decision by asking:
“How would I feel if my family finds out about my decision?”
“How would I feel if my decision is printed in the local
newspaper?”
g.
Take action.
ENHANCEMENT
Ask students to suppose that they are a manager facing an ethical dilemma––for example, a
hospital administrator in charge of purchasing, who is offered a state-of-the-art personal computer
system from a supplier in return for purchasing the hospital’s new computerized billing system
from that company. Ask students, either singly or as a group, to go through the checklist step by
step in order to determine what to do.
B.
Whistleblower protection.
1.
A whistleblower is a person who exposes the misdeeds of others in
organizations to preserve ethical standards and protect against wasteful,
harmful, or illegal acts.
2.
Federal and provincial laws increasingly offer whistleblowers some
protection from retaliatory discharge (being fired). Still, legal protection
is often inadequate
3.
Organizational barriers to whistleblowing include:
a.
A strict chain of command that makes it difficult to report
unethical practices to higher-level managers.
4.
C.
E.
b.
Strong work group identities that encourage loyalty and selfcensorship.
c.
Ambiguous (unclear) priorities that make it difficult to
distinguish right from wrong.
Ethics advisors, formal ethics staff units, and moral quality circles are
three ways in which organizations have attempted to overcome these
whistleblowing barriers and to encourage high ethical standards.
Ethical role models
1.
Because top managers serve as role models, their behavior can either
encourage or discourage unethical behavior within an organization.
2.
All managers can influence the ethical behavior of the people who work
for and with them.
3.
Too much pressure to accomplish goals that are too difficult can also
encourage unethical behavior. A survey of executives suggested that
most felt they were under pressure to compromise their ethics to achieve
company goals.
4.
Part of any manager’s ethical responsibility is to be realistic in setting
performance goals for others.
Codes of ethics
1.
Codes of ethics are official written guidelines on how to behave in
situations susceptible to the creation of ethical dilemmas.
2.
Most codes of ethical conduct identify expected behavior in terms of
general organizational citizenship, the avoidance of illegal or improper
acts in one’s work, and good relationships with customers.
3.
Areas often covered in written codes of ethics include the following:
4.
a.
Workforce diversity.
b.
Bribes and kickbacks.
c.
Political contributions.
d.
Honesty of books or records.
e.
Customer/supplier relationships.
f.
Confidentiality of corporate information.
Ethical codes can never cover all situations; nor are they automatic
insurance that employees will follow them.
Section IV - What is organizational social responsibility (OSR)?
A.
Background on OSR
1.
OSR looks at ethical behavior from the organizational level rather than
the individual level.
B.
C.
2.
Organizational stakeholders are those persons, groups, and other
organizations directly affected by the behavior of the organization and
holding a stake in its performance.
3.
Corporate social responsibility is an obligation of the organization to
act in ways that serve both its own interests and the interests of its many
external stakeholders (someone outside org. that is concerned about how
the org. performs or acts)
OSR is driven by leaders with the following beliefs:
1.
That people do their best in healthy work environments with a balance of
work and family life.
2.
That organizations perform best when located in healthy communities.
3.
That organizations gain by treating the natural environment with respect.
4.
That organizations must be managed and led for long-term success.
5.
That the organization’s reputation must be protected to ensure consumer
and stakeholder support.
Perspectives on social responsibility
1.
The classical view of corporate social responsibility holds that
management’s only responsibility in running a business is to maximize
profits.
2.
The socioeconomic view of corporate social responsibility holds that
management of any organization must be concerned for the broader
social welfare and not just for corporate profits.
3.
The arguments of the classical view “against” social responsibility and
the arguments of the socioeconomic view “in favor of” social
responsibility are:
AGAINST OSR
IN FAVOR OF OSR
Reduced business profits.
Will add long-run profits for businesses.
Higher business costs.
Better public image for businesses.
Dilution of business purpose.
Help businesses to avoid more
governmental regulation.
Too much social power for businesses.
Businesses have the resources and ethical
obligation to act responsibly.
Better environment for everyone and the
public wants it.
Lack of business accountability to the
public.
4.
In today’s world, the public at large expects businesses and other
organizations to act with genuine social responsibility.
5.
Increasing evidence exists that indicates high performance in social
responsibility can be associated with strong financial performance and, at
worst, has no adverse financial impact.
D.
E.
Evaluating social performance.
1.
A social audit is a systematic assessment and reporting of an
organization’s resource commitments and action accomplishments in
various areas of social responsibility.
2.
Four criteria for evaluating corporate social performance:
a.
Is the organization’s economic responsibility met?
It is when it earns a profit through the provision of goods and
services desired by customers.
b.
Is the organization’s legal responsibility met?
It is fulfilled when it operates within the law and according to the
requirements of various external regulations.
c.
Is the organization’s ethical responsibility met?
It is met when its actions voluntarily conform to both legal
expectations and the broader values and moral expectations of
society.
d.
Is the organization’s discretionary responsibility met?
It is met when the organization’s voluntary movement moves
beyond basic economic, legal, and ethical expectations to
provide leadership in advancing the well-being of individuals,
communities, and society as a whole.
The four resulting strategies of social responsibility in terms of level of
commitment to social responsibility. These strategies are
1.
The obstructionist strategy (“fight the social demands”) meets the
organization’s economic responsibility….”doesn’t matter how we earn
money as long as we do!”
2.
The defensive strategy (“do the minimum legally required”) meets the
organization’s economic and legal responsibilities….”cover our butts”
within the law
3.
The accommodative strategy (“do the minimum ethically required”)
meets the organization’s economic, legal, and ethical
responsibilities….”clean up the mess we made”
4.
The proactive strategy (“take leadership in social initiatives”) meets all
the criteria of social performance––economic, legal, ethical, and
discretionary responsibilities…”we want to prevent the mess before it
could ever happen”
Section V - How do organizations and government work together in society?
A.
How government influences organizations.
1.
When organizations do not act in a socially responsible manner,
government is called upon to act in the public’s behalf.
2.
Government agencies are created and charged with monitoring and
ensuring compliance with legislative mandates
Examples in the US include:
Federal Aviation Administration (FAA)
Environmental Protection Agency (EPA)
Occupational Safety and Health Administration (OSHA)
Food and Drug Administration (FDA)
B.
C.
3.
Business executives––particularly, small business owners––often
complain that many laws and regulations are overly burdensome.
4.
While the legal environment is complex and often frustrating for
businesses, state and federal laws have had some positive effects in
regulating business affairs
a.
Occupational safety and health are regulated by the Occupational
Safety and Health Act (OSHA) of 1970, which is intended to
protect worker health and safety on the job.
b.
Fair labor practices are governed by laws such as the Equal
Employment Opportunity Act (EEOA) of 1972, which is
designed to reduce barriers to employment based on race,
gender, age, and national origin.
c.
Consumer protection is provided by the Consumer Product
Safety Act of 1972, which gives the government authority to
remove from sale any product that is considered dangerous.
d.
Environmental protection is provided by many laws, beginning
with the Air Pollution Control Act of 1962, which are designed
to eliminate careless pollution of the air, water, and land.
How organizations influence government.
1.
Businesses seek to influence government to adopt and pursue policies
that are favorable to them.
2.
Approaches that businesses take in influencing government include:
a.
Personal contacts and networks that enable executives to get to
know important people in government.
b.
Public relations campaigns that allow executives to communicate
positive images of their organizations to the public at large.
c.
Lobbying that enables executives to have their positions and
preferences communicated directly to government officials.
d.
Political action committees (PACs) that enable executives to
seek influence through financial support for favored political
candidates.
e.
Illegal acts, such as bribes or illegal financial contributions to
campaigns, that are sometimes used in an attempt to influence
public officials.
Why managers make the difference
1.
Workers and managers in contemporary organizations must accept
personal responsibility for doing the “right” things.
2.
Managers play a crucial role in responding to public demands that
organizations be held accountable for ethical and social performance as
well as economic performance.
Ethics and social responsibility should play a central role in managers’
decisions and activities.
3.