Business Ethics
“Doing the Right thing, and
Making the Good Life Better”
Vocabulary: “Business Ethics”
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What is “Business” ?
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What is “Ethics” ?
Business is inherently social
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Business has its own culture
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Business Transforms Culture
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Enron, Paypal, your office
Kiewit, FNB, community outreach
Business is about relationships
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Workers, subcontractors, suppliers
Business: Its purpose/goal
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Lone Ranger/I am an Island View:
The purpose of business is to make me
money, and increase stockholder value
(Milton Friedman)
Alternate Stakeholder View:
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Business should make money, but it has many
stakeholders– groups/individuals who have a stake in
what the business does. Owners are not the only
one’s with a stake (Freeman)
Your business makes the world
Better or Worse for people by:
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The way you
The way you
coworkers
The way you
The way you
community
treat your customers
treat your employees or
treat your boss/company
contribute to the local
Responsibilities in Business:
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To your employer
To Customers
To employees
To boss/es
To your community
To your family
To your God
The challenge:
Balancing Responsibilities
What is ethics?
“Ethics” isn’t “legal”
Difference between the Law and Ethics:
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Some legal issues are neither ethical or
unethical.
Some ethical issues have no laws to
support them.
Law often tries to encourage ethical
behavior:
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Better to have self-regulation than more
gov’t regulations
Ethics and Regulation
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Government regulation often is
designed to promote ethical behavior:
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SOX
OSHA Regulations
EPA Regulations
Federal Sentencing Guidelines
Federal Sentencing Guidelines
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1. Having Standards
2. Assigned Responsibility - Adequate
Resources
3. Due diligence in Hiring
4. Communications and Training
5. Monitoring, Auditing, Reporting
6. Promotion and Enforcement of Ethical
Conduct
7. Reasonable Steps to Prevent Misconduct
Company Ethics
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Company Policy often has some basis in
the compliance regulations and legal
statutes and fine schedules set up by
government.
But Personal ethics requires personal
decision-making, rooted in values.
Many think Ethics is just about
what to NOT do: “Don’t do __!!”
But ethics is more than just
what not to do
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Minimal: What we shouldn’t do
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Better: What we should do (justice)
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Don’t steal, don’t kill, don’t lie
Be fair, Be honest, Fulfill duties, work hard
Best: What we could do to make things
excellent for all of us…
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Mutual of Omaha Project, Real Estate
Business can help create an
excellent life
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Example of this mindset: Midland National
Life insurance mission:
"To make life better for individuals and families…
to afford security, trust, superior value, and
peace of mind to those we serve… to offer the
best in financial resources and services.“
How does Business make life
better? Table discussion (5 min)
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How do you make life better for your
community through your business?
What are positive things you do for the
benefit of the many through your work?
Do you see these things you do for others as
being ethical?
The Point is: Realize the
good you do in society!
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Businesses do have an effect on
society and culture. Business is not
just about making money.
Moral Psychology
WHY DO PEOPLE
DO WRONG
THINGS?
Milgram Experiment
Question: Why do Soccer mom’s
sometimes drive like jerks?
Question: Why do people forge
signatures and documents?
Why do people stretch or edit
the truth, or exaggerate?
Moral Development: Why do
people do unethical things?
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Why did the soccer mom drive like a
jerk?
Why did my student cheat on the
exam?
Why did people at Enron do unethical
things?
Why do subcontractors cut corners?
Some reasons people do wrong:
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Ignorant
In a hurry
Thoughtless
Didn’t plan ahead
Financial difficulties
Pressure from organization
Not clear communication from management
Lazy
Want a quick buck
They are a Bad evil wicked person
More Moral Psychology:
WHY DO PEOPLE
DO THE RIGHT
THINGS?
Kohlberg’s theory of moral
development
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Stage
Stage
Stage
Stage
Stage
Stage
1:
2:
3:
4:
5:
6:
Obedience and Punishment
For self-benefit
For sake of reputation (good boy)
Maintain Social order
Contractual-Legalistic orientation
Conscience/Principle Orientation
Moral Principles for Living
and Working
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Banker Friend: “look in the mirror rule”
Showgirl from Las Vegas: Grandma rule
Golden Rule: do unto others…
Silver Rule: do no harm…
What rules do you use?....
Business Ethics Issues
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Fraud
Abusive Behavior/Harassment
Conflicts of interest
Defective products
Bribery
theft
Guiding Questions
Questions to help decide if the
situation or decision has ethical
dimensions
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Is it legal but unethical?
Is it necessary?
Does it involve a core ethical principle
such as honesty, integrity, truthfulness,
etc.?
Guiding Questions: Info
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Information gathering questions
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Who are the stakeholders and what are
their rights?
Consider the source, reliability, and
accuracy of all relevant information.
Who should be involved in this decision?
Do I have enough information to make a
sound ethical decision? If not, how do I
get it?
Guiding Questions: Options
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Questions to help identify and evaluate
alternatives
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Am I rationalizing to justify what I want to do?
Am I using anyone for my own personal gain?
(Who will be injured and how)
Are there conflicting loyalties to stakeholders?
What would result in the long run if everyone did
this?
Guiding Questions: Conclusion
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Questions that help in reaching a decision
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Could I defend my position before the Board of
Directors, the CEO, or the media?
What would ______________________ do? (Fill
in the name of the best role model you know.)
Will this seem to be the right decision a year from
now? Five years from mow?
Do I have the moral courage to take the more
ethical course of action? (Am I willing to pay the
price for my convictions?)
Final Thoughts
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Usually, doing the right thing is clear,
even if its not easy
We tend to cut corners for short-term
apparently inconsequential issues, but
this can come back to haunt us
Having Ethical Habits takes practice,
and some thoughtfulness.
Summary:
What have we covered?
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What is Business Ethics?
Some moral theories
Moral Development
Moral Decision Making
The End