Business & Society

confidencetoughManagement

Nov 20, 2013 (3 years and 9 months ago)

100 views

Business & Society

Ethics, Sustainability, and Stakeholder
Management

Eighth Edition

Archie B. Carroll

Ann K. Buchholtz

© 2012 South
-
Western, a part of Cengage Learning

1

Chapter 7

Business Ethics

Fundamentals

© 2012 South
-
Western, a part of Cengage Learning

2

Learning Outcomes

© 2012 South
-
Western, a part of Cengage Learning

1.
Describe how the public regards business ethics.

2.
Define business ethics and appreciate the complexities of
making ethical judgments.

3.
Explain the conventional approach to business ethics.

4.
Analyze economic, legal, and ethical aspects by using a
Venn Model.

5.
Enumerate and discuss the four important ethics questions.

6.
Identify and explain three models of management ethics.

7.
Describe Kohlberg’s three levels of developing moral
judgment.

8.
Identify and discuss the elements of moral judgment.

3

Chapter Outline


The Public’s Opinion of Business Ethics


Business Ethics: Meaning, Types, Approaches


Ethics, Economics and Law: A Venn Model


Four Important Ethics Questions


Three Models of Management Ethics


Making Moral Management Actionable


Developing Moral Judgment


Elements of Moral Judgment


Summary

4

© 2012 South
-
Western, a part of Cengage Learning

Business Ethics



The public’s
interest in business ethics
is at
an all
-
time high, spurred by
headline
-
grabbing
scandals.


The Enron scandal impacted business to
greatly it is called “The Enron Effect.”


Business will never be the same.




© 2012 South
-
Western, a part of Cengage Learning

5

High
-
Profile Ethics Scandals

Enron Era


Worldcom


Tyco


Arthur Andersen

Wall Street Financial Scandals Era


AIG


Bear Stearns


Lehman Brothers


Fannie Mae/Freddy Mac


Bernard Madoff





6

© 2012 South
-
Western, a part of Cengage Learning

Inventory of Ethical Issues in
Business

7

© 2012 South
-
Western, a part of Cengage Learning

Employee
-
Employer Relations

Employer
-
Employee Relations

Company
-
Customer Relations

Company
-
Shareholder Relations

Company
-
Community/Public Interest

The Public’s Opinion of Business
Ethics

The Marist College Institute for Public
Opinion Study Survey Findings


Over 3/4ths said
the moral compass of Corporate
America is pointing in the wrong
direction. (58%
of
business
executives feel the same.)


A majority
gave
corporate America D or F grades for
honesty and
ethics. (Business
leaders gave C and B
marks.)


Around 53% of
Americans and two
-
thirds of executives
gave a grade of D or F to the
financial sector
for
honesty
and ethical conduct.


Around 90
percent of Americans and
executives
see
career advancement, personal financial gain, increasing
profits, or gaining competitive advantage as the primary
factors driving
business
decisions.




8

© 2012 South
-
Western, a part of Cengage Learning

The Public’s Opinion of Business
Ethics
(continued)

National Business Ethics Survey Findings


Observed ethical misconduct at work has decreased
(from 56% to 49%).


Whistle
-
blowing is on the rise (from 58% to 63%).


Ethical cultures have strengthened post
-
2008 (from
53% to 62%).


Pressure to cut corners has decreased (from 10% to
8%).


But,
retaliation against those who report
misconduct has increased.


Business ethics tend to improve in tough economic
times.





9

© 2012 South
-
Western, a part of Cengage Learning

Media Reporting on Business
Ethics


News media outlets
are reporting ethical
problems more frequently and
fervently.


In
-
depth investigative reporting of business
ethics on TV shows as
60 Minutes, 20/20,
Dateline
NBC,
and
Frontline.


Internet coverage in the form of webpages
and blogs has
expanded.




10

© 2012 South
-
Western, a part of Cengage Learning

Is Society Changing?

Former U.S. Treasury Secretary, Michael
Blumenthal, believes


People are not less moral.


The context in which corporate decisions
are made has changed.


Greater demands on businesses.


Shifts in what is considered appropriate
conduct.




11

© 2012 South
-
Western, a part of Cengage Learning

Business Ethics Today versus Earlier
Periods

12

© 2012 South
-
Western, a part of Cengage Learning

Ethical Problem

Ethical Problem

Society’s Expectations
of Business Ethics

Actual

Business Ethics

1960s

2010

Time

Expected and Actual Levels

of Business Ethics

Business Ethics: Meaning, Types,
Approaches

Ethics


The
discipline that
deals with moral
duty and
obligation.

Moral Conduct


Relates
to principles of
right, wrong, and fairness
in behavior.

Business Ethics


Concerned
with
morality and fairness in behavior,
actions,
and
practices
that take place
within a
business context.


Is
the study of practices in organizations and
is a
quest to determine whether these practices are
acceptable or
not.




13

© 2012 South
-
Western, a part of Cengage Learning

Business Ethics: Meaning, Types,
Approaches
(continued)

Descriptive Ethics


Involves describing, characterizing, and
studying morality.


Focuses on
what is
occurring.

Normative Ethics


Concerned
with
supplying and justifying a
coherent moral system of thinking and
judging.


Focuses on
what ought or should be
occurring
.




14

© 2012 South
-
Western, a part of Cengage Learning

Three Approaches to Business
Ethics

Conventional Approach


Based
on how
common society today views
business
ethics and on common sense.

Principles Approach


Based
upon the use of ethics
principles
to
justify and direct
behavior,
actions, and
policies.

Ethical Tests Approach


Based
on short, practical
questions to
guide
ethical decision making
and behavior and
practices.






15

© 2012 South
-
Western, a part of Cengage Learning

Conventional Approach

The conventional approach to business ethics
involves a comparison of a decision or
practice to prevailing societal
norms.




Ethical Egoism


A
n
ethical principle based on the idea that the
individual should seek to maximize his or her
own self interests as a
legitimate factor.

16

© 2012 South
-
Western, a part of Cengage Learning

Decision, Behavior,

or Practice

Prevailing Norms

of Acceptability

Sources of Ethical Norms

17

© 2012 South
-
Western, a part of Cengage Learning

Fellow
Workers

Family

Friends

The Law

Regions of
Country

Profession

Employer

Society at
Large

Local

Community

Religious
Beliefs

The Individual

One’s Self
-
Interest and
Conscience

Ethics and the Law


The law and ethics can overlap in many
respects.


The
law
is a
reflection of what society
thinks are minimal standards of conduct
and
behavior.


Research focuses on two questions:

1.
Why do firms do illegal things?

2.
What are the consequences of engaging
in illegal behavior?




18

© 2012 South
-
Western, a part of Cengage Learning

Making Ethical Judgments

19

© 2012 South
-
Western, a part of Cengage Learning

Behavior or act that has
been committed

Prevailing
norms of
acceptability

Value
judgments and
perceptions of the
observer

Compared with

The Conventional Approach to
Business Ethics


1.
What
is the
true nature

of the practice,
behavior, or decision that occurred
?

2.
What are society’s (or business’s)
prevailing norms

of acceptability
?

3.
What
value judgments

are being made by
someone about the practice or behavior,
and what are that person’s
perceptions

of
applicable norms
?



20

© 2012 South
-
Western, a part of Cengage Learning

Ethical Relativism

Ethical Relativism


Picking
and
choosing
which source of
norms
one wishes
to use based on what
will justify
current
actions or maximize
freedom.



A serious danger of the conventional
approach to making ethical judgments.


21

© 2012 South
-
Western, a part of Cengage Learning

Ethics, Economics, and Law

22

© 2012 South
-
Western, a part of Cengage Learning

Four Important Ethical Questions


1.
What
is
?

2.
What ought to be
?

3.
How
do
we get from what is to what
ought to be
?

4.
What is our motivation in all this
?



23

© 2012 South
-
Western, a part of Cengage Learning

Five Levels for Questions


1.
Level
of the
individual

2.
Level
of the organization

3.
Level of the industry or
profession

4.
Societal
level

5.
Global or international
level


24

© 2012 South
-
Western, a part of Cengage Learning

What Is?



What
are

your personal ethics?


What
are

your organization's ethics?


What
are

the ethics
practice in your
industry?


What
are

society’s ethics?


What
global ethics
are

in practice today?



25

© 2012 South
-
Western, a part of Cengage Learning

What Ought to Be?



How
ought

we treat our aging
employees
?


How safe
ought

we make this product?


How clean an environment
should

we
aim for?


Should

we outsource aspects of
production
to China or India
?



26

© 2012 South
-
Western, a part of Cengage Learning

Getting From
What Is
to
What Ought
to Be

27

© 2012 South
-
Western, a part of Cengage Learning

What are we
able

to accomplish?

What circumstances

permit

us to accomplish?

What do we
intend


to accomplish?

Three Models of Management
Ethics

Immoral Management


An approach devoid of ethical
principles and an
active
opposition to what is
ethical.


The operating strategy of immoral management is
focused on exploiting opportunities for corporate
or personal
gain.

Moral Management


Conforms to high standards
of
ethical behavior or
professional
standards
of
conduct.

Amoral Management


Intentional
: Does
not consider
ethical factors.


Unintentional
: Casual
or careless
about
ethical
factors.

28

© 2012 South
-
Western, a part of Cengage Learning

Characteristics of Immoral
Managers



Intentionally
do wrong


Self
-
centered and self
-
absorbed


Care only about self or organization’s
profits/success


Actively oppose what is right, fair, or just


Exhibit no concern for stakeholders


An
ethics course probably would not help
them


The “bad guys”




29

© 2012 South
-
Western, a part of Cengage Learning

Examples of Immoral Management


Stealing petty cash


Cheating on expense reports


Taking credit for another’s 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




30

© 2012 South
-
Western, a part of Cengage Learning

Characteristics of Moral Managers


Conform to high level
of:


Ethical
or right
behavior


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


T
he
“good guys




31

© 2012 South
-
Western, a part of Cengage Learning

Habits of Moral Leaders

1.
They
have
a passion to do right.

2.
They are morally proactive.

3.
They consider all stakeholders.

4.
They have a strong ethical character.

5.
They have an obsession with fairness.

6.
They undertake principled decision
making.

7.
They integrate ethics wisdom with
management
wisdom
.


32

© 2012 South
-
Western, a part of Cengage Learning

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




33

© 2012 South
-
Western, a part of Cengage Learning

Integrity Strategy


Related to moral management; is
characterized
by a conception of ethics as the driving force
of an
organization.


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 organization’s systems support and reinforce
its
values.


All managers have the skills, knowledge, and
competencies to make ethically sound decisions
daily.




34

© 2012 South
-
Western, a part of Cengage Learning

Characteristics of Amoral Managers

Intentionally Amoral
Managers


Don’t think ethics and business should “mix.”


Business
and
ethics exist
in separate
spheres.


A vanishing
breed.

Unintentionally Amoral
Managers


Don’t consider the ethical dimension of decision
making.


Don’t “think
ethically.”


Have no “ethics
buds.”


Well
-
intentioned, but morally casual or
unconscious.


Ethical gears are in
neutral.

35

© 2012 South
-
Western, a part of Cengage Learning

Hypotheses Regarding Moral
Management Models

Population hypothesis


T
he
distribution of the three models
approximate
a normal curve, with the
amoral group occupying the large middle
part of the curve and the moral and
immoral categories occupying the
tails.

Individual hypothesis


W
ithin the individual manager,
these three
models may operate at various times and
under various
circumstances.




36

© 2012 South
-
Western, a part of Cengage Learning

Three Models of Management
Morality and Emphases on CSR

37

© 2012 South
-
Western, a part of Cengage Learning

Moral Management Models And Acceptance
or Rejection of Stakeholder Thinking

38

© 2012 South
-
Western, a part of Cengage Learning

Making Moral Management
Actionable

Senior management leads the transition
from amoral to moral
management


Business
ethics
training


Codes
of
conduct


Mission/Vision statements


Ethics officers


Tighter
financial
controls


Ethically
sensitive decision
-
making
processes


Leadership
by
example

Recognize that immoral and
amoral
management
exist
and can be
remedied.

39

© 2012 South
-
Western, a part of Cengage Learning

Kohlberg’s Model of Moral
Development

40

© 2012 South
-
Western, a part of Cengage Learning

Why Managers and Employees
Behave Ethically

41

© 2012 South
-
Western, a part of Cengage Learning

Most of Us

Many of Us

Very Few Of Us

1. To avoid some punishment

2. To receive some reward

3. To be responsive to family, friends,


or superiors

4. To be a good citizen

5. To do what is right, pursue some ideal

Ethics of Care Alternative to Kohlberg

42

© 2012 South
-
Western, a part of Cengage Learning

Recognize their own needs

and needs of others

Establish connections and

participate in social life

Self is Sole Object of Concern

Level 1

Level 2

Level 3

External Sources of a Person’s Values

43

© 2012 South
-
Western, a part of Cengage Learning

Philosophical values

Cultural values

Legal values

Religious values

Professional values

The Web

of Values

Internal Sources of a Person’s
Values


Norms prevalent in business include


Respect for the authority structure


Loyalty to bosses and the organization


Conformity to principles and practices


Performance counts above all else


Results count above all
else



44

© 2012 South
-
Western, a part of Cengage Learning

Elements of Moral Judgment


Moral imagination


Moral identification and ordering


Moral evaluation


Tolerance of moral disagreement and
ambiguity


Integration of managerial and moral
competence


A sense of moral
obligation



45

© 2012 South
-
Western, a part of Cengage Learning

Key Terms


Amoral management


Business
ethics


Compliance strategy


Conventional
approach to business
ethics


Descriptive ethics


Ethical egoism


Ethical
relativism


Ethics


Immoral
management



Integrity strategy


Intentional amoral
management


Kohlberg’s levels of
moral development


Moral development


Moral management


Normative ethics


Unintentional amoral
management

© 2012 South
-
Western, a part of Cengage Learning

46