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this is an ethics powerpoint
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Responsible Ethical Decision-Making
1. How do we make good ethical decisions?
2. Where do we go wrong when we make an ethical decision improperly?
3. Who are managers and businesses responsible to?
The Lost IPad
Responsible Ethical Decision-Making: the Hartman/DesJardins model
Step 1: Determine the facts
Step 2: Identify the ethical issue(s) involved
Step 3: Identify and consider all of the people affected by a decision (“stakeholders”)
Step 4: Consider the available alternatives
Step 5: Compare and weight the alternatives
You should be able to explain, defend, and justify your decision to the entire range of stakeholders involved as something that reflects on who you are and that you are willing to stand behind
Step 6: Make a decision
Step 7: Monitor and learn from the outcomes
Beware these common stumbling blocks
1. Ignorance (though one can be negligent or reckless in one’s ignorance, and one can also choose to be ignorant)
2. Failure to consider non-obvious alternatives
3. Using oversimplified decision rules that are inappropriate in more complex circumstances
4. Settling for an option people can live with, even if it’s not the best option.
5. The path of least resistance may make it easier to do the wrong thing
6. A lack of courage to do what’s right and deal with the consequences
7. Peer pressure / organizational culture distorts our moral perception or reasoning
A short business case…
Sales Expense:
The purchasing manager for a large company agrees to give you an order (their first), expecting you agree to make a $200 donation to his favorite charity, a local youth sports team.
How do you respond?
- Jim Balassone (208)
AWARENESS
• issues• stakeholders
• stakes • options
BALANCE
• Ideals• Obligations
• Utilities
COURAGE
• intention to act• skillful action
Responsible Ethical Decision-Making: the ABC model
AWARENESS
• issues • stakeholders
• stakes • options
BALANCE
• Ideals• Obligations
• Utilities
COURAGE
• intention to act• skillful action
7
situation context
person
CharacterAffective stateEngagementBiases
Responsible Ethical Decision-Making: the ABC model
AWARENESS
• issues • stakeholders
• stakes • options
BALANCE
• Ideals• Obligations
• Utilities
COURAGE
• intention to act• skillful action
8
situation context
person
Issue intensityObedience to authorityPeer pressureSlippery slopesSunk costs
Responsible Ethical Decision-Making: the ABC model
Situational “Intensity”
1. social consensus – the degree of social agreement that about the moral value (e.g. evil) of a proposed act.
2. magnitude of consequences – the sum of the benefits/harms done to victims/beneficiaries of the moral act in question.
3. concentration of effect – how spread out or concentrated are the harms/benefits of the proposed action.
- Jones, 1991
Certain contextual factors tend to bias our moral intuitions
4. probability of effect – a joint of function of the probability that the act in question will actually take place and that it will actually cause the harms/benefits predicted
5. temporal immediacy – the length of time between the present and the onset of consequences of the moral act in question.
6. proximity – the feeling of nearness (social, cultural, psychological, or physical) that the moral agent has for the victims/beneficiaries of the evil/good act in question.
AWARENESS
• issues • stakeholders
• stakes • options
BALANCE
• Ideals• Obligations
• Utilities
COURAGE
• intention to act• skillful action
situation context
person
LawOrganizational policies and normsProfessional dutiesCulture
Responsible Ethical Decision-Making: the ABC model
situation context
person
AWARENESS
• issues • stakeholders
• stakes • options
BALANCE
• Ideals• Obligations
• Utilities
COURAGE
• intention to act
• skillful action
LawOrganizational policies and normsProfessional dutiesCulture
Issue intensityObedience to authorityPeer pressureSlippery slopesSunk costs
CharacterAffective state
metacognition
learning
Responsible Ethical Decision-Making: the ABC model
Individual Ethical Decision-Making in an organizational context
Once in a lifetime trip to the Himalayas. Travel a well used trail
Found a half naked holy man in the snow
Do you take him back to a village? Do you care for him? (Both options would cause you to loose the opportunity to make your once in a life time climb.)
The Parable of the Sadhu
Individual Ethical Decision-Making in an organizational context
by Bowen H. McCoy
QUESTIONS RAISED AUTHOR’S OBSERVATIONS
Is no single person responsible when there is a group?
Do we make decisions based on ethnic considerations?
Can a superordinate goal allow for moral slippage?
Is their an institutional or group ethic strong than an individual ethic?
How much effort is enough to satisfy your moral obligation?
Organizations without a history of mutually accepted shared values tend to come apart during stress.
People in touch with core values can deal with change, ambiguity, stress, and tough times.
People tend avoid the ambiguous yet that is what tends to be the most rewarding
Individuals need organizational support to act morally.
The Parable of the Sadhu
- Jerry Estenson
Shareholders and Stakeholders
What is a business? What are its aims and obligations?
How should we think of a business?
Shareholder view A shareholder mission statement:
Capitalism is primarily a system of competition
Businesses should be managed solely for the benefit of shareholders
Executive benefit often tied to shareholder benefit
Coca-Cola:
We exist to create value for our share owners on a long term basis by building a business that enhances the Coca-Cola company’s trademark. This is also our ultimate commitment.
Freeman’s Criticisms of the Shareholder view
1. Not practical in today’s world
2. Legally out of date
3. Unethical
“Business is a set of relationships among groups which have a stake in the activities that make up the business. Business is about how customers, suppliers employees, financiers, communities and managers interact and create value. To understand a business is to know how these relationships work. And the executive’s or entrepreneur’s job is to manage and shape these relationships…”
- Edward Freeman
How should we think of a business?
How should we think of a business?
Stakeholder view
Capitalism is primarily a system of social cooperation and collaboration
Primary responsibility of executive – create as uch value for stakeholders as possible
No stakeholder interest is viable in isolation of the other stakeholders.
Zappos’ Core Values statement:
1. Deliver WOW Through Service2. Embrace and Drive Change3. Create Fun and A Little
Weirdness4. Be Adventurous, Creative,
and Open-Minded5. Pursue Growth and Learning6. Build Open and Honest
Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More With Less9. Be Passionate and
Determined10. Be Humble
Stakeholders & Stakes
Their stake: stocks, bonds, equity, etc.
Expectations: • Return On Investment
(ROI)• Other expectations?
Financiers/Owners
Stakeholders & Stakes
Their stake: • jobs, livelihood, career,
human capital investments
Their expectation:• decent wages,
security, benefits and meaningful work
Employees
Stakeholders & Stakes
Their stake: • need products and
services
Their expectation:• quality products, fair
pricing, and honest dealings.
Customers
Stakeholders & Stakes
Their stake: • need income from
their goods and services
Their expectation:• Expect to be treated
fairly and honestly in a mutually prosperous relationship
Suppliers
Stakeholders & Stakes
Their stake: • the environment,
taxes, payroll, infrastructure improvements
Their expectation:• Provides company with
local resources and in return expects the firm to be a good citizen
Local Community
How do we decide what to do when the interests of stakeholders conflict?
Shareholder view• Do whatever will maximize
shareholder interest
The stakeholder view• Treat all stakeholders
equally?• If not how do you decide
which stakeholder interest gets priority when stakeholder interests conflict?
Milton Friedman
Freeman’s Recommendation
“Where stakeholder interests conflict, the executive must find a way to rethink he problems so that these interests can go together, so have to be made, as often happens in the real world, then the executive must figure out how to make the tradeoffs, and immediately begin improving the tradeoffs for all sides”
Can you serve the long term interests of the shareholders without paying attention to the others?
Why adopt the stakeholder approach?
Utilitarian - It will lead to the best consequences
Business is about collaboration: “The spirit of capitalism is the spirit of individual achievement together with the spirit of accomplishing great tasks in collaboration with others.” (Freeman)
Virtue Ethics - It reflects well on the character and nature of the executive and firm
Deontological - It respects the rights of stakeholders and the duty of the firm to them
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