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BUSINESS ETHICS
Milton Friedman
What is an ethics?
Ethics involves a discipline that examines good or bad practices within the context of moral duty. but "the good practices" is not nearly as straight forward as conveyed.
Many ethicists assert there’s always a right thing to do based on moral principle, and others believe the right thing to do depend on the situation – ultimately it’s up to the individual Ethics is considered as "Science of Conduct.”
The need for a company to behave “ethically” is described in terms of a company’s need to interact productively with its stakeholders.
What are Business Ethics?
Business Ethics means conducting all aspects of business and dealing with all stakeholders in an ethical manner…
Attention to ethics in the work place sensitizes leaders and staff to how they should act.
It may be safe to assume that ethics involves some
hard features, like duties and rights (most of them legal), that are mandatory for all, and soft components, like values, aspirations or best practices, that are desirable but not compulsory and can vary from one organization and person to the next.
Business Ethics... comprises principles and standards that
guide behavior in the world of business is right or wrong, acceptable or
unacceptable behavior within the organization
is determined by key stakeholders
Business Ethics…
Knowing the difference between what you have a right to do in the organization and what is the right thing to do.
The Ethics Mirror & Reality… people judge themselves based on
their intentions others are judged based on their
behavior everyone is accountable for their
actions
Why study business ethics in an Ethics Officer Assoc. Survey,
48% of employees indicated that they had done something unethical or illegal in the past year
annual cost of unethical or illegal acts by U.S. employees: $400 billion
Common Unethical Acts... lying to supervisors falsifying records alcohol and drug abuse conflict of interest Stealing gift/entertainment receipt in violation of
company policy
Key Causes of Unethical Behavior...
meeting overly aggressive financial or business objectives
meeting schedule pressures helping the organization survive rationalizing that others do it resisting competitive threats saving jobs
Key Influences On Ethical Behavior...
personal values supervisor influence senior management influence internal drive to succeed performance pressures lack of punishment friends/coworker influence
Why Misconduct Is Not Reported...
fear of not being considered a team player
did not think corrective action would be taken
fear of retribution (from management) “no one else cares, why should I” did not trust the organization to keep
report confidential
Classification of Ethical Issues...
conflict of interest honesty and fairness Communications organizational relationships
Conflict of Interest... exists when an individual must
choose whether to advance his/her own interests, the organization’s, or others’
examples include bribes or personal payments, gifts, or special favors intended to influence decision making
Honesty & Fairness... following applicable laws a regulations
& not knowingly harming stakeholders Is advertising prescription drugs on TV
and in magazines fair? Are long distance information ads that
place the cost of the call in very small print at the bottom of the screen fair?
Communications... refers to the transmission of information
and the sharing of meaning examples: deceptive advertising,
product safety information, & product composition
Are vitamin and herbal supplements using ‘puffery’ in their advertising? – Note: roughly half of Americans take supplements
Organizational Relationships...
behavior of organizational members toward stakeholders
includes confidentiality, meeting obligations & deadlines, not pressuring others to behave unethically
Ethical Issues Can Relate to AllFunctional Areas...
Accounting Finance Management Marketing
7 Principals of admirable business
Be TrustfulKeep an open mindMeet ObligationsHave clear documentsBecome community involvedMaintain accounting controlBe respectful
Who are the primary stakeholdersthat shape business ethics?
Employees Customers Suppliers Community Government Shareholders other…
Guidelines for managing ethics at workplace
Recognize that managing ethics is a processThe bottom line of an ethics program is accomplishing preferred behaviors in the workplaceThe best way to handle ethical dilemmas is to avoid their occurrence in the first placeMake ethics decisions in groups, and make decisions public, as appropriateIntegrate ethics management with other management practicesUse cross-functional teams when developing and implementing the ethics management programValue Forgiveness
Benefits of Managing Ethics at the Workplace
Attention to business ethics has substantially improved society
Ethics programs help maintain a moral course in turbulent times
Ethics programs cultivate strong teamwork and productivity
Ethics programs support employee growth and meaning Ethics program are an insurance policy – they help
ensure that policies are legal Ethics programs help avoid criminal acts “of omission”
and can lower fines
Myths about business ethics… It’s easy to be ethical Unethical behavior is part of business There are no rewards for being ethical Ethical behavior will prevent me from being
successful Business is like a sport, push the rules & try
not to get caught Business ethics is about character education
and teaching moral philosophy
Myths of Business Ethics
Business ethics is more a matter of religion than management: Diane Kirrane, in “Managing Values: A systematic Approach to Business Ethics,” asserts that “altering people’s values or souls isn’t the aim of an organizational ethics program – managing values and conflict among them is …”
Employees are ethical so we don’t need attention to business ethics:
significant value conflicts among differing interests, real alternatives that are equality justifiable and significant consequences on “stakeholders” in the
situation.
Myths of Business Ethics
Business ethics is a discipline best led by philosophers, academics and theologians
Lack of involvement Believe to be a complex philosophical debate or a
religion Practical application in areas of managementBusiness ethics is superfluous – it only asserts
the obvious: “do good!” Values to which naturally aspireBusiness ethics is a matter of the good guys
preaching to the bad guys
What is business ethics?(a managerial perspective)
defining appropriate behavior establishing organizational values nurturing individual responsibility providing leadership & oversight relating decisions to stakeholder interests developing accountability relating consequences auditing & improvement
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