BECG Pt.-IIntroduction to business ethics

BECG-1: Ethics, Morals and Values

Ethics, Morals and Values

Understanding MoralitySeveral years ago, B.F. Goodrich-manufacturer of vehicle parts was granted contract to design, test and manufacture aircraft brakes for the A7D , a new airplane, the Air Force was designingTo conserve weight: Goodrich guaranteed:

oWeight of their compact brake: not more than 106 poundsoContain max four braking discs or “rotors”oStop aircraft within certain specified distance

Contract quite lucrative for the companyKermit Vandivier- a Goodrich employee, given task of working with Goodrich engineers to write up report of tests run on the brake- Government not likely to question and even less likely to repeat the test

Vandivier- found and wrote, when the small brake was tested, the brake linings on the rotors repeatedly “disintegrated” because “there simply was not enough surface area on the disks to stop the aircraft without generating the excessive heat that caused the lining to fail”His superiors told that regardless of what the brake does on tests, we are to qualify After several tests, Vandivier was told to write report that brake passed the testsVandivier explained to his superior that “ the only way such a report could be written was to falsify the test data” to which superior replied, “You are well aware of what was required, but that you have been ordered to get the report written regardless of how and what had to be done”

Whether Vandivier should participate in writing a false report?He asked his boss, “ whether your conscience will hurt you, if such a thing caused death of a pilot?” He got the reply “ you are worrying too much about many things, that did not concern you- you should do what you are told”

Moral Standards• Vandivier’s beliefs: examples of Moral standards

– It is right to tell the truth– It is wrong to endanger lives of others– Integrity is good and dishonesty is bad

• Morality: the standards that an individual or a group has about what is right and wrong or good and evil

• Moral Standards: the norms about the kinds of actions believed to be morally right and wrong as well as the values placed on the kinds of objects believed to be morally good and morally bad– For example:

• Always tell the truth• It is wrong to kill innocent people• Actions are right to the extent they produce happiness

– Moral values can be expressed as statements describing objects or features of objects that have worth, such as :• Honesty is good• Injustice is bad

Morality: set of beliefs and practices about how to lead a good life

Sources of Moral Reasoning• Religion– Reflects the basic tenants of

religious faith.• Culture/Community– Reflects commonly shared moral

values• Codes of Professional Conduct– Reflects guidelines for professional

conduct.• Moral Theory– Basic Ethical Theories and Principles

• A person’s moral standards are first absorbed as a child from family, friends, and various societal influences like Church temple, television, magazines, music and associations

• As person grows up, with experience, learnings and intellectual development-revised by maturing person some discarded and new ones adopted

• We do not always live up to the moral standards we hold, that is, we do not alwaysdo what we believe is morally right, nor we always pursue what we believe is morally good

Here are some examples of statements which express moral judgments: 1. Dumping chemicals in the rivers is wrong and ought

be banned.2. It’s wrong that our company is trying to avoid the

regulations and it should stop.3. He’s a bad person — he never treats people well

and doesn’t seem to respect anyone.

Moral judgments tend to be characterized by words like ought, should, good and bad. However, the mere appearance of such words does not mean that we automatically have a statement about morals

• Vandivier later stated:– My job paid well, it is pleasant and challenging, and the future looked reasonably bright. My wife

and I had bought a home…………………………. If I refused to take part in the A7D fraud, I would have to either resign or to be fired. The report would be written by someone anyway, but I would have the satisfaction of knowing I had no part in the matter. But bills are not paid with personal satisfaction, nor house payments with ethical principles . I made my decision. The next morning I telephoned [ my superior] and told him I was ready to begin the qualification report

Non Moral Standards

• Moral standards can be contrasted with standards, we hold about things that are not moral:– Standards of etiquette, by which we judge manners as good or bad– Standards we call ‘law’, by which we judge legal right and wrong– Standards of language by which we judge what is grammatically right and wrong– Standards of aesthetics by which we judge good and bad art– Athletic standards by which we judge how well a game is played

• Non Moral Standards: the standards by which we judge what is good or bad and right or wrong in a non moral way

• We can summarize, in Vandivier’s case , that probably he believed that:o Reports should be written with good grammaro Getting fired from a well paid, pleasant, and challenging job took precedence over a

truthful reporto He is right to follow the law

1) Matters that we think can seriously injure (theft, rape, enslavement, murder, child abuse, assault, fraud, law breaking and so on) or seriously benefit human beings

2) Not established or changed by the decisions of particular authoritative bodies( laws and legal standards are established by authority of legislature- validity of moral standards does not rest on voting procedures but on adequacy of the reasons that are taken to support and justify them- so long these reasons are adequate, standards remain valid)

3) Should be preferred to other values including (specifically) self interest4) Based on impartial considerations- “the moral point of view”-that does not evaluate standards according to

whether they advance the interests of a particular individual or group, but one that goes beyond personal interests to a “universal standpoint” in which everyone’s interests are impartially counted as equal

5) Associated with special emotions and a special vocabulary- if I act contrary to a moral standard, I will normally feel guilty, ashamed- I will characterize my behavior as “immoral” or “wrong”

Five Characteristics of Moral Standards

In Vandivier case, it was clear that lying in the government report and endangering lives of pilots were felt to be serious harms and so both were moral matters

He should have chosen the moral values of honesty and respect for life over non moral values of keeping his well paid, pleasant and challenging job (Means it is wrong to choose self- interest over morality)

Vandivier later testified before the congress (in an attempt to make things right) that he later felt shame and remorse about what he did

EthicsEthics: the discipline that examines one’s moral standards or the moral standards of a society- how these standards apply to our lives and whether these standards are reasonable or unreasonable-that is whether they are supported by good reasons or poor ones, in order to apply them to concrete situations and issues

A person starts to do ethics when he/she takes the moral standards from family, church and friends and asks:

o What do these standards imply for the situations in which I find myself?o Do these standards really make sense? o Why should I continue to believe in them? o What can be said in their favor and what can be said against them? o Are they really reasonable for me to hold?o Are their implications in this or that particular situation reasonable?

• Ethics is the formal study of moral standards and conduct. For this reason, the study of ethics is also often called "moral philosophy." What is good? What is evil? How should I behave - and why? How should I balance my needs against the needs of others? These are some of the questions asked in the field of ethics, a branch of philosophy which has some of the most immediate and obvious consequences for how we live our lives.

• Ultimate aim of ethics is to develop a body of moral standards that we feel are reasonable to hold- standards that we have thought about carefully and have decided are justified standards for us to accept and apply to the choices that fill our lives

Ethics : A rational reflection on morality

Examining: What is Right/ Wrong• Vandivier initially had apparently chosen to accept the moral standard that one has

an obligation to tell the truth, and so he felt that in this particular situation it will be wrong to write a false report on the brakes

• But let us ask, whether writing what he felt was a false report was really wrong in his particular circumstances?

– He had several financial obligations: towards himself and other people• Just married• Bought a house-mortgage payments to be made each month• Support to be provided to his family

– If he does not write report as desired- gets fired- not able to meet these obligations– What is basis of his obligation to tell the truth and whether this greater or lesser than a

person’s obligations towards himself and family?– His obligations to his employer? Does it outweigh the obligation not to write a false report?– All seniors insisted to write a qualifying report-If something went wrong with the brake or the

contract, the company will be held accountable, not the individual- a lower level employee– Does the moral right to make a decision belong to the party who will be held accountable for

the decision?– What is the basis of such a right and why we should accept it?– If not he, someone else will write the qualifying report- hence consequences will be same

whether he writes the report or someone else– Does he have any moral obligation to refuse what he is ordered for?– Does one have moral obligation to do something that will make no difference?

Morality & Ethics: the Difference

• One of the most important characteristics of moral judgments is that they express our values. Not all expressions of values are also moral judgments, but all moral judgments do express something about what we value. Thus, understanding morality requires investigating what people value and why.

• The difference between ethics and morals can seem somewhat arbitrary to many, but there is a basic, though subtle(difficult to perceive or describe), difference. Morals define personal character, while ethics stress a social system in which those morals are applied. In other words, ethics point to standards or codes of behavior expected by the group to which the individual belongs. This could be national ethics, social ethics, company ethics, professional ethics, or even family ethics. So while a person’s moral code is usually unchanging, the ethics he or she practices can be other-dependent.

Business Ethics: What Does it Really Mean?

Ethicsinvolves a discipline that examines good or bad practices within the context of moral duty and obligation

Moral conductrelates to principles of right and wrong in behavior

Business Ethics

concerned with good and bad or right and wrong behavior and practices that take place in business

What is Ethics?Latin word ‘Ethicus’ Greek word ‘Ethikos’ meaning character or manners.

systemizing, defending and recommending concepts of right and wrong behavior.

Science of moral, moral principles and recognized rules of conduct.

• Ethics is the study of how people should act• Ethics also refers to the values and beliefs related to the nature of human

conduct– Based on ethical standards or moral orientation

• Ultimate aim of ethics is to develop a body of moral standards that we feel are reasonable to hold- standards that we have thought about carefully and have decided are justified standards for us to accept and apply to the choices that fill our lives

• Ethics is a normative study- an investigation that attempts to reach normative conclusions- that is conclusion about what things are good or bad or about what actions are right or wrong- aims at discovering what should be.

The Fall of Arthur Andersen Opening Case

• Arthur Andersen founded the firm, making its credo, “Think straight, talk straight.” His commitment to integrity became known as the “Andersen Way.”

• For years after his death the firm maintained high standards.• Consulting services became a huge part of the firm that eventually broke away

after a battle with the accounting side of the business.• A new consulting group within Arthur Andersen emerged; auditors were

evaluated on the amount of additional services they sold to clients.

• To cut costs, partners were forced to retire at age 56, removing a layer of leadership experienced in the Andersen Way.

• Under pressure, auditors became reluctant to alienate clients resulting in a series of disgraceful audit performances.

• At Enron an Arthur Andersen auditor was coerced into writing an opinion letter stating that certain tax audits were legitimate, leading to the collapse of both companies.

Arthur Andersen founded a culture of rectitude that warped because several generations of management allowed the Andersen Way to be undermined.

Morals and Values

• Morality: The standards that an individual or group has about what is right and wrong or good and evil

• Moral Standards: The norms about the kind of actions believed to be morally right and wrong as well as the values placed on the kinds of objects believed to be morally good and morally bad

• Values are defined in literature as everything from eternal ideas to behavioral actions. – Criteria for determining levels of goodness, worth or beauty. – Act of valuing– Part of the affective system– Also provide an important filter for selecting input and connecting thoughts and feelings to

action

Moral justification is the process of reinterpreting immoral behavior in terms of a higher purpose.

Ethics: A study of right and wrong behavior –with the aim of defining what is right and wrong

Ethics - is a field of enquiry

Morality- is object of enquiry

ValueValues represents basic convictions (certainty) that “a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence”.

Values lay foundation for understanding of attitudes and motivation

Generally influence attitude and behavior

Types of Values –- Rokeach Value Survey

Terminal Values

Desirable end-states of existence; the goals that a person would like to achieve during his or her lifetime.

Instrumental Values

Preferable modes of behavior or means of achieving one’s terminal values.

Values in the RokeachSurvey

Values in the Rokeach Survey(cont’d)

Levels of Moral Development1. PreconventionSelf-interest motivates behavior to meet one’s own needs to gain rewards while following rules and obedient to authority to avoid punishment.

2. ConventionalLiving up to expectations of acceptable behavior defined by others motivates behavior to fulfill duties and obligations. Common for followers to copy the behavior of the leaders and group.

3. Post conventionalBehavior is motivated by universal principles of right and wrong, regardless of the expectations of the leader or group. One seeks to balance the concerns for self with those of others and the common good.

6 stages of moral development

• Pre-conventional (personal interest)– Do what you are told, self-interest– Others have interests too, but self interests

predominate

• Conventional (maintaining norms)– Conform, cooperate with others– Obey the law for good of society

• Post-conventional– Universal principles– Reciprocity, social justice

Eternal Values of Mankind

Derived from Great Religions Mutual love and

trust Equity Self fulfillment

through action which bring closer to GOD.

God works through People

Golden RuleChristianity - Whatever you want men to do to you, do also to them.Islam - No one of you is a believer until he loves for his neighbor what he loves for

himself.Buddhism – Hurt not others with that which pains yourselfHinduism – This is the sum of duty; do naught unto others what you would not have them

do unto you.Bahai – And if thine eyes be turned toward justice, choose thou for thy neighbor that

which thou choosest for thyself.Jainism – A man should wander about treating all creatures as he himself would be

treated

How Do You Want To Be Treated?

I want to be valued. I want to be appreciated. I want to be trusted. I want to be respected. I want to be understood. I do not want others to take advantage of me.

Three Models of Management Ethics

Amoral ManagementAmoral Management

Moral ManagementMoral Management

Immoral ManagementImmoral Management

Three Models of Management Ethics

ImmoralManagement

ImmoralManagement

A style devoid of ethical principles and active opposition to what is ethicalA style devoid of ethical principles and active opposition to what is ethical

MoralManagement

MoralManagement

Conforms to high standards of ethical behaviorConforms to high standards of ethical behavior

AmoralManagement

AmoralManagement

Intentional: does not consider ethical factors

Unintentional: casual or careless about ethical factors

Intentional: does not consider ethical factors

Unintentional: casual or careless about ethical factors

Characteristics of Immoral Managers

Intentionally do wrong Self-centered and self-

absorbed Care only about self or

organization’s profits Actively oppose what is

right, fair, or just Exhibit no concern for

stakeholders Are the “bad guys” an

ethics course probably would not help them

Characteristics of Moral Managers

Conform to high level of ethical or right behavior

Conform to high level of 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 Are the “good guys”

Characteristics of Amoral ManagersIntentionally Amoral Managers: • Don’t think ethics and business should “mix”• Business and ethics are existing 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

Duryodhan said, “I know what is right but I am not able to act accordingly. I also know what is wrong but I am not able to restrain myself doing it”

Indian philosophy says that we become what we think. Western philosophy also accepts this