ETHICAL BEHAVIOUR AND SOCIAL RESPONSIBLITY

CORPORATE ETHICAL FAILURES

ANOTHER CANADIAN EXAMPLE• Bre-X was a gold mining company.

• In 1989, they bought land in Indonesia.

• Over the course of 6 years, the estimates of how much gold was in the ground there went from 2 million troy ounces to 70 million troy ounces (2.17 million Tons)

• That would be worth about 85 billion USD today.

• As news made it out thatBre-x struck it big, the value of their stock wentfrom cents to $280 as investors wanted to cashin. This made Bre-Xworth over $6 billion.

• What do you think the problem was?

• Micheal de Guzman worked forthe Indonesian subsidiary ofBre-X and wanted recognition.

• He convinced some partners tojoin him in a plan.

• He ended up jumping from a helicopter.

• One person was charged, was not convicted, and lives in the Cayman Islands (where he cannot be sent back to Canada)

• Ethical failures are not necessarily because of bad business decisions or bad research.

• Lying, cheating, threatening, and GREED are the root causes. When this behaviour is carried out by top management, what do you think happens?

WHAT IS ETHICAL BEHAVIOUR?• Ethics are “a code of moral principles that sets standards of good

or bad, or right and wrong, in one’s conduct.”

• They allow us to make decisions between two or more courses of action.

• Ethical behaviour is behaviour that is accepted to be “good and right” as opposed to “bad and wrong.”

LAWS, VALUES, AND ETHICAL BEHAVIOUR• Are laws ethical?

Slavery

Only men can vote

Rule of Thumb

Don’t ask, Don’t Tell

LAWS, VALUES, AND ETHICAL BEHAVIOUR• Is it ethical to take 2 hours for a paid job if it only takes you 1?

• Is it ethical to make personal phone calls while at work?

• Is it ethical to call in sick if you are not really sick?

• What if you see a co-worker breaking a rule and you don’t say anything?

LAWS, VALUES, AND ETHICAL BEHAVIOUR• When people are asked to do things that violate their personal

beliefs, there can be ethical problems. Sometimes, people will say “It’s legal? Let’s do it!” Others need to consider it more than that.

• Values are beliefs about what is appropriate behaviour. The difference in values is what determines a person’s behaviour.-These can be cultural, religious, etc.

LAWS, VALUES, AND ETHICAL BEHAVIOUR• Terminal values are preferences about desired end states.

-This mean…what do you think?

• Some examples are: self-respect, family security, freedom, inner harmony, happiness

• Instrumental values are preferences regarding the means to get to the desired ends.

• Some examples are: honesty, ambition, courage, imagination, self-discipline.

REAL WORLD EXAMPLE• Share-buying “Black-out periods.”

• Prevents “insider trading.”

ALTERNATIVE VIEWS OF ETHICS• There are 4 major views. They are very important to know:

• Utilitarian

• Individualism

• Moral-rights

• Justice

UTILITARIAN VIEW• Began in the 19th century by John

Stuart Mill.

• Summed up best as:

• Business managers use profits, and other criteria to determine the “best”for the majority.

“The greatest good for the greatest number of people.”

UTILITARIAN VIEW• Do we lay-off 1000 employees now and keep the business going?

OR

• Do we keep everybody working and lose the business in six months?

• This is a very popular view. What other examples can you think of?

INDIVIDUALISM VIEW• This is the belief that “one’s primary commitment is long-term

advancement of self-interests.”

• Lying or cheating for short-term gain should not happen, because if that person profits, others will do it. This prevents long-term interests from happening.

• It is supposed to promote honesty and integrity.

MORAL-RIGHTS VIEW• This is behaviour that “respects and

protects the fundamental rights of people.”

• John Locke said that we all have the right to life, liberty, and fair treatment under the law. Nothing should violate these rights.

• Companies that embrace this view have protections for employees right to free speech, consent, safety, and conscience.

JUSTICE VIEW• Broken down into three sub-sections, but all deal with the idea

that people should be treated impartially and fairly, according to laws and legal standards.

PROCEDURAL JUSTICE• Are policies fairly administered?

• Does a charge of sexual harassment against a top executive receive the same level of attention as a first-level supervisor?

• Due process must be followed.-”All legal rights of a person must be respected by the state.”

DISTRIBUTIVE JUSTICE• Are outcomes allocated without respect for individual

characteristics based on ethnicity, race, gender, age, or other?

• Does a woman who works with men doing the same job get paid the same amount?

INTERACTIONAL JUSTICE• Is everyone involved treated with dignity and respect?

• Does the bank loan officer explain to a failed loan applicant why they were turned down?

CULTURAL ISSUES IN ETHICAL BEHAVIOUR• Nowadays, this is a huge issue. Globalization has made culture a

large part of any discussion on ethics.

• Three categories to discuss.

CULTURAL RELATIVISM• “When in Rome, do as the Romans do.” What does this mean to

you?

• Cultural relativism is the belief that there is no single right way to do things; ethical behaviour is determined by context.

• Using child labour in a country where there are no laws against it, and where the culture is ok with using children to work, is an example of this.

UNIVERSALISM• Some ethical standards apply across all cultures.

• If you do not do something in another country because you would not at home, this is an example.

• Some would say that it is an example of the next one though.

THE SCALE OF ETHICS

-No cultures ethics are superior-Values and practices of the local setting determine what is right and wrong.-No universal or absolute rules-”When in Rome, do as the Romansdo.”

-Certain truths apply everywhere-Universal values transcend cultures

in determining what is right and wrong

Cultural Relativism Ethical Imperialism

ETHICAL IMPERIALISM• Usually this is seen as an attempt to impose one’s ethical

standards on other cultures.

• This is very hard to do. A compromise is usually made, where some rights should be insisted upon, but local cultures and traditions can be respected.

• Like, Xin employing children to work in his factory but he pays for schooling for them when they are not working.

ETHICAL DILEMMAS• Situations that “requires a choice regarding a possible course of

action that, although offering the potential for personal or organizational benefit, or both, may be considered unethical.”

• Right and wrong is not clear.

• “I define an unethical situation as one in which I have to something I don’t feel good about.”

POTENTIAL PROBLEM AREAS• Discrimination: An employee is negatively affected because of

their race, religion, gender, age, or other non-relevant aspects.

POTENTIAL PROBLEM AREAS• Sexual Harassment: Making a co-worker feel uncomfortable

through inappropriate comments or actions regarding sexuality; or a manager requesting sexual favours in return for favourable job treatment.

POTENTIAL PROBLEM AREAS• Conflicts of interest: Taking a bribe or kickback or extraordinary

gift in return for making a decision favourable to the gift giver.

POTENTIAL PROBLEM AREAS• Customer confidence: Giving another party privileged

information regarding the activities of a customer.

POTENTIAL PROBLEM AREAS• Organizational Resources:

Using official stationery or a company email account to communicate personal opinions or make requests from community organizations.

HOMEWORK• W-9 “Tom’s of Maine: Where “Doing Business” Means “Doing

Good.”

• Read the article, answer questions 1-3