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19/04/23 1

Organizational Ethics

HR0864 Week 8

Learning OutcomesLearning Outcomes

To understand the relationship between ethics and specific moral guidelines

To understand the relationship between ethical decision making and the organizational context

To understand the differences between leading ethical systems of thought.

To apply ethical considerations to a case.

ContentContent Ethics in the news Defining ethics and morals Leading ethical approaches What makes people behave unethically? A process for ethical decision-making Management and the Ethical organization

Business Ethics News 2012Business Ethics News 2012• A US Court has fined Samsung $1bn for infringing Apple’s patents.

Apple’s CEO Tim Cook said: ‘For us this has always been about something much more than patents or money. Its about values. We value originality and innovation and pour our lives into making the best products on earth. And we do this to delight our customers, not for competitors to flagrantly copy.’

(http://9to5mac.com/2012/08/24/tim-cook-tells-apple-employees-that-todays-victory-is-about-values/ )

Business Ethics News 2013Business Ethics News 2013The new CEO of Barclays, Antony Jenkins has told staff that they should sign up to a new ethical code of conduct or leave the company:

“There might be some who don’t feel they can fully buy in to an approach which so squarely links performance to the upholding of our values,” Jenkins, 51, wrote. “My message to those people is simple: Barclays is not the place for you.”

(http://www.bloomberg.com/news/2013-01-17/barclays-ceo-jenkins-tells-workers-to-follow-new-rules-or-leave.html)

Business Ethics News 2013Business Ethics News 2013Following the discovery of horse and pork products in beef burgers sold across Europe Duncan Campbell, recent president of the Association of Public Analysts, said local authority cost cutting had badly damaged the network of laboratories where scientists test samples for trading standards departments.

“In the long-term, the expertise and the capability of public analyst laboratories will be lost and problems like the one we have seen with horse meat in burgers will continue and possibly increase.” (http://www.independent.co.uk/news/uk/home-news/exclusive-cuts-in-food-safety-checks-mean-that-horsemeat-scandal-could-happen-again-8454911.html )

Business Ethics News 2013Business Ethics News 2013

These three cases illustrate situations in which organizations are judged according to standards of right and wrong.

But how do we know what is right and wrong?

What are the standards of right and wrong that should be applied to organizations?

And do organizations and their managers have particular moral responsibilities ?

Ethics DefinedEthics Defined

There are different understandings of ethics but in broad terms ethics can be seen as:

A science of human choice concerned with the basic guidelines for how one ought to live one’s life. It answers the question, “How should I live?”

The study and philosophy of human conduct with an emphasis on determining right and wrong.

Are Ethics and Morals the Same?Are Ethics and Morals the Same?

Ethics refers to the systematic study of general principles of right and wrong behavior. (reason-based system for moral decision-making)

Morals and morality describe specific, culturally transmitted standards of right and wrong. (beliefs about right and wrong -learned behaviour and vary from one culture to another)

Both ethics and morality involve decisions about right and wrong.

Johnson, (2007).

Deciding What’s Right and Wrong: Deciding What’s Right and Wrong: Ethical Theories Ethical Theories

Major ethical theories attempt to guide us in understanding the criteria to use when deciding whether something is right or wrong. These include:•Utilitarian Theory•Deontology•Virtue Ethics

However ethical relativists deny that any ethical theory can prove itself against others, ethics is always relative to local beliefs and circumstances.

Principles of Utilitarianism Principles of Utilitarianism The action taken is ethical if it produces the most good and the

least harm for everyone affected. ’’greatest good for the greatest number’’

Judgment is based on a cost/benefit analysis.

Focus is on the results of the action, not on how the results are achieved.

Assumes the end justifies the means.

Some costs and benefits are difficult or impossible to measure

Limitations?

DeontologyDeontology Focuses on the rights of the individual and on the

intentions associated with behavior not on the consequences

Believe there are some things we should not do regardless of the utility

Approach is based on universal principles of fairness, respect, justice and rights

What makes acts right or wrong is whether they follow absolute moral imperatives e.g. ‘do not steal’, ‘tell no lies Immanuel Kant

1724 - 1804

Virtue EthicsVirtue Ethics

The morally correct action is the one that displays good character virtues.

A virtue is a character trait that manifests itself in the actions of the individual.

Virtues are traits such as:• Honesty. • Fairness.• Integrity.• Loyalty.

What Makes Moral People Behave Unethically? What Makes Moral People Behave Unethically?

Research findings:– The desire to conform to one’s peers.

– Environmental pressures.

– Rigid hierarchy.

– Fear, insecurity.

– Ambition.

What Makes Moral People Behave Unethically What Makes Moral People Behave Unethically at Work? at Work?

Because ethical action takes place in a social context, situational variables heavily influence ethical behavior.

– Work characteristics.

– Organizational culture.

– Immediate job context.

Unethical Behavior in the Workplace Unethical Behavior in the Workplace

What makes people engage in unethical behavior?– Insecurity, fear of job loss.

• Downsizing, mergers, hostile takeovers, “rank and yank” performance evaluation systems.

– Psychological insecurity.• Bosses who are threatening and controlling.• Competitive environment.

– Materialistic focus. • Focus on the bottom-line concerns above values.• Bonus pay systems with earnings “at risk.”• Large pay disparities between levels.

Making Ethical DecisionsMaking Ethical Decisions

• Why are ethical decisions so difficult?– No one clear solution.– Competing interests.– Many unknowns.

– Pressure.

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A Process for Making Ethical DecisionsA Process for Making Ethical Decisions

Recognize an ethical issue.

Get the facts.

Evaluate alternative actions.

Make a decision and test it.

Act and reflect on the outcome.

Using the Principles of Ethical Theories to Evaluate Using the Principles of Ethical Theories to Evaluate Your OptionsYour Options

• Utilitarian – Which option will produce the most good and do the least

harm?

• Deontological– Which option best respects the rights of all stakeholders?

• Virtue– Which option leads you to act as the sort of person you

want to be?

Management and Ethical Management and Ethical Organizations Organizations

Ethics Compliance ProgramsEthics Compliance Programs Written code of ethics.

Written standards of conduct.

Ethics training.

Mechanism for employees seeking advice.

Reporting network where employees can report inappropriate behavior without fear of retaliation.

Ethical behavior as a part of the performance appraisal system (e.g. Barclays).

Discipline for violating ethical standards.

The limits of Ethics Compliance ProgramsThe limits of Ethics Compliance Programs

“But we’ve been doing that …and ethical violations are still commonplace.”

Even Enron had a code of ethics!

Creating a Culture of EthicsCreating a Culture of Ethics Many researchers agree that the compliance programme

matters less than the culture of the organization in determining its ethics:– Managers must model ethical behavior. They must “walk

the talk.”– Employees must trust management at all levels.– Employees learn appropriate behavior by what they see

managers doing.– The importance of ethics must be communicated at all

levels of the organization. – Reward ethical behavior. Assess how the job was done,

not just “making the numbers”

Viable global norms for business ethics? Viable global norms for business ethics?

• The globalization of business presents difficulties for ethics as different cultures and countries have different ethical norms, just as ethical relativists suggest.

• Some ethicists are looking for ways in which different normative theories might find common ground in establishing principles for business ethics that are internationally acceptable e.g. through The United Nations Global Compact http://www.unglobalcompact.org/

Human Rights1.Businesses should support and respect the protection of internationally proclaimed human rights; 2. Businesses should make sure that they are not complicit in human rights abuses. Labour3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;4. Businesses should uphold the elimination of all forms of forced and compulsory labour;5. Businesses should uphold the effective abolition of child labour; and6. Businesses should uphold the elimination of discrimination in respect of employment and occupation. Environment7. Businesses should support a precautionary approach to environmental challenges;8. Businesses should undertake initiatives to promote greater environmental responsibility; and9. Businesses should encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption10. Businesses should work against corruption in all its forms, including extortion and bribery.

The UN Global Compact – 10 Principles for The UN Global Compact – 10 Principles for Ethical Business.Ethical Business.

Case study: Case study: The story behind the The story behind the water in Walkerton, Ontariowater in Walkerton, Ontario

Case Study Questions1. Was there any attempt at ethical behaviour at the PUC?

2. Using the following principles of bureaucracy describe how the PUC failed the municipality:•A clearly defined sphere of competence •Clear organizational hierarchy •Administration based on written documents•Rules are enforced in a fair and impartial way•Candidates are promoted based on technical qualifications•Offices within a bureaucracy are based on professional careers and promotion is based on achievement

3. Did the organizational culture at the Public Utility Commission influence Stan and Frank Koebel’s actions?

4. How does power and politics relates to this case?