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