Ethics is the study and examination of human conduct, focusing on determining good or bad, right or wrong, and moral duty. It explores the nature and foundation of morality, including moral judgment, standards, and rules of behavior.
According to the American Heritage dictionary, ethics pertains to the analysis of moral choices, moral philosophy, and the regulations or standards that govern professional conduct. Ethics also involves considering how our decisions affect others, as well as examining individuals’ rights and responsibilities and the principles they employ in decision-making. In business, ethical concerns are inevitable like in other areas of life.
Ethics involves determining right from wrong and acting accordingly. However, ethical dilemmas in the workplace are not always clear-cut, going beyond acts like stealing or lying. Some believe there is always a universally correct action based on moral principles, while others argue it depends on circumstances and individuals involved. Many philosophers see ethics as the “science of conduct,” encompassing foundational rules guided by values such as respect, honesty, fairness, and responsibility. The application of these values is called moral or ethical principles.
Business ethics, also known as managerial ethics, involves implementing ethical principles in business relationships and activities. Managers must consider ethical standards even when complying with laws since their behavior cannot be uniform across all situations.
Managers often face ethical dilemmas, struggling to choose between conflicting situations that may both appear right. These dilemmas commonly arise in different aspects of business ethics. Firstly, there are concerns about the firm’s relationship with its employees, including how to treat them fairly and what constitutes fair wages or dismissals. Secondly, there are considerations regarding employee behavior towards the company, such as conflicting loyalties, accepting incentives from suppliers, moonlighting, secrecy, espionage, and honesty even in small matters like pens, paper, and telephones. Lastly, there are ethical issues surrounding the firm’s interactions with its environment which include customers, competitors, stockholders, dealerships and the community. Many industries and organizations have established formal written codes of ethics that provide specific guidelines for managers and employees to follow. However a crucial question arises: does the organization truly enforce these codes when individuals violate them? To address ethical concerns effectively many companies have implemented their own customized codes of ethics.
These guidelines provide standards for ethical decision making in the business field. They encompass various areas such as truthful advertising, misuse of company assets, political donations, payments related to business deals, conflicts of interest, and protection of trade secrets. Establishing industry associations can bring benefits to organizations as they collaborate to enhance and advocate for more ethical codes. It becomes challenging for a lone company to lead ethical practices when its rivals exploit unethical shortcuts to gain an edge.
In order to improve ethics, it is crucial for top executives to support and emphasize ethical behavior. They should lead by example and train their staff in ethics. In business, ethical issues can be categorized into four levels.
I. Societal Level: This level involves the overall institutions in society, such as the role of government in the market and the pros and cons of political parties or ideologies. Managers have a responsibility to shape discussions on social welfare.
II. Stakeholders Level: This level pertains to employees, suppliers, customers, shareholders, and other groups affected by ethical considerations. Companies must consider how their decisions impact these stakeholders. For example, what obligations does a company have towards its suppliers, customers, or owners?
III. Internal Policy Level: At this level, the focus is on a company’s relationship with its employees and managers. Questions arise about fair contracts and employee rights.
IV. Individual Level: This level addresses the personal ethical choices made by individuals within an organization.
At the personal level, individuals within a corporation must treat each other honestly and fulfill their obligations to their bosses, subordinates, and peers. Ethical questions arise in all levels of business activity, involving the rules and behaviors of individuals, companies, and society. Being ethically responsible requires people to reflect on their actions and question the norms they follow. For example, sellers should consider informing customers about harmful products while buyers should decide whether to inform clerks about excessive change. Ethics can be represented as a model with two relationships depicted by arrows in the figure above. An ethical person or organization has strong and positive relationships in these areas. Various sources guide individuals in determining right from wrong, good from bad, and moral from immoral behavior including religious texts like the Bible and Koran as well as one’s conscience known as the “still small voice.” Additionally, guidance can come from significant figures such as parents, friends, role models, associates, and peers.
The laws of the country set forth guidelines for ethical conduct, prohibiting actions that harm others. It is crucial to distinguish between acts that are illegal and those that are unethical. While not all unethical behavior is against the law, certain behaviors like honesty are subject to legal restrictions. For instance, if an individual discovers a lost item and chooses to keep it, they may not have broken any laws but their action would be deemed unethical. Conversely, when a clerk steals from their employer with the intention of helping the less fortunate, they engage in an unlawful act driven by ethical motives.
Decisions of ethics are challenging, but all managers should understand that ethics surpasses legal and market economy obligations. Numerous unethical actions can occur in business without legal repercussions. Being ethical entails more than just having firm convictions based on correct sources. One’s behavior should align with their beliefs about right and wrong. Type I ethics refers to the correlation between an individual or organization’s beliefs and moral guidelines provided by sources of guidance.
Type II ethics refers to the relationship between one’s beliefs and behaviors. It is considered unethical to go against one’s beliefs. However, to be ethical, one must possess both types of ethics. The Tools of Ethics include Ethical Language, which involves key terms such as values, rights, duties, and rules. Values are permanent desires that are inherently good, like peace and they answer the question of why managers should behave ethically. Rights are claims that entitle a person to something, while duties involve specific obligations like paying taxes. Moral rules are a set of laws that guide us when faced with conflicting interests.
Another aspect of ethics is Common Morality, which consists of the rules that govern ordinary ethical problems in our daily lives. Examples of these rules include promise-keeping, benevolence, mutual aid, respect for persons, and respect for property.
In Week 2, the focus is on the scope and objectives of ethics. Managing ethics in the workplace has various benefits. Ethics programs help maintain moral standards during challenging times. They foster teamwork and productivity and support employee growth and fulfillment. These programs also serve as an insurance policy by ensuring policies are legal. Additionally, ethics programs assist in managing values related to quality management, strategic planning, and diversity management – an aspect that requires more attention.Ethics programs play a crucial role in enhancing a positive public image. In just a matter of decades, the focus on business ethics has immensely contributed to the improvement of society. Previously, children were engaged in labor for six hours a day.
The harsh consequences of labor included severed limbs and lifelong disability, leading workers into poverty, sometimes even starvation. Market control by trusts stifled competition and suppressed small businesses. Price manipulation disrupted normal market dynamics. Employment termination was based on personal reasons, while intimidation and harassment were prevalent methods of exerting influence. Eventually, society demanded that businesses prioritize fairness and equal rights. This led to the establishment of antitrust laws and government agencies.
Unions were organized and laws and regulations were established to maintain a moral course in turbulent times. Attention to business ethics is crucial during periods of significant change, similar to the challenges faced by businesses today, whether they are non-profit or for-profit. In times of change, leaders often lack a clear moral compass to navigate complex conflicts regarding right and wrong. By consistently focusing on ethics in the workplace, leaders and staff become more aware of how they should behave. Ethics programs ensure that employee actions align with the organization’s top priority ethical values, as preferred by its leaders. Often, organizations discover a significant gap between their desired values and the actual behaviors exhibited in the workplace. Continuously addressing and discussing values in the workplace fosters openness, integrity, and a sense of community – all vital components for creating strong teams. Employees experience a strong alignment between their own values and those upheld by the organization.
They react with strong motivation and performance. Additionally, ethics programs support employee growth and meaning. Attention to ethics in the workplace helps employees face reality, both good and bad, in the organization and themselves. Employees feel full confidence that they can admit and deal with whatever comes their way. Furthermore, ethics programs act as an insurance policy; they help ensure that policies are legal. This is particularly important due to the increasing number of lawsuits concerning personnel matters and the effects of an organization’s services or products on stakeholders.
State-of-the-art legal matters often involve ethical principles, which are then transformed into legislation as they are applied to major ethical issues. Paying attention to ethics in the workplace ensures the implementation of highly ethical policies and procedures. It is more advisable to invest in mechanisms to ensure ethical practices now, rather than facing the costs of litigation later on. Well-designed personnel policies play a significant role in guaranteeing the ethical treatment of employees, including matters such as hiring, evaluating, disciplining, and firing. Ethics programs help prevent criminal acts through early detection of ethical issues and violations, allowing for timely reporting and addressing. Failure to report actual or potential violations to the appropriate authorities can be considered a criminal act in certain cases, particularly in business dealings with government agencies like the Defense Department. However, organizations that have made clear efforts to operate ethically may receive reduced fines according to the guidelines. Ethics programs also assist in managing values related to quality management, strategic planning, and diversity management. They identify preferred values and ensure that organizational behaviors align with those values effectively.The endeavor involves documenting and creating directives to harmonize actions with desired principles, followed by instructing all staff on these directives. This comprehensive initiative proves beneficial for various workplace initiatives, such as quality management, strategic planning, and diversity management, which necessitate adherence to certain values.
Total Quality Management emphasizes certain key values such as trust, performance, reliability, measurement, and feedback. Ethics management techniques are valuable for effectively managing strategic values such as expanding market share and reducing costs. These techniques are also beneficial for managing diversity, which encompasses more than just the color of a person’s skin; it involves acknowledging and embracing different values and perspectives. Managing diversity requires the recognition and application of diverse values and perspectives.
These activities are the basis of a sound ethics management program. 8) Ethics programs promote a strong public image. Attention to ethics is also strong public relations. Admittedly, managing ethics should not be done primarily for reasons of public relations. The fact that an organization regularly gives attention to its ethics can portray a strong positive image to the public. People see those organizations as valuing people more than profit, as striving to operate with the utmost of integrity and honor. Aligning behavior with values is critical to effective marketing and public relation programs.
Ethical values are vital for building a successful and socially responsible business. Implementing ethics programs has various benefits, including legitimizing managerial actions, strengthening the organization’s culture, improving trust in relationships, promoting consistency in standards and product quality, and fostering sensitivity to the impact of the enterprise’s values and messages.
The principles of business ethics encompass a variety of values. These include taking responsibility and being accountable for one’s actions, as well as promoting and respecting human rights. It also involves honoring agreements, treating everyone fairly and with dignity, conducting business in an environmentally responsible manner based on sustainable development principles, complying with all business laws, managing activities for the benefit of stakeholders, and communicating openly and honestly with all stakeholders. Additionally, engaging in socially responsible activities that contribute to the local community’s well-being is important. Fair treatment of employees during both the selection process and employment is emphasized. Lastly, creating a work environment free from discrimination or harassment while ensuring privacy for employees and their families is crucial.
Highly ethical organizations share certain characteristics:
- They have a comfort level when interacting with diverse internal and external stakeholder groups.
- Fairness is prioritized, and they believe that others’ interests are equally important as their own.
- Individuals take personal responsibility for the actions of the organization. Responsibility is seen as an individual matter.
- The organization’s top management embraces and embodies a clear vision and commitment to integrity over time.
- The reward system aligns with the integrity vision.
- Policies and practices are consistent with the integrity vision, avoiding mixed messages.
- Every significant management decision acknowledges its ethical value dimensions.
To manage ethics in the workplace, organizations can establish an ethics management program. This program typically conveys corporate values through codes and policies that guide decision-making and behavior. The program may also involve comprehensive training and evaluation, depending on the organization.
They offer guidance in ethical predicaments. All organizations possess ethics programs, but many are unaware of this fact. A corporate ethics program comprises values, policies, and activities that influence the appropriateness of organizational conduct. A fundamental objective of an ethics management program is to harmonize and reconcile conflicting values. Business professionals require more practical resources and knowledge to comprehend their values and effectively handle them. There are numerous advantages of formally managing ethics as a program, as opposed to treating it as a one-time endeavor only when deemed necessary.
Ethics programs involve establishing organizational roles to manage ethics, scheduling ongoing assessments of ethics requirements, establishing required operating values and behaviors, aligning organizational behaviors with operating values, developing awareness and sensitivity to ethical issues, integrating ethical guidelines into decision making, structuring mechanisms for resolving ethical dilemmas, facilitating ongoing evaluation and updates to the program, and helping convince employees that attention to ethics is not just a knee-jerk reaction done to improve public image.
Guidelines for managing ethics in the workplace ensure that the ethics management program is operated in a meaningful fashion. It is important to recognize that managing ethics is a process that involves values and associated behaviors. These values are discerned through ongoing reflection. As a result, ethics programs may seem more process-oriented than most management practices.
Managers often doubt process-oriented activities and instead prioritize processes that yield measurable deliverables. However, seasoned managers understand that these deliverables, such as plans, are mere tangible manifestations of underlying process-oriented practices. This applies to strategic planning and ethics management as well. While the resulting plans and deliverables are important, the actual processes involved in strategic planning and ethics management hold greater significance. For instance, ethics programs generate various deliverables such as codes, policies, procedures, budget items, meeting minutes, authorization forms, and newsletters.
However, the most crucial element of an ethics management program is the reflective and dialogical process that results in these deliverTABLEs. The ultimate goal of an ethics program is to achieve desired behaviors in the workplace. The most significant result is the adoption of behaviors that align with the organization’s preferences. The highest ethical values and intentions hold little significance unless they manifest in fair and just behaviors at work. Hence, practices that formulate ethical values or codes of ethics must also develop policies, procedures, and training that translate those values into appropriate behaviors. Indeed, action is the only means through which ethics can be expressed.
According to Jane Addams, the most effective approach to handling ethical dilemmas is to prevent them from happening altogether. This can be achieved through the implementation of practices such as the creation of codes of ethics and codes of conduct. These practices serve to raise awareness among employees about ethical considerations and decrease the likelihood of unethical behavior. It is also recommended to make ethics decisions collectively and, when appropriate, disclose these decisions publicly. This approach typically leads to higher quality decisions as it incorporates a range of perspectives and interests, and enhances the credibility of the decision-making process by mitigating suspicions of bias. Additionally, Addams suggests integrating ethical values into overall management practices, particularly when developing a values statement during strategic planning for the workplace.
When designing personnel policies, it is important to consider the ethical values that should be emphasized in the organization’s culture. In order to promote these behaviors, it is recommended to involve cross-functional teams in the development and implementation of an ethics management program. It is crucial for employees to feel a sense of participation and ownership in the program in order to adhere to its ethical values. This can be achieved by including employees in the process of developing and operating the program (participative management).
One key value to consider is forgiveness. It is important to recognize that everyone makes mistakes, and promoting a forgiving attitude can help individuals address their errors and continue striving to operate ethically.
It is important to note that actively striving to make ethical decisions, even if there are occasional mistakes, is preferable to not attempting ethical behavior at all. Certain organizations have gained widespread recognition for consistently operating with high ethical standards. Unfortunately, it appears that when an organization achieves this positive reputation, some business ethics writers place it on a higher pedestal. Remember, all organizations are composed of imperfect individuals. Therefore, when an error occurs within these organizations, they have a significant amount to lose. Within our increasingly critical society, these organizations are often criticized for being hypocritical and subsequently ridiculed by social critics.
Consequently, some leaders may be afraid to publicly announce an ethics management program, which is unfortunate. The important thing is to try and bring peace of mind, rather than seeking heroic status in society. WEEK 4: BUSINESS ETHICS THEORIES
Ethical Theories are principles or rules people use to determine what is right or wrong. The foundation of all other theories is the Classical Theories, which include utilitarianism Theory. Utilitarian theory was developed by John Stuart Mill (1806-1873) and Jeremy Beneath (1748-1832). Utilitarian theories believe that the moral worth of actions or practices is solely determined by their consequences.
Utilitarians believe that an action or practice is considered right if it results in the best balance of positive outcomes versus negative outcomes for all parties involved. According to this perspective, the purpose of morality is to enhance human welfare by minimizing harm and maximizing benefits. Mills identifies two bases for utilitarian thinking: a normative foundation in the principle of utility and a psychological foundation rooted in human nature. He suggests the “greatest happiness principle” as the fundamental concept in normative ethical theory. In this principle, actions are deemed correct to the degree that they contribute to happiness or the absence of pain, and incorrect to the extent that they cause pain or displeasure.
Mill’s second foundation is based on the idea that most people, if not all, have a fundamental desire for unity and harmony with their fellow human beings. They possess a natural moral sensitivity towards the needs of others, similar to the horror they feel towards crimes. The objective of morality is to leverage these innate human sympathies in order to benefit others, while also restraining unsympathetic attitudes that cause harm to others. The principle of utility, referred to as utilitarianism, is considered the most effective approach to achieving these fundamental human goals. The term ‘utilitarianism’ is derived from the Latin word ‘utility’, meaning ‘useful’. In utilitarianism, the consequences of actions are evaluated based on a single value, such as happiness, welfare, or pleasure, and the aim is to maximize this ‘useful’ value.
Utilitarianism is a moral theory that states individuals should choose actions or follow rules that benefit society the most. However, utilitarianism has several drawbacks. It is challenging to determine the actual amount of pleasure an action will bring. Additionally, calculating the total pleasure requires considering the pleasures of all involved individuals and quantifying them. The value of one person’s pleasure compared to another’s is also a question. Furthermore, determining which action yields more pleasure than another is a difficult task. On the other hand, Deontological theory, introduced by German Philosopher Emmanuel Kant (1724-1804), offers an alternative perspective.
In 1785, Kant published a significant piece on ethics called “Fundamental Principles of the Metaphysic of Ethics.” According to Kant, an action is considered right if it aligns with a moral rule or principle, and a moral rule is determined by rationality. Kant emphasizes the importance of universal respect for human dignity due to the rational nature of human beings. He stresses that individuals should be treated as ends in themselves and not solely as a means.
