Ethics and ethical reasoning presentation

The topic covers about Ethics and Ethical reasoning

1. Ethics and
Ethical Reasoning

2. Key Learning Objectives
Defining ethics and business ethics
Evaluating why businesses should be ethical
Knowing why ethical problems occur in business
Identifying managerial values as influencing ethical
decision making
Recognizing the core elements of ethical character
Understanding stages of moral reasoning
Analyzing ethical problems using generally accepted
ethics theories
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The Meaning of Ethics
Ethics
A conception of right and wrong conduct
Tells us whether our behavior is moral or immoral
Deals with fundamental human relationships—how we think
and behave toward others and want them to think and
behave toward us
Ethical Principles
Guides to moral behavior
Business Ethics
Application of general ethical ideas to business behavior

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Sources of Ethics
Notions of right and wrong come from many sources
Religious beliefs
Family background
Education
Community/neighborhood
Media influences
These experiences create a concept of ethics,
morality, and socially acceptable behavior in each
person
Acts as a moral compass to guide him/her when ethical
puzzles arise

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Ethical Relativism
Concept that holds that ethical behavior should be
defined by various periods in time in history, a society’s
traditions, the special circumstances of the moment, or
personal opinion
The meaning given to ethics would be relative to time, place,
circumstance, and the person/s involved
There would be no universal ethical standards on which
people around the globe could agree
Is an important and controversial issue

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Observations of Unethical Behavior at WorkFigure 1

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Five Key Reasons Business Should be Ethical
1. To meet demands of business stakeholders
10 country poll shows 90% of general public placed
business ethics standards above traditional
corporate goals
Meeting demands of stakeholders is good business
2. To enhance business performance
Research shows linkage between ethically responsible
behavior and favorable corporate financial performance
Imparts trust, promoting positive alliances among
business partners

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3.To comply with legal requirements
U.S. Corporate Sentencing Guidelines provides
that if an employee of a firm is found guilty
of wrong-doing, the sentence may be reduced if
preventive measures were in place in the
company
Measures judges look for in assessing this
culpability (degree of blame) shown on next slide
Five Key Reasons Business Should be Ethical

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U.S. Corporate Sentencing Guidelines
Establish standards and procedures to reduce criminal
conduct
Assign high-level officer(s) responsibility for compliance
Not assign discretionary authority to “risky” individuals
Effectively communicate standards and procedures through
training
Take reasonable steps to ensure compliance—monitor and
audit systems, maintain and publicize reporting systems
Enforce standards and procedures through disciplinary
mechanisms
Following detection of offense, respond appropriately and
prevent reoccurrence

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3.To comply with legal requirements (cont.)
2002 Sarbanes-Oley legislation was approved as
result of corporate accounting scandals like
Enron, and WorldCom
Major provisions of Sarbanes-Oxley shown on
next slide
Five Key Reasons Business Should be Ethical

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Sarbanes-Oxley Act of 2002
The firm’s audit committee is entrusted with audit or oversight with all
independent directors on the committee
Tighter control on non-audit services, the lead auditor rotated every
five years, and auditors report to the audit committee
The CEO and CFO must sign off on financial statements as accurate
and fair and must repay bonuses if a restatement of financials is
undertaken
A Public Company Accounting Oversight Board is established
Firms are not permitted to offer loans to their executive officers or
board of directors
SEC guidelines for internal controls and financial reporting procedures;
require the adoption of, or waiver for, a code of ethics for the board;
mandate that a financial expert serve on the board; and compel the
firm to state its financial condition in plain English on a rapid or current
basis

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4.To prevent or minimize harm
Overriding principle that business should
“do no harm”
Examples include not harming society with toxic
waste, protecting business from unethical employees
and unethical competitors
5.To promote personal morality
Knowing one works in a supportive ethical climate
contributes to sense of psychological security
People want to work for companies that do the right
thing
Five Key Reasons Business Should be Ethical

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Why Ethical Problems Occur in Business
4 Primary Reasons
1.Personal gain and self-interest
2.Competitive pressure on profits
3.Conflicts of interest
4.Cross-cultural contradictions
Chart on next page provides background for each
reason

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Why Ethical Problems Occur in Business
Figure 3

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Core Elements of Ethical Character:
Managers’ Values
Managers’ values set the ethical tone for the company
Corporate scandals has led to a crisis of confidence in
business leadership
Differences in ethical stances of U.S. versus European
managers and employees
Survey of new U.S. CEO’s shows concern for short-term
profits
One in four managers emphasizes moral values
Younger generation of managers more concerned about
ethics/social responsibility

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Virtue Ethics
Part of business ethics theory derived from Philosophy
(Aristotle)
Posits that a person with good character traits will use
these values to show good behavior
Virtue ethics holds that ethics is not rule determined
but based on a way of being and valuable
characteristics
Stated differently – moral virtues are habits that enable
a person to live according to reason and avoid
extremes

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Personal Spirituality
Personal belief in a supreme being, religious
organization, power of nature or some other life-
guiding force
In past 10 years has been a rise in spirituality at work
McKinsey survey of Australian companies showed
increase in productivity and reduced turnover for
companies that provided spirituality outlets for
employees
Is controversial, given separation of church and state
and common view that business is secular
Issues include which religion should be promoted, and need
for recognizing diversity of religious beliefs

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Stages of Moral Development
Well researched model by Dr. Lawrence Kohlberg of
how individuals grow and mature in relation to moral
reasoning and decision-making
From childhood to mature adulthood people move up
in their moral reasoning
Earliest stages of reasoning are ego-centered
Most developed stages are principle-centered
Most managers make decisions based on criteria in
levels 3 and 4
Company executives’ reasoning has wide
implications both inside and outside the organization

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Stages of Moral Development and
Ethical Reasoning
Figure 4

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Analyzing Ethical Dilemmas in Business
Model presented in next set of slides is powerful tool
for reasoning through ethical problems that occur in
business
Based on three standards of ethical reasoning
borrowed from philosophy
Presents guidelines to
Identify and analyze the nature of an ethical problem, and
Decide which course of action is likely to produce an ethical
result

21. Ethical Reasoning
Ethical reasoning is
 
the ability to identify, assess, and
develop ethical arguments from a variety of ethical
positions.” For the purposes of this application, it may
be useful to think of an ethical reasoning course as one
that integrates ethical questions into the intellectual work
required in the course.
For example,
 
if two people of different ethnicities ask
you to hold a door open and there is no difference in
the circumstances other than their ethnicity, they
should get the same treatment. Either you hold the
door for both of them or refuse to help both of them
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22. Ethical reasoning 
helps determine and differentiate between right thinking,
decisions, and actions and those that are wrong, hurtful and/or harmful- to
others and to ourselves. Ethics is based on and motivated by facts, values,
emotions, beliefs, emotions, and feelings. Ethical actions are based on
conscientious reasoning of facts based on moral principles and standards.
Three Criteria in Ethical Reasoning
The following criteria can be used in ethical reasoning according to Weiss:
Moral reasoning must be logical. Assumptions and premises, both factual
and inferred, used to make judgments should be known and made explicit.
Factual evidence cited to support a persons judgment should be accurate,
relevant, and complete.
Ethical standards used in reasoning should be consistent. When
inconsistencies are discovered in a persons ethical standards in a decision,
one or more of the standards must be modified (Weiss, 2014).
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Three Approaches to Ethical Reasoning
Utilitarian
Compares benefits and costs of a decision, policy or action
Costs and benefits can be economic, social or human
Rights
Person or group is entitled to something or to be treated in
a certain way
Examples of basic human rights are right to life, safety,
and due process
Justice
Means benefits and burdens are distributed equally,
according to some accepted rule

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Three Methods of Ethical Reasoning
Figure 5

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Applying Ethical Reasoning to Business Activities
Can use the Utility, Rights and Justice framework as
a tool to analyze real business ethics dilemmas
For each possible action or decision, ask the three
critical questions
If all the answers are “Yes”, the proposed action is
ethical
If all the answers are “No”, the action is not ethical
and needs to be reconsidered
If “Yes” and “No” answers are mixed, you must
decide which takes priority

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Analytical Approach to Ethical ProblemsFigure 6

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What is Whistle-blowing?
When an employee in an organization uncovers
wrongdoing, attempts to get it resolved within the
organization and is unable to (either because mechanisms
are not in place or there is no response), they then choose
to report the situation outside of the organization (e.g.
media or government agency) to achieve resolution
Becoming a whistle-blower is challenging and potentially
hazardous to one’s career
Examples of government protection for whistleblowers
around the world shown in next slide

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Whistle-blowing Protection Around the World
Summary of some legislative efforts to protect whistle-blowers in various countries:
European Union —The EU published a charter for whistle-blower protection,
identifying the terms under which commission staff may blow the whistle, imposing a
duty upon officials to report suspected wrongdoing, and outlining the channels for
reporting malpractice.
Ghana —A whistle-blower protection act has been proposed to offer rewards and
protection to people who volunteer information leading to the prosecution of white-collar
criminals.
Israel —This country adopted whistle-blowing protection legislation that protects
corporate and government workers.
South Africa —The Protected Disclosures Act 26 prohibits employers from subjecting
an employee to an occupational detriment (e.g., disciplinary action, suspension,
dismissal, demotion, harassment, etc.) for raising concerns about unlawful or irregular
conduct.
South Korea —The Anti-Corruption Act established the Korea Independent
Commission Against Corruption, whose mission includes the encouragement,
protection, and compensation of whistle-blowers.
United Kingdom —The U.K. Public Interest Disclosure Act protects most workers from
retaliation by their employers, including dismissal, disciplinary action, or transfer.
Exhibit B

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Stigmas Against Whistle-blowers
Divided loyalties
In some Asian countries, members of the company are treated as
family members and it is considered wrong to report on family
members
History
The country may have a tragic history of reporting on others
Logistics
Employees of global companies may be faced with numerous time
zones and language differences that could prevent whistle-blowing
or make it more difficult
Fear of retribution
Despite government laws to protect whistle-blowers, many
employees of global businesses fear retaliation