You are on page 1of 26

Business Ethics

Omar Shaikh

Morality
The standards that an individual or a group has about what is right and wrong or good and evil It includes the norms we have about the kind of actions we believe are morally right and wrong

Ethics
Is the discipline that examines ones moral standards or the moral standards of the society. It asks how these standards apply to our lives and whether these standards are reasonable or unreasonable. Ethics: A branch of philosophy that teaches us to distinguish between right and wrong. It is also called Moral Philosophy.

Ethical Dilemma: Any situation in which right or wrong cannot be easily identified Stakeholders: People who will be affected by the behavior/performance of the organization.

Common Unethical Acts in Business Lying to customers Lying to management Stealing Bribery Misuse of corporate resources Discrimination

21-May-2009

Business Ethics

Main Reasons of Unethical Behavior Meeting business goals/targets Meeting deadlines Competitive pressures

21-May-2009

Business Ethics

Business ethics
Application of our understanding of what is good and right to business.

Kinds of ethical issues


Systematic
Issues raised by economic, legal, political or other social systems

Corporate
Ethical issues raised about a particular organisation about the morality of the activities, policies, practices structure etc.

Individual
Ethical issues raised about a particular individual or individuals within a company and their behaviours and decisions

Exhibit 59 Stages of Moral Development

Source: Based on L. Kohlberg, Moral Stages and Moralization: The CognitiveDevelopment Approach, in T. Lickona (ed.). Moral Development and Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 3435.

Individual Characteristics Affecting Ethical Behaviors

Values
Basic belief about what is right or wrong on a broad range of issues

Individual Characteristics
Personality Variables
Ego strength
A personality measure of the strength of a persons convictions

Locus of Control
A personality attribute that measures the degree to which people believe they control their own life. Internal locus: the belief that you control your destiny. External locus: the belief that what happens to you is due to luck or chance.

Other Variables
Structural Variables
Organizational characteristics and mechanisms that guide and influence individual ethics:
Performance appraisal systems Reward allocation systems Behaviors (ethical) of managers

An organizations Culture Intensity of the Ethical Issue

Conditions under which a person is morally responsible for causing wrongful injury

The person knowingly and freely perform an act The person knowingly and freely fail to perform his duties

Conditions under which a person is eliminated from moral responsibility for causing a wrongful injury

Ignorance Inability: unable to avoid act

Types of morally questionable acts


Non role acts: A person acting outside his or her role such as stealing, claims for sickness Role failure act: failure to perform his role Role distortion: fulfilling duties but violating others rights/standards Role assertion acts: failure to observe generally accepted moral principles and manipulating customers minds.

Recognising ethical dilemmas


Following are the two ways through which ethical dilemmas can be spotted
Language recognition technique Categories of ethical dilemma

Language recognition technique


Everybody else does it If we dont do it someone else will Well wait until they tell us its wrong It doesnt really hurt anyone I was just following orders

The categories of ethical dilemma


Taking things that dont belong to you Saying things that you know are not true Giving or allowing false impressions Hiding information Permitting organisational abuse committing interpersonal abuse

Guidelines to deal with ethical dilemmas


1. 2. 3. 4. Hire individuals with high ethical standards. Establish codes of ethics and decision rules. Lead by example. Set realistic job goals and include ethics in performance appraisals. 5. Provide ethics training. 6. Conduct independent social audits. 7. Provide support for individuals facing ethical dilemmas.

Guidelines to deal with ethical dilemmas


According to Blanchard and Vincent there are three questions you should ask yourself whenever you are faced with an ethical dilemma
is it legal? Is it balanced? Is it right?

Theories of business ethics

Utilitarianism
A general term of any view that holds that actions and policies should be evaluated on the basis of the benefits and costs they will impose on society It is morally good if its immediate and future benefits are greater than the costs

Relativism
1. Nave relativism: it holds that there are no single universal standards that can be used to guide or evaluate the morality of an act What is right for you may be wrong for me 2. Cultural relativism: moral standards vary from culture to culture

Individual ethical decision making styles


Individualists: making decision that are good for their own selves Altruists: are concerned primarily with other people. Altruists will give up their own personal security for the benefit of others. Pragmatists: concerned primarily with the situation at hand, not with the self and others. Looks at perceived needs of the moment. May abandon values and principles. Idealists: driven by principles, rules and regulations and values

In which style do we make decisions usually? Think of a time when you made a decision as an individualist, altruist, pragmatist or idealist.

You might also like