Business Ethics

1. Business Ethics Ethical Management

2. IMMORAL MANAGEMENT • What is immoral management? • Whenmanagement’s motives are selfish and it cares only or principallyabout its own or its company’s gains. • If management’s activity is actively opposedto what is regarded as ethical, this suggests that management understands rightfrom wrong and yet chooses to do wrong. • Itsmotives are deemed greedyor selfish. • Management’sgoals are profitability andorganizational success at virtually any price. Management does not care aboutothers’ claims to be treated fairly or justly.

3. Operating Strategy • The operating strategy of immoral management is focused on exploiting opportunitiesfor corporate or personal gain. • The main question in thiskind of management is “Can we make money with this action, decision, or behavior, regardless ofwhat it takes?” • Implicit in this question is that nothing else matters, at least not verymuch.

4. Sourses of immoral management • Egoism Egoism is oftenthrough as the anti-thesis of ethicalbusiness Our instinct for survival combined with theeveryday objective of being happy would suggest that the pursuit ofself-interest is a natural way to organise our lives. Each person ought to do whatever maximises their own self-interest,regardless of how this affects others.

5. Egoismcont • we are all egoists in thesense that all our actions are really motivated by a concern for our ownlong-term best interest rather than any real feeling for the interests ofothers. • we might act to our short-term disadvantage but only inour long-term best interest. • It is even argued that we are deceivingourselves if we think we are acting in any other way!

6. ‘Invisible hand’ egoism • ‘Invisible hand’ egoismis a pragmatic view developed in Adam Smith’s The Wealth of Nations(1776). • The argument is that if all entrepreneurs act freely in their owninterest then society as a whole benefits. • Market forceschannels self-interest in theeconomysothategoismbecomesbeneficialforeveryone.

7. Paradox in businessworld • Somebusinessethicistsarguethatthere is a paradox in thebusinessworld. Some of thesescholarsareMarxistandsomeothersarevirtueethicists. • Capitalisteconomy is based on a certainassumptionabouthumanbeings. • Thisassumption is thathumanbeingsareinherently self-interestedor egoist. • It is thisinherentfeature of humanbeingsthatleadstoprofit in businessworld.

8. Paradox in businessworldcont • Self-interestedindividualsareregulatedby an invisiblehandandthisleadstoprofitwhich is goodforsociety • However, self-interestandegoism is alsothesourse of unethicalbehavour. • Thismeansthatbusiness in capitaliseconomiesleadstounethicalbehaviour. • Becausecapitalism is motivatedbyegoism… • How can wemovebeyondthisparadox???

9. Integrity Strategy • Self-governance in accordancewith a set guidingprinciples Thetask of ethicsmanagement is • to define andgive life to an organization’sguidingvalues • tocreate an environmentthatsupportsethicallyenvironment • Toinstill a sense of sharedaccountabilityamongemployees

10. Integrity Strategycont • The integrity strategy is characterizedby a conception of ethics as the driving force of an organization. • Ethicalvalues shape management’s search for opportunities, the design of organizationalsystems, and the decision-making process. • Ethical values in the integrity strategyprovide acommon frame of reference and serve to unifydifferent functions, linesof business, and employee groups.

11. Integrity Strategycont Commonfeatures ofan integrity strategy: • Guiding values and commitments make sense and are clearly communicated. • Company leaders are personally committed, credible, and willing to takeaction on the values they espouse. • Espoused values are integrated into the normal channels of managementdecision making. • The organization’s systems and structures support and reinforce its values. • All managers have the skills, knowledge, and competencies tomake ethicallysound decisions on a daily basis.

12. Ethics programs • Ethics programs are typically organizational units that have beenassigned the responsibility for ethics initiatives in theorganization. Accordingto national surveys conducted, ethics programs typically include the followingfeatures: • written standards of conduct, • ethics training, • mechanisms to seek ethics advice or information, • methods for reporting misconduct anonymously, • disciplinary measures for employees who violate ethical standards, and the • inclusion of ethical conduct in the evaluation of employee performance.

13. Setting Realistic Objectives • Top management must establish sales and profit goals that are realistic—goalsthat can be achieved with current business practices. • Under the pressure ofunrealistic goals, otherwise responsible subordinates will often take the attitudethat “anything goes” in order to comply with the chief executive’s target.

14. Ethical Decision-Making Processes • Many decisionsmanagement faces turn out to have ethical implications or consequences. • identify the action, decision, orbehaviorthat is being considered and then to articulate all dimensions of theproposed course of action. • the individual is asked to subject the course ofaction to what we call an ethics screen. An ethics screen consists of several selectstandards against which the proposed course of action is to be compared. The ideais that unethical actions will be “screened out” and that ethical actions will be“screened in.”

15. Corporate Transparency • One of the most recent trends toward the improvement of ethics programs is thatof transparency. • Corporate transparency refers to a quality, characteristic, or statein which activities, processes, practices, and decisions that take place in companiesbecome open or visible to the outside world. • According to Pagano and Pagano, a transparentmanagementapproach— “what you see is what you get” code of conduct—will increase yourcompany’s credibility in the marketplace, build loyalty, and help you gain thetrust and confidence of those with whom you work.

16. WorkplaceDemocracy • Recently it is believedthatmoredemocraticworkplacesleadstomoreethicalbusinesses. • The main idea of theworkplacedemocracy is thatthebusinessorganizationsbecomemoreinclusive in theirdecisionmaking. • Current model of businesscreates a workplacebased on fear. Thisduetothecommandandcontrolmodels. • Employeeshave a voice in thedemocraticworkplace. • Democraticworkplaceshave 10 principles in theirdesign

17. 10 principles of democraticworkplace • Purpose + vision • Transperancy • Dialogue + listening • Accountability • Choice • Individual + collective • Fairness + dignity • Integrity • Decentralization • Reflection + Evaluation • TraciFentonexplainsthe idea of workplacedemocracy: • http://www.youtube.com/watch?v=h28n2qPp74w