Ethics Right vs. Wrong

Ethics in Business Ethics – Ethics – Deciding what is right or wrong in a reasoned, impartial manner Deciding what is right or wrong in a reasoned, impartial manner A set of rules, moral principles or values that govern behavior A set of rules, moral principles or values that govern behavior Often a higher authority is the basis for reasoning Often a higher authority is the basis for reasoning Business Ethics- ethics used in making business decisions Business Ethics- ethics used in making business decisions

Examples of Unethical Behavior Martha Stewart’s insider trading Martha Stewart’s insider trading Sales Ethics - Boiler room scene Sales Ethics - Boiler room scene- Boiler room scene- Boiler room scene Advertising ethics – “Lucky Strike Cigarettes” Advertising ethics – “Lucky Strike Cigarettes”Lucky Strike Cigarettes”Lucky Strike Cigarettes” Personal ethics – Madmen scene Personal ethics – Madmen scene Madmen scene Madmen scene Environmental ethics – “A Civil Action” Environmental ethics – “A Civil Action” “A Civil Action” “A Civil Action”

Forms of Ethical Reasoning Consequence Based Reasoning Consequence Based Reasoning Right or wrongness is based upon the results of a particular action. Steps of process: Right or wrongness is based upon the results of a particular action. Steps of process: Describe the alternative actions that could be taken Describe the alternative actions that could be taken Forecast the consequences of each alternative Forecast the consequences of each alternative Evaluate the consequences based on a standard or the number of people affected. Evaluate the consequences based on a standard or the number of people affected. Examples of consequence based reasoning Examples of consequence based reasoning Ford v. Grimshaw case Ford v. Grimshaw case Use of eminent domain in expanding I25 Use of eminent domain in expanding I25 Developing open space land into housing Developing open space land into housing

Forms of Ethical Reasoning Fundamental Ethical Rules Fundamental Ethical Rules Actions are judged as right or wrong based upon a recognized authority or human reasoning Actions are judged as right or wrong based upon a recognized authority or human reasoning Authority = law or religion Authority = law or religion Reasoning = universalizing the action Reasoning = universalizing the action Examples Examples Why is stealing wrong? Why is stealing wrong? Why do we have speed limits? Why do we have speed limits?

Code of Ethics Code of Ethics – document that outlines the principles of conduct to be used in making decisions within an organization Code of Ethics – document that outlines the principles of conduct to be used in making decisions within an organization Establishes guidelines for behavior of managers and employees. May include: Establishes guidelines for behavior of managers and employees. May include: Employee disciplinary actions Employee disciplinary actions Relationships between employees Relationships between employees Relationships with customers Relationships with customers Selling policies Selling policies Computer/Internet use during work time Computer/Internet use during work time

A Code of Ethics Content May Address the following: Honesty Honesty Adherence to the law Adherence to the law Product safety and quality Product safety and quality Health and safety in the workplace Health and safety in the workplace Conflicts of interest Conflicts of interest Employment practices Employment practices Staffing and marketing practices Staffing and marketing practices Financial reporting Financial reporting Pricing, billing, and contracting Pricing, billing, and contracting Trading in securities/using confidential information Acquiring and using information about competitors Security Payments to obtain bonuses Protection of the environment

Ethics Activity Develop a Code of Ethics or Honor Code for Lewis-Palmer High School Develop a Code of Ethics or Honor Code for Lewis-Palmer High School Code should address academic honesty Code should address academic honesty Code should address respect and responsibility toward school property and property of others Code should address respect and responsibility toward school property and property of others Code should address student interactions with other students and staff Code should address student interactions with other students and staff Code should address the rights and opinions of others Code should address the rights and opinions of others

Why is Ethical Behavior Important? Behaving ethically: Behaving ethically: Helps employees gain the most of the people with whom they work Helps employees gain the most of the people with whom they work Helps businesses gain the trust of customers, suppliers, and others Helps businesses gain the trust of customers, suppliers, and others Behaving unethically: Behaving unethically: Can hurt or end a businessperson’s career Can hurt or end a businessperson’s career Can cause a company to lose millions of dollars or even go out of business altogether Can cause a company to lose millions of dollars or even go out of business altogether

Ethics at Work Employee Theft Employee Theft Employers trust their employees not to steal from them. Employers trust their employees not to steal from them. Embezzlement Embezzlement Stealing supplies, inventory Stealing supplies, inventory Hours worked Hours worked Employees who behave ethically are honest about the hours they work. Employees who behave ethically are honest about the hours they work. Ethical employees will only miss work when they are truly ill or have a legitimate reason to be home. Ethical employees will only miss work when they are truly ill or have a legitimate reason to be home. Records Records One of the worst ethical lapses an employee can commit is falsifying records. One of the worst ethical lapses an employee can commit is falsifying records. Damages company reputation Damages company reputation Can have grave effects on health of public (i.e. pharmaceutical company) Can have grave effects on health of public (i.e. pharmaceutical company)

What’s the ethical thing to do? Ask Yourself: Have you defined the situation accurately? Have you defined the situation accurately? How would you see the situation if you stood on the other side of the fence? How would you see the situation if you stood on the other side of the fence? Whom could your decision or action injure? Can you discuss the problem with the affected parties before you make your decision? Whom could your decision or action injure? Can you discuss the problem with the affected parties before you make your decision? Are you confident that your position will be as valid over a long period of time as it seems now? Are you confident that your position will be as valid over a long period of time as it seems now? Could you disclose without qualm your decision to action to your boss, your CEO, the board of directors, your family, and society as a whole? Could you disclose without qualm your decision to action to your boss, your CEO, the board of directors, your family, and society as a whole?

Laws Relating to Ethical Behavior The Sherman Act The Sherman Act Monopolies became illegal. Monopolies became illegal. The Clayton Act of 1914 The Clayton Act of 1914 Charging different wholesales customers different prices became illegal. Charging different wholesales customers different prices became illegal. Requiring customers to purchase a second item also became illegal. Requiring customers to purchase a second item also became illegal. Wheeler-Lea Act of 1938 Wheeler-Lea Act of 1938 Banned unfair or deceptive acts, such as false advertising, inform customers of possible negative consequences of using products. Banned unfair or deceptive acts, such as false advertising, inform customers of possible negative consequences of using products.

Consumer Protection Several laws and agencies were designed to protect consumers against unethical and unsafe business practices: The Federal Food, Drug, and Cosmetic Act of 1938 The Federal Food, Drug, and Cosmetic Act of 1938 Food and Drug Administration (FDA) Food and Drug Administration (FDA) Consumer Product Safety Commission (CPSC) Consumer Product Safety Commission (CPSC) Forces manufacturers to recall products that may be defective Forces manufacturers to recall products that may be defective Truth in Leading Act of 1968 Truth in Leading Act of 1968

Environmental Protection National Environmental Policy Act of 1969 National Environmental Policy Act of 1969 Created Environmental Protection Agency (EPA) Created Environmental Protection Agency (EPA) Protects human health and safeguards the air, water, and land. Protects human health and safeguards the air, water, and land. The Clean Air Act of 1970 The Clean Air Act of 1970 Regulates air emissions. Regulates air emissions. The Toxic Substances Control Act of 1976 The Toxic Substances Control Act of 1976 Gave the EPA the ability to track industrial chemicals produced In or importing into the U.S. Gave the EPA the ability to track industrial chemicals produced In or importing into the U.S. The Clean Water Act of 1977 The Clean Water Act of 1977 Sets standards on the type and quality of pollutants that industries can put into bodies of water Sets standards on the type and quality of pollutants that industries can put into bodies of water

Ethical Standards and Culture Corporate Gift Giving Corporate Gift Giving In Japan, lavish gifts are a part of business. In Japan, lavish gifts are a part of business. In United States, government officials are not allowed to accept gifts (and many corporations have policies against this). In United States, government officials are not allowed to accept gifts (and many corporations have policies against this). When doing business abroad, be sure to understand culture. When doing business abroad, be sure to understand culture.

Ethical Standards and Culture Intellectual Property Intellectual Property Ownership of ideas, such as inventions, books, movies, and computer programs Ownership of ideas, such as inventions, books, movies, and computer programs In the U.S., creators of intellectual property have the exclusive right to market and sell their work (guaranteed through patent, trademark, and copyright laws) In the U.S., creators of intellectual property have the exclusive right to market and sell their work (guaranteed through patent, trademark, and copyright laws) Example: Napster website Example: Napster website

Environmental Awareness Businesses limit the damage their business causes on the environment. Businesses limit the damage their business causes on the environment. Business can establish policies to reduce pollution. Business can establish policies to reduce pollution. For example, encouraging employees to carpool. For example, encouraging employees to carpool. Business can use biodegradable and refillable containers. Business can use biodegradable and refillable containers. Ex: The Body Shop Ex: The Body Shop

Is it Ethical? Stossel in the Classroom Videos Stossel in the Classroom Videos Lemonade Stand (2013) Lemonade Stand (2013) Professional Panhandling (2013) Professional Panhandling (2013) Farm Subsidies (2010) Farm Subsidies (2010) Price Gouging (2007) Price Gouging (2007) Stealth Marketing Presentation Stealth Marketing Presentation Stealth Marketing Presentation Stealth Marketing Presentation

Ethics Assignment Research an example of corporate unethical behavior Research an example of corporate unethical behavior Describe the unethical behavior in detail Describe the unethical behavior in detail Explain why the behavior is unethical Explain why the behavior is unethical Explain why, in your opinion, the corporation committed the unethical behavior. What did they hope to gain or avoid? Explain why, in your opinion, the corporation committed the unethical behavior. What did they hope to gain or avoid? What form of ethical reasoning did the company use? Explain your answer. What form of ethical reasoning did the company use? Explain your answer.