© 2005 by Nelson, a division of Thomson Canada Limited. 1 Personal and Organizational Ethics Search the Web Nortel has posted its ethics policies on the Internet. To read it, navigate your web browser to:

© 2005 by Nelson, a division of Thomson Canada Limited. 2 Chapter Seven Objectives To understand the different levels at which business ethics may be addressed To appreciate principles of personal ethical decision-making To identify factors affecting the business moral climate To understand the strategies to improve the ethical climate

© 2005 by Nelson, a division of Thomson Canada Limited. 3 Chapter Seven Outline Levels at which Ethical Issues May Be Addressed Personal and Managerial Ethics Managing Organizational Ethics From Moral Decisions to Moral Organizations Summary

© 2005 by Nelson, a division of Thomson Canada Limited. 4 Introduction to Chapter Seven This chapter focuses on the day-to- day ethical issues that managers face

© 2005 by Nelson, a division of Thomson Canada Limited. 5 Levels at Which Ethical Issues May Be Addressed Personal level—situations faced in personal life (income tax and speeding). Organizational level—workplace situations faced as managers and employees (illegal dumping and creative accounting).

© 2005 by Nelson, a division of Thomson Canada Limited. 6 Levels at Which Ethical Issues May Be Addressed Industrial level—ethical situations confronted as professionals Societal and international levels— local-to-global situations confronted indirectly or directly by management

© 2005 by Nelson, a division of Thomson Canada Limited. 7 Personal and Managerial Ethics Resolving Ethical Conflicts Three Approaches Conventional (covered in Chapter 6) Principles Ethical tests

© 2005 by Nelson, a division of Thomson Canada Limited. 8 Personal and Managerial Ethics Utilitarianism Rights Justice Caring Virtue Servant Leadership Golden Rule Principles Approach The anchors decision making

© 2005 by Nelson, a division of Thomson Canada Limited. 9 Personal and Managerial Ethics Principle of Utilitarianism focuses on producing the greatest ratio of good to evil for everyone –Consequentialist theory

© 2005 by Nelson, a division of Thomson Canada Limited. 10 Personal and Managerial Ethics Principle of Rights focuses on examining, and possibly protecting, individual moral or legal rights

© 2005 by Nelson, a division of Thomson Canada Limited. 11 Personal and Managerial Ethics A principle of justice that involves considering what alternatives promote fair treatment of people Types of justice –Distributive –Compensatory –Procedural

© 2005 by Nelson, a division of Thomson Canada Limited. 12 Personal and Managerial Ethics Rawls’ Justice Each person has an equal right to basic liberties as compared to others Social and economic inequalities are arranged so that they are: reasonably expected to be to everyone’s advantage and attached to positions and offices open to all people

© 2005 by Nelson, a division of Thomson Canada Limited. 13 Personal and Managerial Ethics Principle of caring focuses on a person as a relational (cooperative) and not as an individual –Feminist theory Virtue ethics focuses on individuals becoming imbued with virtues –Aristotle and Plato

© 2005 by Nelson, a division of Thomson Canada Limited. 14 Personal and Managerial Ethics Servant leadership focuses on serving others first such as employees, customers, community, and so on

© 2005 by Nelson, a division of Thomson Canada Limited. 15 Personal and Managerial Ethics Listening Empathy Healing Persuasion Awareness Foresight Conceptualization Commitment to the growth of people Stewardship Building a community Characteristics of Servant Leaders

© 2005 by Nelson, a division of Thomson Canada Limited. 16 Personal and Managerial Ethics Golden rule focuses –do unto others as you would have them do unto you

© 2005 by Nelson, a division of Thomson Canada Limited. 17 Personal and Managerial Ethics Concerns to be Addressed in Ethical Conflicts Obligations Ideals Effects

© 2005 by Nelson, a division of Thomson Canada Limited. 18 Personal and Managerial Ethics When Obligations Ideals and Effects Conflict When two or more moral obligations conflict, use the stronger one When two or more ideals conflict, or conflict with obligations, honour the more important one When effects are mixed, choose the action that produces the greatest good and the least harm

© 2005 by Nelson, a division of Thomson Canada Limited. 19 Personal and Managerial Ethics Ethics Test Approach Test of common sense Test of one’s self Test of making something public Test of ventilation Gag test

© 2005 by Nelson, a division of Thomson Canada Limited. 20 Managing Organizational Ethics Superiors Policies Peers Individual (One’s personal situation) Society’s Moral Climate Business’s Moral Climate Industry’s Moral Climate Factors Affecting the Morality of Managers

© 2005 by Nelson, a division of Thomson Canada Limited. 21 Managing Organizational Ethics Factors Influencing Unethical Behaviour Behaviour of superiors Ethical practices of one’s industry or profession Behaviour of one’s peers in the organization Formal organizational policy (or lack of one) Personal financial need

© 2005 by Nelson, a division of Thomson Canada Limited. 22 Managing Organizational Ethics Amoral decision making Unethical acts, behaviours or practices Acceptance or legality as the standard behaviour Absence of ethical leadership Questionable Behaviour of Superiors or Peers

© 2005 by Nelson, a division of Thomson Canada Limited. 23 Managing Organizational Ethics Use of a system that over estimates profits Insensitivity towards how subordinates perceive pressure to meet goals Inadequate formal ethical policies Questionable Behaviour of Superiors or Peers

© 2005 by Nelson, a division of Thomson Canada Limited. 24 Improving Ethical Climate Top Management Leadership Ethics Programs & Officers Realistic Objectives Ethical Decision- making Processes Codes of Conduct Ethics Audit Ethics Training Whistle-blowing Mechanisms (“Hotlines ”) Discipline of Violators Effective Communication Codes of Conduct

© 2005 by Nelson, a division of Thomson Canada Limited. 25 Ethical Decision-Making Identify decision you are about to make Articulate all dimensions of proposed decision Conventional Approach Standards/Norms -Personal -Organizational -Societal -International Principles Approach Ethical Principles -Justice -Rights -Utilitarianism -Golden Rule Ethical Tests Approach Ethical Tests -Common sense -One’s best self -Public disclosure -Gag test... Course of action passes ethics screen Engage in course of action Course of action fails ethics screen Do not engage in course of action Identify new course of action

© 2005 by Nelson, a division of Thomson Canada Limited. 26 From Moral Decisions to Moral Organizations Moral Decisions Moral Managers Moral Organizations

© 2005 by Nelson, a division of Thomson Canada Limited. 27 Codes of conduct Codes of ethics Compensatory justice Distributive justice Ethical tests Ethical audits Golden rule Legal rights Moral rights Principle of caring Principle of justice Principle of rights Principle of utilitarianism Procedural justice Rights Servant leadership Utilitarianism Virtue ethics Selected Key Terms