An Overview of Ethics

L E A R N I N G O B J E C T I V E S What is ethics, and why is it important to act according to a code of ethics? Why is business ethics becoming increasingly important? What are organizations doing to improve their business ethics? Why are organizations interested in fostering good business ethics? What approach can you take to ensure ethical decision making? What trends have increased the risk of using information technology in an unethical manner?

What is Ethics? Moral Code Rules often expressed in statements about how people should behave, Morality Social conventions about right and wrong that are so widely shared that they become the basis for an established consensus.

Definition of Ethics Ethics is a set of beliefs about right and wrong behavior within a society. Virtues are habits that incline people to do what is acceptable whereas vices are habits of unacceptable behavior. People’s virtues and vices help define their personal value system—the complex scheme of moral values by which they live.

The Importance of Integrity A person who acts with integrity acts in accordance with a personal code of principles. Ethical dilemmas are not as simple as right versus wrong but involve choices between right versus right.

The difference between Morals, Ethics and Law Morals are one’s personal beliefs about right and wrong, Ethics describes standards or codes of behavior expected of an individual by a group (nation, organization, profession) to which an individual belongs. Law is a system of rules that tells us what we can and cannot do.

Ethics in the Business World Why has unethical behaviour risen in the last decades? Greater globalization has created a much more complex work environment that spans diverse cultures and societies, in today’s recessionary economic climate, organizations are extremely challenged to maintain revenue and profits.

Why fostering Good Business Ethics is Important Gaining the good will of the community Creating an organization that operates consistently Fostering good business practices Protecting the organization and its employees from legal action Avoiding unfavorable publicity

EXAMPLE: Our Values As a company, and as individuals, we value integrity, honesty, openness, personal excellence,constructive self-criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves accountable to our customers, shareholders, partners, and employees by honoring our commitments,providing results, and striving for the highest quality. Source: Accessed at

Universal Set of Values Operate with honesty and integrity, staying true to organizational principles Operate according to standards of ethical conduct, in words and action Treat colleagues, customers, and consumers with respect Strive to be the best at what matters most to the organization Value diversity Make decisions based on facts and principles

Social Audit An organization reviews how well it is meeting its ethical and social responsibility goals, and communicates its new goals for the upcoming year. This information is shared with employees, shareholders, investors, market analysts, customers, suppliers, government agencies, and the communities in which the organization operates

Training Employees to Act Ethically Greek Philosophers Kohlberg Other researchers have repeatedly supported the idea that people can continue their moral development through further education, such as working case studies and examining contemporary issues

Formal Training An organization’s code of ethics must be promoted and continually communicated within the organization, from top to bottom Employees can be shown examples of how to apply the code of ethics in real life A comprehensive ethics education programme Examples of recent company decisions based on principles from the code of ethics

Formal Training (Contd) Reassurance from authorities that such feedback will be acted on and that they will not be subjected to retaliation. Including Ethical Criteria in Employee Appraisals

Managerial behavior that can encourage unethical behavior Set and hold people accountable to meet “stretch” goals, quotas, and budgets Fail to provide a corporate code of ethics and operating principles to guide decisions Fail to act in an ethical manner and instead set a poor example for others to follow Fail to hold people accountable for unethical actions When employees are hired, put a 3-inch thick binder entitled “Corporate Business Ethics, Policies,and Procedures” on their desks. Tell them to“read it when you have time and sign the attachedform that says you read and understand the corporate policy

A manager’s checklist for establishing an ethical work environment Does your organization have a code of ethics? Do employees know how and to whom to report any infractions of the code of ethics? Do employees feel that they can report violations of the code of ethics safely and without fear of retaliation?

A manager’s checklist for establishing an ethical work environment Do employees feel that action will be taken against those who violate the code of ethics? Do senior managers set an example by communicating the code of ethics and using it in their own decision making? Do managers evaluate and provide feedback to employees on how they operate with respect to the values and principles in the code of ethics? Are employees aware of sanctions for breaching the code of ethics? Do employees use the code of ethics in their decision making?

Ethical Considerations in Decision Making Develop problem statement Gather and analyze facts, make no assumptions, identify stakeholders affected by the decision. Identify alternatives Involve others, including stakeholders, in brainstorming. Evaluate results Evaluate results against selected success criteria. Were there any unintended consequences?

Ethical Considerations in Decision Making(contd) Evaluate and choose alternative What laws, guidelines, policies, and principles apply? What is the impact on you, your organization and other stakeholders? Evaluate alternatives based on multiple criteria. Implement decision Develop and execute an implementation plan. Provide leadership to overcome resistance to change.

Four Common Approaches to Ethical Decision Making Virtue Ethics Approach Utilitarian Approach Fairness Approach Common Good Approach

Summary Even within the same society, people can have strong disagreements over important moral issues. Ethics has risen to the top of the business agenda because the risks associated with inappropriate behavior have increased, both in their likelihood and in their potential negative impact.

Summary (contd) Organizations have reasons for promoting a work environment in which they encourage employees to act ethically: to gain the good will of the community, to create an organization that operates consistently, to foster good business practices, to protect the organization and its employees from legal action to avoid unfavorable publicity.

Summary (contd) An organization with a successful ethics program is one in which employees are willing to seek advice about ethical issues that arise; employees feel prepared to handle situations that could lead to misconduct; employees are rewarded for ethical behavior; the organization does not reward success gained through questionable means; employees feel positively about their company.

Summary (contd) The corporate ethics officer (or corporate compliance officer) ensures that ethical procedures are installed and consistently adhered to throughout the organization, creates and maintains the ethics culture, and serves as a key resource on issues relating to corporate principles and ethics.

Summary (contd) Most of us have developed a simple decision- making model that includes these steps: develop a problem statement, identify alternatives, evaluate and choose an alternative, implement the decision, evaluate the results.

Summary (contd) One can incorporate ethical considerations into decision making by identifying and involving the stakeholders; weighing various laws, guidelines, and principles— including the organization’s code of ethics—that may apply; considering theimpact of the decision on you, your organization, stakeholders, your customers and suppliers, and the environment.

Summary (contd) Philosophers have developed many approaches to ethical decision making. Four common philosophies are the virtue ethics approach, the utilitarian approach, the fairness approach, and the common good approach.