Design and Society Spring 2005

1
Design and SocietySpring 2005

• Ethics and Stakeholder Analysis
• Carol Hasenberg

2
Themes and Unifying Concepts for Business Ethics
Risk Management/ Systems Analysis
Business Ethics/ Stakeholder Analysis
Cultural/Personal Ethics
Globalized World System
3
The Globalized World

• Quote from Thomas Friedman, in The Lexus and the
  Olive Tree
• the traditional boundaries between politics,
  culture, technology, finance, national security,
  and ecology are disppearing. You often cannot
  explain one with referring to the others, and you
  cannot explain the whole without reference to
  them all

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The Environment Affecting Todays Business
Decisions
Regulatory
Economic
International
National
Technological
Political
Job
You
Industry
Organization
Social
Legal
Natural
adapted from Weiss, Business Ethics, chapter 2
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Why Business Ethics?

• Hypothesis Acting according to ethical
  principles (doing the right thing) is not
  necessary when youre on the job. After all,
  youre not an ethics specialist.
• Can you prove or disprove this hypothesis?

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What is Ethics and Morality?

• The Wikipedia Discussionhttp//www.objectsspace.
  com/encyclopedia/index.php/Morality

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Ethics and Managerial Decision-Making

• What laws apply to this situation and should I
  follow them?
• Criminal Laws
• Business/Civil Laws and Regulations
• Contracts
• What other social guidelines apply to the
  situation?
• Obligations/Responsibilities
• Ethics/Morals
• Justice vs. Mercy
• Short Term vs. Long Term
• What priorities between self-values and
  obligations to the organization should apply?
• Individual vs. Community
• Truth vs. Loyalty
• Face-Saving vs. Fairness

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What Risks does a Business Face for Unethical
Behavior?

• What is Unethical Behavior ? (see previous slide
  for discussion)
• What are the Consequences ?

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What Kinds of Everyday Ethical Decisions Do You
Face on the Job?

• Taking credit for someone elses work
• Lying to employees/management/customers
• Stealing from company
• Padding expense accounts
• Using company resources for personal gain
• Stealing company money/supplies/equipment
• Nepotism/favoritism
• Firing whistle-blowers/unfair firing
• Leaking company trade secrets
• Making someone else appear bad to make yourself
  appear good

adapted from Weiss, Business Ethics, chapter 2
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Kohlbergs Three Levels of Moral Development

• Level 1 Preconventional level
  (self-orientation)
• Stage 1 Punishment avoidance
• Stage 2 Reward seeking
• Level 2 Conventional level (others orientation)
• Stage 3 Good person
• Stage 4 Law and order
• Level 3 Principles level (universal, humankind
  orientation)
• Stage 5 Social contract societal consensus
• Stage 6 Universal ethical principles
  universal, consistent, and comprehensive
  principles

adapted from Weiss, Business Ethics, chapter 1
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Approaches to Moral Responsibility

• Relativism morals are relative to the beliefs
  of individuals, cultures
• Utilitarianism the most moral actions produce
  the best consequences ends justify the means
• Universalism there is a code of rules which
  everyone should follow no matter the consequences
  means justify the ends the
• Rights the rights of individuals are paramount
  over the needs or wants of the many
• Justice basic necessities and opportunities, as
  well as burdens, should be fairly distributed
  throughout the society

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Quick Ethical Tests

• The Golden Rule
• Intuition Ethic Gut Feeling
• Means vs. Ends
• Common Sense
• Ones Best Self
• Feedback from Others
• Making the Action Public
• Purified Idea Do I think this is right only
  because someone said so?
• Gag Test

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Ethical Levels of a Situation

• personal what are my values and beliefs?
• organizational what are the values and beliefs
  of the organization?
• which values and beliefs are at risk in this
  situation?
• who is harmed or helped by the decision?

adapted from Weiss, Business Ethics, chapter 1
14
Three Models of Management Ethics

• Immoral Management make decisions with active
  opposition to what is ethical
• Amoral Management make decisions without regard
  to their ethical implications
• business is outside the realm of ethics and
  morals
• careless or inattentive
• Moral Management make decisions which consider
  what is ethical, fair and just

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Stakeholder Management

• Combines Looking at Environmental Factors with
  Ethics in resolving Business or Policy decisions
• Uses a systematic approach to problem-solving
  this is a type of RISK ANALYSIS

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Stages of Risk Analysis

• Identifying the Risks - Can be the most difficult
  step of risk management
• Assessing the Risks Evaluate each course of
  action for risk, and compare the levels of risk
• Risk Planning Determine a course of action to
  minimize the risk exposure, with contingency
  plans for crisis situations
• Risk Monitoring and Control - Risk management
  process is ongoing. Documentation and
  communication are critical to keep the process
  going.

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Stakeholder Management Approach to an Incident or
Issue

• Identify the stakeholders
• Assess stakeholders interests
• Opportunities
• Challenges
• Assess stakeholders power
• Within the organization
• Political
• Economical
• Identify stakeholder coalitions
• Matrix of Obligations/Responsibilities look at
  ETHICS of the situation here
• Economic
• Legal
• Ethical
• Voluntary
• Develop Strategies with targeted outcomes
• Monitor Results

adapted from Weiss, Business Ethics, chapter 2
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Who is a Stakeholder?
Other Groups Who Affect or are Affected
by Decisions of Organization
Media/Public
Activists
Neighbors
Consumer Organizations
Political Community
Allied
Allied
Owner/ Stockholder
Allied Organizations
Government
Future Generations
ORGANIZATION, MANAGEMENT
Nature, Non-human Species
Customers
Employees
Competitor
Primary Stakeholders
Opposed
Secondary Stakeholders
adapted from Weiss, Business Ethics, chapter 2
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What are the Characteristics of a Stakeholder?
Legitimacy
Urgency
Power
adapted from Carroll Buchholtz, Business and
Society, Ethics and Stakeholder Management,
chapter 3
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Stakeholders and Strategies
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Targeting Outcomes

• Win-win outcome is the most desirable
• Zero-sum game outcome is less desirable
• Lose-lose outcome should be avoided
• act STRATEGICALLY as well as MORALLY
• keep actions consistent with the MISSION of the
  organization

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Stakeholder Management Methods

• acknowledge and actively monitor all legitimate
  stakeholders
• listen and communicate with stakeholders about
  concerns and contributions
• use processes sensitive to stakeholders needs
• recognize the interdependence of effort and
  rewards
• work cooperatively to minimize risk
• do not follow a course of action which will
  endanger other human lives
• recognize conflicting role between managers
  welfare and those of other stakeholders, using
  good communication and third party monitoring of
  management actions

adapted from The Clarkson Center for Business
Ethics, University of Toronto, Principles of
Stakeholder Management, 1999.
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Incident Lifecycle/ When to Apply Stakeholder
Analysis

• Social expectations ISSUES IDENTIFICATION/RANKIN
  G
• Felt need
• Media coverage
• Political issues ISSUES RANKING/ANALYSIS
• Interest group momentum
• Political policies
• Legislation ISSUES STRATEGIES
• Federal studies/hearings
• Legislation/regulation
• Social control ISSUES MONITORING
• Litigation

adapted from Weiss, Business Ethics, chapter 2