BUSINESS ETHICS

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BUSINESS ETHICS
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What is ethics?

• Ethics is the branch of philosophy that focuses
  on morality and the way in which moral principles
  are applied to everyday life. Ethics has to do
  with fundamental questions such as What is
  fair? What is just? What is the right thing
  to do in this situation? Ethics involves an
  active process of applying values, which may
  range from religious principles to customs and
  traditions.

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What is business ethics?

• Business ethics focuses on what constitutes right
  or wrong behavior in the world of business.
  Corporate business executives have a
  responsibility to their shareholders and
  employees to make decisions that will help their
  business make a profit. But in doing so,
  businesspeople also have a responsibility to the
  public and themselves to maintain ethical
  principles.

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• Although ethics provides moral guidelines,
  individuals must apply these guidelines in making
  decisions. Ethics that applies to business
  (business ethics) is not a separate theory of
  ethics rather, it is an application of ethics to
  business situations. Although all people have
  ethical responsibilities, higher ethical
  standards are imposed upon professionals who
  serve as social models, such as physicians,
  attorneys, and businesspeople.

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The Relationship Between Law and Ethics

• The law is an expression of the ethical beliefs
  of our society.
• Law and ethics are not the same thing. The
  question, Is an act legal? is different from
  the question, Is an act ethical? The law
  cannot codify all ethical requirements.
  Therefore, an action might be unethical, yet not
  necessarily illegal. For example, it might be
  unethical to lie to your family, but it is not
  necessary illegal.

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• Similarly, just because an act is illegal does
  not necessarily mean it is immoral. Rosa Parks
  was acting illegally when she refused to give up
  her seat on the bus to a white male, but that
  does not necessarily mean she was acting
  unethically. Should an individual obey the law
  even if it would be unethical to do so? Under
  the theory of civil disobedience espoused by
  Martin Luther King, Mahatma Ghandi and others, an
  immoral law deserves to be disobeyed. Can you
  think of any examples of acts that would be
  illegal, yet arguably ethical?

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THEORIES OF ETHICAL CONDUCT

• Theories of ethics present standards by which a
  person can analyze and evaluate his or her own
  moral conduct.
• Over the centuries, two different philosophical
  frameworks developed ethical standards based on
  universal duties (deontology) and ethical
  standards based on consequences (utilitarianism).

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Deontology

• Deontology is the philosophical practice of
  defining and adhering to an absolute set of
  standards by which ethical behavior can be
  measured. It tries to define universal duties
  that serve as moral guides to decision making.
  When a moral dilemma arises, a person can apply
  these universal standards to determine a course
  of action that is good.

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• In deontology, a person fulfills absolute moral
  duties regardless of whether good comes from the
  actions. A person decides upon actions by asking
  if a particular action is morally right or wrong.
  The act of carrying out that duty is important
  rather than the consequences of the act. An
  example of a set of deontological rules would be
  the Ten Commandments.

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The Rights Model

• The rights model analyzes ethical issues by
  focusing on an actions impact on human rights.
  Under this model, human rights are the rights all
  people have. An action that maximizes respect
  for human rights and minimizes their violation is
  morally correct. When encountering ethical
  dilemmas, a person applying the rights model
  selects the action that minimizes the violation
  of stakeholders rights.

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• The two necessities to be fully human are freedom
  and well-being. Thus, two basic categories of
  human rights exist within the model (1) rights
  of liberty, and (2) rights of well-being.

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Rights of Liberty

• Privacy
• Free consent
• Free speech
• Freedom of conscience
• Right to life

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Rights of Well-Being

• Employment
• Food
• Housing
• Education

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• Under the rights model, each person possesses
  certain fundamental human rights because of the
  fact that they are a human being. Each persons
  life has an infinite value.

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Utilitarianism

• Utilitarianism is an approach to establishing
  ethical standards based on the consequences of an
  action. In an ethical dilemma, a person selects
  the action that brings about the greatest amount
  of good for the greatest number of people. The
  model determines correctness in terms of social
  benefit. Many business people favor the
  cost/benefit approach of utilitarianism.

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Applying the Rights Model

• Identify the facts.
• Identify the ethical issues.
• Identify the alternative courses of action.
• Identify the stakeholders.
• Determine to which extent each alternative
  respects the dignity and fundamental rights of
  stakeholders or violates their rights.
• Choose the alternative that maximizes the dignity
  of stakeholders and minimizes the violation of
  their rights.

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Applying Utilitarianism

• Identify the facts.
• Identify the ethical issues.
• Identify the alternative courses of action.
• Identify the stakeholders.
• For each alternative, calculate the costs and
  benefits (identify who would be harmed and who
  would benefit).
• Choose that alternative which results in the
  greatest amount of good for the greatest number
  of stakeholders.

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Example 1

• Cartoon The Difference Between Ethics and
  Business Ethics

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Example 2

• A secretary who has worked for your corporation
  for fifteen years is involved in a car accident
  in which she permanently loses the use of her
  right hand. Thus, she can no longer effectively
  type, file, or perform many of the other
  functions that she previously had performed and
  that are included in her job description.

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• Your corporation has a very tight budget and does
  not have sufficient funds to pay for an
  additional secretary without reallocating budget
  items. The injured secretary has been very loyal
  to your corporation, and you have been very
  satisfied with her work and dedication. She
  wants to stay at her job.

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• Moreover, she does not believe that she could
  find other employment at this time. Should your
  corporation fire her, lay her off with
  compensation, or find a way to retain her? In
  resolving this dilemma, apply
• Utilitarianism
• The Rights Model
• Your own personal opinion

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CAPITAL PUNISHMENT

• Apart from the United States, few countries use
  the death penalty.
• Only China and Iran execute more people than the
  U.S.
• No member of the European Union uses it. Under
  the European convention for the Protection of
  Human Rights and Fundamental Freedoms, it is
  regarded as a human rights violation, so no
  nation can be admitted to the European Union if
  it still has the death penalty on its books.

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• When President Bush was elected president, the
  federal government had not used the death penalty
  for 38 years. He reinstated it.
• When he was governor of Texas, that state had
  more executions than any other, and Bush signed
  152 death warrants more than any previous
  governor of Texas, or any other American governor
  in modern times.

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• Typically, he made his life-and-death decision
  after a half-hour briefing with his legal
  counsel.
• Only once, as governor of Texas, did he stop an
  execution.

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• Is it inconsistent to oppose the killing of
  embryos or fetuses, yet support the death
  penalty?
• Not necessarily. Bush has said Some advocates
  of life will challenge why I oppose abortion yet
  support the death penalty. To me, its the
  difference between innocence and guilt.

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• But to hold the two positions consistently, one
  would at least need to be very careful about
  supporting the death penalty. Since humans are
  fallible, any legal system that puts large
  numbers of people to death will risk executing
  people innocent of the crimes for which they were
  charged.

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• Several studies list people who have been
  condemned to death, and in some cases executed,
  who were later shown to be innocent.
• The Death Penalty Information Center has a list
  of 102 people wrongfully sentenced to death in
  the U.S. between 1973 and 2000.

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• An investigation by the Chicago Tribune of all
  682 executions in the U.S. between 1976 and 2000
  found that at least 120 people were put to death
  while still proclaiming their innocence, and in 4
  of those cases there was evidence supporting
  their claim of innocence.

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• When Florida Supreme Court Justice Gerald Kogan
  retired, he said that there were several cases in
  which he had grave doubts about the guilt of
  people executed in Florida.

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• President Bushs attitude about the risk of
  putting to death innocent people is in sharp
  contrast to another Republican governor who was
  once a supporter of the death penalty.
• In 1999, Gov. George Ryan of Illinois became
  concerned about the risk of putting innocent
  people to death when an investigation by a
  journalism class at Northwestern University
  proved that another man committed a murder for
  which Anthony Porter, a death-row inmate for 16
  years, was about to be executed.

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• Ryan set up a commission that, over 3 years,
  concluded that 13 condemned prisoners were
  innocent.
• Ryan stated, Our capital system is haunted by
  the demon of error, error in determining guilt
  and error in determining who among the guilty
  should die.

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• Just before he left office, Ryan felt that he
  could no longer live with the risk of executing
  the innocent he commuted all death sentences in
  Illinois to terms of imprisonment.

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• No matter how careful Bush may have been after
  all, he did spend 30 minutes reviewing each case
  before he signed the death warrant it remains
  possible, if not probable, that at least one of
  the people executed during his tenure was
  innocent.

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• Bush has said I support the death penalty
  because I believe, if administered swiftly and
  justly, capital punishment is a deterrent against
  future violence and will save other innocent
  lives.

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• In the third of his debates with Al Gore,
  moderator Jim Lehrer asked Bush whether he
  thought that the death penalty actually deters
  crime. Bush said, I do thats the only reason
  to be for it. Let me finish that I dont think
  you should support the death penalty to seek
  revenge. I dont think thats right. I think
  the reason to support the death penalty is
  because it saves other peoples lives.

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• The problem with this defense of capital
  punishment is that almost all of the evidence is
  against it. Since it is easy to compare murder
  rates before and after the abolition or
  reinstitution of the death penalty, or in
  different jurisdictions that do or do not have
  the death penalty, there is plenty of relevant
  data.

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• For example, after the 1976 USSC ruling that the
  death penalty is constitutional, a dozen states
  chose not to enact laws allowing it. These
  states have not had higher homicide rates than
  the states that did enact a law. In fact, 10 of
  them have had homicide rates lower than the
  national average.

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• South Dakota has it, North Dakota does not. The
  homicide rate is higher in South Dakota.
• Connecticut has it, Massachusetts does not.
  Again, the homicide rate is higher in the state
  that has the death penalty.
• Homicide rates have risen and fallen in roughly
  symmetrical patterns in states with and without
  the death penalty, indicating that the death
  penalty has little effect on the incidence of
  homicide.

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Executing the Mentally Retarded

• A person who is seriously mentally retarded is
  likely to be incapable of understanding right
  from wrong, and thus is morally innocent, even if
  he or she did commit the crime.
• As a national consensus against executing the
  mentally retarded began to build, Bush, as
  governor of Texas, came out against a bill
  prohibiting the use of the death penalty against
  profoundly mentally retarded criminals (with IQs
  of less than 65). His explanation I like the
  law the way it is.

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• Even in Texas, a poll in 1998 showed that 73 of
  all Texans were opposed to executing the mentally
  retarded.
• In May 1997, Bush denied an appeal for clemency
  on behalf of Terry Washington, a
  thirty-three-year-old mentally retarded man with
  the communication skills of a 7-year-old.
  Washington was executed.

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• In June 2002, the USSC ruled that, given the
  growing national consensus, executing retarded
  persons is cruel and unusual punishment and
  hence a violation of the 8th Amendment.

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Internet Activities and Assignments

• 1. Go to http//wbl.westbuslaw.com , select
  Internet Applications, and then click on
  Chapter 40. Do Activity 40-1, Ethics in
  Business.
• 2. Go to the homepage of a Fortune 500 company
  that has published its code of ethics on the
  World Wide Web. What ethical concerns does it
  cover? Is it a detailed document or general in
  its terms?