Ethical Reasoning and Corporate Programs

1
(No Transcript)
2
Ethical Reasoning and Corporate Programs
Chapter
6

• The Core Elements of Ethical Character
• Analyzing Ethical Problems in Business
• Whistle-blowing
• Making Ethics Work in Corporations

3
Managers values in contrast
Exhibit 6.Aa

• American managers were found to be more
  protective of organizational resources and more
  interested in compliance with rules than Russian
  managers.
• German managers were found to be more ethical,
  although more difficult to work with, than other
  managers within the European Union.
• Chinese were more concerned with profits and more
  willing to accept bribes than Americans, although
  Americans were less ethical in their reasoning
  than subjects from the developing country of
  Belize.

4
Exhibit 6.Ab
Managers values in contrast

• Spanish executives were found to be more ethical
  than American managers and they were more
  concerned with global harmful impacts than
  Americans.
• Chilean managers scored higher than Australian
  managers on issues of bribery, and American and
  Australian mangers were more concerned with who
  was being harmed in their ethical reasoning than
  Chilean or Ecuadorian managers.
• Iranian managers were found to be conformists and
  were sociocentric. These traits were found in
  other predominantly Arab countries and differed
  significantly from traits exhibited by American
  managers.

5
Stages of moral development and ethical reasoning
Figure 6.1
Age Group Development Stage and Major Ethics Referent Basis of Ethics Reasoning
Mature adulthood Stage 6 Universal principles Justice, fairness, universal human rights Principle-centered reasoning
Mature adulthood Stage 5 Moral beliefs above and beyond specific social custom Human rights, social contract, broad constitutional principles Principle-centered reasoning
Adulthood Stage 4 Society at large Customs, traditions, laws Society-and-law-centered reasoning
Early adulthood, adolescence Stage 3 Social groups Friends, school, coworkers, family Group-centered reasoning
Adolescence, youth Stage 2 Reward seeking Self-interest, own needs, reciprocity Ego-centered reasoning
Childhood Ego-centered
Childhood Stage 1 Punishment avoidance Punishment avoidance, obedience to power Ego-centered reasoning
6
Corporate culture and ethical climates

• Corporate culture
• A blend of ideas, customs, traditional
  practices, company values, and shared meanings
  that help define normal behavior for everyone who
  works in a company.
• Ethical climate
• The unspoken understanding among employees of
  what is and is not acceptable behavior.

7
The components of ethical climates
Figure 6.2
Ethical Criteria Focus of Individual Person Ethical Company Concern Society
Egoism (self-centered approach) Self-interest Company interest Economic efficiency
Benevolence (concern-for-others approach) Friendship Team interest Social responsibility
Principle (integrity approach) Personal morality Company rules and procedures Laws and professional codes
Source Adapted from Bart Victor and John B.
Cullen, The Organizational Bases of Ethical Work
Climates, Administrative Sciences Quarterly
33(1988), p. 104.
8
Three methods of ethical reasoning
Figure 6.3
Method Critical Determining Factor An Action is Ethical When Limitations
Utilitarian Comparing benefits and costs Net benefits exceed net costs Difficult to measure some human and social costs majority may disregard rights of minority
Rights Respecting entitlements Basic human rights are respected Difficult to balance conflicting rights
Justice Distributing fair shares Benefits and costs are fairly distributed Difficult to measure benefits and costs lack of agreement on fair shares
9
Figure 6.5a
An analytical approach to ethical problems
Step 1
Ask
Utility Do benefits exceed costs?
Rights Are human rights respected?
Justice Are benefits and costs fairly distributed
?
No
Yes
No
Yes
No
Yes
10
Figure 6.5b
An analytical approach to ethical problems
Step 2
Compare results
If yes is the answer to all three questions, it
is probably ethical
If no is the answer to all three questions, it is
probably unethical
If the answers are mixed, it could be
either ethical or unethical
11
Whistle-blowing protection around the world
Exhibit 6.Ba

• United KingdomThe U.K. Public Interest
  Disclosure Act protects most workers from
  retaliation by their employers, including
  dismissal, disciplinary action, or transfer.
• European UnionThe EU published a charter for
  whistle-blower protection, identifying terms
  under which commission staff may blow the
  whistle, imposing a duty upon officials to report
  suspected wrongdoing, and outlining the channels
  for reporting malpractice.
• South AfricaThe Protected Disclosures Act 2
  prohibits employers from subjecting an employee
  to an occupational detriment for raising concerns
  about unlawful or irregular conduct.

Source Lori Tansy Martens and Amber Crowell,
Whistle-blowing A Global Perspective (Part
1), Ethikos, May-June 2002, pp.6-8.
12
Exhibit 6.Bb
Whistle-blowing protection around the world

• IsraelThis country adopted whistle-blowing
  protection legislation that protects corporate
  and government workers.
• GhanaA whistle-blower protection act has been
  proposed to offer rewards and protection to
  people who volunteer information leading to the
  prosecution of white-collar criminals.
• South KoreaThe Anti-Corruption Act established
  the Korea Independent Commission Against
  Corruption, whose mission includes the
  encouragement, protection, and compensation of
  whistle-blowers.

Source Lori Tansy Martens and Amber Crowell,
Whistle-blowing A Global Perspective (Part
1), Ethikos, May-June 2002, pp.6-8.
13
Stigmas against whistle-blowing

• Divided loyaltiesIn some Asian countries,
  members of the company are treated as family
  members and it is considered wrong to report on
  family members.
• HistoryThe country may have a tragic history of
  reporting on others.
• LogisticsEmployees of global companies may be
  faced with numerous time zones and language
  differences that could prevent whistle-blowing or
  make it more difficult.
• Fear of retributionDespite government laws to
  protect whistle-blowers, many employees of global
  businesses fear retaliation.

14
Organizations ethics safeguards at work
Figure 6.5
Ethics safeguard Fortune 1000 (1992) Fortune 1000 (1999) SW PA Organizations (1996) 1,500 employees (2000)
Promoted ethics at work 93 71
Developed code of ethics 93 98 57 79
Created ethics office 17 30
--Ethics hotline 9 51
--Ethics office or hotline 50
Offered ethics training 25 20 55
Conducted audit/evaluation 11 23
15
Corporate ethics awards

• Business Ethics Awards criteria
• Be a leader in the field, showing the way
  ethically.
• Have programs or initiatives that demonstrate
  sincerity and ongoing vibrancy that reaches deep
  into the company.
• Have a significant national presence whose
  ethical behavior sends a loud signal.
• Be a standout in at least one area of ethical
  performance.
• Have recently faced a challenging situation and
  overcome it with integrity.