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Why Business Ethics?

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ETHICS OFFICER. INDEPENDENT AUDIT. DISCIPLINARY ACTION ... The Rights Ethic ... What are the ethics of the alternatives? What are the practical constraints? ... – PowerPoint PPT presentation

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Title: Why Business Ethics?


1
Why Business Ethics?
  • Ethical errors can end careers
  • Framework for business operations
  • Profitability
  • Lower costs
  • Personal well-being
  • Good will/reputation

2
Executives Comments on Reputation
  • A reputation good or bad, is tough to shake.
  • - Richard Teerlink (CEO, Harley-Davison)
  • If we were making that decision now in light of
    the press scrutiny we have been receiving, we
    probably would not have taken that risk.
  • - Robert C. Winters (Chairman, Prudential
    Ins.)
  • A bad reputation is like a hangover. It takes a
    while to get rid of, and it makes everything else
    hurt.
  • - James Preston (CEO, Avon)

3
Why Poor Ethical Conduct?
  • Employers over look it
  • Belief it wont be discovered
  • Hard to place blame
  • Lack of clear ethical culture
  • Personal gain
  • Corporate/supervisor pressure
  • Corporate gain

4
Types of Ethical Dilemmas
  • Individual Values and the Business
  • Business and Employee Rights
  • Business Operations
  • Business and Its Competition
  • Business and Its Product
  • Business and Its Stakeholders

5
Sources of the Business Ethos
BUSINESSETHICS
RELIGION
LAW
PHILOSOPHY
CULTURE
6
Aristotles Theory of Responsibility
  • You are responsible for your actions unless they
    are involuntary. The two factors that create
    involuntariness are
  • 1. IGNORANCE of facts or consequences of
    an act
  • 2. INCAPACITY to perform an action due
    to
  • a. high costs
  • b. no power
  • c. no alternative
  • d. external force
  • CAUTION There are some things such that a man
    cannot be compelled to do themthat he must
    sooner die than do, though he suffer the most
    dreadful fate.
  • Aristotle in The Nicomachean Ethics

7
Factors that Shape Business Ethicsin Other
Countries
  • HISTORICAL EXPERIENCE
  • CULTURAL
  • PHILOSOPHY and RELIGION
  • STAGE OF ECONOMIC DEVELOPMENT

8
Moral Guidelines for Multinational Companies
  • No intentional direct harm
  • Produce more good than bad for host
  • Contribute to hosts development
  • Respect human rights
  • Pay fair share of taxes
  • Respect local culture
  • Cooperate with the local government

9
Factors Influencing Managerial Ethical
  • Leadership
  • Strategy and performance
  • Corporate culture
  • Individual characteristics
  • Interrelatedness

10
How to Build in Ethics
  • TOP MANAGEMENT COMMITMENT
  • MISSION STATEMENT
  • ETHICS CODE
  • POLICIES/PROCEDURES
  • TRAINING
  • WHISTLE-BLOWERS HOTLINE
  • ETHICS OFFICER
  • INDEPENDENT AUDIT
  • DISCIPLINARY ACTION

11
Principles of Ethical Conduct
  • Categorical Imperative
  • Conventionalist Ethic
  • Disclosure Rule
  • Doctrine of the Mean
  • Ends-Means Ethic
  • Golden Rule
  • Intuition Ethic
  • Might-Equals-Right Ethic
  • Organization Ethic
  • Principle of Equal Freedom
  • Proportionality Ethic
  • Rights Ethic
  • Theory of Justice
  • Utilitarian Ethic
  • Virtues and Character Development

12
The Principle of Double Effect
  • When both good and evil consequences result from
    an action, it is ethical if three conditions are
    met
  • 1. Good effects outweigh evil
  • 2. Intentions are good
  • 3. No better alternative exists

13
The Rights Ethic
  • REFERS TO ENTITLEMENTS THAT PEOPLE HAVE, FOR
    EXAMPLE, TO LIFE, LIBERTY, SPEECH, HAPPINESS,
    PRIVACY,RELIGION, FREE CONSCIENCE
  • CONFERRED AS NATURAL RIGHTS or
  • CONFERRED AS CIVIL RIGHTS CONSTITUTIONS STATUTES
    COMMON LAW
  • CORRELATED WITH DUTIES
  • NOT ABSOLUTE

14
Three Spheres of Justice
  • Distributive Justice
  • Laws and rules apply consistently
  • Discrimination only for fair/relevant reasons
  • Rewards proportionate to efforts and achievements
  • Retributive Justice
  • Fairly impose blame
  • Punishment proportional to crime
  • Compensatory Justice

15
John Rawls Theory of Justice
  • Each person is to have an equal right to the most
    extensive basic liberty compatible with a similar
    liberty for others.
  • Social and economic inequalities are to be
    arranged so that they are both
  • Reasonably expected to be to everyones advantage
    (and no action should be taken that does not
    improve the lot of the least advantaged), and
  • Attached to positions and offices open to all

16
Utilitarianism
  • Obligation/duty is to perform the action that
    will result in the greatest possible balance of
    good over evil
  • Objections
  • Hard to measure happiness or utility
  • Confuses good of community with good of
    individual(s)
  • Consequences cannot be predicted
  • What is a benefit? What is a cost?

17
Suggestions for Making Ethical Decisions
  • Use Rational Terms
  • Use Decision Making Tactics
  • Set Ethical Priorities
  • Commit Publicly
  • Be a Role Model
  • Act, Follow Through
  • Develop Sympathy and Charity
  • Others

18
Valasquesz 7 Step Model
  • What are relevant facts?
  • What are ethical issues?
  • Who are primary stakeholders?
  • What are the possible alternatives?
  • What are the ethics of the alternatives?
  • What are the practical constraints?
  • What actions should be taken?

19
Valasquesz 7 Step Model (cont.)
  • Ask 5 questions
  • What are benefits and harms of each alternative
    which leads to best overall consequences?
  • What moral rights do affected parties have
    which action best respects those rights?
  • Which action treats all the same, except where
    morally justifiable?
  • Which course advances the common good?
  • Which course develops moral virtues?

20
Why Ethical Decisions Are Difficult
  • Facts do not dictate values
  • Good and evil are interlocked
  • Knowledge of consequences is limited
  • Multiple stakeholders make competing claims
  • Competing interests use incompatible ethical
    arguments
  • Standards vary with time and place
  • Humans are imperfect
  • Current realities pose new novel conflicts
  • Large organizations are ethically complex
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