Responsibility
the ability or authority to act or decide on one's own without supervision
Responsible Leadership
Making business decisions that takes into account stakeholders, such as workers, clients, suppliers, the environment, the community, and future generations.
License to Operate (Data on Business and Responsibility)
Intangibles:
- 53% of total value of Fortune 500 or about 24.27 trillion
Consumers:
- 85% reputation responsibility. Key (competitiveness and market positioning)
Risk Management:
- government, NGO's, Legal
Employees:
- 3 of 5 want to work for a values com
Smeal Strategic Plan
1. Providing extraordinary education.
2. Highest quality research.
3. Building our culture of:
- integrity
- diversity
- serviceability
- sustainability
Smeal Honor Code
We, the Smeal College of Business Community, aspire to the highest ethical standards and will hold each other accountable for them. We will not engage in any action that is improper or that creates the appearance of impropriety in our academic lives, and
ERC Data: Global Business Ethics Survey
- NBSES was a study of employees to determine what goes on within companies
- Ethics Compliance Initiative
- In most GBES Countries, pressure to compromise is felt by more than 1 in 5 employees
- As pressure to compromise rises, misconduct increases
- All
ERC Data: 6 Elements of Good Ethics Program/Culture
1. Written standards of workplace integrity
2. Training on the standards of workplace integrity
3. Ability to seek feedback and advice related to workplace integrity
4. Confidential or anonymous reporting mechanism
5. Workplace integrity as part of the pe
Poor Ethics Vs. Good Ethics Culture
- Culture supports reporting issues
- Getting the culture right is really valuable
- Good cultures have low pressure to compromise standards, low observed misconduct, high reported misconduct, low experienced retaliation
Global Business Ethics - Big 5 Misconduct Issues
- Bribes and corruption
- Employee abuse
- Fraud/lying and theft
- Regulatory violations
- Contracts misconduct
Ethics 3 Part Definition
Set of principles; right conduct; underlying values
Business Ethics Book Definition
Concerned with morality and fairness in behavior, actions, policies and practices that take place within a business context.
Five Principles of a High Quality Ethics & Compliance Program
- Ethics & compliance central to business strategy
- Ethics & compliance risks are identified, owned, managed, and mitigated
- Leaders all levels across the org. build & sustain a culture of integrity
- The organization encourages, protects, & values repo
Penn State Values
Penn State Community
Responsibility
Respect
Integrity
Discovery
Excellence
Ethics Decision Making Process - Can you teach ethics?
Ethics is an individual process
- ethical awareness
- ethical judgment
- ethical behavior
"I cannot make you ethical... I can make you more aware
Values Framework
- A structured decision making approach to solving ethical issues
- Many companies follow a rules based approach to ethics. However, a values based approach is a preferred method to develop sound ethical practices.
Awareness
- What are the ethical concern
Marijuana Costs to Employers (Corporate)
- Lost productivity ($200 Billion/year)
- Absenteeism (78% higher)
- Injuries (85% more likely)
- Litigation (general and across states)
- Safety (equipment or non-equipment)
- Compliance and risks
- Health cost increases
Marijuana Impacts: Personal
- Short term memory problems
- Impaired thinking
- Loss of balance and coordination
- Decreased concentration
- Changes in sensory perception
- Impaired ability to perform complex tasks
- Decreased alertness
- Decreased reaction time
Media Influence Data
High School Students said that attitudes did not come from someone they knew, but from the media
74% falsify finances
68% secret dumping of toxic waste
62% blackmail normal
53% sabotage comp. facilities
17% injure/murder if they knew too much
Media create
Three ways to assess ethics
Conventional (societal norm focus)
Principles (moral guideline focus)
Tests (applied guideline focus)
Conventional Approach
- Comparison of decision, behavior and practice to prevailing norms of acceptability
- Relies on the use of common sense and a widely held sense of what is ethical
Descriptive Ethics
What is" "what is happening"
- Describing, characterizing and studying morality of people or organization
- Compares and contrasts moral codes, values, beliefs, etc
- Focuses on what IS occurring
- What people believe is going on
- Danger: does not descr
Normative Ethics
what ought to be" "supposed to be happening"
- Supplying and justifying a coherent moral system of thinking
- Distinguished what is ethical from what is unethical
- Might be based on moral common sense, or require critical thinking and ethical analysis
-
Ethics and the Law
Obedience to the law is generally regarded to be a minimum standard of ethical behavior
Ethical Relativism
Relativism when we pick and chose which source of norms we wish to use on the basis of what will justify our current actions or maximize of freedom
Population Hypothesis
Amoral: most common
Moral/Immoral: less common
Is that the distribution of the three models might approximate a normal curve within the management population, with the amoral group occupying the large middle part of the curve and the moral and immoral cat
Individual Hypothesis
Within each individual manager, these three models may operate at various times and under various circumstances
Kolberg's Levels of Moral Development
preconventional, conventional, postconventional
Preconventional Level
- FOCUS: Self
- How people behave as infants (also applicable to adults)
- Stage 1: Reaction to punishment (scolding or spanking)
- Stage 2: Seeking of rewards (connecting of being good with reward forthcoming)
Conventional Level
- FOCUS: Others
- Importance of conforming to the conventional norms of society
- Social relationships form and become dominant
- Stage 3: Good boy/Nice girl morality (rewards to for living up to what is expected bt family or friend, what is generally exp
Postconventional Level
- FOCUS: Humankind
- Level in which individual is able to rise above conventional level of "rightness" or "wrongness"
- Individual develops concept of ethics that is more mature
- Moral principles become self-accepted, not because of society but because o
Sources of Value
Look at different sources of a manager's (employees) values to explain how and why people behave ethically
Values reflect what the individual considers important in the larger scheme of things. One's values, therefore, shape one's ethics.
Plural values le
Elements of Moral Judgment
Moral imagination
Moral identification and ordering
Moral evaluation
Tolerance of moral disagreement and ambiguity
Integration of managerial and moral competence
A sense of moral obligation
Moral Imagination
Refers to the ability to perceive that a web of competing economic relationships is, at the same time, a web of moral or ethical relationships.
Moral Identification and Ordering
Refers to the ability to discern the relevance or nonrelevance of moral factors that are introduced into a decision-making situation. Are the moral issues actual or just rhetorical? Rank and order them.
Moral Evaluation
- Practical phase, where managers need to understand the importance of clear principles and identify economic outcomes
Tolerance of Moral Disagreement and Ambiguity
It includes the ability to hear, discuss and be respectful toward other people's views
Integration of Managerial and Moral Competence
- Learning that there is a significant corporate and personal price to pay for amorality
A sense of moral obligation
Concern for fairness, justice, and due process for people and communities
Principle Approach (moral guideline focus)
- Normative in nature
- Offer guidance regarding what one ought to do
- Concept, guideline or rule that you can apply when faced with an ethical decision
Moral Philosophy Categories
1. Teleological theories
2. Deontological theories
3. Aretaic theories
- Virtue theory
Teleological Theories
Moral Philosophy
- Focuses on the consequences or results of the action
- Utilitarianism, Virtue
- Taking the action that is the greatest good for the greatest number
Deontological Theories
Moral Philosophy
- Duties, rights/justice
-Kant: Act as if to will it a universal law
- Ex: duty of the manager to tell the truth
Principle of Utilitarianism
- Rightness of an action can be determined looking at the results or consequences
- Consequential principle, teleological principle
- Greatest good for the greatest number
- Advantages:
* Forces decision maker to think about greater good
* In business, fo
Kant's Categorical Imperative
- Duty approach, deontological principle
- Refers to the obligatory nature of particular actions as a way of reasoning about what is right and wrong
- Sense of duty arises from reason or rational nature (internal source)
- Three formulations:
1. One shoul
Principle of Right
- Duty approach, deontological principle
- Moral rights, legal rights
- Rights cannot simply be overridden by utility, but only for another more important right
- Expresses morality from the point of view of an individual or groups on individuals, rather
Principle of Justice
- Duty approach, deontological principle
- Fairness principle, involves fair treatment of each person
- To decide what is fair for each person depends of type of work, effort expended, merit, need, etc
- Kinds of justice:
1. Distributive justice: distribu
Rawl's Principle of Justice
1. Each person has equal rights to the most extensive basic liberties
2. Social and economic inequalities are arranged so that they are expected to be to everyone's advantage and attached to positions and offices open for all
Ethics of Care
- Feminine approach
- women speak in a different voice , based more on responsibility to others and continuity of interdependent relationships
- Argues that duties and utilitarianism focus too much on individual self and cognitive thought process
- Views
Virtue Ethics
- School of thought that focuses on individuals becoming imbued with virtues
- Thought that is centered in the heart of the individual
- Emphasizes on BEING rather than DOING
- "What sort of person should I be/become?" vs. "What should I do?"
- Character
Servant Leadership
- Increasingly popular leadership approach that is based on the moral principle of serving others first
- Begins with the natural feeling that one wants to serve
- Then a choice is made to aspire to lead
- Builds a bidge between business ethics and leader
The Golden Rule
- Strong (most powerful) principle of ethical living and decision making
- Ethic of reciprocity
- "Do unto others as you would have them do unto you"
- Key is impartiality
- 4 reasons why managers should adopt the Golden Rule:
1. Accepted by most people
2
Ethical Test
- The filter you use to check yourself in an ethical situation
- More practical in orientation and do not require depth of moral thinking
Ethical Tests
Going public, common sense, best self, venting others, purified idea, gag test, big 4
Going Public
# 1, most important ethical test
"How would I feel if others knew I was doing this? How would I feel if I knew that my decisions or actions were going to featured on the national evening news tonight for the entire world to see?
Common Sense
Does the action I am getting ready to take really make sense?". If, for example, you would surely get caught engaging in a questionable practice, the action does not pass the test of common sense.
Best Self
Is this action or decision I'm getting ready to take compatible with my concept of myself at my best?
Venting Others
Expose your proposed action to others and get their thoughts on it before acting.
Purified Idea
An idea or action might be thought to be "purified" - that is, cleansed or made acceptable - when a person with authority (lawyer, supervisor, accountant) says or implies it is appropriate.
Gag Test
This test was provided by a judge on the Louisiana Court of Appeals. He argued that a manager's clearest signal that dubious decision or action is going too far is when you simply "gag" at the prospect of carrying it out.
Big Four
The big four are four characteristics of decision making that may lead you astray or toward the unethical course of action. The four factors are greed, speed, laziness, and haziness.
Greed is the drive to acquire more and more in your own self-interest
Sp
Fraud Triangle
opportunity, motivation, rationalization
Culture
- shapes attitudes
- reinforces beliefs
- direct behavior
- set expectations
Best Practice for Improving Ethical/Strong Culture
Strong:
1. Leadership Support:
- Moral tone of an org is set by top management
2. Code of Ethics:
- Sets the tone and direction for the org
- Metaphors: rule book, signpost, mirror, magnifying glass, shield, smoke detector, fire alarm, club
3. Ethics offi
Factors Influencing Employee Unethical Behavior
Behavior of superiors (biggest driver of behavior)
- Influence of bosses is powerful
Behavior of peers
- people do pay attention to what their peers are doing and expecting
Industry ethical practices
- Contextual factors are influential
Society's moral cl
Behavioral Ethics
Behavioral Ethics:
The study of systematic and predictable ways in which individuals make ethical decisions and judge the ethical decisions of others that are at odds with intuition
Gives insight into how people actually behave in organizations as a resul
Bounded Ethicality
Tends to occur when managers and employees find that even when they aspire to behave ethically it is difficult due to a variety of organizational pressures and psychological tendencies to intervene. There are limits to people's abilities to be ethical.
Conformity Bias
Is a behavioral pattern that has also been observed. This is the tendency people have to take their cues for ethical behavior from their peers rather than exercising their own independent ethical judgment.
Overconfidence Bias
The tendency for people to be more confident of their own moral character or behavior than they have objective reason to be.
Self-Serving Bias
This is the propensity people have to process information in a way that serves to support their preexisting beliefs and their perceived self-interest
Framing
Refers to the fact that people's ethical judgements are affected by how a question or issue is posed (framed). It has been found, for example, that when people are prompted to think of an issue as an "ethical" issue they will tend to make more ethical dec
Incrementalism
Is the predisposition toward the slippery slope. It has been noticed that there is a tendency toward making a series of minor ethical misjudgments that can lead to major ethical mistakes.
Role Morality
Is the tendency some people have to use different ethical standards as they move through different roles in life.
Moral Equilibrium
The penchant for people to keep an ethical scoreboard in their heads and use this information when making future decisions.
Moral Decisions, Moral Managers, Moral Organizations
The ideal is to create a moral organization that is fully populated by moral managers making moral decisions (and practices, policies, and behaviors), but this is seldom achieved.
Bribery
- Large sums of money to influence high ranking officials to take actions that they otherwise would not take
Grease Payments
- Small sums of money given for the purpose of getting officials to continue doing what they are supposed to, do it faster or better
- Usually given to minor officials
Bribery For, Against, Costs
Favor of Bribery:
- They are necessary for profits in order to do business
- Everybody does it- it will happen
- It is an accepted practice in many countries- it is normal and expected
- Bribes are forms of commissions, taxes, or compensation for conducti
FCPA
- Foreign Corrupt Practices Act
- Differentiates bribes and grease payments
- Prohibits american companies from making corrupt payments to foreign officials
- Prohibits making bribed directly or through intermediaries
- Only exception: facilitating paymen