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In simple terms, ethics is the study of standards of behavior, with business ethics focusing on standards of business behavior.
Ethics can be analyzed at three different levels:
How we act as individuals;–How we structure our organizations; andHow we structure society (including our laws
–Should the chief obligation of managers be to look out for the bottom line, or do managers have obligations to other stakeholders such as customers and employees?
Managers have an obligation to other stakeholders
Is there a tradeoff between looking out for the bottom line and acting ethically? (or does acting ethically actually lead to better long-term bottom line results)?
- There is no tradeoff. Acting ethically leads to longterm bottomline results
- 1. prevents lawsuits
- 2. prevents brand name for being tournished
- 3. keeps stakeholders informed and satisfied
Do global business organizations have unique ethical challenges based on the different customs and practices in locations where companies do business
bribery, child labor, different views on environmental sustainability
Ask you to scrutinize your reasoning for a decision by answering a tough question that might otherwise be avoided: Could you defend your choice if it were made public
Helps you make fair and defensible decisions by putting yourself in the position of the person who would suffer the primary negative consequences of a decision. Would you agree with and respect the reasons for a =the decision
raises the issue of consistency by asking whether you could defend your decision using the same reasoning is similar cases. Is the action you are contemplating, and the rationale behind it, something you wish others would adopt in similar circumstances
The Generalizability Test
What are the three traditions in ethics
The action (means) people use to achieve their goals
The Agents (Persons) who are acting in the situation
The ends (goals) that are outcomes of action
are frameworks for analyzing the moral dimensions of a given situation. they help managers identify key issues raise important questions, and provide a basis for making informed and defensible decisions
Decision Guide #1 Standards of Conduct
Beneficence; Help others
Nonmaleficenc; avoid harm
autonomy; giving freedom
Justice; Fair play
Responsibility; treat others like you want to be treated
The decision guide is ______ which refers to the principles and rules governing a particular commuting. These standards determined what the community considers morally appropriate and inappropriate actions and help the community articulate its mmoral rules...
Beneficence: People should provide help to others.
Nonmaleficence: People should avoid causing harm to others, especially intentional and direct harm.
Autonomy: People should be free to make their own choices.
Justice: People ought to give others what they are due and operate with a sense of fair play.
Responsibility: People have certain expectations of themselves, and feel certain obligations to themselves, which they expect in return from others.
Questions to consider
1. Does this particular act or practice violate a steadier of conduct, whether it be more or the law
2. Can we pursue our strategic interest with our violating a standard o conduct
3. If the public fins out about this activity, could it lead to actions against the firm (lawsuits)
4. Are the standards of conduct observed within the firm defensible and consistent with those of the society in which it operates
5. If there is a conflict between relevant standards of conduct, how can we work togehter to make sure all parties benefit over the long term?
This philosophy focus on the action one may take
Principals like fairness and honesty are also relevant
Is there a conflict between relevant standards of conduct
What are the importance of standard of Conduct
For any society to functions effectively there must be a set of moral standards that are widely shared and observed. That certain basic behavioral mores are necessary for firms to functionwhile its rules may be implicit or explicitly stated and sometimes both every firm has ethics culture. for a business to maximize tis success, it must evaluate and integrate its community's standard of conduct int its operations
The core idea in this decisions guide is that firms have to walk the talk and find ways of doing business that enable them to embody the character traits to which they aspire, such as service, integrity and diversity. Here, we look at much more than the rhetoric of the firm; we focus on what we learn from the habits of managers and ways of doing business that are common with the firm
Decision Guide #2 From Virtue Ethics to Character and Relationships
(The Team Leader)
Taking care of customers or employees
Being trustworthy and reliable partner with suppliers
Respect for self and others
Questions to Consider
1. What character traits does the firm or managers need to be successful over time?
2. To what extent do the actions we are contemplating reflect the character traits that the firm desires
3. Are These character traits the basis for excellent organization performance over time?
4. To what extent is this problem a result of a weak or bad relationship
5. Could improvements in the manner in which the firm communicates with and treats employees and other stakeholders improve the long-term prospects for the firm
Firms and managers need to not only identify their desired goals they must also recognize the character qualities.. the virtues and vices they want to develop or eliminate to help them achieve their purpose: important character traits include courage, decency, respect for self and others, fairness, trustworthiness, integrity, loyalty, compassion, and prudence
Identifying key character traits
Is based on the notion that firms need to create favorable consequences for key stakeholders. Stakeholders are individuals or groups that can affect, or who are affected by, the activity of the company
Decision Guide #3 from consequence to purposes
A helpful way for managers to identify the relevant purposes and consequences in a given case it to do a stakeholders analysis a list of the relevant stakeholders, highlighting their purpose (what they want) and considering their likely course of action in them of this purposes...
Questions to Consider
1. Which purposes are most important? Are there any clear priorities among stockholders
2. Which actions will best help fulfill the key purposes of the firm?
3. Will certain stakeholders be especially harmed? Will they fell negative toward the firm and or seek to hurt the firm?
4. are there any natural alliances among key stakeholders that can developed?
5. can we pursue our interest in ways that also help other key stakholdrs?
The three decision guides help capture what is going on, morally speaking, within a given case. There may be tensions between the guides, particularly between design guide 3, purposes and Consequences, and decision aged 1, standards of Conduct. the is a long standing tension between the ends and the means in ethics. Those who focus on the ends or goals tend to want to achieve such goals even if doing so entails bending moral rules that we normally observe. those who focus on the means may become so fixated on being decent and responsible that they fail to achieve certain key objectives, whether it be winning a war or making their quarterly numbers.
The Three Decision Guides and Decision Making
is the process of convincing yourself that a design is fair and defensible, when, in fact, it merely serves your own interest or offers an easy way out
Good Decision making
When making ethical decisions, managers are often left wondering whether their choices were right and sound. The following are some quoits managers can consider when looking for benchmarks to test tie decision making
1. Did I use the decision guides to help frame the case and highlight the moral dimensions?
2. Did I think through and address the ethical challenges that were raised?
3. did i gather the right information, chick the facts and include all the right people
4. did i use a fair process to get thto my decision
5. is my decision consistent with the law and the express values of my firm and the community in which the firm operates
6. Does my decision pass the publicity test? the reversibility test? the generalizability test?
Ethical Decision Process
- DG1 Standards of Conduct
- DG2 Character and Relationships
- DG3 Goals and Purposes
- Publicity Test
- Reversibility test
- Generalizability test
Why Decision matter
a frustrating aspect of doing ethics for many business students and managers is that the exercise of discussing cases and debating how to proceed leaves them more confused and uncertain than when they started.
The following considerations suggest why your particular decision and reasons you chose it matters
- YOU ARE ACCOUNTABLE TO STAKEHOLDERS
- The decisions you make must be defensible to various stakeholder groups, particularly those to which the firm is most committed and those that have most power to influence the fate of the firm
- ETHICS TALK IS HELPFUL
- Defending a decision in ethical terms with a coherent rationale is very important particularly when dealing with stakeholder groups outside the firm, such as the public, customers, suppliers, and the government
- ETHICAL DECISIONS ARE PART OF THE JOB
- Every day, managers are asked to weigh or balance responsibilities to various stakeholders.
- PERSONAL INTEGRITY IS IMPORTANT
- A decision should matter to you personally, particularly if there are important values or commitments at stake about which you have strong feelings
- LEGAL REASONING IS NECESSARY BUT NOT SUFFICIENT
- The law provides a moral foundation with which corporate behavior should comply except in circumstances where the law may be unjust, and which mangers should respect.
The idea behind reflective equilibrium is that we should not put all our eggs in either the theory or practical judgment basket; both provide important moral insight and both should factor into making good decisions. To decide what the right action is, reflective equilibrium asks that we try to balance our use of moral theory, our principles and virtues, with our moral intuitions. That is, we try to create agreement between theory and practice. When our principles and our considered judgment are squared with each other meaning they tell us the same thing, then we are said to be in reflective equilibrium
The text describes the case of an applicant to an MBA program who is concerned that her grades and GMAT scores are not high enough to get her into a top MBA program. She is considering taking two actions – not disclosing on her resume that she lost her job eight months ago and inflating her title and experience at a consulting firm. In your view, would either of these actions constitute an ethical lapse?
Yes, I believe this is a moral lapse. The way to evaluate this moral lapse is to use the decision guide process. The decision Guide #2 From Virtue Ethics to Character and Relationships. The importance of her character traits when she makes a decision. Evaluating Her decision to not disclose on her resume that she lost her job eight moths ago and inflating her title and experience at a consulting firm leads to traits that form and become patterns of action over time. if she can evaluate her actions in terms of their symbolic importance
The Basic Framework Ideology
1.Is the action consistent with the actors basic Duty
2. Does it respect the rights and other legitimate of the affected party
3. Does it reflect best practice?
4. Is it compatible with the actor's own deeply held commitments
a requirement to act or not to act in a certain way; are typically owed to other parties, The Company, Colleagues, customers, and the general public. though to oneself are also important
- The Basic Framework
Is often the converse of a duty; correspond with other parties duty not to steal; corresponds with the other party duty to inform; an entitlement to certain behavior from other people; are sometime categorizes as positive
The Basic Framework
Are sometime referred to as values, ideals, and aspirations; The distinction between behavior that is ethically required (the must) and behavior that is good but not mandatory. will often elicit praise or admiration even though its absence would not merit criticism or blame
The Basic Framework
the reading notes that there are four fundamental questions that an actor (individual, company, or group) should consider when evaluating a possible course of action:
–Is the action consistent with the actor’s basic duties?–
Does it respect the rights and other legitimate claims of the affected parties?–
Does it reflect best practice?–
Is it compatible with the actor’s own deeply held commitments?
Describe the approach used in this exhibit. What are the eight principles listed in the exhibit?
The eight principles help managers apply the ethical standards on industry basis. Ethics is sometime tacit and not explicit, so the principles help as a guideline.
Describe what David Sokol did with the Lubrizol purchase.
David Sokol got some advice from Citi bankers about potential acquisition for Berkshire and one of those potentials was the company Lubrizol. Sokol had Citi bankers arrange a meeting the executives at Lubrizol. After that meeting, Sokol bought shares in the stock. Then he tells Berkshire about the how he thought the company was a good acquisition. Berkshire acquire the company and Sokol made millions. According to the audit board at Berkshire, Sokol was acting on the behalf of Berkshire when he purchased the stocks from Lubrizol, which in their opinion, violated inside trading codes of conduct
Do you think that what David Sokol did with Lubrizol was ethically inappropriate? Why or why not?
Yes, I believe what David Sokol did was ethically inappropriate. He clearly violated the codes of conduct within Berkshire. He was acting on behalf of Berkshire when the citi bankers proposed the 10 companies that would be potential acquisitions for the company. Under Decision Guide 2 Character and Relationships, which trustworthiness, integrity, and fairness are part of the evaluation of his character, Sokol should have done a reflective equilibrium and could have went through a publicity and reversibility test
What was the conclusion of the Berkshire Hathaway audit committee on Sokol’s actions?
The audit committee ultimately agreed that Sokol acted unethically. They concluded that while Citi bankers presented Sokol with potential acquisitions for Berkshire, he positioned himself to purchase stocks and then presented the case to Warren Buffett as an potential takeover
Do you think any of the frameworks/decision guides discussed in this class could have helped Sokol make the right decision?
I think both the frameworks and decision guides would have been helpful in Sokol making the right decision. Sokol spoke highly about integrity in his career. However, it was believed that he lost his way by being so privileged as part of warren buffet's inner circle. Under the basic framework, Best Practices would have stopped him in his tracks and the reversibility and publicity test would have made him reflect
Describe the different parties to this case – who was present and what were the views of each party regarding the decision to launch the shuttle?
The different parties were:
- Nasa engineers and managers
- Morton's engineers (the contracting company)
The blog post notes that “Despite their best intentions, the engineers were at fault too.” Do you agree? If so, in what way were the engineers at fault?
yes the engineers were at fault, because they didn't do a thorough analysis of the problems concerning the failures of o rings and the temperature.
The blog post notes that “the reward system at Morton Thiokol also contributed to the disaster.” What does this mean?
Chances are that the reward system at Morton Thiokol also contributed to the disaster. Most likely, managers at Morton Thiokol were rewarded for pleasing clients, in this case NASA. When it became clear that NASA didn’t like the “don’t launch” recommendation, Morton Thiokol managers consciously (or subconsciously) realized that their reward was in jeopardy. And they reacted to protect that reward.
The post notes that framing the decision as a “management decision” helped ensure that the ethics of the decision—saving lives—were faded from the picture. Explain
The decision to make it a "management decision"
An examination of this disaster through a modern day “behavioral ethics” lens reveals a troubling picture of an ethical minefield loaded with blind spots that are eerily similar to those plaguing contemporary organizational and political decision processes:The construal of the decision and its impact on ethical fadingThe bounded examination of the available dataThe powerful force of rewardsThe erroneous “smoking gun” guiding the decision processBlind spots that are more dangerous the more they go unnoticed
The Challenger tragedy was as much a technological disaster as it was an ethical one. With the benefit of hindsight, we can see how the organizational culture contributed to the loss of life. Imagine yourself as a senior manager at NASA following the Challenger explosion. What steps would you take to change the culture at the agency?
I would institute a decision making process that will allow all decision to be made through the lens of ethics framework