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Artemis Moon Business Ethics Final Exam TCU

Terms in this set (46)

Caux Round Table, 7 Principles of Business
1. Beyond Shareholders, toward Stakeholders
2. Toward Innovation, Justice and World Community
3. Beyond the Letter of Law Toward a Spirit of Trust
4. Respect for Rules
5. Support for Multilateral Trade
6. Respect for the Environment
7. Avoidance of Illicit Operations
3 Most Common Observed Forms of Misconduct
1.Personal Business on Company Time
2.Abusive Behavior
3.Lying to Employees
~ Where Cultures are Weaker, Misconduct is More Prevalent
Corporations as Moral Agents
Corporate culture without values and appropriate communication about ethics can facilitate individual misconduct
The Five Employee Rights
Right to privacy
RIght to work (employment at wil)
Right to safe working conditions
RIght to adequate pay
RIght to due process
Define Compensation/Examples
the exchange of labor for monetary and non-monetary benefits.

Examples: Salary, health benefits, stock options, bonuses
Employers Purpose for Compensating employees
Ensure a productive, loyal, and stable workforce.
Motivate its workers.
To link effort and output that is paid.
To maintain competitive price levels.
Employees Purpose for Compensation from employer
Stable income flow.
Maintain and enhance ones standard of living.
To accomplish family goals (retirement, education, and travel).
How is compensation determined?
There is an established Minimum wage on state and federal levels.

Through State and municipality "living wage" ordinances

Union Contracts

Labor Market
What is the critical friction? Who said it?
The critical friction is "Who should get what?"

Said by Andrew Carnegie in 1889.

Quote: "Under the law of competition, the employer of thousands is forced into the strictest economies, among which the rates paid to labor figure prominently, and often there is friction between the employer and employed, labor and capital, etc."

"The millionaire will be but a trustee for the poor, entrusted for a season with a great part of the increased wealth of the community, but administrating it for the community far better than it could or would have done for itself... The man who dies leaving behind him millions of available wealth, which was his to administer during life, will pass away "unwept, unhonored, and unsung."
Where is 'due process' involved in the US constitution? Where was it adopted from?
Due process is found in the 5th and 14th ammendments

5th ammendmnt="No person shall be deprived of life, libery, or property, without due process of law...."

14th ammendment="No state shall deprive a person of life, liberty, or property, without due process of law.

Adopted from British Law based of the Magne Carta from 1215 AD.
What is the right of Due Process?
Due process is a legal term that refers to "how" and "why" laws or rights are enforced.

Due process applies to all persons, ciizens or aliens, as well as corporations.

Answers, "Are rights applied fairly at work?"
What is procedural due process? What is due process based off the concept of "fundamental fairness?"
Procedural Due Process refers to how the government can lawfully go about taking away a persons freedom or property when the law otherwise gives them the power to do so.

1) Were the rules and processess followed?
2) Is the law applied fairly to all?
3) Does the law presume guilt, or is it too vague?

Example: Did a person get a fair trial before being punished for a crime?
What is substantitive due process? What is substantitive due process based off the concept of "fundamental fairness?"
Substantitive due process are general rights which give power to the individual to possess or do certain things, despite the governments desire for the contrary.

1) Was the law itself reasonable?
2) Was appropriate governmental justification used in punishing the individual?

Example: Legislation was struck down that required certain non-dangerous mentally ill persons to be confined against their will.
What are the elements of Procedural Due Process?
1) Right to a fair trial
2) Right to be present at trial
3) Right to impartial (not biased) jury
4) Right to be heard in one's defense
What are the 7 advantages to Procedural Due Process?
1) Speed
2) Cost
3) Individually-tailored outcomes
4) Control by parties, not courts
5) Confidentiality
6) Flexibility
7) Internationalization
What are the 4 disadvantages of Procedural Due Process?
1) Equal protection
2) Enforcement
3) Public Access
4) Regulation
How to plan for procedural due process?
=P.A.Q.A.F.S.

1) Predict the types of problems
2) Assess the procedural risks
3) Quantify the desired outcomes
4) Allocate adequate resources for success
5) Formalize program goals and policies
6) Seek broad support for program
How to implement procedural due process?
=R.R.E.E.R.

1) Rigorous case examination
2) Required participation
3) Extensive training
4) Effective program evaluation
5) Review and revise the program
Where and when can employers regulate employee rights and behaviors?
Employers can regulate employee behavior.....
1) During work hours on the job
2) After work hours on work premises
3) Off work premises
4) At home

Employers can limit employee rights.....
1) During the hiring process
2) During the period of employment
3) After separation from the firm
How should an organization develop an ethics program?
What does a strong ethics program include?
An organizations should develop an ethics program by...
1) establishing,
2) communicating,
3) and monitoring uniform ethical values and legal requirements.

A strong ethics program includes:
1) Written code of conduct
2) Ethics officer to oversee the program
3) Care in the delegation of authority
4) Formal ethics training
5) Auditing, monitoring, enforcement, and revision of program standards.
What are the minimum requirements for ethics and compliance programs? Also referred to as what?
Referred to as a company's 7 step program

1) Standards and procedures, such as codes of ethics, that are reasonably capable of detecting and precenting misconduct.
2) High-level personnel who are responsible for an ethics and compliane program.
3) No substantial discretionary authority given to individuals with a propensity for misconduct.
4) Standards and procedures communicated effectively via ethics-training programs
5) Establishment of systems to monitor, audit, and report misconduct.
6) Consistant enforcement of standards, codes, and punishment
7) Consistant improvement of the ethics and compliance program
What is a code of conduct?
A code of conduct is a formal statement that describes what an organization expects of its employees.
What is a code of ethics?
Consists of general statements that serve as principles and the basis for the rules of conduct. It is the most comprehensive document.
What is a statement of values?
A statement of values serves the general public and addresses stakeholder interests.
What are the 6 core values often contained within corporate codes of ethics?
1) Trustworthiness
2) Respect
3) Responsibility
4) Fairness
5) Caring
6) Citizenship
What are ethical officers/comittees responsible for? What are some of their duties?
Ethics officers or committees are responsible for....the oversight of the ethics/compliance program
1) Assess the needs and risks that an ethics program must address
2) Develop, revise, and disseminate the code
3) Conduct training programs for employees
4) Develop effective communication
5)Establish audits and control systems
6) Review and modify the program to improve effectiveness
What must ethics training and communication begin with?
How can ethics training and communication be useful for employees?
Ethics training and communication must start with....
1) a foundation,
2) a code of ethics,
3) a procedure for airing ethical concerns,
4) and executive priorities on ethics

Useful for employees because:
1) Can educate employees about firm's policies and expectations, laws and regulations, and general social standards
2) Can make employees aware of resources, support systems, and personnel who can assist them with ethical advice
3) Can empower employees
What are some common mistakes made in designing/implementing an ethics progam?
1) Not having a clear understanding of the goals of the program from the beginning
2) Not setting realistic and measurable program objectives
3) Senior management's failure to take ownership of the ethics program
4) Developing program materials that do not address the needs of the average employee
5) Transferring a domestic program internationally
6) Designing a program as a series of lectures
What is an ethics audit?
An ethics audit is.....a systematic evaluation of an organization's ethics program and performance to determine whether it is effective.
What are the benefits of an ethics audit?
1) Identify potential risks and liabilities and improve legal compliance
2) Can be key in improving organizational performance
3) Improved relationships with stakeholders
-Pressure to account for actions in areas including corporate governance, ethics programs, customer relationships, employee relations, environmental policies, and community involvement
What is the framework for the ethics audit?
S.E.D.R.C.H.R.

1) Secure commitment of top management and board of directors
2) Establish a committee to oversee the ethics audit
3) Define the scope of the audit process
4) Review the organization's mission, policies, goals, and objective and define its ethical priorities
5) Collect and analyze relevant information in each subject matter
6) Have the results verified by an independent agent
7) Report the findings to the audit committee and if approved , to managers and stakeholder
What are the 4 fundamental purposes of ethical decision making?
1) AWARENESS-Recognize situations with ethical implications. Example: "What's the dilemma?"

2) UNDERSTANDING-Identify outcomes and potential consequences to the ethical dilemma
- Evaluate frameworks and tools to resolve dilemma.
=Moral philosophies, intuition, rules & shortcuts, decision analysis

3) APPLICATION/DECISION
Apply frameworks to ethical dilemma and make a decision
"Stakeholder analysis, anyone?"

4) POST-DECISION CONSEQUENCES
Learn from decision
Use feedback in future decisions
Wha are the four perspectives moral philosophies?
1) Interest-Based Thinking
2) Rights-Based Thinking
3) Duty-Based Thinking
4) Virtue-Based Thinking
What is Interest-Based Thinking? What are Egoism, Utilitarianism, and Relativism?
The fundamental idea is that the moral assessment of actions and policies depends solely on their consequences, and that the only consequences that really matters are the interests of the parties affected (usually human beings).

On this view, ethics is all about harms and benefits to identifiable parties.

Moral common sense is governed by a single dominant objective: maximizing net expectable utility (happiness, satisfaction, well-being, pleasure).


a) Egoism ( Category of Teleology)- Defines right or wrong in terms of its impact on the individual
Egoists make decisions that will maximize their own self-interest
"Do the act that promotes the greatest good for oneself."
"I am the person better off"


b) Utilitarianism ( Category of Teleology)- Seeks the greatest good for the greatest number of people

Rule utilitarians= determine behavior based on principles designed to promote the greatest utility

Act utilitarians= examine a specific action itself, not rules governing it

c) Relativism= individuals and groups derive definitions of ethical behavior subjectively from experience.

1) Descriptive relativism= relates to observing cultures

2) Metaethical relativists= understand that people naturally see situations from their own perspectives
No objective way of resolving ethical disputes between cultures

3) Normative relativists= assume that one person's opinion is as good as another's

"It doesn't really hurt anyone."
What is Rights-Based Thinking?
What is Deontology?
The central idea here is that moral common sense is to be governed not by maximizing interest satisfaction, but by equalizing rights protection.

Deontology= Moral philosophies that focus on the rights of individuals and on the intentions associated with a particular behavior
Believe that individuals have absolute rights
Regard the nature of moral principles as stable and believe that compliance with these principles defines ethicalness
Sometimes referred to as non consequentialism, based on respect for persons

Three kinds of Deontology:

Categorical Imperative: If you feel comfortable allowing the entire world to see your actions, and your rationale is suitable to become a universal principle, then the act is ethical
=Immanuel Kant

Rule deontologists: Conformity to general moral principles determines ethicalness

Act deontologists: Actions are the proper basis on which to judge morality
What is Duty-Based Thinking?
=the least unified and well-defined one.

Its governing ethical idea is duty or responsibility not so much to other individuals as to communities of individuals.

Ethics is about playing one's role as a member of a larger whole, either a web of relationships (like the family) or a community.

Ethics is not about interests and rights according to the duty-based thinker, since those are too individualistic.

The epitome of this line of thinking was expressed in President John F. Kennedy's inaugural: "Ask not what your country can do for you, ask what you can do for your country."
What is Virtue-Based Thinking?
The focus here is on developing and reinforcing certain habits of the heart, character traits, and, in the case of organizations, cultures. (The focus is also on avoiding certain habits, vices, and cultures that could corrupt the decision maker.)
In virtue-based thinking, decisions are subjected to scrutiny not on the basis of their consequences for individuals' interests or rights, or for their fidelity to relationships.

The ultimate purpose is to serve the public good.
The well-being of the community goes together with individual excellence.
Name the 3 tools of ethical decision making.
What do they do?
What are the advantages and disadvantages of each?
1) Intuition-

2) Decision Aids/Rules and Shortcuts-

3) Decision Analysis-
What is intuition?
What are its advantages and disadvantages?
What are some problems with intuition?
Intuition is very rapid (sometimes subconscious) decision-making based on a combination of experience and training.

Advantages:
quick, simple, cheap

Disadvantages:
biases, tough to train others, continue making same decisions even though circumstances change.

Problems:
Primacy/recency
Cultural errors
Prejudice
Height, looks, gender
What are decision aids/rules and shortcuts?
Patterns, policies, and procedures used to guide decision-making.
-Golden Rule= treat others how you would want to be treated.


Advantages: Fast, Convenient, Can be taught easily,
When decision situations are routine and repetitive it can be very efficient.

Disadvantages: May not apply when decision situations are unique, May not allow for novel situations, May not leave room for judgment
What is decision analysis?
What are the 3 main examples? Explain.
What are the advantages and disadvantages?
Decision Analysis involves structured consideration of the issues, individuals, and groups who are involved in or by the ethical situation.

Examples=

a)Cost-benefit, which is tied to utilitarian ethical framework.
Requires projection for what is best for others.

b) Decision Tree/Process Mapping, which projects likelihoods and can establish cost/benefits for each branch.

c) Stakeholder Analysis- A stakeholder is any individual or group who can affect, or is affected by, the actions, decisions, policies, practices or goals of the organization.

A stake is any interest, share or claim that a group or individuals has in the outcome of a corporation's policies, procedures, or actions.

There are three types of stakeholder analysis.......
a) Economic - customers can choose to purchase or not purchase the products/services offered by the firm

b) Equity - investors may choose to invest or not

c) Political - government or NGOs may choose to exercise political or regulatory power

Advantages:
Comprehensive, Good training tool

Disadvantages:
Complex, Time-consuming, and Can get bogged down in detail
What are the three levels where ethical decision making occurs?
Examples of each.
1) As an individual- Personal integrity. Lying, keeping promises.

2) As a Manager- moral muteness, confrontation

3) As an Agent for the Firm- employee rights and due process, interacting with external stakeholders
What are the 3 problems found in Goodpaster's article? What are their solutions?
1) Fixation- when one becomes so fixated on a goal (executives -> success), that they lose sight of ethics/morals

Perspective- counteracts fixation. Must understand that the goals and objectives that we set for ourselves and our organizations are part of a larger mission, the common good.

2) Rationalization- behavior is easily rationalized by subtle distortions of judgment stemming from views of ourselves, others, and the world around us.

Frankness- counteract rationalization. Avoiding rationalization takes practice-practice in telling the truth when exaggeration or denial appear attractive

3) Detachment- Obsessed with winning, the gamesman views all of his actions in terms of whether they will help him succeed in his career

Engagement-counteract detachment. Avoiding what we have called detachment amounts to keeping the head and heart in healthy communication with one another.
What are the three duties of personal integrity? Explain each.
1) Responsive honesty-
Telling the truth when asked.
Responding fully to direct questions.

2) Responsibility not to mislead-
To tell the truth
To separate company from personal property
To keep promises

3) Constructive honesty-
Duty to inform of possible problems
professor at Penn State
Duty to inform of actions that could be misconstrued
What is a company's corporate social responsibility?
What are the 4 levels of social responsibility?
What are the 5 main classifications of companys by the stages of corporate ethical development?
Corporate Social Responsibility (CSR) is a business's concern for society's welfare.
Requires consideration of not only the interests of the business (short and long term) but also its relationship to the society or community in which it operates (short and long term).

Four levels of social responsibility:
1) Economic- maximizing stakeholder wealth and/or value
2) Legal- abiding by all laws and government regulations.
3) Ethical- following standards of acceptable behvior a judged by stakeholders
4) Philanthropic- "giving back" to the community.

Classifications of stage of corporate ethical development:
1) Amoral - only concern about law and ethics is they don't get caught
2) Legalistic - organization is concerned with meeting the letter of the law
3) Responsive - social pressures force these companies to a greater social role
4) Emergent ethical - overt effort to manage ethical culture
5) Ethical - common set of ethical values suffuses the corporation
What is corporate culture?
What are the 4 main organizational culture types? Explain.
a significant factor in ethical decision making.

Ethical issues can arise because of conflicts between the culture perceived by management and that actually at work in the organization.

1) Apathetic: Shows minimal concern for people or performance
2) Caring: Exhibits high concern for people, but minimal concern for performance
3) Exacting: Shows little concern for people, but high concern for performance
4) Integrative: High concern for people and performance
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