Ethics 04 Flashcards
ETHICAL’ Aspects of Decision Making
Despite great interest in ethical leadership, there is at present no consensus on how this term should be defined or measured.
One reason for this is that there is no neutral basis
Ethics
Moral principles or beliefs about what is right or wrong
Law
Formal codes that permit or forbid certain behaviors
Ethics
Consensually accepted standards of behavior for an occupation, a trade, or a profession
Morality
Precepts of personal behavior based on religious or philosophical grounds
Ethics vs. Morality
The way Greece was organized, is profoundly different than the way Rome was organized. And Greece was, well, not a chaos, but the first attempt at democracy. It was not the anarchy but, really a lot of chaos and turmoil. Contrarily Rome was ruled by a general, it was more an army. And so you see, they’re two different worlds.
Ethics vs. Morality
On morality; what you can do, what you cannot do, on the ethical side, the difference between, right versus wrong. This is not a surprise because in Greece, the behavior was like spontaneous, come from the bottom.
In the morality side, in Rome, came much from the top. You do this, you don’t do that.
There is more difference, like ethics is based on values, morality is deduced from laws. Ethics is more induced.
Ethics vs. Morality
So, let’s go a bit further, and, of course it’s like an immediate consequence of the situation.
Ethics is valid here and now. I’m facing a problem, yes, I do this and, morality is more absolute it’s for everybody and it is probably everywhere
Ethical Leaders’ Decision Making
are many types of leadership behaviors that are characterized as unethical by the majority
Ethical Leaders’ Decision Making
falsifying information,
stealing assets for personal gain,
blaming mistakes on others,
selling trade secrets to competitors,
accepting bribes in exchange for services,
and pursuing a ruthless leadership style that injures others.
Leaders are often exposed to moral choices that have the character of paradoxes and dilemmas.
leader should be eligible to receive stock options in his or her own company to enhance his or her motivation. This may have implications for social contracts of any kind.
leaders should hold back or delay information that they have exclusive access to and that is likely to harm the stock price.
leaders keep wages down within their own organizations while raising their personal salaries drastically.
Ethical Leaders’ Decision Making
Title
Developing advanced moral reasoning is considered a prerequisite for ethical conduct which is guided by their values.
Ethical Leaders’ Decision Making
Value-driven leaders are concerned that their daily activities reflect important ethical values such as honesty, fairness and personal integrity.
Ethical Leaders’ Decision Making
They have a highly developed moral sensitivity and are driven by formulating ethical problems.
Ethical Leaders’ Decision Making
Faced with difficult decisions, they know what they stand for and often have the courage to act according to their principles.
Ethical Leaders’ Decision Making
However, since moral reality is a moving target, value-driven leaders realize that they must reiteratively formulate and reformulate the ethical problems of the organization
The justice perspective
Distributive justice
is about distributing resources as equitably as possible, either in full equality or on the basis of need or performance (equity).
Procedural justice
assumes that the actual process of creating justice is as fair as possible, even if the outcome may be different for different individuals.
[It has been suggested that this is the outcome of the higher quality interpersonal interactions often found in the procedural justice process, which has shown to be stronger in affecting the perception of fairness during conflict resolution]
[Procedural justice concerns the fairness and the transparency of the processes by which decisions are made]
DEGREES OF CORPORATE SOCIAL RESPONSIBILITY INVOLVEMENT
Social Obligation Approach
Social Responsibility Approach
Social Responsiveness Approach
Social Obligation Approach
Meet only legal obligations,
Social Obligation Approach
Dr. Milton Friedman (1931-)
“Business should not assume direct responsibility on both practical and theoretical grounds
“THE BUSINESS OF BUSINESS IS BUSINESS”
Acting from motives other than economic may, in the long run, harm the very society the firm is trying to help.
“THE BUSINESS OF BUSINESS IS BUSINESS”
By taking on the burden of these social costs, the business becomes less efficient – either prices go up to pay for the increased costs or investment in new activities and research is postponed. The results negatively affect – perhaps fatally – the long-term efficiency of a business.
“THE BUSINESS OF BUSINESS IS BUSINESS”
is that business (work) of a business (an enterprise engaged in commercial activities) is business (commercial activities such as buying and selling). The last use of the word business also implies that the commercial activities are undertaken for the purpose of making profit.
Milton Friedman
There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.
Social Responsibility Approach
Dr. Keith Davis
“Social responsibility goes hand in hand with social power, and since business is the most powerful force in contemporary life, it has the obligation to assume corresponding social responsibility.”
Social Responsibility Approach
Porter & Kramer
“Social and economic goals are not inherently conflicting, but integrally connected.”
Social Responsibility Approach
Private corporations have responsibility to society that extend beyond making a profit
Carroll’s 4 Responsibilities
Economic
Legal
Ethical
Discretionary
Economic
Economic responsibilities of a business are to produce goods services of value to society
Legal
Legal responsibilities are defined by governments in laws that management is expected to obey
Ethical
Ethical responsibilities of a business are to follow the generally held beliefs about behavior in society
Discretionary
Purely voluntary obligations. (Philanthropic, etc)
Non-Ethical Leaders’ Decision Making
DESTRUCTIVE LEADERSHIP
DARK SIDE OF LEADERSHIP
DESTRUCTIVE LEADERSHIP
Leaders who possess such personality characteristics
as narcissism, power orientation and lack of emotional
maturity more often engage in destructive self-oriented behavior than others.
DESTRUCTIVE LEADERSHIP
History of leadership is full of flaws, failures, and even disgraceful conduct of some noteworthy leaders, including those of Hitler, Karadzic, Pol-pot, and from the business life remember Enron, WorldCom, Tyco, and Parmalat,.
It is obvious that flawed leaders are everywhere.
Corporate fraud is becoming more prevalent across the world, a new survey has found.
The study by PricewaterhouseCoopers (PwC) reported that 42 per cent of financial services companies had been affected by economic crime in the past 12 months.
It is obvious that flawed leaders are everywhere.
No organization is immune from crime. Large and small, companies in every industry sector and territory are seeing ever-increasing incidences of fraud and malfeasance.
It is obvious that flawed leaders are everywhere.
Some actions and processes which bring;
Destruction to organization, to peers and subordinates,
Destruction to humankind in general
Destruction to self,
Agency Theory
Agency Problem –
Objectives of owners & agents in conflict
Difficult for owners to verify agent performance
Stewardship Theory
Executives more motivated to act in best interest of the corporation than their own self-interests. Theory that over time, senior executives tend to view corporation as extension of selves.
Conflict of Interests
Long Term – Short Term Orientation
Risk Sharing Problem –
Long Term – Short Term Orientation
“In my opinion, many American companies are running out of stock. They’re trading away their future health for short-term results” (Minzberg; Productivity is killing American Enterprize, 2007)
How to enforce code of ethics
Code of Ethics
Audit, Nominating, and Compensation Committees all outside directors
Corporate Stakeholders:
Affect or are affected by the achievement of the corporation’s objectives
Organizational Stakeholder
Employees, Customers, Competitors, Governments, Suppliers, Communities, Shareholders, Unions, Trade and industry association, Social and political action group.
Stakeholders
People who have an interest, claim, or stake in an organization, in what it does, and in how well it performs
Organizational Effectiveness
Satisfying Stakeholders’ Goals and Interests
Each group evaluates the effectiveness of the organization by judging how well it meets the group’s specific goals
Primary stakeholder
Sufficient bargaining power to affect outcomes
Customers , Employees , Suppliers , Shareholders , Creditors
Secondary stakeholder
Indirect stake but are affected by corporation’s actions
Governments , NGO’s , Activists , Local communities , trade associations , Competitors
Stakeholder Input
Determine whether input is necessary
pages 43 and pages 52
WHAT SEEMS AT FIRST TO BE THE BEST DECISION BECAUSE IT APPEARS TO BE THE MOST PROFITABLE MAY ACTUALLY RESULT IN THE WORST SET OF CONSEQUENCES TO THE CORPORATION
