Week TWOb: Emerging Business Ethics Issues

Question 1

What is an ethical issue and what are some causes of unethical behaviour

Answer 1

Ethical issue = problem, situation or opportunity that requires an individual or group to choose among actions

Causes

• Meeting overly aggressive financial or business objectives (helping the company)
• Meeting schedule pressures (eg. cutting corners with safety)
• Helping organisation survive
• Rationalise that others do it
• Resisting competitive threats
• Saving jobs

Question 2

What are the three foundational values of ethics

Answer 2

Honesty -> truthfulness, integrity and trustworthiness

Fairness -> quality of being just, equitable, impartial

Integrity -> uncompromising adherence to ethical values

Question 3

Outline each of the major business ethics issues:

• misuse of company resources
• abusive or intimidating behaviour
• deception/lying
• conflict of interest
• bribery
• corporate intelligence
• discrimination
• sexual harrassment
• fraud
• insider trading
• white collar crimes

Answer 3

Misuse of Company Resources
- Leading form of observed misconduct
- Range of unauthorised use of equipment and computers to embezzle company funds
- Time theft costs organisations hundreds of billions in lost productivity annually
= time that employees waste or spend not working during working hours

Abusive or Intimidating Behaviour

• One of the most common ethical problems
• Physical threats, false accusations, profanity, insults, harshness, ignoring someone, unreasonableness (intent important in determining abuse)
• Bullying is a growing problem and associated with hostile workplace

Deception/Lying

• > Three types of lies:
• Joking without malice
• Commission lying -> creating false perception with words that deceive the receiver (creating noise)
• Ommission lying -> intentionally not informing channel members of problems relating to a product that affects awareness, intention or behaviour

Conflicts of Interest

• Exist when an individual must choose whether to advance their personal interests, organisation or another group
• Individuals must separate personal interests from business dealings

Bribery

• Practice of offering something in order to gain an illicit advantage
• Active bribery: person who promises or gives bribes commits the offence
• Passive bribery: an offense committed by the official who receives the bribe
• Facilitation payments -> legal as long as small

Corporate Intelligence

• > Collection and analysis of information on:
• Markets
• Technologies
• Customers and competitors
• Socioeconomic and external political trends
• Trade secrets
• Hacking/eavesdropping
• Social engineering

Discrimination

• On the basis of race, colour, religion, sex, marital status, sexual orientation, disability, age is illegal
• On the basis of political opinions or affiliation with a union is harrassment
• Affirmative action programs -> efforts to recruit, hire, train and promote qualified individuals from groups that have traditionally been discriminated against
• > Companies can be sued for discrimination if it:
• Refuses to hire an individual for discriminatory reasons
• Unreasonably excludes an individual from employment
• Unreasonably discharges an individual
• Discriminates against an individual with respect to hiring, employment terms, promotion or privilege

Sexual Harrassment
- Repeated, unwanted behaviour of a sexual nature perpetrated upon an individual by another
- Hostile work environment
- Conduct unwelcome
- Conduct severe, pervasive and regarded by claimant as hostile/offensive
- Conduct was such that reasonable person would find it hostile/offensive
inappropriate/dual relationships
- Personal, loving and/or sexual relationship with someone with whom you share professional responsibilities
-> Key ethical issue in sexual harrassment
= To avoid sexual misconduct, a firm needs:
- Statement of policy
- Definition of sexual harrassment
- Non-retaliation policy
- Specific procedures for prevention
- Establish, enforce and encourage victims to report
- Establish reporting procedure
- Timely reporting requirements to proper authorities

Fraud

• Any purposeful communication that deceives, manipulates or conceals facts in order to create false impression
• Marketing fraud ( puffery and labeling issues)
• > Consumer fraud
• When consumers attempt to deceive businesses for personal gain (eg. price tag switching, item switching or lying to obtain discounts)
• > Collusion involves an employee who helps a consumer commit fraud
• > Duplicity is a consumer duping a store
• > Guile is associated with a person using tricks to gain unfair advantage

Accounting fraud
- Failure to understand and manage ethical risks was a key problem in the financial crisis

Insider Trading

• Legal insider trading: legally buying and selling stock in an insider’s own company but not all the time
• Illegal inside trading: buying or selling of stocks by insiders who possess material that is not public

White Collar Crimes
- Individual or group committing an illegal act in relation to their employment
- Nonviolent criminal act involving deceit, concealment or other fraudulent activity
- Highly educated in a position of power, trust, respectability and responsibility
- Abuses the trust and authority normally associated with the position for personal and or organisational gain
-> Reasons for existence
- Patterns of activities become institutionalised and may encourage unethical behaviour
- Undecided employees go along with the majority, whether ethical or not
Increase after economic recession