Business and Ethics Seminar March 15 2013 Orhun

Business and Ethics Seminar (March 15, 2013) Orhun O. MOLYER MSc. IS 1

PARADOX 2

• Where the ethics comes in • Ethics … Some definitions … • Business Ethics • Ethical Issues / Dilemmas • Ethical Norms • Moral Theories • How to solve an ethical issue / dilemma • Code of Ethics, of Conduct, of Practice PRESENTATION PLAN 3

• A father is explaining ethics to his son, who is about to go into business. • “Suppose a woman comes in and orders a hundred dollars worth of material. You wrap it up, and you give it to her. She pays you with a $100 bill. But as she goes out the door you realize she’s given you two $100 bills. • Should you or should you not tell your partner? ” (Henny Youngman) WHERE THE ETHICS COMES IN 4

• One of your colleagues, a close friend of yours, told you that her application for a managerial position in the competitor company was accepted, and would quit at the end of the month. You were asked to keep it as a secret. Afterwards, your boss called you and said that he was going to get your colleague friend promoted to the position which you were after. • What should you do? (1) tell the boss that she would quit; or (2) keep her secret. Why? WHERE THE ETHICS COMES IN 5

• A vast of field of study that really addresses only one question: How should we live our lives? (Des. Jardens) • Currently a general term for concerns about what people should do. (Schultz) • The study of what is good or right for human beings. It asks what goals people should pursue and what actions they should perform. (Hoffman, Fredercik, Schwartz) ETHICS … SOME DEFINITIONS … 6

• Derived from Greek word (usual/predictable) • “ethos” ήθος “ethos” is to conform to what is typically done, to obey the conventions of and rules of one’s society and religion. • Philosophical ethics denies “ethos”. • Philosophical ethics seeks – a reasoned analysis of custom and – a reasoned defense of how we ought to live ETHOS vs ETHICS 7

• Ethos what people DO value – Sociology, psychology, anthropology • Ethics what people SHOULD value – Step back and rationally evaluate the customary beliefs and values that people hold! – Abstract yourself from “what is normally / typically done”. – Think deeply upon whether or not “what is done should be done”, and “what is valued should be valued”. ETHOS vs ETHICS 8

• Etiquette – Behavior that is considered socially acceptable, as opposed to morally right or wrong. – Politeness, manners, one’s dress; One to use handkerchief upon sneezing; one to shake hand of a person one is meeting for the first time – Some may cross over the line into the domain of Ethics: in some countries acceptance of gifts can be considered proper etiquette! WHAT IS NOT ETHICS 9

• Law – Tends to reflect or embody the moral norms of society. – Generally what is legal is also ethical. – Sometimes what is legal may be unethical (previous apartheid laws in South Africa, withholding information from superiors, constantly complain about others, etc. ). – Breaking the law often starts with unethical behavior that has gone unnoticed. WHAT IS NOT ETHICS 10

• Religion – Many of ethical prescriptions derive from religious doctrine. – They may overlap in some cases (abortion, euthanasia, the role of women in society). WHAT IS NOT ETHICS 11

• Moral – Refers to what is good and right in character and conduct. – Essentially interchangeable with ethics, though in common usage, “morality” often implies particular dogmatic (i. e. rigid, inflexible) views of propriety (i. e. decency, politeness), especially as to sexual and religious matters. ETHICS WHAT IS NOT ETHICS 12

• Different from ordinary decision • Surfaced at the point – where the accepted rules no longer serve, and – Where the decision maker is faced with the responsibility for weighing reaching a values, judgment and in a situation which is not quite the same as any he or she has faced before. ETHICAL DECISIONS 13

ETHICAL ISSUES 14

• A branch of applied ethics. • Studies the relationship of what is good and right to business. • Refers to values, standards, and principles that operate within the business. BUSINESS ETHICS 15

• The goal is to focus on the cognitive and intellectual side of ethics. • More a matter of ethical reasoning and thinking than ethical behavior. • Comprises principles and standards that guide behavior in the world of business. BUSINESS ETHICS 16

• An individual ‘s personal values and moral philosophies are only one factor in the ethical decision-making process. • Being good person and having sound personal ethics may not be sufficient to handle the ethical issues that arise in a business organization. • The values people learn from family, religion, and school may not provide specific guidelines for complex business decisions. THE IMPORTANCE OF BUSINESS ETHICS 17

• Helps business people – Begin to identify ethical issues – Recognize the approaches available to resolve them – Learn about the ethical decision- making process and ways to promote ethical behavior – Begin to understand how to cope with conflicts between personal values and organizational values. THE IMPORTANCE OF BUSINESS ETHICS 18

• 2000 B. C. The code of Hammurabi - honest prices. • 400 B. C. Aristotle – Discussions on the vices and virtues of tradesmen and merchants. • The Old Testament and the Jewish Talmud – discussions on the proper way to conduct business. • The New Testament and the Islamic Koran – business ethics related to wealth and poverty EVOLUTION OF BUSINESS ETHICS 19

• 1200 A. D. “Ahilik (Brotherhood) – Ahi Evran” code of business conduct EVOLUTION OF BUSINESS ETHICS 20

• 1920 -1960: A moral activity; ethics and social responsibility rarely mentioned. • 1960 s: Civil rights, the environment, safety in workplace, consumer issues • 1970 s: Business ethics in academia • 1980 -85: journals, research centers, and conferences. • 1985 -95: integrated into large corporations, code of ethics, ethics training, ethic hotlines, ethics officers • 1995 -now: issues related with international business activities, bribery and corruption, use of child and slave labor abroad. EVOLUTION OF BUSINESS ETHICS 21

• Cultural initiatives that make ethics part of core organizational values • Communication core values to the employees by ethics programmes and assigning ethics officers • Ethical components of a corporate culture: Relates to the values, beliefs, and established and enforced patterns of conduct that employees use to identify and respond to ethical issues • Ethical culture: Decision making process that employees use to determine whether their responses to ethical issues are right or wrong CURRENT TREND IN BUSINESS ETHICS 22

• Employee Commitment • Investor Loyalty • Customer Satisfaction • Profits BENEFITS OF BUSINESS ETHICS 23

• frequently used as a phrase to refer questions or dilemmas which involve moral judgment. • a situation, a problem, or even an opportunity that requires thought and discussion to determine the moral impact of the decision. ETHICAL ISSUE 24

• When an issue involves conflicts between different interests – that cannot be resolved on the level of interests alone • When higher level principles need to be applied – that provide a basis for saying “What is right” and "What is wrong” RECOGNIZING AN ETHICAL ISSUE 25

• Sense of discomfort • Partiality in decisions based on personal perceptions; “Loaded (subjective)” words, like “fairness”, “justice”, “doing right”; • Conditions preclude (prevent) the possibility of action RECOGNIZING AN ETHICAL ISSUE 26

• A problem, situation, or opportunity that requires an individual, group, or organization to choose among several wrong or unethical actions, • Where ethical issue is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical. ETHICAL DILEMMA 27

• Become visible through stakeholder concerns about an event, activity, or the results of a business decision • Stakeholders – Employees, Shareholders, Suppliers, Customers, Government, Community at large DETERMINING AN ETHICAL ISSUE / DILEMMA IN BUSINESS 28

1. 2. 3. 4. 5. 6. 7. Abusive and Intimidating Behavior Discrimination Sexual Harassment Lying Conflict of Interest Bribery Corporate Intelligence 8. 9. 10. 11. 12. 13. Environmental Issues Fraud Consumer Fraud Insider Trading Intellectual Property Rights Privacy Issues DETERMINING AN ETHICAL ISSUE / DILEMMA IN BUSINESS 29

• Due to hardware problems, the mail to your site has to be reemailed. (This involves checking each letter in the dead letter queue, checking to see to whom it should have been sent, and running a program to put it into the user’s mailbox. ) While doing this you end up seeing the contents of several messages. 1. A message seems to be bragging about getting away with some fraud. 2. A message is giving information you know to be false about someone you know. 3. A message is telling another user false information about you. 4. A message seems to be setting up a drug deal. 5. A message that gives you a personal advantage. AN EXAMPLE OF A BUSINESS CASE 30

1. 7. Respect for Others Honesty 2. Integrity 8. Responsible Citizenship 3. Promise-keeping 9. Pursuit of Excellence 4. Fidelity 10. Accountability 5. Fairness 11. Reciprocity 6. Caring for Others 12. Optimization ETHICAL NORMS: REFERENCE POINTS 31

Moral Theories Goodness Intrinsic Monism Pluralism Relative Perspective Obligation Instrumental Teleology Egoism Deontology Utilitarianism Rule Utilitiarian Virtue Ethics Justice Descriptive Distributive Rule Deontologist Metaethical Procedural Act Deontologist Normative Interactiona l Act Utilitarian MORAL THEORIES 32

• What makes a given action right or obligatory? • Emphasizes the means and the motives by which actions are justified. • Teleology • Deontology MORAL THEORIES: OBLIGATION THEORY 33

• Consequentialism • An act is considered morally right or acceptable if it produces some desired results. • Assesses the moral worth of a behavior by looking at its consequences. • Egoism – • Right or acceptable behavior is defined in terms of consequences for the individual. Utilitarianism – Right or acceptable behavior is defined in terms of the consequences for the greatest number of people. MORAL THEORIES: OBLIGATION - TELEOLOGY 34

• Nonconsequentialism • Compliance with moral principles = Ethicalness • Individuals have certain absolute rights: – Freedom of conscience (sense of right or wrong) – Freedom of consent (self-authority) – Freedom of privacy – Due process (limitation of authority) • Rightness of an action = f(whether the action is required, prohibited, or permitted by a moral rule) • Focus on the rights of individuals and on the intensions associated with a particular behavior. MORAL THEORIES: OBLIGATION - DEONTOLOGY 35

• Definitions of ethical behavior are subjectively derived from the experiences of individuals or groups. • They use themselves or the people around them as their basis for defining ethical standards. • Descriptive Relativism • Metaethical Relativism • Normative Relativism MORAL THEORIES: RELATIVIST PERSPECTIVE 36

• Moral principles -> “what should I do? ” • Virtue ethics -> “what kind of person should I be? ” • Emphasizes moral education and the development of moral character • Tries to understand the traits that enable a person to lead a full satisfying ethical life. MORAL THEORIES: VIRTUE ETHICS 37

• Involves – Evaluations of fairness, or – The nature to deal with perceived injustices of others • The decision rules could be based on the perceived rights and on the intentions. MORAL THEORIES: JUSTICE 38

1. What are the facts? 2. What are the ethical issues? 3. What are the major stakeholders? 4. What are the options? 5. What is the ethicalness of the options? 6. What are the practical constraints? 7. What actions should be taken? HOW TO SOLVE AN ETHICAL ISSUE: SEVEN-STEP PROCEDURE 39

• Code of ethics – Defines the values that underpin the code – Describes a company's obligation to its stakeholders. • The code – includes details of • how the company plans to implement its values and vision, • guidance to staff on ethical standards and how to achieve them. CODE OF ETHICS 40

• Code of conduct – is generally addressed to and intended for employees alone. – It usually sets out restrictions on behavior, – Is far more compliance or rules than value or principle CODE OF CONDUCT 41

• Code of practice – adopted by a profession or by a governmental or non-governmental organization to regulate that profession CODE OF PRACTICE 42

QUESTIONS 43