Chapter 3:Philosophical Ethics& Business Team 3: Angela Van Strander Matt Vital
The Justification of Human Rights By: Denis G. Arnold
Human Rights Moral rights that apply to all persons in all nations, regardless of whether the nation in which a person resides acknowledge and protects those rights Human rights are inalienable
Philosophical Questions #1. How can human rights be justified? Are they a Western concept? #2. What specific human rights exists? #3. How do human rights differ from other rights? Such as legal rights.
Activity #1 Reflection Group yourselves and for a couple minutes think about the 3 previous questions & try to answer them.
Conclusion Have a sense of personhood “Metaphysical” rather than biological Capable of acting in a manner consistent with one’s considered preferences
Caux Principles of Business The Caux Round Table (CRT) is an international network of experienced business leaders, who work with business and political leaders to design the intellectual strategies, management tools and practices to strengthen private enterprise and public governance to improve our global community. http://www.cauxroundtable.org/
Motives Improve economic and social changes Seek to begin a process that identifies shared values, reconciles differing values, and develop a share perspective on business behavior acceptable to and honored by all.
2 Basic Ethical Ideals: Kyosei Japanese concept meaning “living and working together for the common good”; thus enabling cooperation and mutual prosperity to coexist with healthy and fair competition Human dignity sacredness or value of each person as an end—not simply as a means to the fulfillment of others’ purposes or even majority prescription
Section I: Preamble/Introduction Business can be a powerful agent of positive social change. They offer the following principles as a foundation for dialogue and action by business leasers in search of responsibility. Necessary for moral values in business decision-making
Section II: General Principles The Responsibilities of Business: Beyond Stakeholders toward Stakeholders The Economic and Social Impact of Business Toward Innovation, Justice and World Community Business Behavior: Beyond the Letter of Law toward a Spirit of Trust
Section II: General Principles (cont’d) Respect for Rules Support for Multilateral Trade Respect for the Environment Avoidance of Illicit Operations
Do CEOs Get Paid Too Much? By: Jeffrey Moriarty
BusinessWeekestimated that, in 2003, CEOs of 365 largest US corporations were paid on average $8 million, 301 times as much as factory workers. CEO packages includes: Salary, bonus, and restricted stock & stock option grants And increased by 340% from 1991-2001, while workers’ paychecks increased by only 36%. What is wrong with this?
3 Views of Justice in Wages In general, what makes a wage just? Agreement View Desert View Utility View
Agreement View Based on arm’s length negotiation between informed CEOs and owners Meet 2 requirements: Independent of the CEO Must be informed Problems: Mainly occurs on company’s owners No guarantee that shareholders would choose independent and informed representatives in elections Shareholders do not elect directors in a meaningful way
Agreement View (continued) Board of Directors may be informed, but they may not act independently 3 factors that compromise director’s independence from CEOs: Gratitude Self-interest Absence of a reason directors have to favor shareholders
Agreement View (continued) While admitting that these influences are problematic, directors are usually assisted by compensation consultants that can make accurate and bias-free assessments of a CEO’s worth Problem: Sometimes they don’t always consider all the consultant’s advice
Desert View Company assumes that a CEO should get the wage deserved which is determined by contributions to the firm and the proper measure of contribution is firm performance
Problem #1:Identifying the standard for deservingness Difficulty, stress, dangerousness, risk, and unpleasantness Degree of responsibility/importance Contribution to the firm Amount of ability, skill, or training the job requires
Problem #2:How does the job fare? Based on: Physical effort Degrees of responsibility Contributions to the firm Formal education and years of experience After determining the deserving factor, decide on what wage is deserved for the CEO
Desert View (cont’d) While admitting that these influences are problematic, there is still justification of current disparities between CEOs and worker pay. If employee pay cannot be increased, then this view demands that CEO pay is reduced drastically.
Utility View Wages are not rewards, but as incentives for future work Purpose: To maximize firm wealth by attracting, retaining, and motivating talented workers
Motivate CEOs toward bonuses
Wealth created by CEO must be weighed against the cost of their services
Utility View (cont’d) Attraction & Retention Reasons why employees get paid more based on their: Effort Skill Difficulty Motivation Pay motivates CEO to work harder No guarantee extra headwork will translate into extra revenue Compensation packages make stock prices rise because stock is include within their compensation package
Utility View (cont’d) Pay of a CEO may be an effective motivational tool, but not likely cost effective
Conclusion How to Reduce CEO Pay CEO’s should be removed from the director election process Directors should be required to make meaningful investments in firms
Overall, this should make you think about the moral dimensions of wages.
Bingo word choices: Caux Principles ofBusiness Kyosei Human Dignity Section 1: Preamble Section 2: General Principles (7) Section 3: Stakeholder Principles (6) Do CEOs Get Paid Too Much? BusinessWeek CEO packages Agreement View (6) Desert View (5) Utility View (7) How to Reduce CEO Pay