4. Overview – Lecture 1
- Introduction
- Normative ethics
- Ethical theory
- First approach: Character and virtues of the individual
- Second approach: Consequentialism & Utilitarianism
- Third approach: Deontology: Do to others as you would have
them do to you
- Fourth approach: Theory of justice
- Ethical leadership concept:
- Purpose 4
5. - Moral Person
- Moral Manager
- Meaningful leadership-follower relationship
- Business ethics
- What is Insider Trading?
- Whistleblowing
- Why ethics in business
5
6. Introduction
The English word ethics is derived from the Ancient
Greek word ēthikós (ἠθικός), meaning “relating to one's
character”, which itself comes from the root word êthos
(ἦθος) meaning “character, moral nature”.
The concept of ethics therefore dates back to the Ancient
Greeks and investigates the set of questions that arise
when considering how one ought to act, morally speaking.
6
7. Traditionally, normative ethics was the study of what
makes actions right and wrong.
These theories offered an overarching moral principle one
could appeal to in resolving difficult moral decisions, and
therefore determining how to behave ethically.
At the turn of the 20th century, moral theories became
more complex and were no longer concerned solely with
rightness and wrongness but were interested in many
different kinds of moral status.
7
8. Ethics is traditionally subdivided into:
• Normative ethics,
• Metaethics, and
• Applied ethics.
8
9. Normative ethics: It addresses questions about what practices
are right and wrong, and what our obligations to other people
or future generations are.
Metaethics: It is the study of moral thought and moral
language. Metaethics asks what morality actually is. It is
interested in knowledge of moral truths/feelings/or attitudes
and asks how we understand moral discourse as compared
with other forms of speech and writing.
Applied ethics: It is also called practical ethics. It is the
professional application of ethics to real-world problems (in
our case, business ethics).
9
11. Ethical theory related to normative ethics
We know in fact we do use theories on a day-to-day basis
even though we might not recognise them as such. We all
have theories-in-use.
Let’s see the “Trolley car ethical dilemma”
A version of an ethical dilemma that philosopher Philippa
Foot devised in 1967.
Watch the trolley car problem video and discuss-
https://www.youtube.com/watch?v=bOpf6KcWYyw
11
13. First approach
- An approach to ethics that focuses on the character and
virtues of the individual goes back to the Ancient Greeks,
particularly Aristotle. He argues that virtues allow us to
flourish and become fully human.
- Virtue ethics is the ethical theory that revolves around the
character/traits of people. An action is morally good if it
is what a virtuous person would do in the circumstances.
Being virtuous means realizing your potential to the best
of your ability (eudemonia).
13
14. - Scholars have come up with a long list of such virtues
including benevolence, courage, honesty, civility,
respect for the law, and integrity.
- Different contexts and different roles might recognise
and value different virtues (we might look for
different qualities in a business leader than in a
politician, or a religious leader, or a military leader).
14
15. Second approach
- A second approach to ethics is called “Consequentialism
ethical theory”.
- Here an act is considered to be ethical if there are more good
consequences than bad ones.
- One version of this is “Utilitarianism”, which was developed
by the English philosopher Jeremy Bentham. Bentham
proposed that an act can be ethically justified if it produces
the greatest happiness of the greatest number of people.
- Bentham’s definition is a little bit slippery: quite how we
measure happiness is tricky, and it is difficult to consider all
the consequences of an action before acting.
15
16. - But applied in a business ethics context, a utilitarian
perspective can be useful because it allows us to
consider a stakeholder over a shareholder view, which
is often seen as narrow and self-interested, valuing
financial gains above everything else.
16
19. - A stakeholder view of a firm, by contrast, considers the
consequences of an action- not just for shareholders,
but for ALL stakeholders: employees, suppliers, the
community and the wider society.
- It points to the impact that leaders might have, both on
individuals within their organisations and the
organisation as a whole. It is consistent with the idea of
corporate social responsibility and signals that ethical
leadership can lead to enhanced performance, both in
ethical and in more general terms.
19
20. Third approach
- A third approach to ethics is associated with the German
Philosopher Immanuel Kant. He believed that the right action
to pursue does not depend on its consequences.
- For example, we should keep our promises, fulfil our duties,
and pay our debts, regardless of what might happen as a result.
- This is called “Deontology”. Deontology is the ethical theory
according to which the morality of an action is based on
adherence to a rule: An action is morally good if it honours a
given obligation (principles, values, duty), and the right action
to pursue is independent of the consequences of that action.
20
21. - Kant’s approach has been summed up as “do to
others as you would have them do to you” and
focuses on relationships.
- It teaches us that we should value relationships for
themselves, and that we should not treat others as a
means to an end.
- This is clearly important in a leadership context,
because much of leadership consists of engaging in
relationships with others, particularly followers.
21
22. Fourth approach
- A different approach to ethics is based on justice and the idea
of fairness. The American philosopher John Rawls argues in
his ‘Theory of justice’ that a fair system of arrangements is one
that all parties can agree to before they know if it will benefit
them personally.
- Rawls presents a hypothetical position where we make choices
behind what he termed a ‘veil of ignorance’. From behind this
“veil of ignorance”, a rational person would not seek to
maximise gain based on self-interest but would instead make
fair decisions and consider the position of the least
advantaged.
22
23. - Why is that? Well, because if we don’t know if a
decision benefits us or not, we might be one of the
disadvantaged ourselves- we simply don’t know it
yet. Applied to a business ethics context, the practical
implications of Rawls justice-based approach might
impact how organisations reward people -are rewards
handed out on the basis of fairness and do we
consider need, merit or some other criterion?
23
24. What do you personally prefer out of
these theories?
Why?
24
26. Ethical leadership concept
1) Purpose
2) Moral Person
3) Moral Manager
4) Meaningful leadership-follower
relationship
26
27. 1- Purpose
- The first dimension is the “Purpose” of leaders to get
ethical outcomes. What are their ethical motivations to
take responsibility for the impact that their actions have
on other people, communities and the wider
environment?
- This is the WHY-question of ethical leadership. Some
organisations dedicate their entire mission to ethical
goals. Examples are not-for-profit organisations such as
Transparency International, Greenpeace or Amnesty
International.
27
28. - But all other organisations should have ethical
objectives too, for example:
▪ Employee compliance with the
organisational ethics code,
▪ A safe and healthy workplace,
▪ A focus on reducing waste and recycling,
▪ A focus on building an ethical business
model with a transparent supply chain.
28
29. 2- Moral Person
- The second dimension is the Moral Person.
- This dimension focuses on the WHO question of the ethical
leadership concept.
- It looks at the ethical qualities of the person in the leadership
role: their moral character, behaviour and decision-making.
- Ethical leadership is sometimes described as simply ‘doing
the right thing’. Moral reasoning involves applying your
general moral principles into situations.
- It is a value-based style of leadership that has integrity,
honesty and fairness at its core. Ethical leaders act upon
moral principles. Their values and principles are reflected
both in their behaviour and in their decision making, and in
both ordinary and challenging situations.
29
31. Moral Manager
- The third dimension is the Moral Manager.
- It shifts the focus to the practical HOW question:
• How is ethical leadership practiced in the everyday
operations of an organisation or business?
• How do leaders cultivate ethical decision-making
and behaviour amongst employees?
- Particularly important practices of moral managers are:
visible role modelling, two-way communication and
feedback, and reinforcement of the moral values and
norms through discipline and reward.
31
32. A good leader may encourage employees to join in. Social
learning theory posits that employees learn from leaders
through role modelling. However, employees might also
copy a bad example.
Think about:
- What message does it send to the wider organisation
when leaders reward employees who get good results,
but use practices that are ethically questionable?
- When leaders make an exception to the organisational
rules for themselves? Would you believe them if they
still claimed that ethics are important for the business?
32
33. Discuss in group what do you do as a
leader/employee.
Think about how YOU set a good example -
is it always visible for others?
33
34. - We watch and listen to leaders closely to their day-to-day
operations. How we perceive them in their actions and in their
interactions with others; if they do what they say; and if they explain
how and why they made certain decisions.
- All that matters for how genuine and credible we find them as an
ethical leader. For a leader to be recognised as an ethical leader, it is
therefore equally important to be a moral person AND to act as a
moral manager.
- As a consequence, leaders need to think about how others might
perceive them, and if their actions speak louder than words. They
need to think about how they can explicitly set a good example and
how they come across to employees on all levels throughout the
organisation.
34
35. 4- Meaningful leadership-follower relationship
- Lastly, the fourth dimension of ethical leadership concerns the
mutual relationship between leader and followers. Being an
ethical leader starts with fostering good relationships that are
built on mutual respect, trust, empathy, support and care.
- As an ethical leader you need to be able to put yourself in the
other person’s shoes; to treat them, as you would like them to
treat you; to understand what drives them to ‘do the right
thing’, and what is needed for them to put that into action.
Having good relations is the foundation for ethical leadership.
- Not every moral person is automatically a good, ethical leader;
although every ethical leader needs to have personal integrity
and a purpose to begin with.
35
36. To sum it up
To be an ethical LEADER, it is important to
act as a moral manager, to build relationships with
employees, and to give direction to the ethics message
throughout the organisation.
This explicit focus on promoting and
managing organisational ethics is what distinguishes
ethical leadership from other leadership styles.
36
37. Discussion
- What is your concept of ethical leadership?
- What is your understanding of what leading by example
means, and whether you have a role model, or had one
when you were growing up?
- For example, have you have ever had an inspirational
teacher, a family member, or a pop star whose
behaviour you admired? And why did you admire this
person?
- What does ethical leadership mean to you?
37
38. Business ethics
• Business ethics is the study of appropriate business
policies and practices regarding potentially controversial
subjects including corporate governance, insider trading,
bribery, discrimination, corporate social responsibility,
and fiduciary responsibilities.
• Usually, applied ethics is used to determine public
policy.
• Business ethics is concerned with social obligations as
well as obligations to employees, customers, suppliers
and competitors. 38
40. What is Insider Trading?
• Insider trading involves trading in a public company's stock by
someone who has non-public material information about that
stock for any reason.
• Insider trading can be either illegal or legal depending on
when the insider makes the trade.
40
41. Whistleblowing
• A whistleblower is a person who tells the public or
someone in authority about alleged dishonest or illegal
activities occurring in a government department or
private company or organization.
• A whistleblower is a person who raises concern about
frauds, corruptions, wrongdoings and mismanagement.
41
42. • A government employee who exposes corruption practices
within his department is a whistleblower. So is an employee
of a private organization, who raises his voice against
misconduct within the company.
• The misconduct can be classified in several ways, such as:
o Violation of laws.
o Posing direct threat to public interest (fraud, corruption).
o Violation of health or safety norms
o Deceptive practices
42
43. Why ethics in business
Unethical behaviour implications
https://www.youtube.com/watch?v=yg16u_bzjPE
minute 3.40
43
44. • The increasingly unethical conduct that was found by
corporations during the 1960s has created the need for
solutions.
• To counter this, corporations developed social responsibility
programs which included charitable donations and funding
local community projects.
44
45. Recap
- Introduction
▪ The English word ethics is derived from an Ancient Greek word,
meaning “relating to one's character”
▪ Ethics was the study of what makes actions right and wrong.
▪ At the turn of the 20th century, moral theories became more
complex.
- The difference between normative ethics, metaethics, and
applied ethics.
Ethical theory
- First approach: Character and virtues of the individual
▪ An approach focuses on the character and virtues of the
individual, goes back to the Ancient Greeks, particularly
Aristotle. 45
46. ▪ Virtues we search for could differ based on the context/role,
we might look for different qualities in a business leader than
in a politician, or a religious leader, or a military leader.
- Second approach: Consequentialism & Utilitarianism
▪ Consequentialism: Act is considered to be ethical if there are
more good consequences than bad ones.
▪ One version of this is Utilitarianism: act can be ethically
justified if it produces the greatest happiness of the greatest
number of people, Jeremy Bentham, example could be
considering a stakeholder over a shareholder view.
- Third approach: Do to others as you would have them do to
you
▪ Do to others as you would have them do to you: Right action
to pursue does not depend on its consequences, Immanuel
Kant, more focused on relationships. 46
47. - Fourth approach: Theory of justice
▪ Theory of justice: A fair system of arrangements is one that all
parties can agree to before they know if it will benefit them
personally, John Rawls.
▪ From behind a “veil of ignorance”, a rational person would not
seek to maximise gain based on self-interest but would instead
make fair decisions and consider the position of the least
advantaged.
Ethical leadership concept:
- Purpose
▪ Purpose/motivations of leaders to get ethical outcomes (WHY-
question).
▪ Some organisations dedicate their entire mission to ethical goals
(not-for-profit organisations, Transparency International,
Greenpeace or Amnesty International).
▪ Other organisations should have ethical objectives too. 47
48. - Moral Person
▪ WHO question of the ethical leadership concept.
▪ It looks at the ethical qualities of the person in the
leadership role: their moral character, behaviour and
decision-making, integrity, honesty and fairness at its
core.
- Moral Manager
▪ HOW question- How is ethical leadership practiced in
the everyday operations of an organisation or business.
▪ Not every moral person is automatically a good, ethical
leader; although every ethical leader needs to have
personal integrity and a purpose to begin with.
48
49. - Meaningful leadership-follower relationship
▪ Being an ethical leader starts with fostering good
relationships that are built on mutual respect, trust,
empathy, support and care.
▪ As an ethical leader you should put yourself in the other
person’s shoes; to treat them, as you would like them to
treat you; to understand what drives them to ‘do the right
thing’.
▪ Having good relations with your followers/employees is
the foundation for ethical leadership.
49
50. - Business ethics
- Insider Trading: It involves trading in a public company's
stock by someone who has non-public material
information about that stock for any reason.
- Whistleblower: It is a person who tells the public or
someone in authority about alleged dishonest or illegal
activities occurring in a government department or
private company or organization.
- Why ethics in business
50
