The document discusses ethics and integrity in business. It covers several key points in 3 or less sentences: It discusses the importance of ethics in both private and professional life, and examines common ethical dilemmas faced in business regarding self-interest, rules, conscience, fairness and financial benefits. It notes that ethical decisions are rarely clear-cut and require balancing various considerations. The document also briefly outlines several approaches to moral philosophy including egoism, utilitarianism, relativism and virtue ethics that can guide business ethics.

1. TRUST, INTEGRITY AND ETHICS
WEEK 7

2. LEARNING OBJECTIVES
 What is importance of ethics in business?
 How relevant are ethics in my private and professional life?
 What is the importance of context in ethics?

4. Ethical Dilemma
An ethical issue is a situation, problem, or opportunity in which an individual must choose among
several actions that must be evaluated as morally right or wrong.
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5. INTEGRITY AND ETHICS
 We may:
• Be guided by specific rules
• Have our own sense of justice/fairness
• Follow the orders of others
• Follow our individual conscience
• Act out of self-interest
• Choose the way which is most beneficial to the needs of others
• Follow what we feel to be most financially beneficial

6. INTEGRITY AND ETHICS
 • Be put under pressure from our managers
 • Pass this pressure on to those who work for us
 Rarely will there be a decision that everyone will recognize clearly as having a right or wrong answer.
 It is difficult to please everyone, as decision making is usually a trade-off between possible
considerations.
 We must try to remain consistent, and try to collect a broad base of information before deciding.
 Some writers suggest that we can apply ethical theory to business, while others feel that organizations
have their own ethical rules.

7. 5 minutes
THINK OF SITUATION WHERE YOU FACED ETHICAL
DILEMMA?

8. MORAL PHILOSOPHY
 Refers to principles or rules that people use to decide what is right
or wrong
 Presents guidelines for determining how to settle conflicts in
human interests
 Guides businesspeople in formulating strategies & resolving
specific ethical issues
 There is no one moral philosophy accepted by everyone

9. MORAL
PHILOSOPHY
PERSPECTIVES
• Egoism
• Utilitarianism
Teleology
The Relativist Perspective
Virtue Ethics

10. CATEGORIES OF TELEOLOGY
 Egoism
 Right or acceptable behavior defined in terms of consequences to
the individual maximizes personal interests
 Utilitarianism
 Conduct a cost/benefit analysis to determine behavior on the basis
of principles of rules that promote the greatest utility rather than
on an examination of each situation

11. THE RELATIVIST PERSPECTIVE
 Defines ethical behavior subjectively from the experiences of
individuals & groups
 A positive group consensus indicates that an action is considered
ethical by the group
 Acknowledges that we live in a society in which people have
different views and many different bases from which to justify a
decision as right or wrong.

12. VIRTUE ETHICS
 What is moral in a given situation is not only what conventional
wisdom suggests, but also what a “moral” character would deem
appropriate
 Elements include: truthfulness, trust, self control, empathy, &
fairness
 Negative virtues include: lying, cheating, fraud & corruption

13. SITUATION
 You are a sales representative and are preparing a sales presentation on behalf of
your firm, Midwest Hardware, which manufactures nuts and bolts. You are hoping to
get the contract from a construction company that is building a bridge across St.
Anthony River.
 The bolts manufactured by Midwest Hardware have a 3% defect rate, which
although acceptable in the industry, make them unsuitable for certain projects, such
as those that might be subjected to sudden, severe stress. The new bridge will be
located in the fault line, the source of major earthquake in 1811. The epicenter of
that earthquake, which caused extensive damage to and altered the flow of the river,
is about 190 miles form the new bridge sit.
 Getting this contract will give you a commission of $25,000. On the other hand, if
you tell the contractors about the defect rate, Midwest may lose the sale to the
competitor whose bolts are slightly more reliable.

14. INTEGRITY AND ETHICS
 Consider the following questions and how you feel about them:
1. Is there a behavior that might be acceptable in business that would not be
acceptable in every day life?
2. Is there a point where ‘profit at any cost’ must stop?
3. Is it acceptable to use business practices in one country that would not be
acceptable in another, e.g. giving and taking bribes?

15. CASE STUDY
DILEMMA: CONSOLIDATE ITS
EXISTING NETWORK OF SCHOOLS,
STRENGTHENING CURRENT
SYSTEMS AND PREPARING FOR
FUTURE LEADERSHIP OR ACCEPT
GOVERNMENT’S OFFER TO
IMPROVE STANDARD OF 140
ADDITIONAL SCHOOLS?

16. EMOTIONAL
INTELLIGENCE
 Self Awareness: Belief that every child
gets education and having confidence
in your ability.
 Self Management: Initiative, If they will
work with integrity, they will make
difference
 Social Awareness & Skill: Empowering
teachers; A new human resource
system for stating responsibilities of
the school staff
 Social Skill: Meeting with teachers

17. LEADERSHIP STYLE
 Team Management?
 Task or Relationship Oriented?

18. PERSONALITY
 Ambitious
 Steadfast
 Conscientiousness
 Integrity
 Positive approach

19. What is Behavioral Ethics?
Behavioral Ethics is a relatively new field where we study
how people behave when there are ethical dilemmas.

20. Some Forms of Justifications and Biases

21. Role Morality
It is the tendency we have to use different
moral standards for the different roles we play
in society
In one study people were asked to judge the morality of a company selling a drug that caused unnecessary deaths when
its competitors’ drugs did not. 97% of people concluded that it would be unethical to sell the drug. Then, the researchers
placed different people into groups, and asked each group to assume the role of the company’s directors. Acting as
directors, every one of the 57 groups decided to sell the drug. They framed the issue as a business decision in dollars-and-
cents terms. They ignored the harmful impact their decision would have on others.

22. Ethical Fading
Ethical fading occurs when we are so focused
on other aspects of a decision that its ethical
dimensions fade from view.

23. Cognitive
Dissonance
Cognitive dissonance is the psychological
discomfort that we feel when our minds
entertain two contradictory concepts at the
same time

24. Conformity Bias
Conformity bias refers to our tendency to take
cues for proper behavior in most contexts from
the actions of others rather than exercise our
own independent judgment

25. Why Good People Behave Unethically?

26. Four Common Myths
Myths
It’s the
individual: there
are good people
and bad people
It’s about ethical
principles
Everyone is
different
It’s all about
motives

27. Unethical Behavior Among Individuals
Evidence from behavioral science research has shown that people are less
consistent and less rational in their decisions than they would like to admit to
themselves.
Sometimes a person may not be aware when his or her behavior diverts from
ethical standards.
This is because justifications and biased judgment blur the perception of
ethical breaches

28. Key Problems
1. Ethical unawareness
2. Not considering internal locus of
control.
3. Ethics are not on the top of their
minds.

29. Self Awareness
While indulging in unethical behavior we no longer recognize it as such .
Small unethical actions are the part of our daily life and become a common act.
These common practices are unethical and as an individual we need to change
our unethical practices.

30. Unethical Behavior Among Individuals

31. Unethical Behavior Among Individuals

32. Unethical Behavior Among Individuals

33. Unethical Behavior Among Individuals

34. Internal Locus of Control
Most of the time we are worried about what we cannot change or influence
Individuals are more focused towards bigger issues such as global politics,
national politics, the lifestyle of the rich and powerful, materialistic ambitions
and desires, what is wrong with the country or institution
Identify areas of improvement in our own lives, look with in your self
Exercise : Self Introspection; towards self improvement

35. Ethics are not on the top of their minds.
Selling a house or a
vehicle without
disclosing its defects
or history to the buyer
Ill-treatment of house
workers
Damaging the
environment
Discriminating against
or disrespecting
people based on their
social stratum
Not following traffic
rules

36. Aspects of Decision Making
The way individuals make moral choices
The way social dynamics impact individual behavior

37. Moral Choices
Good Intentions Psychological Shortcuts

38. Moral Choices
Good Intentions Misperceptions

39. Moral Choices
Good Intentions Temptations

40. Moral
Choices
Understanding the
dynamics and pitfalls of
moral choices can help
guide decisions towards
conformity with ethical
principles.

41. Morality is Influenced by Context

42. Power of Context
We play well in hands of the context we are part of
Morality is influenced
by the context people
are in, not just by the
type of people they are,
and this contextual
influence is more
powerful than people
generally expect.

43. Turning Ethical Principles into Practice
Understanding internal
dynamics of moral choices
Creating norms that
guide ethical action

44. Understanding Internal Dynamics of
Moral Choices
Moral Balancing
• Dynamic process
• Unconscious effort
• Moral reference point

45. Understanding Internal Dynamics of Moral Choices
Ethical Unawareness

46. Ethical Unawareness
Creating norms that guide ethical action
Mr. A is an HR manager in ABC company and is involved in
interview process. His friend is also going to appear in the
interview in his company. Mr. A knows the list of questions to be
asked in interview and can provide important clues to his friend.
Should he provide clues to his friend?
As a receptionist, Mr. A is responsible for making photocopies in his
office. His son visits him and requests to get some copies for his class
project due that is due the next day. The company copier does not
require a security key nor do they keep track of copies made by
departments. Should Mr. A make copies for his son?

47. Understanding Internal Dynamics of
Moral Choices
Raising the moral reference point Emphasizing the moral reference point
Trust

48. Importance of Context in Ethical Practices
Moral choices are not made in isolation
Social motives influence human decisions
Care about what other think or do
People prefer to act in a self-serving manner but at the same time like to appear
moral to others (Batson et al., 1999)

49. Reciprocity as Context
It plays a key role in most social interactions and also lies at the core of many
corrupt practices
A motivation or excurse for unethical behavior
Typical justifications include:
◦ Self-serving altruism
◦ Robin Hood logic
◦ Diffusion of responsibility

50. Ensuring Ethical Practices
Transparency and Accountability as tools to curb unethical behaviors
The perception of being observed by others makes it more difficult to justify
Transparency makes people more responsible for their acts.
High level of monitoring and enforcement do not always work, particularly
where unethical behavior become a norm.

51. Social Identity
Individual moral choices are determined through social norms and identities
Gradual divergence from ethical behavior tend to be more accepted by others,
leading to generalized dishonesty
Social Identity should be used to create and strengthen behavioral norms.
Context significantly influences ethical behavior
We can design contexts that help people avoid ethical risks, bring ethics to top of
the people’s mind and motivate ethical behavior.

52. Key Principles of Behavior Design
Ethical behavior can be affected by changing the context in which people make
decisions and act: we can design contexts that help people avoid ethical risks,
bring ethics to the top of people’s minds, and motivate ethical behavior.
Key principles of behavior design are:
1. Making desired behavior easy ( remove barriers that make ethical actions
harder than they need to be)
2. Protecting from risk (it is easy to underestimate ethical risks)
3. Designing to be better (no system is perfect, one should not let perfection be
the enemy of improvement)

53. Key Principles of Behavior Design
What are your examples of organizations designing more ethical systems into
everyday practices of hiring, promoting, rewarding, and monitoring?

54. Key Principles of Behavior Design
Organizations can take the following steps to improve ethical behavior and
reduce ethical risks
•Have a clear code of conduct that is written and communicated to all employees
in the organization so that employees have an overview of what kind of behavior
is expected and what kind of behavior is unacceptable
Higher management / Business owners should lead by example as employees
look up to them for direction.

55. Key Principles of Behavior Design
Reinforce Consequences for Unethical Behavior – hold employees accountable
for unethical behavior.
Show Employees Appreciation- appreciation on regular basis through a
predefined reward system improves loyalty and loyal employees are less likely to
act unethically.
Create checks and balances
Hire for values

56. Activity: Role Play
How do you define ethics, particularly in business or organizational context?
Do you remember any particular time when you were ethically challenged or faced ethical
dilemma?
What are your personal qualities or values that you think help you solve these problems?
What are common unethical behaviors/practices that you see in organizational or business
leaders in Pakistan?
Can you suggest some useful policies and strategies that can help to address ethical
dilemmas or issues in organizations of Pakistan?

57. SITUATIONAL LEADERSHIP THEORY
A model that focuses on follower “readiness”
◦ Followers can accept or reject the leader
◦ Effectiveness depends on the followers’ response to
the leader’s actions
◦ “Readiness” is the extent to which people have the
ability and willingness to accomplish a specific task
Ability to follow Willingness to Follow Leadership Behavior
Unable Unwilling Give clear and specific directions
Unable Willing Display high task orientation
Able Unwilling Use a supportive and participatory style
Able Willing Doesn’t need to do much

58. PATH GOAL THEORY
Effective leaders clarify followers’ paths to their work and make
journey easier by reducing road blocks
The Theory:
◦ Leaders provide followers with information, support, and
resources to help them achieve their goals
◦ Leaders help clarify the “path” to the worker’s goals
◦ Leaders can display multiple leadership types
Four types of leaders:
◦ Directive: focuses on the work to be done
◦ Supportive: focuses on the well-being of the worker
◦ Participative: consults with employees in decision making
◦ Achievement-Oriented: sets challenging goals

59. FIEDLER MODEL
Fit between Leader’s style and situation
Identifying Leader’s style:
◦ Enduring personal characteristics
◦ Relationship Oriented or Task Oriented
Understanding Situational Factors:
◦ Leader-member relations: degree of confidence and trust in the leader
◦ Task structure: degree of structure in the jobs
◦ Position power: leader’s ability to hire, fire, and reward

60. Defining the Situation
Favorable or Unfavorable
Favorable Situation:
◦ Good leader-member relationship
◦ Highly structured job
◦ Stronger Position power
Conclusion: Leader has significant control over the situation
Unfavorable Situation
◦ Poor leader-member relationship
◦ Low on task structure
◦ Weak Position power
Conclusion: Leader has little control

61. Integrating the Leadership style with situation

62. Fiedler’s Conclusions….
Leadership effectiveness can be achieved
by matching the eight situations
Task Oriented Leaders:
◦ When situation is very favorable(I, II, III) and very unfavorable (VII & VIII) , task oriented leasers are most effective
Relationship Oriented Leaders
◦ When situation is moderately favorable, relationship oriented leaders are most effective.
KEY LEARNINGS?

63. Conclusions from Fielder’s Model
Leadership styles are enduring and cannot be changed
Contingency theory holds that leaders must be assigned situations in which they can be effective
In other cases situation must be changed to fit the leader.