Business Ethics

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Study of ethical dilemmas, values, and decision-making in the world of commerce…

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Business Ethics

  1. 1. Business Ethics Study of ethical dilemmas, values, and decision-making in the world of commerce…
  2. 2. ACCOUNTING SCANDAL #1
  3. 3. ACCOUNTING SCANDAL #2
  4. 4. ACCOUNTING SCANDAL #3
  5. 5. CEO GREED #1
  6. 6. CEO GREED #2
  7. 7. INSIDER TRADING
  8. 8. Is “business ethics” just corporate rhetoric?
  9. 9. Today’s Plan  Profit-motive and greed  Wall Street  Philosophy of Ethics  Why ethics is particularly challenging in business  Class Exercise – Selling Cigarettes
  10. 10. Is “business ethics” just corporate rhetoric?  profit-motive / self-interest / greed  some say “no difference”  business inherently wrong  “greed is good”
  11. 11. Is “business ethics” just corporate rhetoric?  Milton Friedman  moral obligation:  make as much money as possible  obey the law  “the business of business is business”  government’s responsibility  race to the bottom
  12. 12. Is “business ethics” just corporate rhetoric?  Critique Milton Friedman’s view. What are the problems with the view that “the business of business is business?”  After considering a summary of Friedman’s position and some critiques of it, what do you think? Does a business have any obligation beyond making money and obeying the law? If so, give some examples.
  13. 13. Philosophy of Ethics  Two most commonly held schools of thought:  Consequentialism  Deontology  (There are others)  No wide spread agreement on which approach to ethics is most valid
  14. 14. Consequentialism  “the belief that what ultimately matters in evaluating actions or policies of action are the consequences that result from choosing one action or policy rather than the alternative.”  consequences of all affected persons  e.g. why should Enron have disclosed its true liabilities?  e.g. lying to Nazi prison guards
  15. 15. Questions for Consequentialism  What is a good consequence and what is a bad consequence? Pleasure and pain?  Experience machine?  How should we rank good consequences and bad consequences when we face a trade-off?  e.g. forestry practices  Is morality determined by actual consequences or expected consequences?  e.g. drunk driving
  16. 16. Questions for Consequentialism (cont’d)  What about personal rights?  Is it right to kill one person if that killing saves 4 other people?  Consequences to whom?  How heavily should one consider the consequences to oneself, or to one’s friends?  What about animals, the environment, fetuses, etc.
  17. 17. Consequentialism (cont’d)  Utilitarianism  One form of consequentialism  “greatest good for the greatest number”
  18. 18. Consequentialism (cont’d)  Some people have criticized consequentialism because it implies that child labour practices in extremely poor countries might be a good thing. What do you think about this criticism?
  19. 19. Deontology  Ethical rules  “don’t lie”  “do for others as you would have them do for you”  Ends don’t justify the means  Nazi prison guard example  Holding on to political power  Keeping company alive and thus saving jobs
  20. 20. Deontology - Kant  Kantian theory  Duty to treat people with respect  Duty to not treat people as a means to your own ends  Implies people have rights  Problems:  What are those rights? (What are some rights that people claim that are open to question?)  Which rights over-ride others? (e.g. nurses’ right to strike versus people’s right to healthcare)
  21. 21. Deontology – Kant (cont’d)  Kant criticizes consequentialism by arguing that only our own actions are under our control; the consequences of our actions are often out of our control. What do you think of this criticism?
  22. 22. Ethics and Religion  Many people get at least some of their ethics from religious teachings  Problem: Can’t persuade a non-believer with “God says so”.
  23. 23. Ethics in Business  Problem #1: Competing Demands  Opposing interests  E.g. shareholder interests versus employee interests  Are primary obligations towards those who hired you?  E.g. Coke managers
  24. 24. Ethics in Business (cont’d)  Problem #2: Strong Temptation  Primarily evaluated based on financial results  Great results – great rewards  Poor results – tough consequences  E.g. Kenneth Lay – positive image kept share value up for him  E.g. Andersen partner in charge of Enron account (David Duncan)
  25. 25. Ethics in Business (cont’d)  Problem #3: Group Ethics  Business activities involves numerous people  People differ in  Approaches to ethics  Views on what is ethical and what is not  Level of commitment to ethical behaviour  Hard to get adherence  Need to be able to persuade
  26. 26. Ethics in Business (cont’d)  Problem #4: Employer Authority  employee acts on employer’s behalf  when disagreement arises, employer may expect employee to defer to the employer Some Advice from Don’s Soapbox: Don’t ever let a boss or anyone else presume to have the authority to make your moral decisions for you.
  27. 27. Selling cigarettes  Is it ethical to sell cigarettes? Why or why not? Try to come up with as many arguments as you can for both sides of the issue. But formulate a conclusion.  What types of arguments did you use? Did you use either consequentialist or deontological arguments? Or perhaps other types of arguments? What arguments do you think would be most persuasive if you were a middle manager trying to change your supervisor’s mind?
  28. 28. Is “business ethics” just corporate rhetoric? NO!
  29. 29. Thank You! Visit: www.TheCorporateTrainer.ca

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