Ethical Theories LESSON 6

Ethics

Refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues.

Relates to the standards of conduct and moral judgements that differentiate right from wrong. It is not a natural science but a creation of the human mind. For this reason, it is not absolute and is open to the influence of time, place, and situation.

This can be viewed as a way of behaving that can be prescribed and imposed by the work environment.

The meaning of this is “a system of moral principles, rules, and conduct.”

A “Science of morals”.

Ethical Behavior

It is accepted as “right” or “good” in the context of a governing moral code.

Ethicus or Ethicos

The word ethics has emerged from this Latin word or Greek word. The origin of these two words is from ‘ethos’ meaning character.

Character unlike behavior

It is an intrinsic or basic factor which derives from inner most.

Business Ethics

Constitute the ethical/moral principles and challenges that arise in a business environment.

The application of ethical principles and methods of analysis to business. This deals with the topic of study that has been given its due importance in business, commerce and industry since the last three decades.

Finance and Accounting

Creative accounting, Earnings management, Financial analysis, Insider trading, Securities Fraud, Facilitation payment.

Human Resource Management

Executive compensation, Affirmative action, Workplace surveillance, Whistle blowing, Occupational safety, and health, Indentures servitude, Union busting, Sexual Harrassment, Employee raiding

Sales and Marketing

Price fixing, price discrimination, green washing, spamming, using addictive messages/images in advertising, Marketing to children, False advertising, Negative campaigning.

Context and relevance of Business Ethics in today’s business

• Present day global crisis has raised questions about the legitimacy of capitalism. Ethical failures certainly played a role. While it remains to be seen whether and how many people blatantly broke the law, there are abundant signs of various forms of potentially unethical behavior.

• These include greed, unreasonable amounts of leverage, subtle forms of corruption (such as ratings agencies that appear to have had a conflict of interest), complex financial instruments that no one really understood, and herd behavior where people just followed along and failed to exercise independent judgement.

• Business leaders must use their personal moral compasses to make ethical decisions. As for the businesses’ compass, it should be oriented toward satisfying above all stakeholders. That is the orientation that allows for the greatest competitive success and profitability.

Beneficience

This guides the decision-maker to do what is right and good. This priority to “do good” makes an ethical perspective and possible solution to an ethical dilemma acceptable. This principle is also related to the principle of utility, which states that we should attempt to generate the largest ratio of good over evil possible in the world. This principle stipulates that ethical theories should strive to achieve the greatest amount of good because people benefit from the most good. This principle is mainly associated with the utilitarian ethical theory discussed later in this set of notes.

Least Harm

This deals with situations in which no choice appears beneficial. In such cases, decision makers seek to choose to do the least amount of this as possible and to do this to the fewest people. Students might argue that people have a greater responsibility to “do no harm” than to take steps to benefit others. For example, a student has a larger responsibility to simply walk past a teacher in the hallway rather than to make derogatory remarks about that teacher as he/she walks past even thought the student had failed that teacher’s class.

Respect for Autonomy

The principle states that decision-making should focus on allowing people to be autonomous. To be able to make decisions that apply to their lives. Thus, people should have control over their lives as much as possible because they are the only people who completely understand their chosen type of lifestyle. Each individual deserves respect because only he/she has had those exact life experiences and understands his emotions, motivations, and physical capabilities in such an intimate manner. In essence, this ethical principle is an extension of the ethical principle of beneficience because a person who is independent usually prefers to have control over his life experiences in order to obtain the lifestyle that he/she enjoys.

Justice

This states that decision-makers should focus on actions that are fair to those involved. This means that ethical decisions should be consistent with the ethical theory unless extenuating circumstances that can be justified exist in the case. This also means that cases with extenuating circumstances must contain a significant and vital difference from similar cases that justify the inconsistent decision.

Deontology

This states that people should adhere to their obligations and duties when engaged in decision-making when ethics are in play. This means that a person will follow his or her obligations to another individual or society because upholding one’s duty is what is considered ethically correct. For instance, a deontologist will always keep his promises to a friend and will follow the law. A person who adheres to deontological theory will produce very consistent decisions since they will be based on the individual’s set duties.

Utilitarian

They are based on one’s ability to predict the consequences of an action. The choice that yields the greatest benefit to the most people is the one that is ethically correct.

Act Utilitarianism

This subscribes precisely to the definition of utilitarianism - a person performs the acts that benefit the most people, regardless of personal feelings or the societal constraints such as laws.

Rule Utilitarianism

This takes into account the law and is concerned with fairness. This seeks to benefit the most people through the fairest and most just means available. Therefore, added benefits of this are that it values justice and includes beneficience at the same time.

Rights

These are established by a society and are protected and given the highest priority. These are considered to be ethically correct and valid since a large population endorses them. Individuals may also bestow this upon others if they have the ability and resources to do so.

Virtue

This judges a person by his/her character rather than by action that may deviate from his/her normal behavior. It takes the person’s morals, reputation, and motivation into account when rating an unusual and irregular behavior that is considered unethical.

MODELS OF PERSONAL AND ORGANIZATIONAL DEVELOPMENT

• Cognitive moral development asserts that ethics education is possible. Just as people develop mentally, physically, and emotionally, they develop a moral cognizance.

• Using critical thinking and decision-making tactics such as the Socratic method, people can solve their ethical dilemmas.

• Kohlberg taught that there were six stages of ethical thinking, each stage being of greater maturity than the previous one.

• By delineating these levels, we are allowed to know and test our own thinking and decision-making.

• This helps individuals know themselves better and challenges them to move on to a higher level of thinking.

Selected Principles of Ethical Conduct

When individuals find themselves in a decision-making situation when ethics are in play, there are a variety of ethical theories (decision rules) that provide decision-making guidance as individuals strive to make ethically correct answers. Each ethical theory attempts to adhere to the ethical principles that lead to success when trying to reach the best decision. Most individuals adopt a preferred decision-making style but might adjust it depending on decision circumstances. As decision makers, they soon discover that others have adopted different decision rules. Thus, a team of decision makers must first understand the decision-making styles and decision rules of all members of the team.