BU288 - Ethics in Organizations

Lecture 19 - Ethics in Organizations Summary: - Three Primary ethical decision criteria: -> Utilitarian, Rights, Justice ->...in a given situation, consider all three - do they produce the same conclusion? - Person and Situation can impact behaviour -> Personality -> Leaders' impact, organizational culture, organizational systems, stakeholders - When ethics is a concern, consider -> Impact on people, organization, and alternatives - Ethical/Unethical behaviour sends signals - There is no universal code of ethics, but organizations can do something to promote ethical behaviours

What is Ethics?

Ethics: Code of moral principles and values that governs the behaviours of a person or group with respect to what is right or wrong

• Ethical values set standards as to what is good or bad in conduct and decision making

• Orgs. that take ethics seriously tend to be more successful

What are the Three Ethical Principles / Decision Criteria?

1. Utilitarian

2. Rights

3. Justice

What is the Utilitarian (Ethical) Principle?

Utilitarian: Behaviour is ethical if it delivers the greatest good to the greatest number of people

• Focused on outcomes; ends justify the means

• Best Decision = action that produces the greatest good for the greatest number of people

What are the utilitarian theories?

Also known as “consequentialist” theories

• Identify actions to take, and the harms/benefits the actions have for all relevant stakeholders

• The best decision yields the greatest net benefits

• The worst decision yields the greatest net harm

Key things to consider when applying the Utilitarian principle:

Key issues to consider:

• Can you identify all the stakeholders?

  • Immediate? Distant?

• Can you identify all the harms and benefits for each?

• Can you really see what decision/action will produce the greatest good (and least harm) for the greatest number of people, for society overall?

What are the advantages of Utilitarian Principle?

• Promotes efficiency and productivity

What are the disadvantages of Utilitarian Principle?

Disadvantages

• Ignores rights of some individuals

• Difficult to apply to values that cannot be easily quantified

  • Ex: Health, life, employment

What is the Rights (Ethical) Principle?

Rights: Behaviour is ethical if it respects the fundamental rights shared by all human beings

• Ex: Charter of Rights and Freedoms, Free speech, due process, privacy, life and safety, etc.

Key things to consider when applying the rights principle:

Key issues to consider:

• What are stakeholders’ rights?

• Should I acknowledge, respect and guarantee such basic rights?

What are the advantages of Rights Principle?

Advantages:

• Protects individuals from injury consistent with freedom and privacy

What are the disadvantages of Rights Principle?

Disadvantages:

• Can create overly legalistic environment

• Can hinder productivity and efficiency

• Competing individuals’ rights

What is the Justice (Ethical) Principle?

Justice: Behaviour is ethical if it is fair and impartial in its treatment of people

• Impose and enforce rules fairly

• Equity

Key things to consider when applying the Justice principle:

Key issue to consider:

• Is my action fair?

  • Fair outcomes (Distributive fairness)

  • Fair procedure (procedural fairness)

  • Fair treatment (interactional fairness)

What are the advantages of Justice Principle?

Advantages:

• Protects interests of under-represented and less powerful

What are the disadvantages of Justice Principle?

Disadvantages:

• Can encourage a sense of entitlement

• Difficult to define “fairness” in dealing with different people with different needs and values

• Can reduce risk-taking, innovation and productivity

List Ethical Behaviours:

Ethics underly our decisions

• Honest communication

  • Ex: Evaluating employees candidly, advertising honestly

• Fair Treatment

  • Ex: paying equitably, avoiding using people as scape-goats

  • Special Consideration (ex: helping people with disabilities)

• Fair Competition

  • Ex: avoiding bribes and kickbacks

• Responsibility to organization

  • Ex: Supporting the organization Vs. Self-Interest

• Corporate Social Responsibility

  • Ex: Positive community impacts

• Respect for the Law

  • Ex: Following labour laws

What are the two general causes of Unethical Behaviours?

1. Personality Causes (Bad Apple)

2. Situational Causes (Bad Barrel)

Explain “Personality Causes” for unethical behaviours:

• Need for Power

• Machiavellianism

• Risk Taking

• Moral Identity

Explain “Situational Causes” for unethical behaviours:

• Gain

  • Ex: Anticipation of reward or lack of punishment

• Role Conflict

• Competition/Scarce Resources

• Pressures to conform

• Social modeling

• Anonymity/Lack of Accountability

• Organization/Industry Culture

What are strategies to make better ethical decisions?

• Identify the impact on people

  • Stakeholders

  • What is the potential for harm?

  • Costs and benefits

• Organizational Systems

  • How does the organization usually do business?

  • What policies/procedures help? Norms, laws, ethical codes, etc.

• Choices

  • What other alternatives are available?

  • What are the risks of behaving ethically (or unethically)?

What is Corporate Social Responsibility (CSR)?

CSR: Management’s actions that contribute to the welfare and interest of all organizational stakeholders

• Tends to be a positive relationship between ethical/socially responsible behaviour and financial results

What are examples of CSR?

For example:

• Respect for environment

  • Environment stewardship

• The relationship between the business and society

  • Ex: Contribute to better society

• Fair treatment of employees, suppliers, customers, communities, etc.

• Adhering to ethical values

  • Ex: Going beyond legal obligations

Employees responding positively to CSR relates to…

• Organizational trust

• Organizational identification

• Work engagement

• Organizational commitment

• Job satisfaction

• Job performance

• Citizenship behaviours

Employees responding negatively to CSR relates to…

• Turnover intentions

• Organizational deviance

What are sources of ethical values in organizations?

• Personal Ethics

  • Role of leaders (Role model, “Linking-pin”)

• Organizational Culture

  • Embed ethical values

• Organizational Systems

  • Employee selection, training, rewards

  • Presence of ethics codes

• External Stakeholders

  • Reward/value ethical behaviour

Formal Structure and Systems???

• Structure

  • Assigning ethics committee or ethics officer

• Disclosure Mechanisms

  • Visibly reward ethical acts and punish unethical ones

  • Provide protective mechanisms so that employees are able to discuss ethical dilemmas and report behaviour against the code of ethics

• Code of Ethics

  • Used by an increasing number of organizations

  • Not enough to have a policy, must also be followed

• Training Programs