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Personal and
Organizational
Ethics
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© 2005 by Nelson, a division of Thomson Canada Limited.
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Chapter Seven Objectives
• To understand the different levels at which
business ethics may be addressed
• To appreciate principles of personal
ethical decision-making
• To identify factors affecting the business
moral climate
• To understand the strategies to improve
the ethical climate
© 2005 by Nelson, a division of Thomson Canada Limited.
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Chapter Seven Outline
• Levels at which Ethical Issues May Be
Addressed
• Personal and Managerial Ethics
• Managing Organizational Ethics
• From Moral Decisions to Moral
Organizations
• Summary
© 2005 by Nelson, a division of Thomson Canada Limited.
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Introduction to Chapter Seven
• This chapter focuses on the day-today ethical issues that managers face
© 2005 by Nelson, a division of Thomson Canada Limited.
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Levels at Which Ethical Issues
May Be Addressed
• Personal level—situations faced in
personal life (income tax and speeding).
• Organizational level—workplace
situations faced as managers and
employees (illegal dumping and creative
accounting).
© 2005 by Nelson, a division of Thomson Canada Limited.
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Levels at Which Ethical Issues
May Be Addressed
• Industrial level—ethical situations
confronted as professionals
• Societal and international levels—
local-to-global situations confronted
indirectly or directly by management
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Resolving Ethical Conflicts
Three Approaches
• Conventional (covered in Chapter 6)
• Principles
• Ethical tests
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Principles Approach
The anchors decision making
• Utilitarianism
• Rights
• Justice
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© 2005 by Nelson, a division of Thomson Canada Limited.
Caring
Virtue
Servant Leadership
Golden Rule
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Personal and Managerial Ethics
Principle of Utilitarianism focuses on
producing the greatest ratio of good to
evil for everyone
– Consequentialist theory
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Principle of Rights focuses on
examining, and possibly protecting,
individual moral or legal rights
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
• A principle of justice that involves
considering what alternatives promote
fair treatment of people
• Types of justice
– Distributive
– Compensatory
– Procedural
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Rawls’ Justice
• Each person has an equal right to basic
liberties as compared to others
• Social and economic inequalities are
arranged so that they are:
reasonably expected to be to everyone’s advantage and
attached to positions and offices open to all people
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
• Principle of caring focuses on a person
as a relational (cooperative) and not as an
individual
– Feminist theory
• Virtue ethics focuses on individuals
becoming imbued with virtues
– Aristotle and Plato
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Servant leadership focuses on
serving others first such as
employees, customers, community,
and so on
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Characteristics of Servant Leaders
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Listening
Empathy
Healing
Persuasion
Awareness
• Foresight
• Conceptualization
• Commitment to the
growth of people
• Stewardship
• Building a
community
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Golden rule focuses –do unto others
as you would have them do unto you
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Concerns to be Addressed in
Ethical Conflicts
• Obligations
• Ideals
• Effects
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
When Obligations Ideals and Effects
Conflict
• When two or more moral obligations conflict,
use the stronger one
• When two or more ideals conflict, or conflict
with obligations, honour the more important
one
• When effects are mixed, choose the action that
produces the greatest good and the least harm
© 2005 by Nelson, a division of Thomson Canada Limited.
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Personal and Managerial Ethics
Ethics Test Approach
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Test of common sense
Test of one’s self
Test of making something public
Test of ventilation
Gag test
© 2005 by Nelson, a division of Thomson Canada Limited.
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Managing Organizational Ethics
Factors Affecting the Morality of Managers
Society’s Moral Climate
Business’s Moral Climate
Industry’s Moral Climate
Superiors
Policies
Individual
(One’s
personal
situation)
© 2005 by Nelson, a division of Thomson Canada Limited.
Peers
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Managing Organizational Ethics
Factors Influencing Unethical
Behaviour
• Behaviour of superiors
• Ethical practices of one’s industry or
profession
• Behaviour of one’s peers in the organization
• Formal organizational policy (or lack of one)
• Personal financial need
© 2005 by Nelson, a division of Thomson Canada Limited.
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Managing Organizational Ethics
Questionable Behaviour of
Superiors or Peers
• Amoral decision making
• Unethical acts, behaviours or practices
• Acceptance or legality as the standard
behaviour
• Absence of ethical leadership
© 2005 by Nelson, a division of Thomson Canada Limited.
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Managing Organizational Ethics
Questionable Behaviour of
Superiors or Peers
• Use of a system that over estimates profits
• Insensitivity towards how subordinates
perceive pressure to meet goals
• Inadequate formal ethical policies
© 2005 by Nelson, a division of Thomson Canada Limited.
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Improving Ethical Climate
Ethics Programs
& Officers
Realistic
Objectives
Effective
Communication
Top
Management
Leadership
Ethics Audit
Ethics Training
Ethical Decisionmaking Processes
Codes of
Conduct
Discipline of
Violators
© 2005 by Nelson, a division of Thomson Canada Limited.
Whistle-blowing
Mechanisms
(“Hotlines”)
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Ethical Decision-Making
Identify decision you
are about to make
Articulate all dimensions
of proposed decision
Conventional Approach
Standards/Norms
-Personal
-Organizational
-Societal
-International
Principles Approach
Ethical Principles
-Justice
-Rights
-Utilitarianism
-Golden Rule
Course of action passes
ethics screen
Engage in course of
action
Ethical Tests Approach
Ethical Tests
-Common sense
-One’s best self
-Public disclosure
-Gag test . . .
Course of action fails
ethics screen
Do not engage in course
of action
Identify new course of
action
© 2005 by Nelson, a division of Thomson Canada Limited.
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From Moral Decisions to Moral
Organizations
Moral Decisions
Moral Managers
Moral Organizations
© 2005 by Nelson, a division of Thomson Canada Limited.
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Selected Key Terms
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Codes of conduct
Codes of ethics
Compensatory justice
Distributive justice
Ethical tests
Ethical audits
Golden rule
Legal rights
Moral rights
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© 2005 by Nelson, a division of Thomson Canada Limited.
Principle of caring
Principle of justice
Principle of rights
Principle of
utilitarianism
Procedural justice
Rights
Servant leadership
Utilitarianism
Virtue ethics
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