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Three Major Approaches to Business Ethics Conventional Approach • Based on how the average person views business ethics, and on common sense. Principles Approach • Based on the use of ethics principles to justify and direct behavior, actions, and policies. Ethical Tests Approach • Based on short, practical questions to guide ethical decision making and behavior and practices. 1 The Conventional Approach to Business Ethics The conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms. Decision, Behavior, or Practice Prevailing Norms of Acceptability Ethical Egoism • An ethical principle based on the idea that the individual should seek to maximize his or her own self interests as a legitimate factor. 2 Sources of Ethical Norms Fellow Workers Family Friends The Law Local Community Regions of Country The Individual Profession One’s SelfInterest and Conscience Employer Religious Beliefs Society at Large 3 Ethics and the Law • The law and ethics can overlap in many respects. • The law is a reflection of what society thinks are minimal standards of conduct and behavior. • Research of illegal corporate behavior focuses on two questions: 1. What leads firms to behave illegally? 2. What are the consequences of engaging in illegal behavior? 4 Making Ethical Judgments Behavior or act that has been committed Compared with Prevailing norms of acceptability Value judgments and perceptions of the observer 5 The Danger of Ethical Relativism • A serious danger of using the conventional approach to business ethics is: Ethical Relativism • One picks and chooses which source of norms one wishes to use based on what will justify current actions or maximize freedom. 6 Ethics, Economics, and Law – A Venn Model 7 Three Models of Management Ethics Immoral Management • An approach devoid of ethical principles and an active opposition to what is ethical. • The operating strategy of immoral management is focused on exploiting opportunities for corporate or personal gain. Moral Management • Conforms to highest standards of ethical behavior or professional standards of conduct. Amoral Management – • Different in nature from the others, it has two kinds: • Intentional: Does not consider ethical factors. • Unintentional: Casual or careless about ethical factors. 8 Characteristics of Immoral ManagersThese Managers: • • Intentionally do wrong • Are Self-centered and self-absorbed • Care only about self or organization’s profits or success • Actively oppose what is right, fair, or just • Exhibit no concern for stakeholders • Are the “bad guys” An ethics course probably would not help them 9 Examples of Immoral Management • Stealing petty cash • Cheating on expense reports • Taking credit for another’s accomplishments • Lying on time sheets • Coming into work hungover • Telling a demeaning joke • Taking office supplies for personal use • Showing preferential treatment toward certain employees • Rewarding employees who display wrong behaviors • Harassing a fellow employee 10 Characteristics of Moral Managers These Managers: • • • • • • • Conform to the highest standards of ethical behavior or professional standards of conduct. Ethical Leadership is commonplace. Their goal is to succeed within the confines of sound ethical precepts Demonstrate high integrity in thinking, speaking and doing. Follow both the letter and the spirit of the law Possess an acute moral sense and moral maturity Moral managers are the “good guys” 11 Habits of Moral Leaders 1. They have a passion to do right. 2. They are morally proactive. 3. They consider all stakeholders. 4. They have a strong ethical character. 5. They have an obsession with fairness. 6. They undertake principled decisionmaking. 7. They integrate ethics wisdom with management wisdom. 12 Positive Ethical Behaviors of Moral Leaders • Giving proper credit where it is due • Being straightforward and honest with other employees • Treating all employees equally • Being a responsible steward of company assets • Resisting pressure to act unethically • Recognizing and rewarding ethical behavior of others • Talking about the importance of ethics and compliance on a regular basis 13 Characteristics of Amoral ManagersIntentionally Amoral Managers • • • Don’t think ethics and business should “mix.” Business and ethics exist in separate spheres. A vanishing breed. Unintentionally Amoral Managers • • • • • Don’t consider the ethical dimension of decisionmaking. Don’t “think ethically.” Have no “ethics buds.” Well-intentioned, but morally casual or unconscious. Ethical gears are in neutral. 14 15 Three Models of Management Morality and Emphases on CSR 16 Moral Management Models And Acceptance or Rejection of Stakeholder Thinking 17 Why Managers and Employees Behave Ethically 1. To avoid some punishment Most of Us 2. To receive some reward Many of Us 3. To be responsive to family, friends, or superiors 4. To be a good citizen Very Few Of Us 5. To do what is right, pursue some ideal 18