Business Ethic concept.

1. Business Ethics

2. Ethical Decision Making Framework
 Helps to understand – How decision are
taken within organization or in business
 Factors that influence ;
 Ethical Issue Intensity
 Individual Factors
 Organizational Factors
 Opportunity
 Business Ethics Evaluations and Intentions
 Ethical or Unethical Behaviour

3. 1- Ethical Issue Intensity
 Ethical Issue; “…..”
 Intensity;
“perceived importance to the decision maker”
 EII; “the relevance or importance of an
ethical issue in the eyes of the individual,
work group, and/or organization”
 “reflects the ethical sensitivity of the
individual or work group that faces the
ethical decision making process”
 Moral intensity; “person’s perception of
social pressure and the harm the decision
will have on others.”

4.  Individuals cognitive state of
concern about an issue
 Whether or not having knowledge
about an issue being ethical or
unethical
 Indicates their involvement in making
choices

5. Characteristic and factors to intensity
 Personal
 Temporal
 Values, beliefs, needs, perceptions, situations,
personal pressure at particular place and time
 Senior employees
 Individuals with administrative authority
 Liability formula – Federal Sentencing
Guidelines

6. Individual factors
 Six spheres that influence individual while
making ethical choices
 Workplace
 Family
 Religion
 Legal system
 Community
 Profession
 There level of importance shall vary
depending on the perception of decision
maker about the issue.

7. Relationship
 Individuals sense of situation’s
moral intensity increases
individual’s perceptiveness
regarding ethical problems
 If an individual has high moral
sensitivity then his/her perception
about ethical problems will also
increase.

8. Other Factors – Organizational settings
 Management’s
 Incentive system
 Reward
 Punishment
 Corporate policies
 Values
 Positive or negative incentive system can
increase or decrease the perception about
an ethical issue being important
 Awareness level of individuals

9. 2- Individual Factors
 How will you decide an issue to be ethical
or unethical in daily life?
 Own values and principles
 Socialization, religion and education
 Workplace ethical issues;
 Honesty
 Conflicts of interest
 Discrimination
 Nepotism
 Misuse/theft of organizational resources

10.  Individual factors that affect ethical
awareness are;
 Gender
 Education
 Work experience
 Nationality
 Age
 Locus of control

11. 3- Organizational factors
 Within organizational settings –
workplace is influential than
individual factors.
 Corporate culture
 Significant others
 Obedience to authority

12. Corporate culture
 Set of values, beliefs, goals, norms, and
ways of solving problems shared by the
members (employees) of an organization
of any size (for profit or non-profit).
 Includes behavioural patterns, concepts,
values, ceremonies, and rituals that take
place in the organization.
 It gives individuals meanings as well as
internal rules of behaviours.
 Often expressed informally
 Comments, wishes of top mgmt, dress code,
working hours, extracurricular activities etc.

13. Evaluations and Intentions
 Ethical dilemma – problem solving
situation
 Any concrete rules?
 In fact, Decision rules are vague and
conflicting
 So uncertain results of such situations
 Then what is the key !
 Critical thinking
 Responsibility for own decisions

14.  The edge to point of no return in
ethical decision making
 Individual’s intentions
 Individuals actions
 If intentions and behaviours are
inconsistent with ethical judgement.
 Guilt!
 Which is first sign of unethical decision

15.  How an individual can deal with the
state of guilt ?
 Change their behaviour to reduce such
feelings
 Shift to value system that fits to decision
taken
 Change the decision next time
 Some may quit

16. Role of Leadership in Developing
Ethics program
 See exhibit 5-1 in your books

17. Leadership Styles
 Leadership styles and attitudes can help
pinpoint where future ethical issue may
arise.
 Leaders must have knowledge and
experience to make informed choices.
 Empower and involve everybody
 6 styles
 Coercive, authoritative, affiliative, democratic,
pacesetting, coaching

18. Classification of Leadership styles
 Transactional
 Attempt to create employee satisfaction
through negotiation for desired behaviour or
levels of performance.
 Ensure procedures and rules are in place
 Relationship based on situations (crisis,
reaction, conflict) rather than ethical concerns
 Transformational
 Look for raising employees’ commitment level
and encourage trust and motivation.
 Communicate sense of mission and vision
 Enhance and generate new learning
 Stimulate new ways of thinking

19. Corporate culture
 Set of values, beliefs, goals, norms, and
ways of solving problems shared by the
members (employees) of an organization
of any size (for profit or non-profit).
 Includes behavioural patterns, concepts,
values, ceremonies, and rituals that take
place in the organization.
 It gives individuals meanings as well as
internal rules of behaviours.
 Often expressed informally
 Comments, wishes of top mgmt, dress code,
working hours, extracurricular activities etc.

20. Ethical Framework and Auditing
Corporate Culture
Concern
for
people
Integrative
ExactingApathetic
CaringHigh
Low
High Low
Concern for performance

21. Leaders Influence on Corporate
Culture
 Use power and influence to shape
corporate culture
 Status and power of leader directly
related to the pressure he/she can put on
others.
 Five power bases to motivate individuals
ethically/unethically
 Reward power
 Coercive power
 Legitimate power
 Expert power
 Referent power

22. Reward Power
 To influence an individual behaviour
by offering something desirable.
 Money, status, promotion etc.
 Useful to change behaviour in the
long run.

23. Coercive power
 Penalizes the actions or behaviours
 Opposite to reward power
 Useful in changing behaviour
 Short run and situational
 Not good in making long term
relationships
 Continuous coercion
 Power groups formation to counterbalance
 Leaving organization

24. Legitimate power
 A certain individual has right to
authority
 Others have obligation to accept
 People follow because;
 Centralised structure of organization
 Charismatic personality of leader

25. Expert Power
 The person’s knowledge or the
perception that he/she posses
knowledge
 Credibility with sub ordinates
 Credibility and expert power
positively related to experience,
education and honours.
 Physicians, lawyers, consultants
 Advantage of others’ ignorance

26. Referent Power
 Referential
 Individuals with similar objectives
influencing each other by referring to
same objective.
 To be successful – empathetic
 By identification with others, the
decision maker gets confidence

27. Motivating Ethical Behaviour
 Motivation – force within an
individual that focuses his/her
behaviour toward achieving a goal.
 How motivation is created?
 Motivation helps explain ethical
behaviour! How?
 Organizational level
 individual’s needs/hierarchy of needs
 Motivation and ethical behaviour

28. Corporate Culture & Ethics
 How corporate culture can/may
support for ethical/unethical
behaviour?
 Ethical Conflict – the conflict
between the cultural values, in
theory and in practice
 Who develops plans in organization?
 Who acts on rules in organizations
 Consistency in ethical culture.

29. Whistle Blowing
 Whistle blowing - exposing an
employer’s wrongdoing.
 Whistle blower – an employee who
discovers corporate misconduct and
chooses to bring it to the attention
of others.
 Internal whistle blowing
 External whistle blowing

30. Ethics of Whistle blowing
 Brave, honourable and people of
integrity.
 Save organization and society
 Disloyal, not trustworthy, tattletale,
informers, sneakers, spies
 Loose cannons and troublemakers for
personal gains and egos

31. When is whistle blowing ethical?
 Company, through a product or decision will
cause serious and considerable harm to the public
or break existing laws.
 A serious threat of harm, should report and state
the moral concerns.
 Immediate supervisor doesn’t act. Employee
should exhaust internal procedures and chain of
command to the BoDs.
 Having documented evidence that is convincing to
a reasonable and impartial observer.
 Valid reasons to believe that revealing
wrongdoing to public will result in the changes
necessary to remedy the situation.

32. When is whistle blowing unethical
 Potential for financial gains
 Motivated by the opportunity financial gains
 Media attention
 Vendetta against company
 Hard to evaluate one’s intentions but the
key is;
 Sure about your facts and evidence
 Irrefutable