Chapter 8 Personal and Organizational Ethics SUGGESTED ANSWERS TO DISCUSSION QUESTIONS Students should recognize that their answers to these discussion questions should be well reasoned and supported with evidence. Although some answers will be more correct than others, students should be aware that simplistic answers to complex questions, problems, or issues such as these will never be “good” answers. What are some examples of personal ethical dilemmas students may face, both in their personal lives and as part of an organization, and how do these dilemmas highlight the complexity of ethical decision-making? Students will have many different answers to this question. They may range from decisions whether or not to cheat on a test, to situations in their love lives, to illegal downloading of copyrighted material. Answers to the second part of the question, ethical dilemmas they have faced as part of an organization, are likely to be similarly diverse. They may range from decisions related to underreporting time spent at work, to taking company property (pens, damaged goods, petty cash), to reporting the unethical / illegal conduct of others. One that I faced in an organization was whether to tell the managing partner at a law firm where I did not work that associates were padding their hours on their time sheets. The law firm made more money from the additional hours, and I was friends with some of the attorneys who were padding their time. However, the clients were paying for the additional time. Further, since I wasn’t employed with the firm where the practice was occurring, I wasn’t certain how management would respond to the news. Finally, reporting the incident could have had a negative impact on my reputation in the legal community. Another example would be whether to tell a customer that senior managers at a bank were repeating false rumors about the customer’s business practices. Assume that these rumors could potentially do great harm to the customer’s business, but the managers have the ability to fire the informant if they desire to do so. Further, assume that this dilemma occurred during a recession, making the likelihood of finding another job comparable to the one at the bank slim. What ethical considerations and decision-making frameworks could have guided the individual in the scenario described in the provided answer from "Business & Society: Ethics, Sustainability, and Stakeholder Management In the first example I could have used any one of the guides presented in this chapter to help me with my decision. I could have weighed the consequences of my decision, both on the client’s business and on my family; I could have thought about how I would feel if my decision was on the front page of the local newspaper; I could have used the principle of caring—some of the clients were friends of mine. One of the most popular ethical tests in business is the test of making something public. In fact, it is the test that Warren Buffet employs at Berkshire Hathaway. If I had asked myself how I would feel if others knew that I didn’t report the padding of the time sheets, I would have come forward to the management of the law firm where the practice was taking place. What are some considerations students might take into account when evaluating the consequentialist and deontological perspectives in personal and organizational ethics, and how might they navigate situations where these perspectives conflict? Obviously, students will have different answers to this question. After all, philosophers have been debating this very question for hundreds of years with no resolution! On the consequential side, our society believes that results matter. What happens to people as a result of my actions is very important. Students like teleological theories, especially utilitarianism, because they often apply a cost-benefit approach to decision-making in their other business coursework. However, teleological theories have trouble with questions of rights and justice. We also think that there are some things that just should not be done, regardless of the outcome (e.g., killing an innocent person or denying someone the right to pursue his or her happiness). Many students will agree that there are certain moral and legal rights that cannot be overridden by utility. I personally tend to favor the deontological perspective—I believe there are things that should not be done regardless of the consequences. I also think that the consequences of doing my duty, or “the right thing” will almost always provide positive outcomes. However, when several moral and/or legal rights conflict under the principle of rights or when there are multiple acceptable outcomes using the principle of justice, I would use a teleological theory (e.g., utilitarianism) to reach a final decision. What are the key components of ethical leadership as outlined in the suggested answers to discussion questions from the 'Personal and Organizational Ethics' chapter of the book 'Business & Society: Ethics, Sustainability, and Stakeholder Management Because ethical leadership is built upon management that embodies the characteristics of a moral manager and a moral person, I would focus on these aspects of ethical leadership. A moral person exhibits (1) ethical traits (such as honesty, trustworthiness, etc. – the foundation of virtue ethics), (2) ethical behaviors and (3) ethical decision-making. A moral manager (1) serves as an ethical role model, (2) effectively communicates ethical choices, and (3) uses effective rewards and discipline. Since research has shown that behavior of superiors is the factor most likely to impact an organization’s ethical climate, I believe that it would be paramount for me to serve as an ethical role model by demonstrating ethical behavior, specifically exhibiting the traits of a virtue ethicist and exercising ethical decision-making. I would strive to effectively communicate ethical choices, through my own actions and through the implementation of the company’s code of conduct and training courses. Finally, I would emphasize that there are rewards for ethical behavior and punishments for unethical behavior and implement those measures when appropriate. What are the key factors that determine the effectiveness of codes of conduct within organizations, and how do they influence employee behavior and organizational culture? Codes of conduct, if embedded in the culture of a company, can provide effective guidance to employees. Collins and Porras, in Built to Last, talk about the effects of “cult-like cultures.” These cultures provide ideological control (assuring that employees look at the world in similar ways) and simultaneous operational autonomy. An effective code of conduct can provide a like result. In addition, the Sarbanes-Oxley Act of 2002 requires public companies to have a code of conduct for senior financial officers or to publicly disclose why they do not have this code. Finally, the Federal Sentencing Guidelines direct prosecutors to consider “the existence and adequacy of the corporation’s compliance program” (which includes an effective code of conduct), when determining whether to charge an organization for the criminal actions of its agents. Unfortunately, in reality, most codes of conduct are written to protect the company from its employees’ behaviors, and many are little more than window dressing. On balance, like most things, codes of conduct can be helpful if they are carefully written, properly implemented, uniformly enforced, and embedded in the culture. And like most things, they can be harmful if employees see them as hypocritical, window dressing, or applied capriciously. What strategies and approaches can organizations implement to cultivate an ethical climate that encourages and rewards ethical behavior among employees, while also addressing the concerns of senior managers who may prioritize profit over ethics? In my opinion, this question does not address the critical issue. Business ethics can be taught. The subject matter is no more difficult to grasp than any other academic subject. People have been making judgments about right and wrong all of their lives, using some type of criteria (or maybe just instinct, as the authors point out). People can learn how to use different ethical criteria. The more important, and much more relevant question is one of motivation—Rest’s third component. Because of this, effective ethics training must focus on the organization’s ethical climate, providing an atmosphere that is conducive to and supportive of ethical decisions. As discussed in this chapter, employees of firms feel pressured to compromise their ethics in pursuit of other (usually financial) goals. The problem is not that people don’t know how to make ethical decisions—the problem is that they are worried that doing the right thing will result in punishment rather than reward. So the real question is whether senior managers (those who establish the ethical climate in their organizations) can learn or be persuaded to establish climates that encourage and reward ethical behavior first and foremost, not exclusive pursuit of profit; I believe that current and future managers can be convinced to establish an ethical climate by studying the economic and legal consequences of unethical and ethical behaviors. What role does senior management play in establishing and maintaining an ethical climate within an organization, according to the suggested answers provided in the 'Personal and Organizational Ethics' chapter of 'Business & Society: Ethics, Sustainability, and Stakeholder Management'? The single most important factor in establishing a strong ethical climate is the commitment and behavior of senior managers. These are the people in the organization who set the standards of behavior for everyone else. If the senior managers authentically believe in ethical behavior, and act that way themselves, there will be little difficulty in establishing an ethical work climate. All of the other practices discussed in the textbook—communicating effectively, establishing ethics programs, setting realistic performance objectives, including ethics in the decision-making process, establishing codes of conduct, disciplining violators, setting up hotlines, providing ethics training, performing ethics audits and risk assessments, being transparent, and providing effective board oversight will be helpful, but these measures will only be successful if senior management sets a moral tone at the top. GROUP ACTIVITY Divide students into groups of four to five students. Instruct them to read the following scenario: “Alex Smith is preparing a sales presentation for his company, Phones4Kids, which manufactures and sells cell phones that are specifically designed for children. Phones4Kids employs several hundred workers in Mooray, Missouri, a small town with only two other large employers in addition to Phones4Kids. Alex hopes to sell specialty phones for boys and girls aged 6-10 to a retailer in Hooptown, Missouri. This sale would represent approximately 25% of the projected revenue for the current year for Phones4Kids. The phones are not specifically designed for internet access; however, about eight percent of the time the phones can pick up a wireless internet connection and the user can access the internet. There is a 48% chance that once a child connects to the internet using one of these specialty phones, he or she could access a pornographic site. Derrick Vance, Alex’s boss, has promised Alex a commission in addition to his regular salary if he makes the sale to the retailer. However, if he tells the retailer about the potential to access pornography via the cell phone, the retailer may buy the phones from a competitor that sells phones without internet access. Alex has reviewed the corporate policy for Phones4Kids and can find no specific guidance on how to handle this situation. However, the policy does indicate that sales representatives are to be honest and fair in their dealings with customers.” Each group should determine how Alex should handle this situation in a written memo. Specifically, the group should use the ethical decision-making process to reach a resolution to the hypothetical. The group’s ethics screen should include an analysis of several ethical principles and tests. Instructors may want to have students use the following additional ethical decision-making process, which builds on the process provided by the text but incorporates an economic and legal analysis of proposed courses of action: Step 1: State the Problem / Analyze the Problem Step 2: Identify All Courses of Action that You Could Take Step 3: Evaluate Each Course of Action Would the proposed course of action meet the firm’s economic responsibilities? Would the proposed course of action meet the firm’s legal responsibilities? Would the proposed course of action meet the firm’s ethical responsibilities? Note the ethical principles / tests employed by top management. Note the ethical principles / tests required by the code of conduct. Step 4: Evaluate New Alternative (Repeat Step 3) Step 5: Implement Chosen Course of Action Group Activity: Ethical Decision-Making at Phones4Kids Scenario Overview: Your group has been presented with a scenario involving Alex Smith, a sales representative at Phones4Kids, who is facing an ethical dilemma in preparing a sales presentation for specialty cell phones designed for children. The phones have the potential to access the internet, with a risk of accessing pornographic content. Alex's boss has promised him a commission if he makes the sale to a retailer, but disclosing the internet access risk may jeopardize the sale. Ethical Decision-Making Process: Step 1: State the Problem / Analyze the Problem: The problem is whether Alex should disclose the risk of accessing pornography via the cell phones to the retailer, knowing that doing so may impact the sale and his commission. Step 2: Identify All Courses of Action: 1. Disclose the internet access risk to the retailer. 2. Proceed with the sale without disclosing the risk. 3. Seek guidance from higher management or legal counsel. Step 3: Evaluate Each Course of Action: A. Economic Responsibilities: • Option 1: Disclosing the risk may result in lost sales and potential revenue for Phones4Kids. However, it upholds the principle of honesty and transparency. • Option 2: Proceeding with the sale without disclosure may secure the sale and Alex's commission but could lead to legal and reputational risks if the retailer discovers the issue later. B. Legal Responsibilities: • Option 1: Disclosing the risk aligns with legal obligations to provide accurate and truthful information to customers. • Option 2: Withholding information could potentially violate consumer protection laws and regulations. C. Ethical Responsibilities: • Option 1: Disclosing the risk demonstrates integrity, fairness, and respect for the well-being of children who may use the cell phones. • Option 2: Withholding information prioritizes short-term gains over ethical considerations and may harm customers. Step 4: Evaluate New Alternative: • Consider seeking guidance from higher management or legal counsel to navigate the ethical and legal complexities of the situation. Step 5: Implement Chosen Course of Action: • The group should recommend disclosing the internet access risk to the retailer, emphasizing honesty, transparency, and commitment to ethical conduct in business dealings. Conclusion: Based on the ethical decision-making process, the group recommends that Alex disclose the risk of accessing pornography via the cell phones to the retailer. This course of action aligns with Phones4Kids' ethical principles, legal obligations, and long-term reputation as a responsible and trustworthy company. This structured approach encourages students to consider ethical principles, legal obligations, and economic implications when making business decisions, fostering critical thinking and ethical reasoning skills in the context of real-world scenarios. INDIVIDUAL ASSIGNMENT Distribute the following instructions to each student: Describe an ethical dilemma that you faced in the workplace. Analyze how you would resolve the dilemma using (1) utilitarianism, (2) the principle of rights, (3) the principle of justice, (4) virtue ethics and (5) the Golden Rule. Based on your analysis of these principles, what course of action would result in the most ethical outcome? Determine what ethical principle(s) or tests(s), if any, were employed by senior management or required by the company’s code of conduct. Finally, describe the course of action that you took in the situation and ascertain whether you would choose the same course of action again or if you would act differently based on your analysis of the ethical principles, management’s behavior and the requirements (if any) of the company’s code of conduct.
Principles Approach to Ethics
Teleological Theories
Egoism
Utilitarianism
Deontological and Nonteleological Theories
Kant
Rights
Justice
Ethical Tests Approach
Test of Common Sense
Test of One’s Best Self
Test of Making Something Public
Test of Ventilation
Test of the Purified Idea
Test of the Big Four
Gag Test
Individual Assignment: Ethical Dilemma Analysis in the Workplace Description of Ethical Dilemma: In my previous role as a project manager, I encountered an ethical dilemma related to the allocation of project resources. Our team was working on multiple projects simultaneously, and we faced a situation where one project required additional resources to meet a critical deadline, while another project was struggling due to resource constraints. As the project manager, I had to decide how to allocate resources fairly and ethically to ensure the success of both projects. Analysis Using Ethical Frameworks: 1. Utilitarianism: • Evaluate the consequences of allocating resources based on the greatest overall benefit to all stakeholders. Consider factors such as project deadlines, client satisfaction, and long-term project success. 2. Principle of Rights: • Respect the rights of all team members to fair treatment and opportunities for success. Ensure that resource allocation decisions are made transparently and based on objective criteria rather than favoritism or bias. 3. Principle of Justice: • Strive for fairness and equity in resource allocation, considering the needs and contributions of each project. Aim to distribute resources in a way that promotes equal opportunities for success among all projects and team members. 4. Virtue Ethics: • Act with integrity, honesty, and accountability in making resource allocation decisions. Consider the impact of your decisions on team morale, trust, and organizational values. 5. Golden Rule: • Treat others as you would want to be treated in a similar situation. Consider how your decisions would affect you if you were a team member on either project. Assessment of Ethical Outcome: Based on the analysis of ethical frameworks, the most ethical course of action would be to prioritize resource allocation based on project priorities, deadlines, and critical needs. This approach ensures that resources are distributed fairly and optimally to maximize the success of both projects while upholding principles of fairness, justice, and integrity. Ethical Principles Employed by Management: Senior management often emphasized the principles of fairness, transparency, and accountability in resource allocation decisions. The company's code of conduct outlined the importance of ethical behavior, professionalism, and respect for all team members' contributions. Description of Action Taken: In the situation described, I took a collaborative approach, involving project stakeholders in resource allocation discussions. We openly communicated project priorities, deadlines, and resource constraints, allowing team members to voice concerns and propose solutions collaboratively. While decisions were ultimately made based on project needs, transparency and fairness were prioritized throughout the process. Reflection: Upon reflection, I believe that the approach taken was appropriate given the circumstances and aligns with ethical principles of fairness, justice, and transparency. However, I would emphasize even more proactive communication and collaboration among team members to ensure that all perspectives are considered in future resource allocation decisions. This assignment encourages students to reflect on real-life ethical dilemmas they have encountered in the workplace, apply ethical frameworks to analyze the situation, and consider the implications of different courses of action on stakeholders and organizational values. It fosters critical thinking and ethical decision-making skills in professional contexts. Solution Manual for Business and Society: Ethics, Sustainability, and Stakeholder Management Archie B. Carroll, Ann K. Buchholtz 9780538453165
