Business ethics ethical decision making and case 10e chapter 3

Chapter 3 Emerging Business Ethics Issues Part Two Ethical Issues and the Institutionalizati on of Business Ethics... Recognizing an Ethical Issue An ethical issue is a problem, situa

Chapter 3 Emerging Business Ethics

Issues

Part Two Ethical Issues

and the Institutionalizati

on of Business

Ethics

Recognizing an

Ethical Issue

An ethical issue is a problem,

situation, or opportunity that requires

an individual or group to choose

among actions

 New ethical issues are emerging

constantly

 Can be difficult to recognize ethical issues

Failure to do so puts corporations at risk

 Is a problem in industries where winning is perceived to be a game

Specific Types of Observed Misconduct

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Discrimination 15 14 Conflicts of interest 15 16 Inappropriate social networking 14 n/a Health or safety violations 13 11 Lying to outside stakeholders 12 12

 Honesty: Truthfulness or trustworthiness

 Telling the truth to the best of your

knowledge

 Dishonesty: A lack of integrity,

incomplete disclosure, or an unwillingness

to tell the truth

Issues related to honesty arise when people perceive business as something where normal rules do not apply

 Fairness: The quality of being just,

equitable, and impartial

 Equality: How wealth or income is

distributed

 Reciprocity: Occurs when an action

that has an effect upon another is returned

 Optimization: The tradeoff between

equity and efficiency

Ethical Issues and Dilemmas in Business

 An ethical dilemma is a problem,

situation, or opportunity that requires an individual or group to chose among

several wrong or unethical actions

 There is no ethical choice

7 Integrity in collecting and managing data

8 Supply chain relationships and human rights

Misuse of Company

Resources

The leading form of observed

misconduct

 Can range from unauthorized use of

equipment and computers to embezzling company funds

 Time theft costs organizations

hundreds of billions in lost productivity annually

Abusive or Intimidating

Behavior

One of the most common ethical

problems

 Can be physical threats, false

accusations, profanity, insults, harshness, ignoring someone, or unreasonableness

 Intent is important in determining abuse

 Bullying is a growing problem

 Is associated with a hostile workplace

Actions Associated

with Bullies

1 Spreading rumors to damage others

2 Blocking others’ communication in the workplace

3 Flaunting status or authority to take advantage of others

4 Discrediting others’ ideas and opinions

5 Use of e-mails to demean others

6 Failing to communicate or return communication

7 Insults, yelling, and shouting

8 Using terminology to discriminate by gender, race, or age

9 Using eye or body language to hurt others or their reputations

10 Taking credit for others’ work or ideas

Source: Adapted from Cathi McMahan, “Are You a Bully?” Inside Seven , California Department of

Transportation Newsletter, June 1999, 6.

Three types of lies

 Joking without malice

 Commission lying is creating a false

perception with words that deceive the receiver

 Creating noise

 Omission lying is intentionally not

informing channel members of problems relating to a product that affects awareness, intention, or

behavior

Conflicts of

Interest

Exist when an individual must

choose whether to advance his/her

personal interests, those of the

organization, or some other group

 Individuals must separate personal

interests from business dealings

The practice of offering something

in order to gain an illicit advantage

 Different types of bribery

 Active bribery: The person who

promises or gives the bribe commits the offense

 Passive bribery: An offense committed

by the official who receives the bribe

 Facilitation payments: Legal as

long as they are small

Corporate Intelligence

The collection and analysis of

information on…

 Markets

 Technologies

 Customers and competitors

 Socioeconomic and external political

trends

Corporate Intelligence

Three intelligence models

 Passive monitoring system for early

warning

 Tactical field support

 Support dedicated to top

management strategy

Is illegal in the U.S.

 A company can be sued for

 Unreasonably discharges an individual

 Discriminates against an individual with

respect to hiring, employment terms, promotion, or privileges

 Equal Employment Opportunity

Commission (EEOC)

 The Age Discrimination in

Employment Act

 Affirmative Action Programs

 Efforts to recruit, hire, train, and

promote qualified individuals from groups that have traditionally been discriminated against

Discrimination

Sexual Harassment

A repeated, unwanted behavior of a sexual nature perpetrated upon an

individual by another

 Hostile work environment

 The conduct was unwelcome

 The conduct was severe, pervasive, and

regarded by claimant as hostile/offensive

 The conduct was such that a reasonable

person would find it hostile or offensive

Dual Relationship

A personal, loving, and/or sexual

relationship with someone with

whom you share professional

responsibilities

 A key ethical issue in sexual

harassment

 Unethical dual relationship: The

relationship causes a conflict of interest or impairment of professional judgment

1 Statement of policy

2 Definition of sexual harassment

3 Non-retaliation policy

4 Specific procedures for prevention

5 Establish, enforce, and encourage

victims to report

6 Establish a reporting procedure

7 Timely reporting requirements to the

proper authorities

To Avoid Sexual

Misconduct,

A Firm Needs

Any purposeful communication that

deceives, manipulates, or conceals facts

in order to create a false impression

 Accounting fraud

 Misrepresentation of company’s financial reports

 Dramatic changes in accounting field

 Increased competition and pressures to perform can create opportunities for misconduct

 Accountants should abide by a strict code of ethics

Initial Detection of Operational Frauds

Source: Association of Certified Fraud Examiners, Report to the Nations on Occupational Fraud and

Fraud

The process of dishonestly creating,

distributing, promoting, and pricing

products

 Puffery: Exaggerated advertising claims,

blustering, and boasting

 Implied falsity: An advertising message

that misleads, confuses, or deceives the public

 Literally false: Claims can be divided into

tests prove (establishment claims) and bald assertions (non-establishment claims)

 When consumers attempt to deceive

businesses for personal gain

 Price tag switching, item switching, or

lying to obtain discounts

 Collusion involves an employee who

helps a consumer commit fraud

 Duplicity involves a consumer

duping a store

 Guile is associated with a person who

uses tricks to obtain an unfair advantage

Consumer

Fraud

Financial Misconduct

 The failure to understand and manage

ethical risks was a key problem in the recent financial crisis

 Many firms rewarded risk-taking

 Difficult-to-understand financial instruments

and murky accounting played roles

 Government calls for reform

 Stricter controls on hedge funds and other

instruments

 Greater transparency

 Dodd-Frank Wall Street Reform and

Consumer Protection Act

Insider Trading

 Two types of insider trading

 Legal insider trading: Involves legally

buying and selling stock in an insider’s own company, but not all the time

 Illegal insider trading: The buying or

selling of stocks by insiders who possess material that is not public

Intellectual Property

Rights and Privacy

 Involve the legal protection of

intellectual properties

 Books, movies, software

 Many privacy issues in the business

world

 Employee use of technology

 Consumer privacy

 Can be challenging for businesses today

to meet the needs of consumers while protecting privacy

 Identity theft is a growing problem

The Challenge of

Determining Ethical Issues in Business

 Most ethical issues become visible

through stakeholder concerns

 Determining ethical issues is a

challenge

 Changing societal standards over time

 The ethical decision making process

starts when ethical issue awareness occurs and a discussion begins