Business ethics Notes- all notes from the entire semester, including exam study guide
Business ethics Notes- all notes from the entire semester, including exam study guide MARK 20100
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Responsibilities to Third Parties: Honesty, Whistleblowing, and Insider Trading o Honesty Carr – Bluffing, deception, manipulation, lying in business is ethically permissible? Business' standards of right and wrong differ from those of society But this is not entirely accurate 3 reasons to explain ethical obligation to be honest utilitarian rationale- dishonesty undermines ability to communicate and will have adverse social consequences Kantian- wrong to treat others as means to our own ends dishonesty causes lack of moral integrity in the dishonest person Can only be ethical if adequately respond to these 3 concerns o Whistleblowing Employee or other insider informs the public or government agency of an illegal, harmful, or unethical practice done by institution But employees are considered loyal R. DeGeorge – three conditions must be met for it to be ethically permissible Real threat of serious harm bc whistle blowing can be threat to company and other employees First seek to prevent harm through internal channels of firm to minimize harm on others Exhaust all internal procedures for preventing harm Becomes obligatory when two further conditions are met whistleblower must have documented evidence to convince impartial observers of the firm’s role in causing the harm the whistleblower must have good reason to believe that blowing the whistle will prevent the harm. o Insider Trading Buying or selling stocks and bonds on basis of nonpublic information that you have obtained as an "insider" Can buy a bunch of stock just before the information is made public Ex) Enron - top executives were selling their stock while pretending that they were fine so ppl would buy them Some think it could be ethical(market-based) – it is an efficient means to disseminate accurate info that, in turn, moves stock prices closer to the point that reflects true value; also allowing it would provide strong incentives for insiders to work to benefit firm These arguments aren’t ethically persuasive – does this by unfair and unethical means (Enron); and insiders can benefit from both good and bad news and may have incentive to work against the firm’s best interest Three arguments criticizing insider trading unfair to other security traders since they lack same info It is only unfair when you are damaged by insider info that you don’t have equal and fair access to this information used is the property of the firm and using it is unethical it violates trust implied by fiduciary relationship between a firm and its employees In sum – information does belong privately to firm, but trading on inside information involves misappropriating private resources for personal gain in a way that harms the firm’s investors. Because investors rely on managers to represent their interests, insiders who trade on inside information violate that trust and defraud the very people they have a responsibility to represent. Actual investors are denied benefits that they had legitimate ethical claims to. Reflection on Discussion Case o Other companies implicated in ethical or legal scandals o Is there a single cause? Identifying causes of scandals and creating strategies to prevent them are an important part of business ethics – three levels of concern – individuals, organizations/corporate structure and practices, and governmental and social institutions o New attention in companies – HR functions, ethics officers Take ethics training more seriously o Governmental perspective – Sarbanes-Oxley (2002), Dodd-Frank, prosecution of corporate crime What is their role? Bans on personal loans to executive officers Faster reporting of trades by insiders Chapter 1 If a bank must pay a higher rate to borrow than others do, then markets must have less confidence in the institutions financial strength Sarbanes-Oxley Act- requires corporations to have a code of ethics including standards that comply with the law and honesty etc Ethical reputation can provide an advantage o There have been consumer boycotts as a result of unethical conduct ex)nike, walmart, mcdonalds Does good ethics mean success? o Successful companies were found to place emphasis on their core values These provide the ultimate guide in decision making But regardless of whether valus are good or not, still successful o Ethical values are the beliefs and principles that seek to promote human well-being in an impartial way o Trust, loyalty, initiative, creativity o Bad things: if other people cheat though, this will put you at a disadvantage Some think ethics is just compliance with the law but there is much ambiguity here so then you must make your own judgments o Many acts are not illegal until a court says they are (reactionary, after the fact) o Legal compliance vs ethical responsibility o Sometimes the law is just wrong or in conflict with moral code ex) slavery/abortion ethos generally defined as the decisions you should make based on the standards of your community, but instead of what is valued, ethics is what ought to be valued o Cultural norm Steps of ethical decision o Understand the facts o Identify ethical issues involved o Identify all stakeholders/understanding how they will be affected Consider variety of people affected by the decision and diff perspectives o Employing moral imagination to understand alternatives o Considering how others will judge your decision- consider the consequences o Making a decision and monitoring/learning from the results Class Case study: LIBOR manipulating interest rates Acknowledge systemic failures Marketing risk of unethical behavior o Reputation of company, brand equity and brand image o Ex) guy from factory that burned down was given tons of publicity for still paying its workers o Ex) toms gives shoes to people for every pair bought Values: beliefs or standards that incline us to act or choose in one way rather than another Ethical values o Serve the ends of human well being (not personal/selfish) o Ethical acts and choices should be acceptable and reasonable from all points of view o Impartial values Chapter 5, Frankl excerpt Frankl excerpt Man tends to only live by looking to the future We can rise above a situation of suffering by observing the moments as if they were already in the past o When you lose belief in the future you also lose spiritual hold- let ourselves decline and become subject to mental and physical decay o When a man finds that it is his destiny to suffer, he will have to accept his suffering as a task (his single and unique self) When there was an opportunity for it, you have to give yourself a why (an aim) for your life in order to strengthen you to bear the terrible of how your life is Right action and right conduct Life ultimately means taking the responsibility to find the right answer to its problems and to fulfill the tasks which it constantly sets for each individual. o These tasks = the meaning of life They differ in all men from moment to moment, therefore it is impossible to define the meaning of life in a general way Life was still expecting something from them; something in the future was expected of them o Must realize that our uniqueness that distinguishes each individual gives a meaning to our existence ex) child waiting for you o Must realize the impossibility of replacing a person --> become aware of the responsibility we have for our existence and his life's continuance Once you are aware of this responsibility, cannot throw life away bc you know the why for your existence and can bear any how Analogy of a chess move – which is the best in the world- depends on the circumstance of the move One should not search for an abstract meaning of life. Everyone has his own specific vocation or mission in life to carry out a concrete assignment which demands fulfillment. Therein he cannot be replaced, nor can his life be repeated. Thus, everyone’s task is as unique as is his specific opportunity to implement it. Each man is questioned by life…. He can only answer by answering for his own life; to life he can only respond by being responsible. Logotherapist- widening and broadening the visual field of the patient so that the whole spectrum of potential meaning becomes conscious and visible to them o The more you forget yourself and instead give yourself a cause to serve or another person to love, the more human you are and the more you actualize yourself Self actualization is possible only as a side effect of self transcendence o Belief that it is the striving to find a meaning in one's life that is the primary, most powerful motivating and driving force in human beings Responsibleness = the very essence of human existence o Are we responsible to society or to our own conscience? We can discover the meaning of life: 1) by creating a work or doing a deed – doing work that matters 2) by loving another unconditionally o Love is the only way to grasp another human being in the innermost core of his personality. By love we see the essential traits and features of another, and we see potential, and allow the other to be aware of and realize potential 3) by the attitude we take toward unavoidable suffering o Suffering – ceases to be suffering at the moment it finds a meaning, such as the meaning of a sacrifice o When we are no longer able to change a situation, we are challenged to change ourselves If suffering is avoidable, the meaningful thing to do is to remove its cause o If we will not survive, then all this suffering has no meaning If we don’t survive, there is no meaning to survival, for a life whose meaning depends upon such a happenstance (as whether one escapes or not) ultimately would not be worth living at all Our current mental hygeine philosophy stresses the idea that people ought to be happy o Such a value system might be responsible for the fact that the burden of unavoidable unhappiness is increased by unhappiness about being unhappy Freedom is but the negative aspect of the whole phenomenon whose positive aspect is responsibleness….. Freedom is in danger of degenerating into mere arbitrariness unless it is lived in terms of responsibleness o Freedom not mean anything unless it is partnered with responsibility o Something is good bc it is a choice that you have the freedom to make “What man becomes – within the limits of endowment and environment – he has made out of himself. In the concentration camps, for example…., we watched and witnessed some of our comrades behave like swine while others behaved like saints. Man has both potentialities within himself; which one is actualized depends on decisions but not on conditions…… After all, man is that being who invented the gas chambers of Auschwitz; however, he is also that being who entered those gas chambers upright, with the Lord’s Prayer or the Shema Yisrael on his lips Chapter 10- Business' Environmental Responsibilities Creates a new global space for business to manage Leads to cultural, legal, accountability issues Demands recognition of stakeholders and related implications Discussion case: Sustainable Business? Environmental responsibilities cannot be met without a conscious restructuring of business operations Sustainability – financially, socially, environmentally – triple bottom line The “business case” for sustainability o The huge unmet market potential among the world’s developing countries can only be met in sustainable ways – “base of the pyramid” (BOP) o Sustainability is a prudent long-term strategy for corporations o Significant cost savings can be achieved through sustainable practices o Competitive advantages exist for sustainable business o Sustainability is a good risk management strategy o Business can stay ahead of legislation Stakeholder concept – community (humans, environment) as stakeholder - constituent to which management is responsible Social and environmental responsibility – interrelated Instrumental value versus intrinsic value – is the environment a means or an end? Intrinsic value of environment may be motivated by theistic, aesthetic, non-moral considerations, but ethical case alone is sufficient Moral imperative o Principle of intergenerational justice o Social justice issue – disproportionately created by wealthy; costs born by poor Contrasting perspectives: o Classical model of CSR – natural objects have no value in their own right and have value only to the degree that humans place value upon them – there is no “right” state of nature – no objective standard o Goal – (utilitarian) overall good – is met by the market – criticism of this approach o Wilderness area/ski resort example (DesJardins) o Market failures – many of the best known involve environmental issues i. externalities – costs born by external parties, first generation problem ii. no public pricing mechanisms exist Three Pillars of Sustainability (recall triple bottom line) o UN World Commission on Environment and Development: Sustainable practices must be able to meet the “needs of the present without compromising the ability of future generations to meet their own needs” o Principle of “intergenerational justice” o Precautionary principle- if in situation where potential of harm to human well being should focus on humans rather than profitability Extended producer responsibilities- in an environmentally stable economy, when a business creates a product, it must take responsibility for managing its entire life cycle Environmental market failures o Since pollution is borne by parties external to economic exchange, free market exchanges cannot guarantee optimal results o There is no market for endangered species, rare plants/animals, and biodiversity since not traded on open markets (besides ivory on black market). Stable climate, clean air have no established market price so cant guarantee protection o What is good and rational for a collection of individuals is not necessarily good and rational for a society o First generation problem (narrow approach) i. But when public policy involves irreplaceable public goods such as endangered species, wilderness areas, and public health and safety, this strategy is not good One approach says that citizens can rely on democratic processes to establish environmental goals. Can demand that businesses provide environmentally friendly things Underestimates the influence business can have in establishing the law and influence consumer choice If only rely on law to protect environment, protection will only extend as far as law extends Assumes economic growth is environmentally and ethically kind Circular flow model- explains nature of economic transactions in terms of a flow of resources from business to households Problem- people live in poverty so cant provide for all these ppl, worlds population will continue to grow, must have system that can provide for needs of world while also promoting sustainability Daly argues that neoclassical econ, which emphasizes econ growth as goal of econ policy, must recognize that econ is a subsystem of earth's biosphere Over the long term, resources and energy cannot be used, nor wastes produced, at rates at which the biosphere cannot replace them without jeopardizing ability to sustain human life 3 pillars of sustainability used to judge sustainable practices: economically, environmentally, and socially satisfactory Must be able to meet needs of present without compromising ability of future generations to meet own needs Business should: 1: adequately meet economic expectations of society (jobs etc) 2: support ability of biosphere to sustain life 3: address minimum demands of social justice Natural capitalism and its 4 guiding principles for redesign of business Ecoefficiency- productivity of natural resources can be increased Closed loop design- business should be redesigned to model biological processes i. Attempts to eliminate waste and integrate wastes back into system ii. Business is responsible for entire life of its products Businesses should be modeled as a provider of services rather than provider of goods Business managers have responsibility to reinvest in natural capital- use only at rate that can replace itself Unmet market potential among the worlds developing economies can only be met in sustainable ways- serving billions who need economic goods and services Businesses can save a ton of costs Can attract environmental consumers and attract workers who take pride in their work Good risk management strategy Class notes Different ways of doing things in asia because mostly have to respect elders and not question someone above you Now that environmental issues are beginning to affect us we are caring How do you put a value on this when there are no price points for it Benefits of sustainability o Shows company is looking to the future o Loyalty of customers o Competitive advantage o Can recruit and maintain good ppl o Risk management is most persuasive Chapter 5 reading Some for profit institutions have social goals as central to their missions We work as a means to our end but can work ever be an ends instead of just a means Work can provide valuable, meaningful, and uplifting human activity, but can also be dehumanizing and degrading o Could work be a necessary evil Meaning of work: job, career, or calling- each distinguished by the degree to which the identity of the person filling the role is determined by the role itself o Job- work in which self identity is independent of the activity, no meaning other than the instrumental value as a means for earning wages o Career- developing a relationship between the self and the activity, ongoing o Calling- morally inseparable, who you are determined fully by what you do The value of work o instrumental value- work as a means to certain ends (needs and desires), necessary for obtaining many other goods o People work to attain the feelings of satisfaction that comes from achieving challenging goals Working achieves psychic goods – self-worth, achievement, self- esteem, happiness Expression of deepest attitudes and character Work provides social meaning – social status, honor, respect, companionship, camaraderie o Today, people work more jobs in their lifetime Income stability and self-esteem may be at risk o Growth in contingent work – temporary, part-time, subcontracted Values and benefits of work are uncertain and conditional Go to school at the same time o Implications of financial crisis? Conventional model of work o Something that must be endured and avoided, means to an ends o There are higher and more meaningful things we can do than just work o Work is a drudgery that prevents from achieving happiness o Classical interpretation of work – humans are intellectual beings, but work is physical; work diminishes human potential Work cannot be made meaningful so no responsibility exists Happiness is the enjoyment of cultural activities o Hedonistic interpretation – work is a necessary means for obtaining life’s pleasures; work has no value in its own right but only as a price that must be tolerated to achieve other ends that make life enjoyable Happiness is getting what you want Work is meaningful when used to attain workers goals Too open ended for responsibility Bowie argues employers cannot make employees better ppl especially against wishes of the workers o Too limited? o Employers have little responsibility to try to make work meaningful Human fulfillment model o Work is the primary activity through which people develop their full potential as human beings – the “good life” o Character traits developed and ends achieved through work are connected to meaningful human life o You are improved as a person when you have the ability to approach tasks with diligence, perseverance, concentration Conversely, those who do not work at any task risk becoming lazy, careless, apathetic o Individuals exercise control over their jobs; their jobs influence individuals – employment has psychic costs and benefits o “What will this work do to me? What kind of person will I become?” Even work that does good things FOR me (by providing income) may do bad things TO me (i.e. lowering self-esteem, harming mental/physical health, etc.) o Create work to attain needs and wants, but it also shapes humans Humans are creating themselves by determining what kind of person they become o We can exercise freedom in making choices and directing our lives o Develop talents and exercise creativity o Create own society and culture therefore creating own identity o Aspirational/too demanding of employers? Liberal model o Middle ground between the two models o Individual workers should be free to choose the ends of their work o Humans can be influenced by their work; make ethical assessments of the work based on how it affects the workers Affects on worker’s ability to make free and autonomous decisions about his/her own life o The very necessity of work (for obtaining other ends) means we have responsibility to ensure workplace conditions are as humane as possible o Distinction from human fulfillment model – there is not a substantive, objective norm to determine the kind of person everyone should be o Individuals have certain rights in the workplace that function to protect certain primary goods o It is not good for humans to just do whatever they want- some ways of living are morally better than others But is it right to force people to live a certain way in the workplace Not want to force employees to do something they not want to Employers not have the responsibility of making employees better ppl especially bc it could be against their will o Companies realizing that need to give the worker more/protect interest of employee in order to retain loyalty Chapter 2 If lived in world of relativism any behavior could be justified bc opinion o Relativism is not one of the theories All theories would provide good guidance and all have strengths Utilitarianism fails when not know what outcome will be o In favor of death penalty- our society as whole would be better as a whole without this person Kantian o Malden mills so aspirational that not rooted in practicality Consequences associated with truth telling were still astronomic Virtue o Associated with aristotle o Role modeling Audi: Chapter 4- A Framework for Making Ethical Decisions Various things business managers ought to do concerning 6 groups: owners, employees, customers and clients, suppliers, creditors, and the community where a business operates Broad perspectives provide principles of conduct o Kantian and utilitarian theories o Golden rule- true in all faiths o Virtue ethics Universally valid set of ethical principles reflected in many religions and also the 3 major ethical series: Ross' prima facie duties: o Justice- not commit injustice and prevent future injustices and rectify existing ones o Non-injury- avoid harming others o Fidelity- keep promises o Veracity- avoid lying , faithfulness to your word o Reparation- made amends for wrongdoing o Beneficence- do good deeds for others, contribute to their goodness of character, knowledge, or pleasure o Self-improvement- better oneself o Gratitude- express appreciation for good deeds toward us Prima facie duties- summary of moral obligations o Have moral force that's not completely eliminated even when overridden by conflicting obligations of higher priority Even tho can be overridden, they always matter and have moral standing o Ex) fidelity and beneficence to longstanding employees might result in harming recently hired workers who might need to be laid off to avoid bankruptcy. Final obligation here is combined fidelity and beneficence so maybe it would outweigh obligation of non injury o Final obligation determined relative to circumstances o They are valenced- a positive or negative reason for action is implied Audi proposes 2 other prima facie duties o Liberty- preserve and enhance human freedom o Respectfulness- obligations of manner and respectfulness- how we do what we do Concern how we do what we are obligated to do under other principles as opposed to what we must do (obligations of matter) Reflect on how we want to be treated 5 steps to enhance decision making: 1 Classification- Determine what obligations apply o Identify initial first stage options o Ex) conflict btw loyalty to one person and justice to another o These facts enable us to view options in relation to major ethically relevant categories o Beneficence might call for seeking a comprehensive health care plan. But also fidelity to shareholders bc might want to save money and choose smaller plan o Ask questions regarding each prima facie duty o Think about stakeholders- who is affected and what obligations do we have to them 2 Identify conflicts of obligations- what conflicting prima facie duties are there o Even when there is no conflict about what course of action fulfills final obligation (ex. promoting one over other), still problems about what acts will best accomplish this goal Making promotion will involve: self sacrifice, effort, or ill effects such as resentment towards person who got job Questions of timing, salary, and conditions of new position o Conflicts of obligation may persist even when action emerges at best bc must think about manner in which will carry out o Ex) persuading small business owner to accept loan may fulfill obligation but must go about doing it may wound pride o Ethical dilemmas- when 2+ incompatible options seem obligatory o Some ways of doing the right thing are wrong: sometimes should be delayed, reconsidered, or revised in light of limited ways can realistically do it 3 Ethical assessment of obligations- how weighty are conflicting obligations o Relative equilibrium- our descriptive factual beliefs about a case are in balance with our moral judgments and our principles bearing on the case o Could formulate a working principle that incorporates comparison of conflicting prima facie Ex) choose between retaining a loyal employee and risking loss of the business. Obviously avoiding loss of business is more important o Ethics by cost-benefit analysis- utilitarian would endorse ex) Pinto Utilitarians use calculation strategy by putting happiness in place of profit and pain in place of loss and then quantify happiness in terms of best indicators 4 Selection of ethically viable options- what are ethically viable alternatives o Obligations of manner come into play o Also secondary follow up obligations to handle the hurt beneficently 5 Decision on course of action- decision that resolves o Ex) hiring between competing candidates- principles used to make decision and justify it: take into account experience, productivity, support from managers and peers, replaceability in case of resignation Universalization A sound decision should be precedential- should be justifiably usable as a guiding precedent for future decisions Formulating a universally sound principle is a good test of whether decision is sound (generalization) If a second person makes same error, consequence should be the same Effort to find a universal principle may lead to a revising decision Competing constituencies- stockholders and employees o Ex) if employees need better healthcare, must justify to shareholders whose dividends will be lowered by the decision Paying athletes- should NCAA revenue 1 Classification- fidelity to stakeholders and players, beneficence to players Stakeholders and what you owe them Students and people of notre dame- Student athletes- owe full financial aid and scholarships, quality education If pay football players how will you fund other sports Should football be paid more money or equal for all players Other student athletes not generate as much rev so what will you base paying them on Fans of ND, alumni- owe them entertainment and faith in/support of their school Other schools- fairness in comparison to how they generate rev Under armour- good representation of their product Video games 2 Identification of conflicts of obligations Deliver top quality sports to alumni Main focus supposed to be academics and paying would be like actual job Lose amateurism Respectfulness- manner in which you present this idea and do it for each team Someone practicing a lot and they not have a lot of money Responsible to student athletes for education and scholarship, quality of living Fidelity/fairness to other schools and students- athletes already here on scholarship so why should they get paid more. but beneficence to players Gratitude to players for what they do for the school, self improvement for school's image vs non injury to other people who wouldn’t like this idea Justice -Conflict within team itself bc walk-ons wouldn’t be included Veracity- could intentionally get injury but still get paid 3 Ethical assessment Have huge alumni base and dedication to academics so is paying athletes and taking out a large part of the budget just to help them out really worth it Should make uniform for everyone from school to school JUSTICE is important here and very weighty Would your scholarship for one sport here be worth more than it is elsewhere 4 Options Cover the cost of living, but then the cost of living is different depending on where you are Walkons don’t get likeness so set aside fund as premium or benefit 5 Decision Mandated hour requirement per week to equate it to a job. Has to be uniform school to school and sport to sport Some schools cant afford it though Do it by conference and NCAA oversees how each conference delegates money Players can sell own likeness like autographs and jerseys. The better you are the more you will sell Employee health and safety Focus on relative risks faced by workers- a workplace is safe if risks are acceptable Relative risks- comparing probabilities of harm If it can be determined that the probability of harm involved in a specific activity is equal to or less than the probability of harm from a more common activity, this activity is an acceptable risk Ex) ppl live by toxic waste dump fear leukemia. Govt responded that fears were irrational bc relative risks in living near this dump were lower than those faced by smokers since ppl accept the risks from smoking. BUT you cant do anything about where you live- with smoking you can avoid it This approach ignores employee input, assumes that health and safety are simply preferences that can be traded off, and assumes workplace risks and other risks are the same when there are actually significant differences Classic model/free market approach: employees can bargain to choose appropriate wage based on the risks they are willing to face. Can also be compensated for additional risks that are clearly the fault of employers Problems: employees not have these kinds of choices and risky jobs are often lowest paying. Also, ppl may not have full knowledge of risks involved First generation problem – market approach is not sufficient 1. Sacrifice the first generation of workers in order to gain info about risks ex) we learn that exposure to lead is dangerous to pregnant women after miscarriages If 13 out of 100,000 people are certain to get lung cancer and you are looking to hire 100,000, it is certain that 13 will get it. But when bargaining as an individual, you are okay with accepting the job bc risk is so low 1. --> government mandates on safety Employees shouldn’t be forced to choose between health/safety standards and job security/wages Implement a standard for industries to comply with, and will make ppl's exposure to toxic chemicals at the lowest level which is technologically and economically feasible But this cost benefit analysis may not always be best bc costs could still outweigh benefits and treats health/safety like just another commodity Offensive because puts monetary value on you and if your cost leads to company's benefit, that's fine Risks must be reduced to lowest feasible level, employees must be fully aware of them Moral rights are inalienable – unlike property rights Ethics demands more of us than law does Free will is a necessary condition for informed consent (example – miners) Privacy right to be “let alone” within a personal zone Let alone in personal decisions: family, reproduction, sexuality Certain decisions are so fundamental to establishing our own identity that they ought to be protected a right to control information about oneself Depends on your relationship with the persons that know that information If you don’t have a relationship with someone and they know something about you, that is a violation Employee privacy is violated when: Employers infringe upon personal decision that are irrelevant to the employment contract (implied or explicit) Personal information that is irrelevant to that contract is collected, stored, or used without consent of employee Conditions of a contract Must be voluntary, informed, consensual Can decide what info will be known, who will know it, how it can be used, and what methods of collecting personal info are appropriate Examine techniques of info collection 1. Employees should be given notification before. ex) It would only be justified to do random drug testing if something happened Cost of privacy violations: financial/social Difference between authority and power lies in ethical justification of the control over someone Class Notes Volkswagon recall case for bad emissions o Got rid of CEO bc scapegoat for scandal o Ppl were purchsing the car to be environmentally friendly but it wasn’t o Even if they did try to fix it they have damage to their name At work we have certain things required by employers (certain rights guaranteed) o Sourced from law, contractual goods, and moral rights If work is a right, then it becomes someone's responsibility to provide these rights o He says govt puts protections in place and sets policies to stimulate private sector development, and then the private sector is responsible for providing work, then govt provides safety nets Once at work, employers have to provide meaningful work o Employers have to provide due process o Safety We have right to protect bodily well being, treated with dignity and autonomy so shouldn’t be forced to choose btw safety and work Necessary precondition that allows dangerous work to be permissible: informed consent- worker has been briefed on risk they are taking and sees real risk associated with it As autonomous people, we can consent to that work Not send prisoners to coal mines because cant give consent If we think reward outweighs the risk, then we will opt into doing it Need go above and beyond what the law requires First generation problem- write a law after the first ppl are injured (leave up to market mechanism) and then consumers respond o Privacy Morally, what we do and the decisions we make belong to us and ours to share as we see fit Nature of relationship with other party- how you exchange info with that person, what info is fair game To prevent bad behavior, you can reward ppl for good behavior: put in gyms, give fit bits, virtue approach to incentivize good choices rather than punitive behavior “Operationalizing” business ethics How can we use what we know to improve the well-being of ourselves and others? Conscious Capitalism- a higher purpose o Purpose aligns stakeholders – shareholders, and others alike – to create value for all of the major constituencies o Need to have a purpose in a company bc it energizes ppl o When all aligned around a purpose, less likely to care about self interest o Why do we exist? Why do we need to exist? What contribution do we want to make? o Attracts a certain kind of people o Ex) disney: to use our imaginations to bring happiness to millions o Most powerful when aligned with what it means to be human (uplifting, moral) o When becomes primarily about making profit, starts to lose true identity o Frankl: we can discover meaning in our lives by: 1. doing work that matters, 2. loving others unconditionally, 3. finding meaning in suffering o Profits are the outcomes of doing business with a higher purpose o Harder for profit driven companies to recover from slumps o Purpose driven remain true to purpose even when times are bad o Critical for companies to hire people who align strongly with their purpose o Want to promote people who are most aligned ex) if hire highly paid executive from outside company, may not be on board with purpose OECD Measuring Well-Being o Organization for Economic Co-operation and Development (OECD) o Shift perspectives on well-being of societies from traditional economic measures to include dimensions of human well-being Allows to gauge whether a range of well being outcomes in each country are moving in line with the aspirations of citizens o Income and wealth, health and skills, working and housing conditions, interconnectedness, life satisfaction, etc. o Lack of trust in governments has been shown o Data on well-being indicators from OECD countries around the world that can assist in identifying relative strengths and weaknesses, developing policy interventions, and designing strategies to grow and prosper Provide info like how people feel about their lives Gender inequality is still relevant from school, retirement, and labor data Women live longer but have lower health status and worse job prospects. Have more satisfaction about lives overall but experience more negative feelings Job quality is important o Sustainability of well being Assess the distribution of resources across population and if managed efficiently How todays actions will affect future well being o This OECD framework, featuring eleven dimensions of human well- being, acknowledges that country GDP is not a complete measure of wealth and prosperity o Inequalities show how well being is shared across a society. Use specific data for each country Less educated and low income have lower well being Policy makers need to know whether policies should be targeted at specific groups of the population Just measuring by GDP could obscure the wealth gaps- need to think about distribution of wealth within population Could also look at how the wealth is being generated and at what cost (are you depleting all resources? Are you polluting the environment (china)?) How can we operationalize these concepts for application in our lives as business leaders? 3 applications: o Vocation of the Business Leader Targeting Christian business leaders Seeing challenges and opportunities Globalization- leads to inequality, cultural homogeneity, economic dislocation Communications technology- enabled connectivity, new solutions and products, and lower costs, but also info overload and rushed decision making Financialization- wealth maximization and short term gains at expense of working for common good Cultural changes- more individualism, more fam breakdowns, and preoccupations with the self and what is good for me. Employees feel entitled, consumers want instant gratification at lowest price, rights more important than duties Judging Good business decisions rooted in respect for human dignity of employees and service to common good Take responsibility for environmental costs Produce sustainable wealth and distribute it justly Acting Pursue vocation rather than financial success When business activity is carried out justly and effectively, customers receive goods and services at fair prices; employees engage in good work and earn a livelihood for themselves and their families; and investors earn a reasonable return on their investment. Communities see their common resources put to good use and the overall common good is increased. As a Christian business leader, am I promoting human dignity and the common good in my sphere of influence? Each person is an end in him or herself, never merely an instrument valued only for its utility—a who, not a what; a someone, not a something The common good embraces and supports all the goods needed to allow each human being and all human beings to develop, individually and communally Wants us to not divide spiritual life and work- should keep aligned Leadership in a servant spirit Am I supporting the culture of life, justice; international regulations; transparency; civic, environmental and labour-standards; and the fight against corruption? Am I promoting the integral development of the person in my workplace? o Interpretive Guide to Business & Human Rights Overview of key concepts (pp. 5-8) Foundational Principles Policy commitment, human rights due diligence, remediation, issues of context Due diligence- what is expected from someone under particular circumstances, management processes that must undertake to meet responsibility to respect human rights Human rights: people have a right to be treated with dignity How do we protect (the State) and respect (the Corporation) human rights? Must protect ppl against human rights abuses including by business enterprises Responsibility exists above legal compliance “Protect, Respect, and Remedy” Framework Remediation- make good the adverse impact (apologize, rehabilitate, financial compensation) There can be legal, financial and reputational consequences if enterprises fail to meet the responsibility to respect. Such failure may also hamper an enterprise’s ability to recruit and retain staff, to gain permits, investment, new project opportunities or similar benefits essential to a successful, sustainable business. As a result, where business poses a risk to human rights, it increasingly also poses a risk to its own long-term interests. o UN Principles for Responsible Investing Multi-stakeholder groups represented in developing the principles These principles will better the performance of investment portfolios and align investors with the broader objectives of society Voluntary and aspirational- possible actions for incorporating ESG issues into investment decision making ESG- environmental, social, and corporate governance Principles: Incorporate ESG issues into investment analysis and decision making process Will be active owners and incorporate ESG issues into ownership policies and practices Will seek appropriate disclosure on ESG issues by entities in which they invest ex) integrate into financial reports Will promote acceptance and implementation of the principles within the investment industry Will enhance effectiveness in implementing the principles Report activities and progress towards implementing the principles Impact investing, socially responsible investment (SRI), other movements (at ND and beyond) Final exam notes Virtues: these are the things that lead to a society we want to live in so we should try to adopt these traits for ourselves and then you can take them to an organizational level Beliefs or standards that incline us to act in one way over another Ethical values- different bc of the ends that they serve (serve human beings rather than selfish) Creating culture: What is the role of a leader? Making the decisions on how to run the business in the best way How do we create culture? By how we run society (i.e. cutting the lowest 10% of performers) What does this tell us about corporate culture? What are the means by which you make money? Both individual excellence and organizational excellence have to be in place in order for the business to be successful Is ethics good for business? Trust, loyalty, initiative, creativity Why study ethics? Risks of ethical behavior Breaking the law and going to jail or paying fines Bad publicity Ruin relationships with customers Internally it matters: losing employee loyalty-employees want to feel like they are working in a good environment What are the levels of attention that are important to the study of business ethics? individual, organizational, systemic/societal Values & Ethics: Doing Good & Doing Well Characteristics of companies found in study to all have in common: strong core values (even of not necessarily good or moral) Malden Mills Person at top (CEO Aaron Feuerstein and president) leveraged everything to benefit employees (continued to pay employees and rebuild burnt down mills) Purpose of taking ethics: to enhance our knowledge of principled reasoning Why is it not okay to only use the law for ethical behavior? Gray area- Legal compliance versus ethical responsibility Sometimes laws are open to interpretation Law is always changing and evolving Loopholes in laws Sometimes the law is just wrong (ex: slavery, abortion, etc) Can be different than your moral values Whether we examine ethical questions explicitly or not, they are answered by each of us every day in the course of living our lives – it is our choice whether we answer them deliberately or unconsciously Things arent illegal until after the fact when the law says they are It’s not enough to follow idea of ethos (cultural norms, conventional norms) Sometimes cultural norms can be wrong Difference between what is and what ought to be Ethical Perspectives: Managers and other Stakeholders “Perspective-taking” – a variety of perspectives can be taken when examining ethical issues in business Acknowledge your role, the context in which your decision is taking place Questions of management are key Perspective/point of view matters Context matters – social, legal Use the law and norms as input to come to conclusion, don’t ignore but don’t only use A Model for Ethical Decision-Making 1) Understand the facts, identify the ethical issues involved 2) Identify the stakeholders and how they will be affected 3) Explore alternatives- look at what’s worked in other societies 4) Consider the consequences 5) Make a principled decision Values: those beliefs or standards that incline us to act or choose in one way rather than another. Ethical Values: distinguished by the ends that they serve Serve the ends of human well-being – not personal/selfish Ethical acts and choices should be acceptable and reasonable from all relevant points of view! Thus: Ethical values are those beliefs and principles that seek to promote human well-being in an impartial way. Business Ethics: those values, standards, and principles that operate within business; also, The academic discipline that not only studies those standards, values and principles, but seeks to articulate and defend those that ought or should operate in business – describe, examine and evaluate ethical issues that arise within business settings Ethics and Ethos Ethics derived from Greek ethos Philosophical ethics does not accept this – conformity and obedience are not the best guides to how we should live. Reason as the foundation of ethics – a reasoned analysis of custom and a reasoned defense of how we should live Difference between what is valued and what ought to be valued How ought we to live? Ethical theories – systematic answers to the fundamental question of how human beings should live their lives. Based on reason and principles. Ethical relativism: circumstantial; how you feel/what you think is right relative to cultural norms Important to learn from ethical relativism, agree on importance of tolerance – BUT agree that our own opinions are not adequate All judgments are relative to diff cultures, would demand more and more proof Believing something doesn’t make it true If lived in world of relativism any behavior could be justified bc opinion Utilitarian ethics Determine the ethical significance of any action based on the consequences of that act – “the greatest good” Consequentialist ethics- consequences determine whether something is ethical Cons Need to find a way to measure happiness Intentions and how you meet ends don’t matter Not an easy thing to measure- how can you consider ALL consequences Everyone has a different definition of what is good Balance between individual freedom and the overall good- Sacrificing the good of individuals for the overall good of mankind Do ppl always choose whats best for them? Goes against part of ethics: in utilitariansim the ends justify the means But this is not always the case because some rules you should follow no matter what like slavery May violate the principles of justice, equality and respect Different versions of what is “good” for mankind Rights-Based and Kantian Ethics Some things we should and should not do regardless of consequences Obligation to fulfill a contractual agreement Individuals have rights that should not be sacrificed just for a means to an end – the common good We should act only in way that our intentions for the act could be made a universal law; i.e. telling the truth is a universal ethical law – the categorical imperative Act only in those ways in which the maxim (intention) of our acts could be made universal law Ethics requires us to treat all people as ends and never only as means We are required to treat people as subjects, not as objects Rights and duties Cons Hard to determine rights universally Sugar cereal example: wants vs best interests: to be a good parent, you are not obligated to give child what he wants Ppl not always want whats in their best interest to have Some rights are so important that they should not be sacrificed simply for overall good ex)child labor We can make choices about our own ends and treating someone as "means" denies them an essential human characteristic Virtue Ethics- role modeling Seeks a full and detailed description of those character traits (virtues) that would constitute a good and full human life Our motivations (interests, wants, desires) are rooted in character – human beings act in and from character - character plays a deciding role in our behavior Thus – how these traits of character are formed and illustrated is the focus of virtue ethics – parents, schools, social institutions, business - role modeling What kinds of people are created from business practices Our character informs our behavior Tension between the person we want to be and what business asks us to be Tom Mendoza Reflected Kantian ethics: treated employees as subjects not objects and learned that the ends do not justify the means Reflects virtue ethics because he himself is modeling good characteristics for others Ford Pinto What happened? Ford Pinto was the car to compete against other companies (Honda & Japan) Spent 2 years instead of 3.5 to make Because of that, it had a dangerous defect but Ford sold the cars anyway because it would cost more to fix the cars Caused many deaths What ethical perspectives? Bad ethical values Not utilitarian because not greater good for all people, only the company itself Johnson & Johnson Tylenol What happened? 7 people died in Chicago from extra strength Tylenol capsules so they recalled extra strength across country and fixed and sold again 4 years later someone else died so they recalled all sold pills and tablets despite the money it cost Ethical perspectives? Took initiative Recalled and switched pills and tablets Willing to take responsibility Virtuous model that can be an example to others Utilitarian but by reasonable/correct means Passed all three ethics tests/types R. Audi’s “A Framework for Making Ethical Decisions” Summary of our moral obligations to ourselves and society and we can use these obligations to guide our actions Business managers ought to be concerned with at least six specified groups – stakeholders: owners, employees, customers and clients, suppliers, creditors, and the community Broad perspectives provide principles of conduct Kantian and Utilitarian theories Other examples – the Golden Rule Virtue ethics – virtues translate into principles Ross’s list of “prima facie” obligations Justice- not commit injusti
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