Ethical Issues in Business

Ethical Issues in Business

• Stakeholders may question whether a company's actions are ethical
• Failure to address ethical issues can erode stakeholders' trust and confidence
• Ethical issues must be studied including the factors that affect a company's approach to them

Peter Drucker's Argument

• Business enterprises are components of society and their actions affect the social environment
• Businesses should look after their own interests in addition to the common good.

Role of Ethics

• Laws cannot cover all aspects of human behavior
• Ethics helps determine the correct conduct using conscience and reason in the absence of law.

Ethical Issues Defined

• An ethical issue involves a problem, situation, or opportunity
• It requires a choice between actions that must be evaluated as right or wrong, ethical or unethical.
• Surveys can provide an overview of unsettled ethical issues

Ethical Issues Classification

• A constructive step is classifying ethical issues relevant to company organizations
• It also includes abusive behavior, lying, conflict of interest, fraud, and discrimination
• Issues include business decisions that harm consumers like products causing obesity

Ethical Issues Overview

• Classifications provide an overview of major ethical issues faced by business decision-makers
• An ethical issue simply requires thought, discussion, or investigation to determine the moral impact of a decision

Abusive or Intimidating Behavior

• It ranges from physical threats to false accusations, annoying coworkers, profanity, insults, yelling, and being unreasonable
• The meaning of words can differ by person
• Intent should be considered

Bullying in the Workplace

• Bullying in the workplace is now a legal issue
• Workplace policies should clarify that bullying behaviors will not be tolerated
• Employee handbooks should emphasize respect among workers

Lying

• Lying distorts the truth
• Joking without malice or a "white lie" avoids hurting someone's feelings
• Lying by commission intentionally deceives through words
• Lying by omission involves withholding material facts
• Lies that distort openness, transparency, and other values are unethical

Conflict of Interest

• When individuals choose between advancing their own interests, their organization's interests, or those of other groups
• Employees generally should not accept bribes, gifts, or favors intended to influence decisions

Fraud

• False communications deceive, manipulate, or conceal facts to create a false impression when others are damaged or denied a benefit
• It is a crime that can result in fines and/or imprisonment

Accounting Fraud

• It involves pressures on accountants such as time constraints, reduced fees, and client requests for altered opinions
• Accounting firms must report a true and accurate picture of a company's financial condition

Marketing Fraud

• Intentional misrepresentation or deceit when creating, distributing, promoting, and pricing products
• False or misleading marketing can destroy customer trust
• False or deceptive advertising, puffery, and implied falsity are examples

Consumer Fraud

• Intentional deception to gain an unfair economic advantage
• Examples include shoplifting, collusion, duplicity, and guile

Discrimination

• Minorities, workers with disabilities, and older workers traditionally face discrimination
• They experience higher unemployment rates and are denied leadership roles
• Affirmative action programs recruit, hire, train, and promote qualified individuals from groups traditionally discriminated against

Information Technology

• Technology and intellectual property are becoming increasingly important
• More information is stored in digital formats, particularly on the internet

Factors Influencing Ethical Decision Making

• Personal Moral Philosophy, moral development, motivation, age, experience, and gender can influence ethical decision making
• Ethical choices are made jointly in committees, workgroups, or conversations with coworkers
• People learn to settle ethical issues from their background and from others in their environment
• A firm's culture provides direction on how to behave and deal with problems

Opportunity

• Opportunity is a set of conditions that provides or limits barriers or provides rewards
• When conditions provide rewards like, financial gain, recognition or positive feelings from work well done the opportunity for unethical conduct can be encouraged.