Ethics in Business: Normative Foundations

Study Notes

Normative Foundations

Normative foundations help determine right and wrong
They influence ethical decision making in business
Examples include consequentialist and non-consequentialist ethics

Consequentialist Ethics

Focused on the outcome achieved, regardless of the process
Consequentialist ethics use the phrase "the ends justify the means"
Example: A manager pursuing a critical project might skip regulatory approval, considering the outcome's benefits outweigh the process.

Utilitarianism

A subcategory of consequentialist ethics
Aims for the greatest good for the greatest amount of people
Focuses on minimizing harm to people

Non-Consequentialist Ethics

Focused on the process and not the outcome
Prioritizes ethical principles and upholding moral standards
Example: If the outcome is good but involves dishonesty, a non-consequentialist might see the process as unethical

Deontological Ethics

A type of non-consequentialist ethics
Prioritizes principles like honesty, fairness, justice, and compassion
Example: A manager might uphold the principle of honesty even if it harms the company’s outcome.

Virtue Ethics

Takes into account the actor's character, motivations, and intentions, unlike previous systems
Example: Accountants, doctors, and lawyers abide by codes of conduct for their professions

The Hippocratic Oath for Managers

Outlines eight key ethical principles for business managers
Includes serving the public, balancing stakeholders, acting with integrity and upholding the law
Emphasizes accurate reporting, respectful decisions, professional development, and protecting the profession

Ethical Blindness

Definition: Ethical blindness occurs when individuals fail to recognize the ethical implications of their decisions, leading to actions they may later regret.
Common Causes:
- Higher Purpose: Justifying unethical behavior by attributing it to serving a greater purpose or authority figure.
- Stereotypes: Using stereotypes to simplify situations and bypass critical thinking, leading to unethical actions.
- Tribalism: Dividing into opposing groups fosters unethical behavior towards those perceived as "different," resulting from group affiliation.
- Fear of Exclusion: Conforming to group norms can overshadow personal ethics, leading to compromised decision-making.
- Group Pressure: Individuals tend to align with the majority's views, even when it conflicts with their personal ethics.
Warning Signs of Rationalization:
- "It's not a big deal."
- "It's just business."
- "This is how things are done."
- "If I don't do it, someone else will."
Implementation of Ethical Systems:
- Gather Facts: Thorough investigation of the situation to ensure a comprehensive understanding.
- Define the Issues: Identify the ethical dilemmas and concerns.
- Identify Stakeholders: Recognize all parties affected by the decisions.
- Consider Consequences: Evaluate the potential outcomes of different actions.
- Identify Obligations: Understand ethical duties and responsibilities.
- Check Integrity: Reflect on how the decision aligns with personal values and ethical principles.
- Think Creatively About Potential Actions: Explore alternative solutions and approaches.
- Check Gut Feeling: Listen to instincts and intuition, but ensure it is not overriding objective reasoning.

Ethical Blind Spots

Slippery Slope: A gradual descent into unethical behavior, starting with seemingly minor infractions and escalating to more serious transgressions.
Broken Windows Theory: Environments with a perception of disorder or lawlessness can encourage and normalize unethical behavior.
Obedience to Authority: Individuals may blindly follow orders from those in authority, even if it contradicts their personal ethics.
The Path to Evil: A progression of increasingly unethical actions, often stemming from dehumanization and group ideology.

Case Studies

Ford Pinto: Ford engineers recognized a safety flaw in the Pinto's gas tank but deemed it less costly to deal with potential lawsuits than to fix the defect. This exemplifies prioritization of profit over safety and ethics.
Wells Fargo: Aggressive sales quotas and a disregard for ethical practices led to employees opening unauthorized financial accounts under customers' names. This highlights the dangers of prioritizing organizational goals at the expense of ethical principles.