Business Ethics Chap 2 PDF

Normative Foundations: Applied Reasoning When you need advice on a tricky problem in your life, it’s best to seek out the perspective of those you trust and respect. Through their advice, you may receive different ways of looking at your problem, helping you come to the best solution. The same goes...

Normative Foundations: Applied Reasoning When you need advice on a tricky problem in your life, it’s best to seek out the perspective of those you trust and respect. Through their advice, you may receive different ways of looking at your problem, helping you come to the best solution. The same goes for business matters. In order to become an ethically sound management professional, you’ll need to build from a strong foundation—a Normative Foundation. A normative foundation may consist of one or more schools of thought, or systems of determining right and wrong. These branches of moral philosophy may not seem readily applicable to practical, real-world business issues, but considering the different methods of approaching moral quandaries will help turn you into a more well- rounded and ethical decision maker.  A Hypothetical Dilemma You are a manager at an automobile factory. You are privy to the major top-down decisions from the executive level, and learn that due to the chip shortage, the plant will be forced to close down before the start of the next fiscal year. As a manager, you want to maintain employee morale and ensure quotas are still met, but sharing this information to other team members will jeopardize that. The following week your longtime friend, Leo, who works on the production floor, tells you they are ready to close on the purchase of a house near the factory. He’s heard rumors that the factory may close, and ask you to be frank with him, and tell him as a friend, are the rumors true? You’ve known Leo and his wife for a long time, and would feel terrible withholding this news from him, but at the same time you have your responsibilities as a manager to uphold. What do you do? We will approach this scenario through the different Normative Foundations.  Sources of Ethical Standards In the following sections, we’ll explore the basic tents of the following Normative Foundations: Consequentialis Non- t Consequentialist  Consequentialist Ethics The Consequentialist foundation is concerned with outcomes. You may have heard the phrase, “the ends justify the means.” In other words, if the outcome is good, then the action to achieve that outcome is also good. In a business context, maybe you’re leading a critical project and determine that doing things strictly “by the book,” such as waiting for regulatory approval you know will pass anyways, will result in failure. Deciding to place the outcomes (success of your company and stakeholders) over the process itself is, from a consequentialist perspective, right. has several sub-categories, the most prominent Consequentialism being Utilitarianism: “a theory which states that an action is morally right if it results in the greatest amount of good for the greatest amount of people affected by the action.” This is focused in particular in outcomes within a community, which relates well to a business context.  The Utilitarian Approach ( 1 / 3 ) Utilitarianism is “useful” in that it’s focused on the greatest good for the greatest amount of people. Another way of looking at it is anything that does the least harm, or hurts the least amount of people. The setting of “The Ones Who Walk Away from Omelas,” a piece of short fiction by Ursula K. Le Guin, is an examination of the utilitarian school of thought taken to the extreme by asking the question, “Is the lifelong suffering of a single child justified if it means the happiness of an entire city? “ The Utilitarian Approach ( 2 / 3 ) The utilitarian approach to a problem in a business context would be considering the outcome for all stakeholders affected by the issue at hand. Asking yourself “How will this affect the customers, employees, shareholders, the community, and the environment. Which of these stakeholders will benefit? Is the outcome we’re seeking likely? And will the benefits of this outcome outweigh the costs of the process?” The approach sounds alright on paper, but when in real-life do we have all the information to make a perfectly sound decision? Not always. We also get into choppy waters when we systematically discard the needs of the “few” over the “many.”  The Utilitarian Approach ( 3 / 3 ) Let’s consider our friend Leo in the auto-factory. Will the net-outcomes outweigh the negatives by telling him the news? Telling him is what a good friend would do, and would help you sleep at night. However, Leo will surely spread this news to other employees, which will send the rest of the factory into pandemonium. This would be a net-negative for the rest of the plant. Therefore, from a Utilitarian approach to this scenario, you should not tell Leo, as this would cause the “least harm.” Real-life isn’t always as simple as a tell or don’t tell answer. Maybe you could advise the board members to disclose the factory’s closure to the rest of the staff, or tell Leo you’ve heard the rumors too, and maybe it would be best to wait before buying a house.  Non-Consequentialist Ethics If Consequentialist ethics are concerned with the outcome, then Non- Consequentialiste thics are more concerned with the process through which we arrive at the outcome. There are several types of Non- Consequentialist schools of thought. Here, we’ll focus on the most prominent one: Deontological (deo being Greek for “duty”) or duty-based ethics. Deontological or Duty-Based ( 1 / 3 ) You may have heard the phrase, “It’s the principle of the thing!” used as an objection to a questionable way of achieving an outcome. This would fall under the deontological (henceforth referred to as duty- based) school of thought. The duty-based approach places value not on the outcome, but more so on upholding abstract ethical principles such as “honesty, promise keeping, fairness, loyalty, rights, justice, responsibility, compassion, respect…” etc. Using a duty-based approach for dealing with an ethical quandary could lead to the conclusion that although the overall outcome is good, it is still “wrong” if certain moral principles (such as honor, etc.) were not upheld.  Deontological or Duty-based ( 2 / 3 ) Let’s return to our friend Leo at the factory. With a duty-based approach, should we tell him? The answer lies in which ethical principles do we deem the most valuable in upholding? We could follow The Golden Rule or “Do onto others as others would do onto you.” Would Leo tell us about the factory closing if he were in our shoes? This Golden Rule sounds good, but the problem being this only leads us to the “right” decision if we know Leo is also highly ethical. There’s also the problem in choosing which particular principles we are upholding. If loyalty is important, to whom are we most loyal? Our company and career, which provides us with our livelihood, or our good friend of many years? Deontological or Duty-based ( 3 / 3 ) Emmanuel Kant’s categorical imperative states “Act as if the maxim of they action were to become by thy will a universal law of nature.” In plain English, if your way of solving this problem were to become the way for everyone to solve this problem going forward, would you agree with that? Or is more of a “just this one time,” kind of thing? Therefore, in our Leo scenario, if all managers disseminated information from the top freely to all employees, or chose the loyalty of personal friends over the well-being of the entire company, would this be a good precedent to set? With the duty-based approach, intention is everything. The difficult part is untying the knot of discovering where your best intentions lie.  Consequentialist vs. Non-Consequentialist Ethical dilemmas commonly pit these two schools of thought against one another. Do we stand by our principles, or make the best of the situation for the preferable outcome? The owner of a maritime shipping company came into a dilemma when pirates hijacked one of his freighters, and held the crew hostage, demanding a ransom in exchange for their lives. You be the judge. Should he have stood by his principles, or focused on the best outcome? Let’s weigh each methodology for the question should the owner pay Non-Consequentialist Consequentialist the ransom?: Paying will encourage future pirate attacks on other ships; Goes against his sense of justice by paying criminals; The crew will keep their The crew knew the risks sailing in these waters, and lives; signed a waiver; Their families will receive life insurance;  Virtue Ethics ( 1 / 3 ) Although consequentialist and non-consequentialist systems are the most commonly discussed, contemporary business ethicists are returning to the discussion of Virtue Ethics. Virtue ethics considers an actor’s character, motivations, and intentions, something left out entirely of the previous two systems. This approach works well for people who are a part of a profession that inherently demands high ethical standards. Accountants, doctors, lawyers, psychologists and many other professions all have some sort of living document outlining what it means to do the “right thing” for the clients they serve. Unlike the above, “Business management professional” isn’t a well-defined profession, but there are some tenets we can abide by…  Virtue Ethics ( 2 / 3 ) The 2008 Harvard Business Review article outlined the “Hippocratic Oath for Managers” which reads as follows: 1. Service to the Public and Society by creating sustainable value in the long-term. 2. Balance Multiple Stakeholders’ Interests. – balance the often-conflicting needs of many stakeholders to enhance enterprise value in a way that is consistent with societal well-being. 3. Acting with Integrity in the Enterprise’s Interest – putting the interests of your enterprise ahead of your own. 4. Adherence to the Law – adhering to both the spirit and letter of the law.  Virtue Ethics ( 3 / 3 ) The “Hippocratic Oath for Managers” continued… 5. Accurate and Transparent Reporting – report enterprise performance accurately to the relevant stakeholder enabling them to make informed decisions. 6. Respectful and Unbiased Decision Making – make decisions in an unbiased and respectful manner without considering race, gender, sexual orientation, relegation, nationality, politics, or social status. 7. Professional Development – Continual commitment to bettering ones own knowledge and expertise to make the best informed decisions. 8. Responsibility to Protect the Profession – Make one’s best effort to protect the trust, respect, and honor associated with their profession.  Key Takeaways Normative Foundations are branches of moral philosophy that work as ethical systems to help us arrive at the “best” decision for a difficult problem. Consequentialist Ethics are focused on achieving the best outcome, putting less weight on the process. The Utilitarian approach is a consequentialist system of ethics that focuses on the best outcome for the most number of people. Non-Consequentialist ethics are focused more on the process than the outcome achieved. The Deontological or Duty-based approach is focused on upholding abstract moral principles (justice, honesty, etc.) regardless of the outcome.  References Crane, A, et. Al. “Business Ethics: Managing Corporate Citizenship and Sustainability an the Age of Globalization” Oxford University press, 2019. Trevino, Nelson, “Managing Business Ethics: Straight Talk about How to Do It Right, 8th ed.” John Wiley & Sons, 2021