Chapter 2 Internalizing Ethics in Business PDF

Chapter 2  At the end of this chapter, you should be able to:  Identify and discuss the common ethical dilemmas faced by business people  Identify and explain the three levels of decision-making  Differentiate between ethical management and management of ethic...

Chapter 2  At the end of this chapter, you should be able to:  Identify and discuss the common ethical dilemmas faced by business people  Identify and explain the three levels of decision-making  Differentiate between ethical management and management of ethics  Explain the concept of role in ethics  Outline the role of leadership to inculcate an ethical culture in a business organisation  Discuss the role of managers as economic actors, company leaders and community leaders Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 3   Compare and contrast between compliance-based code of ethics and integrity-based code of ethics and recognize their application to inculcate an ethical corporate culture  Discuss the importance of integrating economic, legal and moral dimensions to make effective and fair business decisions  Identify and explain the three check questions that one has to ask and self-assess when faced with an ethical dilemma  Discuss the role of religion in resolving ethical issues in business Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 4  Balancing the economic character of organizations with justice and fairness Responsibility to Conflict of interest stakeholders Personality traits Level of openness Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 5   This dilemma arises when decisions that maximize profitability may conflict with the ethical considerations of fairness, equality, and social responsibility.  For example, an organization may face the dilemma of whether to cut costs by reducing employee benefits, which may negatively impact employee well-being and fairness in compensation. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 6   This dilemma arises when the pursuit of economic goals clashes with the broader responsibilities to stakeholders.  For instance, a company may face a dilemma when deciding whether to prioritize shareholder profits over fair wages for employees or environmentally sustainable practices. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 7   The dilemma lies in finding the right balance between transparency and protecting sensitive information.  Business people must decide how much information to share with stakeholders, considering factors such as trade secrets, intellectual property, and privacy rights.  They must navigate the tension between being open and honest while safeguarding confidential or proprietary information. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 8   Personal traits can significantly influence ethical decision-making in business.  Individual with strong integrity are more likely to make ethical choices and act in accordance with their values, even when faced with challenges.  Empathy allows business people to consider the perspectives and interests of others, leading to more ethical and fair decision-making. Moral courage is vital for standing up for what is right, even in the face of adversity or conflicting interests. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 9   Business people often encounter dilemmas when their personal interests or relationships conflict( susahan) with their professional duties or obligations.  These conflicts may involve financial interests, personal relationships, or biases that can potentially compromise ethical decision-making. ( they will felt very difficult )  Business people must effectively manage and address conflicts of interest by implementing policies, ensuring transparency and making decisions that prioritize the best interests of stakeholders. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 10  Individual Business System Organization Identifying the appropriate level for a decision is important, because an ethical problem may have no solution on the level it is approached. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 11   At the individual level, decision making in business ethics involves the ethical choices made by individual employees or professionals within an organization.  This level focuses on personal values, beliefs, and moral principles that guide actions and decisions.  For example, a salesperson encounters a situation where a potential client offers a bribe in exchange for securing a contract. At the individual level, the salesperson faces a decision about whether to accept the bribe or report the incident to their supervisor and uphold ethical values. The decision made at this level reflects the personal integrity and commitment to ethical behavior of the individual.  the example was very important when sellers selling their things because would really don’t know wheater they can buy a bribe or not. Is that correct or not they will ask to them self. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 12   At the organization level, decision making in business ethics involves the ethical choices made collectively by the management, leaders, and employees within an organization.  This level focuses on the ethical culture, values, and practices established by the organization, as well as the policies and procedures put in place to promote ethical conduct.  For example, a company establishes a whistleblower hotline to allow employees to report unethical behavior anonymously. At the organization level, this decision reflects the commitment to create an ethical environment where employees feel comfortable speaking up and reporting violations. The organization demonstrates its dedication to transparency, accountability, and fostering an ethical culture by providing a mechanism to address ethical concerns. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 13   At this business system level, decision making in business ethics considers the broader impact of business practices and decisions on society, the environment, and various stakeholders.  This level focuses on the ethical implications of the overall business system, including its economic, social and environmental impact. It involves considering the long-term sustainability, social responsibility, and ethical consequences of business decisions.  For example, a multinational corporation implements a supply chain policy that requires all suppliers to adhere to fair labor practices and environmental sustainability standards. At the business system level, this decision reflects the corporation’s commitment to ethical sourcing and ensuring that the entire supply chain operates in an ethical and socially responsible manner. The decision aligns with the corporation’s values and demonstrates a concern for the well- being of workers and the environment. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 14  The Ethical Management Management of Ethics Relates to the undertaking of management Managers acting functions in an ethical effectively in manner by doing the situations that have right thing for an ethical aspect individual success and organizational effectiveness Business Ethics CE Topic 1 - Jul 03 All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 15   Ethical management starts from an individual’s values, which can be seen in his actions while performing management duties and responsibilities.  High-level managers are responsible for creating and maintaining an ethical corporate climate that protects the organization against unethical and illegal conduct.  Most managers think they are ethical, but only to some degree of relevancy to their work. There is no difference from being ethical in business and in private life.  Management of ethics involve managers applying internal policies, rules and regulations as well as stipulated government laws to manage ethical issues.  Managers must also ensure his subordinates comply with the policies, procedures and guidelines too. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 16   Organisations internally bind their members through myriad rules, regulations, policies and values that must be prudently managed.  Effective organisational functioning also depends on gaining the acceptance of these policies, rules and regulations. This acceptance requires a perception of fairness and commitment of employees. Ethical misconduct has shown severe harm to many individuals and organizations.  It is necessary for managers to possess some specialized knowledge to practice ethical management and management of ethics.  Managers must also have skills that come with experience and training to make sound ethical decisions and implementing them.  Needs for specialized knowledge and skills is especially acute when business is conducted abroad. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 17 Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 18   People in certain positions have responsibilities to many different groups and must consider a wide range of interests.  Roles are created in order to serve society better as a whole. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 19   Because the board members are stewards for not only the assets of the company but also the interests of all stakeholders, Schwartz, Dunfee and Kline recommend six core values to guide their behaviour as board members: Honesty Be truthful and forthright with their decisions. Act with honour; decisions will always coincide with the ethical Integrity vision and standards of the firm. Loyalty Avoid all deals that fulfill self interests; hold classified any confidential and/or proprietary information. Responsibility Fulfill all assigned responsibilities, transparent actions and accountable for their actions. Fairness Make fair decisions and treat others in a fair and respectable manner. Citizenship Act as good citizens for involved communities; make decisions that do not harm the environment. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 20   Economic actors Make sound economic decisions, ensuring profitability for the growth of the company.  Company leaders / trustees Manage assets prudently. Fulfill the needs of stakeholders and balance any conflicting interests.  Community leaders Exercise powers given upon them that demonstrates corporate leadership. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 21  The Economic The Legal The Moral Dimension Dimension Dimension Thinking Thinking Thinking about about about the business administrative best thing to benefits decisions do Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 22   Effective business decisions involve an integration of all three business dimensions mentioned previously.  Business ethics is the attempt to think clearly and deeply about the ethical issues in business and to arrive at conclusions that are supported by the strongest possible arguments. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 23 Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 24   All believers of religion have their own principles to uphold.  Since most religions embody the idea of Transcendent Reality which has some bearing upon purpose and meaning of life, how one lives on earth and what lies beyond this finite, mortal existence, it also shapes one’s perception of ethics and determines one’s action in resolving ethical issues in business. Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 25 Business Ethics All Rights Reserved © Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 26