Business ethics ethical decision making and case 10e chapter 3

Part Two
Ethical Issues
and the Institutionalization of
Business Ethics

Chapter 3
Emerging Business Ethics Issues

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1


Recognizing an
Ethical Issue

An ethical issue is a problem, situation, or opportunity that requires an
individual or group to choose among actions




New ethical issues are emerging constantly
Can be difficult to recognize ethical issues
Failure to do so puts corporations at risk



Is a problem in industries where winning is perceived to be a game

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2


Specific Types of
Observed Misconduct
Behavior
Misuse of company time

33

n/a

Abusive behavior

21

22

Lying to employees

20

19

Company resource abuse

20

23

Violating company Internet use policies

16

n/a

Discrimination

15

14

Conflicts of interest

15

16

Inappropriate social networking

14

n/a

Health or safety violations

13

11

Lying to outside stakeholders

12

12

Stealing

12

9

Falsifying time reports or hours worked

12

n/a

Employee benefit violations

12

11

Sexual harassment

11

7

Source: Ethics Resource Center, 2011 National Business Ethics Survey: Workplace Ethics in Transition (Arlington, VA: Ethics

2009 (%)
Resource Center, 2012), 39.

2011 (%)

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3


Integrity



Integrity: Uncompromising adherence to ethical values



One of the most important terms relating to virtue

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4

Honesty



Honesty: Truthfulness or trustworthiness




Telling the truth to the best of your knowledge
Dishonesty: A lack of integrity, incomplete disclosure, or an unwillingness to tell the
truth
Issues related to honesty arise when people perceive business as something where
normal rules do not apply

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

5


Fairness



Fairness: The quality of being just, equitable, and impartial






Equality: How wealth or income is distributed
Reciprocity: Occurs when an action that has an effect upon another is returned
Optimization: The tradeoff between equity and efficiency

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

6


Ethical Issues and
Dilemmas in Business



An ethical dilemma is a problem, situation, or opportunity that requires an
individual or group to chose among several wrong or unethical actions



There is no ethical choice

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7

Shareholder
Issues

1. Core values

2. Shareholder participation in electing directors

3. Executive compensation

4. Legal compliance

5. Lobbying and political activities

6. Reputation management

7. Integrity in collecting and managing data

8. Supply chain relationships and human rights

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

8


Misuse of Company Resources

The leading form of observed misconduct




Can range from unauthorized use of equipment and computers to embezzling
company funds
Time theft costs organizations hundreds of billions in lost productivity
annually

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

9


Abusive or Intimidating
Behavior

One of the most common ethical problems




Can be physical threats, false accusations, profanity, insults, harshness, ignoring
someone, or unreasonableness



Intent is important in determining abuse

Bullying is a growing problem



Is associated with a hostile workplace

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

10


Actions Associated
with Bullies
1. Spreading rumors to damage others
2. Blocking others’ communication in the workplace
3. Flaunting status or authority to take advantage of others
4. Discrediting others’ ideas and opinions
5. Use of e-mails to demean others
6. Failing to communicate or return communication
7. Insults, yelling, and shouting
8. Using terminology to discriminate by gender, race, or age
9. Using eye or body language to hurt others or their reputations
10. Taking credit for others’ work or ideas

Source: Adapted from Cathi McMahan, “Are You a Bully?” Inside Seven , California Department of Transportation Newsletter, June 1999, 6.

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

11

Lying

Three types of lies





Joking without malice
Commission lying is creating a false perception with words that deceive the
receiver



Creating noise

Omission lying is intentionally not informing channel members of problems
relating to a product that affects awareness, intention, or behavior

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

12


Conflicts of
Interest

Exist when an individual must choose whether to advance his/her
personal interests, those of the organization, or some other group



Individuals must separate personal interests from business dealings

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

13


Bribery

The practice of offering something in order to gain an illicit advantage




Different types of bribery




Active bribery: The person who promises or gives the bribe commits the offense
Passive bribery: An offense committed by the official who receives the bribe

Facilitation payments: Legal as long as they are small

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

14


Corporate
Intelligence

The collection and analysis of information on…






Markets
Technologies
Customers and competitors
Socioeconomic and external political trends

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15


Corporate
Intelligence

Three intelligence models





Passive monitoring system for early warning
Tactical field support
Support dedicated to top management strategy

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

16


Corporate
Intelligence










Hacking



System hacking



Remote hacking



Physical hacking

Social engineering
Shoulder surfing
Password guessing
Dumpster diving
Whacking
Phone eavesdropping
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

17


Discrimination

Is illegal in the U.S.



A company can be sued for discrimination if it…






Refuses to hire an individual for discriminatory reasons
Unreasonably excludes an individual from employment
Unreasonably discharges an individual
Discriminates against an individual with respect to hiring, employment terms,
promotion, or privileges

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

18


Discrimination





Equal Employment Opportunity Commission (EEOC)
The Age Discrimination in Employment Act
Affirmative Action Programs



Efforts to recruit, hire, train, and promote qualified individuals from groups that have
traditionally been discriminated against

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

19


Sexual
Harassment

A repeated, unwanted behavior of a sexual nature perpetrated upon an
individual by another



Hostile work environment





The conduct was unwelcome
The conduct was severe, pervasive, and regarded by claimant as hostile/offensive
The conduct was such that a reasonable person would find it hostile or offensive

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

20


Dual
Relationship

A personal, loving, and/or sexual relationship with someone with whom
you share professional responsibilities




A key ethical issue in sexual harassment
Unethical dual relationship: The relationship causes a conflict of interest or
impairment of professional judgment

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

21


To Avoid Sexual Misconduct,
A Firm Needs

1.
2.
3.
4.

5.
6.
7.

Statement of policy
Definition of sexual harassment
Non-retaliation policy
Specific procedures for prevention
Establish, enforce, and encourage victims to report
Establish a reporting procedure
Timely reporting requirements to the proper authorities

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

22


Fraud

Any purposeful communication that deceives, manipulates, or conceals
facts in order to create a false impression



Accounting fraud





Misrepresentation of company’s financial reports



Accountants should abide by a strict code of ethics

Dramatic changes in accounting field
Increased competition and pressures to perform can create opportunities for
misconduct

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

23


Initial Detection of
Operational Frauds

Source: Association of Certified Fraud Examiners, Report to the Nations on Occupational Fraud and Abuse: 2012 Global Fraud Study , 14.

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

24


Marketing
Fraud

The process of dishonestly creating, distributing, promoting, and pricing
products





Puffery: Exaggerated advertising claims, blustering, and boasting



Can be difficult to distinguish from fraud

Implied falsity: An advertising message that misleads, confuses, or deceives the
public
Literally false: Claims can be divided into tests prove (establishment claims) and
bald assertions (non-establishment claims)

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25