ETHICS: OVERVIEW

Defining Ethics
Ethics are the set of moral principles that guide a person’s behavior.
Learning Objectives
Define ethics and how it applies to organizations
Key Takeaways
Key Points
 Ethical behavior is based on written and unwritten codes of principles and values held in
society.
 Ethics reflect beliefs about what is right, what is wrong, what is just, what is unjust, what
is good, and what is bad in terms of human behavior.
 Ethical principles and values serve as a guide to behavior on a personal level, within
professions, and at the organizational level.
Key Terms
 behavior: The way a living creature acts.
 ethics: The study of principles relating to right and wrong conduct.
 values: A collection of guiding principles; what one deems to be correct, important, and
desirable in life, especially regarding personal conduct.
Ethics are the set of moral principles that guide a person’s behavior. These morals are shaped by
social norms, cultural practices, and religious influences. Ethics reflect beliefs about what is
right, what is wrong, what is just, what is unjust, what is good, and what is bad in terms of
human behavior. They serve as a compass to direct how people should behave toward each other,
understand and fulfill their obligations to society, and live their lives.
While ethical beliefs are held by individuals, they can also be reflected in the values, practices,
and policies that shape the choices made by decision makers on behalf of their organizations.
The phrases business ethics and corporate ethics are often used to describe the application of
ethical values to business activities. Ethics applies to all aspects of conduct and is relevant to the
actions of individuals, groups, and organizations.
In addition to individual ethics and corporate ethics there are professional ethics. Professionals
such as managers, lawyers, and accountants are individuals who exercise specialized knowledge
and skills when providing services to customers or to the public. By virtue of their profession,
they have obligations to those they serve. For example, lawyers must hold client conversations
confidential and accountants must display the highest levels of honest and integrity in their
record keeping and financial analysis. Professional organizations, such as the American Medical
Association, and licensing authorities, such as state governments, set and enforce ethical
standards.
Example
The concept of corporate social responsibility emphasizes ethical behavior in that it requires
organizations to understand, identify, and eliminate unethical economic, environmental, and
social behaviors.
Ethics Training
Moral reasoning is the process in which an individual tries to determine what is right and what is
wrong.
Learning Objectives
Explain the role of ethical moral reasoning in the business environment
Key Takeaways
Key Points
 There are four components of moral behavior: moral sensitivity, moral judgment, moral
motivation, and moral character.
 To make moral assessments, one must first know what an action is intended to
accomplish and what its possible consequences will be on others.
 Studies have uncovered four skill sets that play a decisive role in the exercise of moral
expertise: moral imagination, moral creativity, reasonableness, and perseverance.
Key Terms
 goodwill: The ability of an individual or business to exert influence within a community,
club, market, or another type of group, without having to resort to the use of an asset
(such as money or property).
 ethics: The study of principles relating to right and wrong conduct.
Moral reasoning is the process in which an individual tries to determine the difference between
what is right and what is wrong in a personal situation by using logic. To make such an
assessment, one must first know what an action is intended to accomplish and what its possible
consequences will be on others. People use moral reasoning in an attempt to do the right thing.
People are frequently faced with moral choices, such as whether to lie to avoid hurting
someone’s feelings, or whether to take an action that will benefit some while harming others.
Such judgements are made by considering the objective and the likely consequences of an action.
Moral reasoning is the consideration of the factors relevant to making these types of assessments.
According to consultant Lynn W. Swaner, moral behavior has four components:
  Moral sensitivity, which is “the ability to see an ethical dilemma, including how our
actions will affect others.”
 Moral judgment, which is “the ability to reason correctly about what ‘ought’ to be done
in a specific situation.”y
 Moral motivation, which is “a personal commitment to moral action, accepting
responsibility for the outcome.”
 Moral character, which is a “courageous persistence in spite of fatigue or temptations to
take the easy way out.”
The ability to think through moral issues and dilemmas, then, requires an awareness of a set of
moral and ethical values; the capacity to think objectively and rationally about what may be an
emotional issue; the willingness to take a stand for what is right, even in the face of opposition;
and the fortitude and resilience to maintain one’s ethical and moral standards.
Realizing good conduct, being an effective moral agent, and bringing values into one’s work, all
require skills in addition to a moral inclination. Studies have uncovered four skill sets that play a
decisive role in the exercise of moral expertise.
 Moral imagination: The ability to see the situation through the eyes of others. Moral
imagination achieves a balance between becoming lost in the perspectives of others and
failing to leave one’s own perspective. Adam Smith terms this balance “proportionality,”
which we can achieve in empathy.
 Moral creativity: Moral creativity is closely related to moral imagination, but it centers
on the ability to frame a situation in different ways.
 Reasonableness: Reasonableness balances openness to the views of others with
commitment to moral values and other important goals. That is, a reasonable person is
open, but not to the extent where he is willing to believe just anything and/or fails to keep
fundamental commitments.
 Perseverance: Perseverance is the ability to decide on a moral plan of action and then to
adapt to any barriers that arise in order to continue working toward that goal.
Example
William LeMesseur designed the Citicorp Building in New York. When a student identified a
critical design flaw in the building during a routine class exercise, LeMesseur responded not by
shooting the messenger but by developing an intricate and effective plan for correcting the
problem before it resulted in drastic real-world consequences.
Culture and Ethics
Culture reflects the moral values and ethical norms governing how people should behave and
interact with others.
Learning Objectives
Explain the role of culture in shaping moral and ethical behavior
Key Takeaways
Key Points
 Culture refers to the outlook, attitudes, values, goals, and practices shared by a group,
organization, or society.
 Interpretation of what is moral is influenced by cultural norms, and different cultures can
have different beliefs about what is right and wrong.
 According to the theory of cultural relativism, there is no singular truth on which to base
ethical or moral behavior, as our interpretations of truths are influenced by our own
culture.
Key Terms
 ethnocentric: Of the idea or belief that one’s own culture is more important than, or
superior to, other cultures.
 moral relativism: Refers to any of several philosophical positions concerned with the
differences in moral judgments among different people and across different cultures.
 norms: Rules or laws that govern a group’s or a society’s behaviors.
Culture describes a collective way of life, or way of doing things. It is the sum of attitudes,
values, goals, and practices shared by individuals in a group, organization, or society. Cultures
vary over time periods, between countries and geographic regions, and among groups and
organizations. Culture reflects the moral and ethical beliefs and standards that speak to how
people should behave and interact with others.
Cultural map of the world: This diagram attempts to plot different countries by the d of
different types of values. One axis represents traditional values to secular-rational values, while
the other axis accounts for survival values and self-expression values. Different groups of
countries can be grouped into certain categories, such as Catholic Europe, English speaking, and
Ex-Communist.
Cultural norms are the shared, sanctioned, and integrated systems of beliefs and practices that are
passed down through generations and characterize a cultural group. Norms cultivate reliable
guidelines for daily living and contribute to the health and well-being of a culture. They act as
prescriptions for correct and moral behavior, lend meaning and coherence to life, and provide a
means of achieving a sense of integrity, safety, and belonging. These normative beliefs, together
with related cultural values and rituals, impose a sense of order and control on aspects of life that
might otherwise appear chaotic or unpredictable.
This is where culture intersects with ethics. Since interpretations of what is moral are influenced
by cultural norms, the possibility exists that what is ethical to one group will not be considered
so by someone living in a different culture. According to cultural relativists this means that there
is no singular truth on which to base ethical or moral behavior for all time and geographic space,
as our interpretations of truths are influenced by our own culture. This approach is in contrast to
universalism, which holds the position that moral values are the same for everyone. Cultural
relativists consider this to be an ethnocentric view, as the universal set of values proposed by
universalists are based on their set of values. Cultural relativism is also considered more tolerant
than universalism because, if there is no basis for making moral judgments between cultures,
then cultures have to be tolerant of each other.
Example
The French and Americans have different views on whistle-blowing. Compared to the French,
American companies consider it to be a natural part of business. So natural, in fact, that they set
up anonymous hotlines. The French, on the other hand, tend to view whistle-blowing as
undermining solidarity among coworkers.
The Manager’s Role in Ethical Conduct
Employees can more easily make ethical decisions that promote a company’s values when their
personal values match the company’s norms.
Learning Objectives
Explain the role of personal values in influencing behavior in organizations
Key Takeaways
Key Points
 Personal values provide an internal reference for what is good, beneficial, important,
useful, beautiful, desirable, and constructive.
 Personal values take on greater meaning in adulthood as they are meant to influence how
we carry out our responsibilities to others.
 To make ethical and moral choices, one needs to have a clear understanding of one’s
personal values.
Key Terms
 value: A standard by which an individual determines what is good or desirable; a
measure of relative worth or importance.
 norms: According to sociologists, social norms are the laws that govern society’s
behaviors.
Personal values provide an internal reference for what is good, beneficial, important, useful,
beautiful, desirable, and constructive. Over time, the public expression of personal values has
laid the foundations of law, custom, and tradition. Personal values in this way exist in relation to
cultural values, either in agreement with or divergent from prevailing norms.
Personal values are developed in many different ways:
 The most important influence on our values comes from the families we grow up with.
The family is responsible for teaching children what is right and wrong long before there
are other influences. It is thus said that a child is a reflection of his or her parents.
 Teachers and classmates help shape the values of children during the school years.
 Religion (or a lack thereof) also plays a role in teaching children values.
Personal values take on greater meaning in adulthood as they are meant to influence how we
carry out our responsibilities to others. This is true in the workplace, especially for managers and
leaders, who are charged with overseeing resources for the benefit of others. Because of their
authority structures, social norms, and cultures, organizations can have a powerful influence on
their employees. Employers do their best to hire individuals who match match well with the
organization’s norms and values. In this way they seek to promote their standards of ethical
behavior.
Conversely, conflicts can occur between an individual’s moral values and what she perceives to
be those of others in their organization. Since moral judgments are based on the analysis of the
consequences of behavior, they involve interpretations and assessments. One might be asked to
do something that violates a personal belief but is considered appropriate by others. To make
ethical and moral choices, one needs to have a clear understanding of one’s personal values.
Without that awareness, it can be difficult to justify a decision on ethical or moral grounds in a
way that others would find persuasive.
Example
If you value equal rights for all and you go to work for an organization that treats its managers
much better than it does its workers, you may form the attitude that the company is an unfair
place to work; consequently, you may not produce well or may even leave the company. It is
likely that if the company had a more egalitarian policy, your attitude and behaviors would have
been more positive.
Blurring Ethical Lines
Ethical decisions involve judgments of facts and situations that are subject to interpretation and
other influences.
Learning Objectives
Analyze the gray areas of ethical expectations within the context of corporate decision making
and ethical business practice
Key Takeaways
Key Points
 Identifying the ethical choice can be difficult, since many situations are ambiguous and
facts are subject to interpretation.
  In organizations, employees can look to the code of ethics or the statement of values for
guidance about how to handle ethical gray areas.
 Individual ethical judgement can be clouded by rationalizations to justify one’s actions.
Key Terms
 business ethics: The branch of ethics that examines questions of moral right and wrong
arising in the context of business practice or theory.
 norms: According to sociologists, social norms are the laws that govern society’s
behaviors.
Law and ethics are not the same thing. Both exist to influence behavior, but complying with the
law is mandatory, while adhering to an ethical code is voluntary. Laws define what is
permissible, while ethics speak to what is right, good, and just. Lawyers and judges are
responsible for clarifying the meaning of a law when there is ambiguity or when a matter is
subject to interpretation. Where ethics are concerned, that responsibility lies with each
individual. In organizations, employees can look to the code of ethics or the statement of values
for guidance about how to handle ethical gray areas.
Even when an individual has a clear sense of right and wrong, or good and bad, it can be difficult
to know what is ethical in a given situation. Ethical choices involve judgment because they
involve weighing the potential consequences of one’s actions for other people. One analyzes
ethical issues by asking questions such as: What could happen? How likely is it happen? What
might the harm be? Who might be hurt? The answers are not always clear cut.
Individual judgments can be influenced, even clouded, by a number of factors. A study by
Professor Robert Prentice suggests that self-image can influence an individual’s decision -
making process, making him or her feel justified in taking shortcuts or doing things that could be
seen as ethically questionable. In addition, there are times when people believe that the ends
justify the means. In other words, if the result of an action is good, then it is okay if the action
itself is unethical.
There is a saying that a good person is one who does good deeds when no one is looking. The
same goes with ethical decisions. People who are ethical follow their beliefs even when they
believe no one will find out about what they have done. In many cases of ethical breaches in
organizations, those who acted unethically likely believed that they wouldn’t be discovered.
Others may have thought that if the issues were discovered, the actions wouldn’t be traced back
to them. They had the opportunity to be ethical but chose not to be.
Business Ethics Around the Globe
Social norms aren’t identical in different countries, and ethical standards can vary as well. A
business may operate in a country that permits actions that would be considered unethical under
that business’s ethical code. How will employees working in that country handle that situation,
especially if something that could be considered unethical in one place is actually thought to be
important to business success in the other? For instance, in some cultures it is customary for
business partners and customers to be invited to weddings, with the expectation that guests will
give a cash gift to the bride and groom. A company might consider the gift an unethical bribe in
exchange for a customer’s business, yet it may be essential to enter a new market. Adhering to
ethical standards in such instances can be difficult.

This way to ethics: Ethical decisions are not always clear-cut.