Week#2

Instructor: Elma Afsar

Date: 02/9/2024
 Ethics in the
Business World
• Ethics has risen to the top of the
business agenda because the risks
associated with
inappropriate behavior have
increased, both in their likelihood
and in their potential
negative impact.
Globalization
• Uncertain Economic Conditions
Need of Ethics in IT
• Many employees have their email and Internet access monitored while at work, as employers
struggle to balance their need to manage important company assets and work time with
employees’ desire for privacy and self direction.
• Millions of people have downloaded music and movies at no charge and in apparent violation of
copyright laws at tremendous expense to the owners of those copyrights.
• Organizations contact millions of people worldwide through unsolicited email (spam) as an
extremely low-cost marketing approach.
• Hackers break into databases of financial and retail institutions to steal customer information,
then use it to commit identity theft—opening new accounts and charging purchases to
unsuspecting victims.
• Students around the world have been caught downloading material from the Web and
plagiarizing content for their term papers.
• Web sites plant cookies or spyware on visitors’ hard drives to track their online purchases and
activities.
Employe
e
Miscondu
ct
Organizations have five good reasons for promoting a work
environment in which they encourage employees to act ethically:
(1) to gain the goodwill of the community
(2) to create an organization that operates consistently
(3) to foster good business practices
(4) to protect the organization and its employees from legal action, and
to avoid unfavorable publicity.
 • Corporate social responsibility (CSR) is the
concept that an organization should act
ethically by taking responsibility for the impact
of its actions on the environment, the
Corporate community, and the welfare of its employees.
Social
Responsibili • Setting CSR goals encourages an organization
to achieve higher moral and ethical standards.
ty
• Each organization must decide if CSR is a
priority and, if so, what its specific CSR goals
are.
 • Gaining the goodwill of the community
• Creating an organization that operates consistently
• Operate with honesty and integrity, staying true to organizational
principles. • Operate according to standards of ethical conduct, in words
and action. • Treat colleagues, customers, and consumers with respect. •
Strive to be the best at what matters most to the organization. • Value
diversity. • Make decisions based on facts and principles.
• Fostering good business practices

CSR • Operate with honesty and integrity, staying true to organizational

principles. • Operate according to standards of ethical conduct, in

Goals
words and action. • Treat colleagues, customers, and consumers with
respect. • Strive to be the best at what matters most to the
organization. • Value diversity. • Make decisions based on facts and
principles.
• Protecting the organization and its employees from legal action
In a 1909 ruling (United States v. New York Central & Hudson River
Railroad Co.), the U.S. Supreme Court established that an employer can
be held responsible for the acts of its employees even if the employees
act in a manner contrary to corporate policy and their employer’s
directions.26 The principle established is called respondeat superior, or
“let the master answer.”
• Avoiding unfavorable publicity
Microsoft’s statement of values
• Our Values As a company, and as individuals, we value integrity,
honesty, openness, personal excellence, constructive self-criticism,
continual self-improvement, and mutual respect. We are committed
to our customers and partners and have a passion for technology. We
take on big challenges, and pride ourselves on seeing them through.
We hold ourselves accountable to our customers, shareholders,
partners, and employees by honoring our commitments, providing
results, and striving for the highest quality.
 Improving
Corporate Ethics
 • A well-implemented ethics and
compliance program and a strong
ethical culture can, in turn, lead to less
pressure on employees to misbehave
and a decrease in observed
Improvin misconduct.
g • It also creates an environment in which
employees are more comfortable
Corporate reporting instances of misconduct,
partly because there is less fear of
Ethics potential retaliation by management
against reporters (for example, reduced
hours, transfer to less desirable jobs,
and delays in promotions).
The ERC has defined the following
characteristics of a successful ethics
program:
• Employees are willing to seek advice about ethics issues.
• Employees feel prepared to handle situations that could lead to
misconduct.
• Employees are rewarded for ethical behavior.
• The organization does not reward success obtained through
questionable means.
• Employees feel positively about their company
 • A corporate ethics officer (also
1. called a corporate compliance
officer) provides an organization
Appointin with vision and leadership in the
ga area of business conduct. This
individual “aligns the practices of a
Corporate workplace with the stated ethics
and beliefs of that workplace,
Ethics holding people accountable to
Officer ethical standards.
Specific responsibilities

• Responsibility for compliance—that is, ensuring that ethical

procedures are
put into place and consistently adhered to throughout the organization
• Responsibility for creating and maintaining the ethics culture that the
highest
level of corporate authority wishes to have
• Responsibility for being a key knowledge and contact person on issues
relating to corporate ethics and principles
 • The board of directors is responsible for the
careful and responsible management of an
organization.

• Board members are expected to conduct

themselves according to the highest standards
2. Ethical for personal and professional integrity, while
setting the standard for company-wide ethical
Standard conduct and ensuring compliance with laws
and regulations.
s Set by
BODs • Board members must create an environment in
which employees feel they can seek advice
about appropriate business conduct, raise
issues, and report misconduct through
appropriate channels.

• Board of Directors are responsible to set high values of

 • A code of ethics is a statement that
highlights an organization’s key
ethical issues and identifies the
overarching values and principles
3. that are important to the
Establishing organization and its decision making.

a Corporate • Codes of ethics frequently include a

Code of set of formal, written statements
about the purpose of an organization,
Ethics its values, and the principles that
should guide its employees’ actions.
INTEL CODE OF CONDUCT JANUARY
2012
• Code of Conduct Since the company began, uncompromising integrity and professionalism have
been the cornerstones of Intel’s business. In all that we do, Intel supports and upholds a set of
core values and principles. Our future growth depends on each of us understanding these values
and principles and continuously demonstrating the uncompromising integrity that is the
foundation of our company. The Code of Conduct sets the standard for how we work together to
develop and deliver product, how we protect the value of Intel and its subsidiaries (collectively
known as ‘Intel’), and how we work with customers, suppliers and others. All of us at Intel must
abide by the Code when conducting Intel-related business. The Code affirms our five principles
of conduct:
• Conduct Business with Honesty and Integrity
• Follow the Letter and Spirit of the Law
• Treat Each Other Fairly
• Act in the Best Interests of Intel and Avoid Conflicts of Interest
• Protect the Company’s Assets and Reputation
 • An organization’s code of ethics applies to
its directors, officers, and employees, and
it should focus employees on areas of
ethical risk relating to their role in the
organization, offer guidance to help them
To whom it recognize and deal with ethical issues,
and provide mechanisms for reporting
may apply? unethical conduct and fostering a culture
of honesty and accountability within the
organization.

• An effective code of ethics helps ensure

that employees abide by the law, follow
necessary regulations, and behave in an
ethical manner.
 • A code of ethics cannot gain company-
wide acceptance unless it is developed
with
employee participation and fully endorsed
How to by the organization’s leadership.
• It must also be easily accessible by
access employees, shareholders, business
Code of partners, and the public.
• The code of ethics must continually be
Ethics and applied to a company’s decision making
and emphasized as an important part of
apply? its culture.
• Breaches in the code of ethics must be
identified and dealt with appropriately so
the code’s relevance is not undermined.
 • In a social audit, an organization
reviews how well it is meeting its
ethical and
social responsibility goals, and
communicates its new goals for the
4.Conduct upcoming year. This information is
ing Social shared with employees,
shareholders, investors, market
Audits analysts, customers, suppliers,
government agencies, and the
communities in which the
organization operates.
 • For example, each year Intel
prepares its “Corporate
Responsibility Report,”
which summarizes the firm’s
progress toward meeting its ethical
and CSR goals. In 2011,
Example Intel focused on goals in three
primary areas:
A. Environment
B. Corporate Governance
C. Social
 • The ancient Greek philosophers believed that
personal convictions about right and wrong
behavior could be improved through education.
• Thus, an organization’s code of ethics must be
promoted and continually communicated within
5. the organization, from top to bottom.
Organizations can do this by showing employees
Requiring examples of how to apply the code of ethics in
real life.
Employees • One approach is through a comprehensive ethics
education program that encourages employees to
to Take act responsibly and ethically.
• Formal ethics training not only makes employees
Trainings more aware of a company’s code of ethics and
how to apply it, but also demonstrates that the
company intends to operate in an ethical manner.
• The existence of formal training programs can
also reduce a company’s liability in the event of
legal action.
 • Motorola, designer of wireless
network equipment, cell phones,
and smartphones, is committed to a
strong corporate ethics training
Example program to ensure that its
employees conduct its business
with integrity.
 • Managers can help employees to meet
performance expectations by monitoring
employee
behavior and providing feedback; increasingly,
6. Including managers are including ethical conduct as
part of an employee’s performance appraisal.
Ethical • Operating effectively in a multicultural
environment; accepting personal accountability
Criteria in for meeting
business needs; continually developing others
Employee and themselves; and operating openly and
honestly with suppliers, customers, and other
Appraisals employees.
• These factors are considered along with the
more traditional criteria used in performance
appraisals
 Creating
an Ethical
Environme
nt
It is managers responsibility to
create an ethical environment
Here are a few examples of how managerial behavior can encourage unethical employee behavior:

• A manager sets and holds people accountable to meet “stretch” goals, quotas, and budgets, causing
employees to think, “My boss wants results, not excuses, so I have to cut corners to meet the goals my
boss has set.”
A manager fails to provide a corporate code of ethics and operating principles to make decisions, so
employees think, “Because the company has not established any guidelines, I don’t think my conduct is
really wrong or illegal.”
• A manager fails to act in an ethical manner and instead sets a poor example for others to follow, so
employees think, “I have seen other successful people take unethical actions and not suffer negative
repercussions.”
• Managers fail to hold people accountable for unethical actions, so employees think, “No one will ever
know the difference, and if they do, so what?”
• Managers put a three-inch-thick binder entitled “Corporate Business Ethics, Policies, and Procedures” on
the desks of new employees and tell them to “read it when you have time and sign the attached form that
says you read and understand the corporate policy.” Employees think, “This is overwhelming. Can’t they
just give me the essentials? I can never absorb all this.”
Including Ethical
Considerations
in Decision
Making
 A problem statement is a clear, concise description
of the issue that needs to be
addressed.
A good problem statement answers the following
questions:
• What do people observe that causes them to think

Develop a there is a problem?

• Who is directly affected by the problem?
Problem • Is anyone else affected?
• How often does the problem occur?
Statement • What is the impact of the problem?
• How serious is the problem?
• Development of a problem statement is the
most critical step in the decision-making process.
Without a clear statement of the problem or the
decision to be made, it is useless to proceed.
 • Good problem statement: Our product
supply organization is continually
running out of stock of finished products,
creating an out-of-stock situation on over
15 percent of our customer orders,
resulting in over $300,000 in lost
sales per month.
Examples • Poor problem statement: We need to
implement a new inventory control
system. (This is a possible solution, not a
problem statement.)
• Poor problem statement: We have a
problem with finished product inventory.
(This is not specific enough.)
 • During this stage of decision making, it is
ideal to enlist the help of others, including
stakeholders, to identify several
alternative solutions to the problem.
Brainstorming
with others will increase your chances of
Identify identifying a broad range of alternatives
and
Alternati determining the best solution

ves • During any brainstorming process, try not

to be critical of ideas, as any negative
criticism will tend to shut down the
discussion, and the flow of ideas will dry
up. Simply write down the ideas as they
are suggested.
 • Once a set of alternatives has been identified,
the group must evaluate them based on
numerous criteria, such as effectiveness at
addressing the issue, the extent of risk
Evaluate associated with each alternative, cost, and time
to implement.
and • An alternative that sounds attractive but that is
not feasible will not help solve the problem.
Choose • As part of the evaluation process, weigh various

the laws, guidelines, and principles that may apply.

You certainly do not want to violate a law that

Alternati can lead to a fine or

imprisonment for yourself or others.

ve • Do any corporate policies or guidelines apply?

• Does the organizational code of ethics offer
guidance?
• Do any of your own personal principles apply?
• Philosophers have
developed many
approaches to aid in ethical
decision making.
Four of the most common
approaches
 • The virtue ethics approach to
decision making focuses on how
you should behave and think about
relationships if you are concerned
with your daily life in a community.
Virtue • It does not define a formula for
ethical decision making, but
Ethics suggests that when faced with a
Approach complex ethical dilemma, people do
either what they are most
comfortable doing or what they
think a person they admire would
do.
 • The utilitarian approach to ethical
decision making states that you
should choose the
action or policy that has the best
Utilitaria overall consequences for all people
n who are directly or indirectly
affected.
Approach • The goal is to find the single
greatest good by balancing the
interests of all affected parties
 • The fairness approach focuses on
how fairly actions and policies
distribute benefits and burdens
among people affected by the
Fairness decision.
Approach • The guiding principle of this
approach is to treat all people the
same.
 • The common good approach to
decision making is based on a vision of
society as a community whose
members work together to achieve a
common set of values and goals.
Common • Decisions and policies that use this
approach attempt to implement social
Good systems, institutions, and
environments that everyone depends
Approach on and that benefit all people.
• Examples include an effective
education system, a safe and efficient
transportation system, and accessible
and affordable health care.
 • Once an alternative is selected, it should be
implemented in an efficient, effective, and
timely manner. This is often much easier
said than done, because people tend to
resist
change.
Implement • Why are we doing this?
• What is wrong with the current way we do
the things?
• What are the benefits of the new way for
Decision you?
A transition plan must be defined to explain
to people how they will move from the
old way of doing things to the new way. It is
essential that the transition be seen as
relatively easy and pain free.
 • After the solution to the problem
has been implemented, monitor the
results to see if the desired effect
Evaluate was achieved, and observe its
impact on the organization and the
the various stakeholders. Were the
Results success criteria fully met?
• Were there any unintended
consequences?
 • The growth of the Internet, the ability to capture and store vast
Ethics in amounts of personal data, and greater reliance on information
systems in all aspects of life have increased the risk that

IT
information technology will be used unethically.
 • Many employees have their email and Internet access
monitored while at work, as employers struggle to
balance their need to manage important
• Company assets and work time with employees’ desire
for privacy and self direction.
• Millions of people have downloaded music and movies at
no charge and in apparent violation of copyright laws at
tremendous expense to the owners of those copyrights.
• Organizations contact millions of people worldwide
through unsolicited email (spam) as an extremely low-
Examples cost marketing approach.
• Hackers break into databases of financial and retail
institutions to steal customer information, then use it to
commit identity theft—opening new accounts and
charging purchases to unsuspecting victims.
• Students around the world have been caught
downloading material from the
• Web and plagiarizing content for their term papers.
• Web sites plant cookies or spyware on visitors’ hard
drives to track their online purchases and activities.