Fundamentals of Management Business Ethics

Chapter 3
BUSINESS ETHICS
By
Dr. Doaa Saleh
Fundamentals of Management Business Ethics

Overview

Introduction Theories of Business

Management Ethics
(Ch. 1)
(Ch. 2) (Ch. 3)
Fundamentals of Management Business Ethics

Flashback Controlling
Subsystem
Purpose
Process
Murphy’s Law

Definition Measuring Taking

Performance Comparing Corrective
Measured Action
Performance
How? To Standards
Control

Standard

What? Problem

Symptom
Successful
Power
Controlling Position
Power
Personal
Authority Power
Power
Fundamentals of Management Business Ethics

Objectives
1. A thorough understanding of business ethics

2. Insights into the importance of business ethics

3. An understanding of a code of ethics

4. Knowhow to Creating an Ethical Workplace

Fundamentals of Management Business Ethics

Definitions
• Ethics:

The capacity to reflect on values in the corporate decision making

process, to determine how these values and decisions affect various
stakeholder groups, and to establish how managers can use these
observations in day-to-day company management.
Fundamentals of Management Business Ethics

Why Ethics Is Vital?

• John F. Akers, former board chair of IBM said

“Ethics and competitiveness are inseparable. We compete as a

society. No society anywhere will compete very long or successfully
with people stabbing each other in the back; with people trying to
steal from one another; with everything requiring notarized
confirmation because you can’t trust the other person; with every
little squabble ending in litigation; and with government writing
reams of regulatory legislation, tying business hand and foot to keep
it honest.”
Fundamentals of Management Business Ethics

Why Ethics Is Vital?

• The employment of ethical business practices can enhance overall
corporate health in three important areas:
1. Productivity.
2. Stakeholder Relations.
3. Government Regulation.
Fundamentals of Management Business Ethics
Why Ethics Is Vital?
Productivity.
• When management is resolved to act ethically toward stakeholders,
then employees will be positively affected.
• For example, a corporation may decide that business ethics requires it
to make a special effort to ensure the employees health and welfare.
• Many corporations have established Employee Advisory Programs
(EAPs) to help employees with family, work, financial or legal
problems, or with mental illness or chemical dependency.
• For instance, Control Data Corporation found that its EAP reduced
health costs and sick-leave usage significantly.
Fundamentals of Management Business Ethics
Why Ethics Is Vital?
Stakeholder Relations.
• A positive public image can attract customers and suppliers who view
such an image as desirable.
• For example, Johnson & Johnson Credo (announced 60 years ago).
Fundamentals of Management Business Ethics
Why Ethics Is Vital?
Government Regulation.
• Where companies are believed to be acting unethically, the public is
more likely to put pressure on legislators and other government
officials to regulate those businesses or to enforce existing
regulations.
• For example, in 1995, Texas state legislators held public hearings on
the operations of the psychiatric hospital industry. These hearings
arose, at least partly, out of the perception that private psychiatric
hospitals were not following ethical pricing practices.
Fundamentals of Management Business Ethics

A Code of Ethics
• A formal statement that acts as a guide for the ethics of how people
within a particular organization should act and make decisions.
• It commonly addresses such issues as:
1. Conflict of Interest.
2. Competitors.
3. Privacy of Information.
4. Gift Giving.
5. Giving and receiving political contributions or business.
• It is impossible to cover all ethical/unethical conducts in one code.
• Managers should view codes of ethics as adaptive tools.
Fundamentals of Management Business Ethics

A Code of Ethics
Fundamentals of Management Business Ethics

A Code of Ethics
Fundamentals of Management Business Ethics

Creating an Ethical Workplace

• To create, distribute, and continually improve the code of ethics.
• To appoint a Chief Ethics Officer (has the job of ensuring the
integration of organizational ethics and values into daily decisions at
all organizational levels).
• To furnish organization members with appropriate training programs:
• Do not attempt to teach managers what is moral or ethical.
• Give them criteria they can use to help determine how ethical a certain action
might be.
Fundamentals of Management Business Ethics

Creating an Ethical Workplace

• Managers can feel confident that a potential action will be considered
ethical by general public if it is consistent with at least one of these
standards:
• The golden rule: “Act in a way you would expect others to act toward you”.
• The utilitarian principle: “Act in a way that results in the greatest good for the
greatest number of people”.
• Kant’s categorical imperative: “Act in such a way that the action taken under
the circumstances could be a universal law, or rule, of behavior”.
• The professional ethic: “Take actions that would be viewed as proper by a
disinterested panel of professional peers”.
Fundamentals of Management Business Ethics

Creating an Ethical Workplace

• The TV test: Managers should always ask, “Would I feel comfortable
explaining to a national TV audience why I took this action?”.
• The legal test: “Is the proposed action or decision legal?” Established laws are
generally considered minimum standards for ethics.
• The four-way test: Managers can feel confident that a decision is ethical if
they can answer “yes” to the following questions:
1. Is the decision truthful?
2. Is it fair to all concerned?
3. Will it build goodwill and better friendships?
4. Will it be beneficial to all concerned?
Fundamentals of Management Business Ethics

Flashback Productivity

Why?
Definition
Stakeholder
Relation

Ethics

Government
Regulations
Creating an Code of
Ethical Ethics
Workplace

Definition Contents
Chief Ethics
Officer
Fundamentals of Management Business Ethics

Overview

Introduction Theories of Business

Management Ethics
(Ch. 1)
(Ch. 2) (Ch. 3)
 Fundamentals of Management

1. All students who were keen to attend the lectures.

1. All students managers  [Time and Quality managers] for their white hands.
2. All students who participated in discussions during the lectures.