Brady Shiplet

BUAD 5304

Ethics Journal

#1: 12-03-2009
Ethics and Virtue

The article, “Ethics and Virtue” by Velasquez, Andre, Shanks, S.J., and Meyers, states that virtues are
developed through learning and through practice. Or more simply put, virtues are habits. After first
reading this statement I had some trouble coming to terms with this definition.
It seems to me that a person can practice or imitate having different virtues, but never actually
become a truly virtuous person. People of all religions and backgrounds have been striving to
accomplish this one unreachable goal for centuries, striving to reach the “mecca”. The idea of a truly
virtuous person can only be related as metaphors or through divine examples such as Jesus Christ and
Buddah. I believe virtues are born in a person as a part of nature. Universally known but whose true
nature can never be accurately defined.
However, it was at this point in my thought process that I realized virtues are present in a person but lie
dormant unless cultivated; although, in order to be cultivated they first have to be found by the
individual. Next virtues have to be learned, and then practiced, and then finally they become habits.
Once they are acquired, they become characteristic of a person. Moreover, a person who has developed
virtues will be naturally disposed to act in ways that are consistent with moral principles. The virtuous
person is the ethical person.
The article states that at the heart of the virtue approach to ethics is the idea of "community". A
person's character traits are not developed in isolation, but within and by the communities to which he
or she belongs, including family, church, school, and other private and public associations. Many
people have had the chance to realize and cultivate the presence of virtues, but other communities may
not have had access to these quality resources. They have not had the chance to witness what a truly
moral character would deem appropriate.
The same is true in business. A business is also a community in itself (because each business is
made up of people), but there are also communities of businesses. These businesses work with each
other and learn from each in the same organic manner as humans. In the past, companies only sought
profits. As more companies are developed the more this strategy is taught and thus learned. Companies
need to realize that these innate characteristics lie within their structure also. A company can be
classified as being honest, striving towards honesty, and thus cultivate honesty as a virtue. But where is
our shining, divine example of a truly virtuous company? Where’s our Jesus Christ of business - the
Catholic Church? Or are they just the business of Jesus Christ?
http://www.scu.edu/ethics/practicing/decision/ethicsandvirtue.html

#2: 12 – 10 – 09
Google’s Corporate Governance

In 2004, Google had just become a public company. There were some issues surrounding their
corporate governance. On page 29 of the prospectus released on Aug. 18, Co-founders Larry Page and
Sergey Brin and CEO Eric Schmidt "run Google as a triumvirate," the prospectus declares. Notice the
use of the present tense -- and a term of governance that implicitly ignores a role for the board,
institutional shareholders, and, well, just about everyone else.
Missing are almost all the tools that shareholders in other public companies use to assert their rights as
owners. Supervoting rights are accorded to the Class A shares, mergers could require the approval of
investors representing 60% of the votes, and the board can change the bylaws without shareholder
approval. All of which means investors have two choices: They can watch what happens or vote with
their feet. Influencing how Google is run isn't an option.
What's more, under the terms of the stock-option plan, repricing is explicitly allowed -- so if the stock
plummets, Google can reward those responsible by restoring the value of their options, even as regular
shareholders give up their plans for early retirement.
The board also has its share of potential conflicts. The nominating committee, which chooses new
directors, includes L. John Doerr, a partner at the venture-capital firm of Kleiner Perkins Caufield &
Byers, an early Google backer. Under Nasdaq rules, Doerr is an independent director, but ISS considers
him an "affiliated outsider" -- a nonemployee director who has a business relationship with the
company. ISS considers that inappropriate for a committee that should be completely independent.
The stakeholder model of corporate governance places the board of directors in the central
position to balance the interests and conflicts of the various constituents of the company. The failure to
balance stakeholder interests can result in a failure to maximize shareholder’s wealth. The real problem
occurs with Google in the arena of loyalty. The duty of loyalty means that all decisions should be in the
interest of the corporation and its stakeholders. An insider-dominated board could easily pack the
compensation committee with current and former execs and erect formidable takeover defenses such as
staggered board elections. Is Google possibly too loyal?
The triumvirate says it opted for an unconventional system of governance because the
traditional structures weren't good enough. Google execs, wary of being beholden to Wall Street's
short-term financial interests, seem to believe that being responsible to shareholders will interfere with
their ability to keep Google a leading innovator in a competitive market. That notion will no doubt
come as a surprise to other innovative companies in competitive markets such as Pfizer and Intel,
which have sterling governance reputations.
In the end, how the Googlers manage their company may not make a difference. As long as it earns
money, few investors will care that the CEO is doing business with his own company or that each one
of their shares entitles them to a single vote while insiders get 10. Following this ideal into 2009, it
seems that Google’s governance has not halted investors from pouring money into the company. It
seems that Google’s loyalty lies with innovation – and investors are OK with that.

#3: 12-17-09
Practical Ethics Resources
In this journal I sought to compile a resource page for applying ethics in the every day workplace.
Each is used to make a manager more of aware of their actions and to consciously make ethical
decisions.
Ethics Self Assessment by George S. May
Periodically examine and reflect on your own behaviors to ensure you are staying on the ethical
track. Use the following ethics self-assessment as a guide to identifying your integrity strengths and
the areas you need to work on.
• Conducted personal business on company time?
• Used or taken company resources for personal purposes?
• Called-in sick when I really wasn't?
• Used an ethnically derogative term when referring to another person?
• Told or passed along an ethnically or sexually oriented joke?
 • Engaged in negative gossip, or spread rumors about someone?
• "Bad mouthed" the company or management to co-workers?
• "Snooped" into a co-worker's conversations or private affairs?
• Passed along information that was shared with me in confidence?
• Knowingly ignored (violated) an organizational rule or procedure?
• Failed to follow through on something I said I would do?
• Withheld information that others needed?
• "Fudged" on a time sheet, billing sheet, estimate, or report?
• Knowingly delivered a poor quality (or defective) good ... or service?
• Been less than honest (lied or manipulated the truth) to make a sale?
• Accepted an inappropriate gift or gratuity?
• Taken or accepted credit for something that someone else did?
• Failed to admit to or correct a mistake I made?
• Knowingly let someone screw up and get into trouble?
http://ethics.georgesmay.com/check_yourself.htm
5 Ways to Ethically Consider Situations
Embrace Racial, Cultural and Creative Diversity.
Many of the benefits society enjoys have come from a very diverse group of people from throughout
the world. For an example, we all enjoy technological advances that we all enjoy were developed by
weird creative types who also were different. Diversity is something to be embraced. It is a great
strength and competitive business advantage.
Don't Take What Isn't Yours ... Don't Accept What You haven't Earned.
This is self-explanatory. It applies to everything from office supplies to "the credit" for work done by
others.
Maintain Confidentiality.
If you agree to confidentiality, honor your agreement. If you can't or won't agree to keeping a
confidence, make that clear before you accept the information.
Spread The "Straight Scoop."
Don't try to BS your way through an explanation or a sale. The short-term hassle you might save by
doing that can come back to bite both you and your organization. And it's just plain unfair to the people
you deal with. Don't know an answer? Tell the person you'll get back with them. Then, do the
necessary research. Pride yourself on being able to say that every answer you give is as correct as it can
be. Ethics is about being and doing right, not sounding right.
"Means" Are Just As Important As "Ends"
Be extremely cautious of the old "The end justifies the means" argument. Don't work through a task
only to find that the result has been tainted by the less-than-ethical way you chose to get there. Means
are as important as ends and need to be treated as such.
http://ethics.georgesmay.com/ethical_ways.htm
#4: 1– 07–10
TOMS Shoes
Over the Christmas holiday I was pressed for time and opted to shop online rather than endure partial
claustrophobia and the need for anger management classes trying to navigate the packed malls and
shopping centers to find the perfect gift for each family member (at a reasonable price.)

My sister had informed me that she wanted a pair of TOMs Shoes and also that our mother had no clue
of what she was talking about. Having the luxury of listening to the radio at work (about the only one),
I had heard and remembered commercials for the shoes. The message and selling point is quite simply
put by the founder and CEO of the company, Blake Mycoskie: "Inspired by a traditional Argentine
shoe and challenged by the continent's poverty and health issues, I created TOMS with a singular
mission: To make life more comfortable. TOMS accomplishes this through its unique shoe and my
commitment to match every pair purchased with a donated pair to a child in need...no complicated
formulas, it's simple...you buy a pair of TOMS and I give a pair to a child on your behalf."
It seems to me, that since taking this class I put corporate missions, non profits, advertising, and other
movements through what I like to call the “altruistic litmus test.” This is where I consider and weigh
whether the goal of the movement is genuinely intended to help others, the planet, or whatever else, or
just an alternative way to bring in revenue. Being in the holiday spirit but also not willing to throw
away all my cash I bought my sister and my brother each a pair of the shoes, totaling around $100.
After the purchase I felt satisfied because I not only struck two people off my shopping list at a
reasonable price; but I also donated two pairs of shoes to invisible children, thus doubling my “do-good
quotient.” In fact, I still feel good about myself. A boost in self-self esteem by way of the Good
Samaritan Rule is hard to put a price on, but TOMS Shoes has definitely derived a value-added
product. Ultimately, they passed the test.

#5: 1–14–10
Lone Star Auto Auction
I am currently employed as a detail technician at Lone Star Auto Auction. The detail
department of Lone Star Auto Auction employs 17 workers and two supervisors. Auto detailing is the
performance of an extremely thorough cleaning, polishing and waxing of an automobile, both inside
and out, to produce a show-quality level of detail. Besides improving the appearance of cars, detailing
helps to preserve the car, and thus, increases resale value. Our facility houses five bays: three for
[1]

detailing the interior of the car, one for thoroughly washing the car, and one final prep/buff bay for
cleaning the exterior of the vehicle.
In the detail department I have witnessed a possible ethical dilemma. I work in one of the three
interior detail bays. In the wash bay there usually two to three employees. There are two permanent
employees in this work group, “Beans and John Boy.” (It is part of our culture to give employees
nicknames, basically signifying acceptance into the community.) These two employees are close to the
main supervisor of the department. These three make up an informal group in the company because
they associate with each other after work. The ethical problem arises out of favoritism displayed by the
main supervisor onto these two employees.
Every Wednesday of every week the company holds its auto auction. Sales representatives
bring in vehicles throughout the prior week to be detailed before the sale. The number of vehicles to be
detailed varies from week to week, but is usually above 100. For this past week, we detailed 160
vehicles for the auction.
In order to complete this vast amount of work, we have to work an extremely long day (and night) on
Tuesday, prior to the sale. This last week we clocked in at 7:00 a.m. Tuesday morning and finally
clocked out at 9:00 a.m., Wednesday morning.
At the beginning of the detail process a vehicle begins in the wash bay, moves to an interior
bay to have the passenger section of the car cleaned, and lastly to the final prep bay where the vehicle
is buffed and the entire exterior polished. Between each section of the process cars usually begin to
build up. The wash bay washes cars faster than the interior bays can detail them, and the interior bays
complete cars faster than the final prep bay.
Because of the bottlenecks in the process, the two employees in the wash bay are able to finish
their duties faster than the other employees and the main supervisor lets them go home before anyone
else. Also, the employees in the interior bays finish up their work before those in the final prep bay, but
do not get to leave. Rather, once finished they help the final prep bay finish up or start scrubbing out
their bays. Even though the two employees get to leave earlier (about four hours) than the other
employees and do not have help out any other bay complete their work, this is not the concerning
problem. It is the fact that the main supervisor leaves them clocked in and physically punches them out
himself after everyone else finishes up, or even later.
This information has made its way through the grapevine to me and other employees. Needless
to say, many people are upset. I once questioned him about this issue and got the reply, “I take care of
those who take care of me”.
Personally, I am not too bothered by these actions, but do view them as unethical. I am also
friends with the two employees outside of work, but am as close to the boss as they are. Since they
leave early and not stay to help, it takes longer to finish up all of our tasks. This may lead to more work
for myself, but also leads more time on the clock, ore overtime, and thus more money in my pocket. I
feel that something needs to be done about this problem. Other employees have had enough with the
whole favoritism game, even leading one person to quit. I am not sure of how to handle this problem,
so I just let it happen and try to ignore it, but still feel some weight on my conscience. The problem lies
between my boss and two friends; I’m stuck.

#6: 1-21-10
Texas Instruments

The book highly praises Texas Instruments for their ethics program. I was curious as to why the
company is held in such high regards. It states that the company has gained recognition as having the
one of the nation’s leading ethics programs. The company has won numerous ethics awards as well as
being listed on the Fortune list of America’s most admired company where it ranked number one in the
semiconductor industry for three years. I was curious as to why the company is held in such high
regards and what programs are in place.
From the company’s website, the Ethics Office has three primary functions:
1. To ensure that business policies and practices continue to be aligned with ethical principles.
2. To clearly communicate ethical expectations.
3. To provide multiple channels for feedback through which people can ask questions, voice
concerns and seek resolution to ethical issues.

To help their employees understand and adhere to ethical business practices, TI created three guidance
documents, which are updated as needed: the TI Standard Policies and Procedures; The TI
Commitment and the TI Ethics Booklet. These documents set clear expectations, and their messages
are firmly and credibly supported by the highest levels of management and the board of directors. They
have also become famous in the ethics realm for their Ethics Quick Test.
The Ethics Quick Test:
• Is the action legal?
• Does it comply with our values?
• If you do it, will you feel bad?
• How will it look in the newspaper?
 • If you know it's wrong, don't do it!
• If you're not sure, ask.
• Keep asking until you get an answer.
But the question still remains: Why set out to be a leader in ethics?
TI responds, “It's the right thing to do and has always been a part of TI's culture – to know what's right
and do what's right. It also gives us a competitive advantage as our customers know our reputation and
trust us to be responsible corporate citizens. Our employees know our reputation and have a loyalty to
TI because of that. Our turnover rates remain low in our peer group, which keeps our recruiting costs
low. And, in the long run, we believe we avoid huge expenses that other companies may incur when
they cut corners and adversely affect consumers or the environment.”
When it comes to ethics programs, TI has been pioneering innovative solutions to combat unethical
behavior within the corporation. With the fall of Enron, businesses have realized the need for
transparency in potential unethical situations.
#7: 1-28-10
Moral Perspectives Revisited

Moral philosophy refers to the specific principles or rules that people use to decide what is right or
wrong. I wanted to use this journal entry to revisit these philosophies in order to gain a better
understanding of the decision making process.

Economic value orientation - is associated with values that can be quantified by monetary means. If
an act produces more value than its effort, then it should be accepted as ethical.

Idealism places special value on ideas and ideals as products of the mind, in comparison with
the world’s view. Objects in nature and science are assigned to representations of a higher order
of existence.
- Positive correlation to ethical decision making.

Realism is the view that an external world exists independent of our perception of it. Humans
are inherently self-centered and competitive. Each is guided by their own self interests; all
actions a self motivated.
- Negative correlation to ethical decision making.

Basic concepts of goodness:

- Focus on the end result of actions and the goodness or happiness created by them.

Monist – only one thing is intrinsically good.

Hedonism – one’s pleasure is the ultimate intrinsic good, or that the moral end, or
goodness, is the greatest balance of pleasure over pain. Right or acceptable behavior
maximizes personal pleasure.
* All monists are not necessarily hedonists. A person can believe in a
sole intrinsic good other than pleasure. Ex. Power, Goodwill, any Virtue
Quantitative Hedonists – The more the pleasure the better
Qualitative Hedonists – It is possible to get too much of a good thing.

Pluralists – all are classified as nonhedonists, no one thing is intrinsically good.

 - Plato’s mix: 1. moderation and fitness, 2. proportion and beauty, 3. intelligence and
wisdom, 4. sciences and arts, and 5. pure pleasures of the soul.

Instrumentalists reject the idea that:

1. Ends can be separated from the means that produce them
2. Ends, purposes, or outcomes are intrinsically good in and of themselves.
- Ends-means is a relative distinction, that the difference between ends and means is no
difference at all but a matter of the individual’s perspective. Almost any action can be an end or
a means.
Example: People work to eat; and eat to work.
- No such thing as a single, universal end.

Obligation Theories - emphasize the means and motives by which actions are justified.

Teleology – act is considered morally right if it produces some desired result such as pleasure,
knowledge, career growth, the realization of self-interest, utility, wealth, and fame.
- Assess moral worth of behavior by looking at its consequences
- Consequentialists

Egoism – individuals make decisions that maximize their own self interests, defined
differently for each person
- Physical well-being, power, pleasure, fame, career, good family life, wealth, etc.
- Negative correlation
Enlightened egoism – allows for the well being of others although own interest is
paramount.

Utilitarianism – seeks greatest good for the greatest number of people. Make decisions that
result in the greatest total utility, that achieve the greatest benefit for all those affected by
the decision.
- Cost / Benefit analysis

Rule Utilitarianism – determine behavior on the basis of principles, or rules, rather than
looking at each individual situation.

Act Utilitarianism – examine a specific action itself, rather than the general rules
governing it, to assess whether it will result in the greatest utility
- Rather than “Bribing is wrong” there may be some cases where it may be more
beneficial.

Deontology – refers to the moral philosophies that focus on the rights of the individuals and on the
intentions associated with a particular behavior rather than on its consequences.
- There are some things we should not do.
- The nature of moral perspectives are permanent and stable; compliance defines
ethicalness
- Certain behaviors are inherently right; focuses on individual, not society.
- Nonconsequentialist – respect for persons
- If you can “universalize” the behavior then it is ethical

Rule Deontology – conformity to general moral principles determines ethicalness

 - The Golden Rule
- Freedom of speech, conscience, consent, privacy, due process

Act Deontology – actions are the proper basis on which to judge morality. Use equity fairness,
and don’t be impartial.
- Know what acts are wrong and right

Relativist – subjective to the experiences of individuals and groups

- Descriptive – different cultures exhibit different norms, customs, and values
- Metaphysical – people naturally see situations from their own perspective.
- One culture cannot be preferred over another.
- Normative – one person’s opinion is as good as another’s.

Philosophers
After evaluating the meat of the subject, the perspectives, I did some research and found philosophers
that I relate to in terms of moral perspective. I actually derived these results from online quizzes. The
results proved to be consistent across several quizzes.

Jean-Paul Sartre (1905-1980)

• When we choose something, we affirm the value of our choice because we have chosen it
above other choices
• When we choose something for ourselves, we should choose it for all people.
• We must be consistent in our interpretations of moral situations regardless of whom the
agent is.
• Logic cannot help us in specific situations
• Making conscious moral choices is more significant than consistently following moral
guidelines
• The conflict between the interests of two people is in the end, irresolvable
• "You can always make something out of what you've been made into."
• “I think, therefore I exist”

Aquinas (1225 or '27-1274)

• Morality is derived from human nature and the activities that are objectively suited to it.
• The difference between right and wrong can be appreciated through the use of reason and
reflection.
• Religious reflection may supplement the use of reason and reflection to determine right
from wrong.
• Societies must enact laws to ensure the correct application of moral reasoning.

#8: 2-4-10
The MBA Oath
In his article, ‘'The Hippocratic Oath of the Manager: Good or Bad Idea?' for Philosophy for Business,
Sean Jasso looks at the new phenomenon of Hippocratic-style oaths for newly qualified MBAs. There
has been a trend of business schools incorporating the oath into their programs. The purpose of this
article is for all stakeholders of the business enterprise to engage in a debate of serious reflection as to
what management means in society
Admirable as the aim of instituting an oath may be, does the idea really make sense, given that
possession of an MBA is not (yet) a requirement for practicing management? Is it likely to improve the
performance of managers? The answer to that question depends to a considerable extent on what one
considers to be 'good' manager.
Harvard management professors assert that the MBA should be a professional license to practice
management. However, many believe this movement is purely idealism. Skeptics suggest that any trend
toward Hippocratic Oaths of MBAs is only as good as the movement grows beyond the university.
There is no apparent sweeping demand from the large stakeholder environment mandating managers to
have a certificate or license on their office wall affirming one's oath to do no harm.
Moreover, and perhaps most relevant, there exists no authentic regulatory board (analogous to the
medical, legal, and accounting professions) to monitor the fair practice and fiduciary responsibility of
the oath-mandated manager. Rather, stakeholders simply want to see results attained within the rule of
law, within the good governance of
the firm, and within the fair playing field of the market.
At the core of the Harvard professors' vision is an economy where market failure is erased or
minimized by the licensed practitioner. However, the purest moral certification remains the simple
influence of competition -- fair, dynamic, and value-centered. When this exchange is pure, the ethic of
commerce and the morality of the market require no oath other than a simple handshake. When this
sacred exchange is broken by fraud, complacency or incompetence, consumers will simply demand
new markets to replace the old.
Additionally, the Harvard vision appears to suggest that a fiduciary responsibility by one's managerial
oath be infused as a guarantee to his or her client's best interest which comes before individual profit.
This is noble, but unrealistic. This idealism is already infused in a well regulated market system
whereby profit incentivizes the producer to innovate and compete for the sustainability of the
organization made possible only by strategically connecting to the consumer by marketing products
and services with the right quality, at the right price, at the right location, within the rule of law. The
MBA is a manager of risk for the benefit of a complex, multi-stakeholder constituency. No oath can
guide this arena of exchange better than the existing social contract.
Though the Hippocratic Oath of the Manager may inspire new MBAs to do no harm, the validity of the
good manager is much deeper than any oath. The well regulated, dynamic, and competitive market will
take care of the bad behavior. Good managers will navigate the organization toward results and
ineffective managers will be expelled by the most powerful measure of them all -- the consumer and
the owner each demanding value for their investment. The oath need not take place at the
commencement of a degree, but rather in the quiet of the manager's heart because the morality of the
market is nothing without the morality of the good man or the good woman.
http://www.isfp.co.uk/businesspathways/current.html
THE MBA OATH - Responsible Value Creation
As a manager, my purpose is to serve the greater good by bringing together people and resources to
create value that no single individual can build alone. Therefore I will seek a course that enhances the
value my enterprise can create for society over the long term. I recognize that my decisions can have
far-reaching consequences that affect the well-being of individuals inside and outside my enterprise,
today and in the future. As I reconcile the interests of different constituencies, I will face difficult
choices.
Therefore I promise:
I will act with utmost integrity and pursue my work in an ethical manner.
I will safeguard the interests of my shareholders, co-workers, customers and the society in which we
operate.
I will manage my enterprise in good faith, guarding against decisions and behavior that advance my
own narrow ambitions but harm the enterprise and the societies it serves.
I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own
conduct and that of my enterprise.
I will take responsibility for my actions, and will represent the performance and risks of my enterprise
accurately and honestly.
I will develop both myself and other managers under my supervision so that the profession continues to
grow and contribute to the well‐being of society.
I will strive to create sustainable economic, social, and environmental prosperity worldwide.
I will be accountable to my peers and they will be accountable to me for living by this oath.
This oath I make freely, and upon my honor.
http://mbaoath.org/wp-content/uploads/2009/06/MBA-Oath-to-Sign.pdf
#9: 2-11-10
Major Topics in Business Ethics
Ethical Decision Making
Ethical decision making involves both a descriptive understanding of how decisions are made as well
as frameworks for understanding the intellectual decision making process. It is important to learn that
organizational ethical decision making is very different from personal, individual ethical decision.
The first step is recognizing stakeholder interests and concerns. Stakeholders, obviously, are
individuals, groups, and even communities that can directly or indirectly affect a firm’s activities.
Unfortunately, failure to recognize the needs and potential impact of employees, suppliers, regulators,
special-interest groups, communities, and the media, can lead to unfortunate consequences.
Thus organizations need to identify and prioritize stakeholders and their respective concerns about
organizational activities, and gather information to respond to significant individuals, groups, and
communities. These groups apply their own values and standards to their perception of many diverse
issues. They supply resources—e.g., capital, labor, expertise, infrastructure, sales, etc.—that are more
or less critical to a firm’s long-term survival, and their ability to withdraw—or threaten to withdraw—
these resources gives them power.
One approach to stakeholders is to deal proactively with their concerns and ethical issues and stimulate
a sense of bonding with the firm. When a company listens to their concerns and tries to resolve issues,
the result is tangible benefits that can translate into customer loyalty, employee commitment, supplier
partnerships, and improved corporate reputation. This requires going beyond basic regulatory
requirements and making a difference by genuinely listening to stakeholders and addressing their
concerns. Such a stakeholder orientation secures continued support and stakeholder identification that
promotes the success of the firm.
The purpose of understanding stakeholder concerns and risks is to pinpoint issues that could trigger the
ethical decision-making process. If ethical issues are perceived as being related to the importance of
stakeholders’ interaction with the firm, a sound framework will exist for assessing the importance or
relevance of a perceived issue—the intensity of the issue. The intensity of a particular issue is likely to
vary over time and among individuals and is influenced by the organization’s culture, the specific
characteristics of the situation, and any personal pressures weighing on the decision. Different people
perceive issues with varying intensity due to of their own personal moral development and philosophies
and because of the influence of organizational culture and coworkers.
Understanding individuals’ moral philosophies and reasoning processes is one approach that is often
cited for recognizing and resolving ethical issues. However, the role of individuals and their values is
one of the most difficult challenges in understanding ethical decision making. Although most of us
would like to place the primary responsibility for decisions on individuals, years of research suggest
that organizational factors have greater dominance in determining ethical decisions at work.
Nonetheless, individual factors are clearly important in evaluating and resolving ethical issues, and
familiarity with theoretical frameworks from the field of moral philosophy is helpful in understanding
ethical decision making in business. Two significant factors in business ethics are an individual’s
personal moral philosophy and stage of personal moral development. Through socialization,
individuals develop their own ethical principles or rules to decide what is right or wrong, and with
knowledge and experience, they advance in their level of moral development. This socialization occurs
from family, friends, formal education, religion, and other philosophical frameworks that an individual
may embrace.
Although individuals must make ethical choices, they often do so in committees, group meetings, and
through discussion with colleagues. Ethical decisions in the workplace are guided by the organization’s
culture and the influence of coworkers, superiors, and subordinates. A significant element of
organizational culture is a firm’s ethical climate—its character or conscience. Whereas a firm’s overall
culture establishes ideals that guide a wide range of behaviors for members of the organization, its
ethical climate focuses specifically on issues of right and wrong. Codes of conduct and ethics policies,
top management’s actions on ethical issues, the values and moral development and philosophies of
coworkers, and the opportunity for misconduct all contribute to an organization’s ethical climate. In
fact, the ethical climate actually determines whether certain dilemmas are perceived as having a level
of ethical intensity that requires a decision.
Together, organizational culture and the influence of coworkers may create conditions that limit or
permit misconduct. If these conditions act to provide rewards—such as financial gain, recognition,
promotion, or simply the good feeling from a job well done—for unethical conduct, the opportunity for
further unethical conduct may exist. Thus, organizational policies, processes, and other factors may
contribute to the opportunity to act unethically.
Such opportunities often relates to employees’ immediate job context—where they work, with whom
they work, and the nature of the work. The specific work situation includes the motivational “carrots
and sticks” that managers can use to influence employee behavior. Pay raises, bonuses, and public
recognition are carrots, or positive reinforcement, whereas reprimands, pay penalties, demotions, and
even firings act as sticks, the negative reinforcement. For example, a salesperson that is publicly
recognized and given a large bonus for making a valuable sale that he obtained through unethical
tactics will probably be motivated to use unethical sales tactics in the future, even if such behavior goes
against his personal value system.
7 Habits of Strong Ethical Leaders
1. Ethical leaders have strong personal character.
2. Ethical leaders have a passion to “do right.”
3. Ethical leaders are proactive.
4. Ethical leaders consider stakeholders interests.
5. Ethical leaders are role models for the organization’s values.
6. Ethical leaders are transparent and actively involved in organizational decision making.

7. Ethical leaders are competent managers who take a holistic view of the firm’s ethical culture.
Adapted from: Archie B. Carroll, “Ethical Leadership: From Moral Managers to Moral Leaders,” in
Rights, Relationships and Responsibilities, O.C. Ferrell, Sheb True, and Lou Pelton, eds, Vol. 1,
(Kennesaw, GA: Kennesaw State University, 2003), pp. 7-17.
Corporate Governance
Corporate governance is a formal system of accountability and control for organizational decisions and
resources. Accountability relates to how well the content of workplace decisions is aligned with a firms
stated strategic direction. Control involves the process of auditing and improving organizational
decisions and actions. The philosophy that a board or firm holds regarding accountability and control
directly affects how corporate governance works. The major categories to consider in corporate
governance discussions include:
-Sarbanes-Oxley Act
-Federal Sentencing Guidelines for Organizations & recent amendments
-shareholder rights
-executive compensation
-mergers and acquisitions
-composition and structures of boards of directors
-auditing and control
-risk management
-CEO selection and executive succession plans
These issues normally involve strategic-level decisions and actions taken by boards of directors,
business owners, executives, and other people with high levels of authority and accountability.
Accountability for organizational decisions and resources begins with a strategic mission and vision
that informs all levels of employees and stakeholders. From this strategic direction, it is possible to
account for and assess decisions made on behalf of the organization. Thus, corporate governance is
about the process and content of decision making in business organizations.