Ethical Issues in Business

BEBI

Key Causes of Unethical Behavior...

meeting overly aggressive financial or business objectives meeting schedule pressures helping the organization survive rationalizing that others do it resisting competitive threats saving jobs
1997 Society for Human Resource Management/ Ethics Resource Center, Business Ethics Survey.

Key Causes of Unethical Behavior...

Pressure to balance work and family Poor communication Long work hour Lack of mgmt support Pressure to meet sales or profit goals Little or no recognition of work

Key Causes of Unethical Behavior...

Company policies Personal financial worries Insufficient resources

Continue.

Key Influences On Ethical Behavior...

personal values supervisor influence senior management influence internal drive to succeed performance pressures lack of punishment friends/coworker influence

1997 Society for Human Resource Management/ Ethics Resource Center, Business Ethics Survey.

Why Misconduct Is Not Reported...

fear of not being considered a team player did not think corrective action would be taken fear of retribution (from management) no one else cares, why should I did not trust the organization to keep report confidential
1997 Society for Human Resource Management/ Ethics Resource Center, Business Ethics Survey.

Classification of Ethical Issues...

conflict of interest honesty and fairness communications organizational relationships

Conflict of Interest...
exists when an individual must choose whether to advance his/her own interests, the organizations, or others examples include bribes or personal payments, gifts, or special favors intended to influence decision making

Honesty & Fairness...

following applicable laws a regulations & not knowingly harming stakeholders Is advertising prescription drugs on TV and in magazines fair?

Are long distance information ads that place the cost of the call in very small print at the bottom of the screen fair?

Communications...
refers to the transmission of information and the sharing of meaning examples: deceptive advertising, product safety information, & product composition

Are vitamin and herbal supplements using puffery in their advertising?

Note: roughly half of Americans take supplements

Organizational Relationships...
behavior of organizational members toward stakeholders includes confidentiality, meeting obligations & deadlines, not pressuring others to behave unethically

Ethical Issues Can Relate to All Functional Areas...

accounting
finance management marketing

Ethical Dilemmas
BEBI

What is??
Ethical Dilemma is a moral situation in which a choice has to be made b/w two equally undesirable alternatives. An ethical dilemma is a situation that will often involve an apparent conflict between moral imperatives, in which to obey one would result in transgressing another. This is also called an ethical paradox since in moral philosophy, paradox plays a central role in ethics debates.

Business Ethical Dilemma

Business ethical dilemma exists when an organizational decision maker faces a choice between two or more options that will have various impacts on
A. organization profitability and competitiveness B. Stakeholders

 In a situation of this kind, one must act out of prudence to take a better decision. Eg. Of advertising agency

How the dilemmas in Business Affects stakeholders

Sharehoder

Business Balance

Employee

Society

Sources Of Ethical Problems

Ethical challenges and their attendant dilemmas may arise due to:
1. Failure of personal character 2. Conflict of personal values 3. Organizational goal vs. Social goal 4. Hazardous but popular products 5. Newer technologies, diverse religious, cultural and social beliefs, economic and political system, and Ideologies.

Other Ethical Challenges

Some of other unethical practices sample are such: Price fixing and profiteering due to monopoly and often artificially created scarcity. Shifting unfair shares to the producer stakeholders and employee

Some of other unethical practices sample are such:

Discriminatory wages structure Using scarce and irreplenishable industrial resource and raw material. Shifting or locating business at the cost of society Overworking women and children

Why does business have negative image??

3 main points for ethical dilemmas:
Competitive Pressure Individual greed Differing cultural contexts

Why Business should act Ethically

To meet stakeholder expectations. To prevent harm to the general public To build trust with key stakeholder groups To protect their own emplyee To create an environment in which workers can act in ways consistent with their values

Code of Personal ethics for Employee

Respect confidential information to which you have access. Maintain high standard of professional responsibility Avoid being placed in situations involving conflict of interest Act with integrity

Code of Personal ethics for Employee

Do not discriminate against anybody or anything on any bias Maintain professional relations based on mutual respect for individuals and organization Be committed to the goals of the organization Do not give up your individual professional ethics

Waltons six models of business conduct

1. The Austere Model: It gives almost
exclusive emphasis on ownership interest and profit objectives. 2. The Household Model: Following the concept of an extended family, the model emphasizes jobs, benefits and paternalism.

Waltons six models of business conduct

3. The Vendor Model: In this model, consumer
interest, tastes and rights dominate the organization. 4. The Investment Model: This model focuses on the organization as an entity and thus on long-term profits and survival. In the name of enlightened self-interest, it gives some recognition to social investment along with economic ones.

Waltons six models of business conduct

5. The Civic Model: Its slogan is corporate citizenship. It goes beyond imposed obligations, accepts social responsibility and make a positive commitment to social needs. 6. The Creative Model: This model encourages organization to become creative instrument.

How to resolve Ethical problem

To resolve ethical dilemma ask 3 question:
Utility: Does its benefits exceed cost (shareholder)? Rights: Does it respect human rights (society)? Justice: Does it distribute benefits and burdens evenly (employee)?

Steps of resolving
Step1: Analyze the consequences Step2: Analyze the Actions Step3: Make a Decision