Bernard Edwards

Before

After

UTube
Bernard Ebbers co-founded the telecommunications
company WorldCom.
In 2005, he was convicted of fraud and conspiracy in one
of the biggest accounting scams in the US. WorldCom's
false financial reporting resulted in a $11-billion loss to
investors. He is currently serving a 25-year prison term.

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ttp://business.rediff.com/slide-show/2009/may/1
4/slide-show-1-worlds-20-worst-ceos.htm

Ethics
The study of what is good and evil, right
and wrong, and just and unjust. (p.180)
Descriptive Ethics deals with what is
Normative Ethics deals with what ought
to be
Business Ethics is the application of
ethics to the business setting.

 Theory of Amorality: The belief that

business should be conducted without
reference to the full range of ethical
standards, restraints and ideals in society.

Theory of Moral Unity: Business

actions are judged by the general ethical
standards of society, not by a special set of
more permissive standards,

Types of Management Ethics

Immoral
Recognize the ethical issues involved and
choose to do the wrong thing.

Moral
Recognize the ethical issues involved and
choose to do the right thing.

Amoral
Do not consider the ethical implications of an
action or believe that ethics are irrelevant.

Major Sources of Ethical Values in

Business

McGraw-Hill/Irwin

7-6

2006 The McGraw-Hill Companies, Inc. All rights reserved.

The Overlap Model of Law,

Ethics and Morals
While all three approaches of law, ethics,
and morals attempt to give us guidance as to
the propriety of our conduct, they do not
always give us the same answers.

Definitions
Ethics: Rules of conduct based on
consensually-accepted standards of
behavior. (Conventional Approach)
Morals: Absolute Precepts of personal
behavior based on religion or philosophy.
(Principles Approach)
Law: Formal standards that permit or
forbid certain behaviors.

Approaches to Ethics
Conventional Approach
Ethical Relativism: Culture

Principles Approach
Moral Absolutes: Religion and Philosophy

Law
Codified Ethical Expectations

Conventional Approach: Ethics

Culture
Our pursuit of self-interest ought to be bounded by
the standards of society.
Behaviors are judged right or wrong based on their
agreement with prevailing norms of society or
consensually accepted standards of behavior
Because this approach is based on consensus, our
notion of what is right or wrong may vary over
time and among different societies.

Ethical Universalism
The theory that because human nature is
everywhere the same basic ethical rules are
applicable in all cultures.

Ethical Relativism
Ethical relativism is the doctrine that the
moral rightness and wrongness of actions
vary from society to society and that there
are not absolute universal moral standards
on all men at all times. Accordingly, it
holds that whether or not it is right for an
individual to act in a certain way depends
on or is relative to the society to which he
belongs.
John Ladd

Follow the Law Approach

Law is the publics agency for translating morality
into explicit social guidelines and practices for
stipulating punishments for offenses.
--Beachamp and Bowie (2001)

It is not uncommon (especially in business situations)

for people to equate law and ethics.
ethical behavior is typically thought to reside
above behavior required by the law. This is the
generally accepted view of ethics. we would
certainly say that obedience to the law is generally
regarded to be minimum standard of behavior.
-- Carrol & Buchholz (2003)

Compensatory Damages
Payments awarded to redress concrete
losses suffered by injured parties

Punitive Damages
Payments in excess of a wronged partys
actual losses. They are awarded to deter
similar actions and punish a corporation that
has exhibited malicious and willful
misconduct.

Principles Approach: Morals

Right or wrong is a personal choice, based
on unchanging standards of right and wrong
(principles) and what society thinks is not
relevant to moral decision making.
A key issue in the principles approach
concerns the source of these absolutes.
Those using this approach to ethics turn to
religion, philosophy and their own
consciences to answer that question.

Principle Approach: Philosophy

Consequentialist: Ends
An action is right if its consequences are good.
Utilitarianism

Deontological: (Deon = Duty) Means

An action is right or wrong in and of itself,
regardless of its consequences.
Rights
Justice

Virtue: Being, Good Character

The Overlap Model of Law,

Ethics and Morals
A law-abiding person is not necessarily morally sensitive
or virtuous, and the fact that something is legally
acceptable does not imply that it is morally acceptable.
A related problem involves the belief that a person found
guilty under law is therefore morally guilty. Such
judgments are not necessarily correct but rather depend
on the moral acceptability of the law on which the
judgment has been reached. Taken together, these
considerations lead to the following conclusion: If
something is legal, it is not necessarily moral; if
something is illegal, it is not necessarily immoral.
--Beachamp and Bowie 2001

Overlap Model
Actions are ethical, moral, and legal

Ethics

Morals

Law

Overlap Model
Actions are ethical and legal, but not moral.
(e.g. abortion)
Ethics

Morals

Law

Overlap Model
Ethics

Morals

Law

Actions are moral and legal, but not ethical.

(e.g. laws protecting the privacy of aids patients, Sunday closing laws )

Overlap Model
Action is moral and ethical, but not legal.
(e.g. Sodomy laws with regard to married couples.)

Morals

Ethics

Law

Overlap Model
Actions are ethical, but not moral or legal.
(e.g. Gambling (Football pools ))
Ethics

Morals

Law

Overlap Model
Actions are moral, but not ethical or legal.
(e.g. modern-day polygamy among the FLDS )

Ethics

Morals

Law

Overlap Model
Ethics

Morals

Actions are ethical, but not moral or legal.

(e.g. Apartheid laws)

Law

Four Internal Forces

Leaders Example
Strategies
Organizational Culture
Individual Characteristics

How Companies Manage Ethics

Seven Steps: U.S. Sent Comm
Establish compliance
standards and procedures
Code of Conduct

Ethical oversight occurs

at high levels of
management
Do not delegate authority
to persons who are prone
to engage in criminal
behavior
Use background checks

Communicate standards
to all employees
Ethics Training Programs

Establish Monitoring and

ethical auditing systems
Consistently enforce
standards
Immediately after an
offence take steps to
prevent future offences

Enron

Enron Values
http://www.youtube.com/watch?v=C
Fk4ivlvvrw
http://www.youtube.com/watch?v=2gKv4WaGBw&feature=related