business ethics (ethical issues & dilemmas)

• Business gifts of clients and business associates can raise conflict of interest problems, and knowing where to draw the line, between what is right and wrong, is not always easy. The clear point is that those who cross that line, intentionally or not, end up in big trouble.
• Factors in Determining the Morality of Gift-Giving a. Value of the Gift

  b. Purpose of the Gift

  c. Circumstances under which the gift was given or received

  d. Position between or relationship of the Giver and Receiver

  e. Acceptable Business Practice in the Industry

  f. Company Policy

  g. Laws and Regulations
• Bribe

  • A financial advantage or other reward to induce or influence that individual or company that is offered to, given to, or received by an individual company
• RECOGNIZING AN ETHICAL ISSUE

  • An ETHICAL ISSUES is simply a situation, a problem, or even an opportunity that requires thought, discussion, or investigation before a decision can be made.
  • And because the business world is dynamic, new ethical issues are emerging all the time.
  • Advertising, Personal Selling, Suppliers, Contracts, Pricing
• ETHICAL ISSUE


  An ethical issue is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical.
• ETHICAL DILEMMA


  An ethical dilemma is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that have negative outcomes.
• ETHICAL ISSUES AND DILEMMAS IN BUSINESS

  • An ethical issue is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical.

  • An ethical dilemma is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several wrong or unethical actions.

  • There is not a right or ethical choice in a dilemma, only less unethical or illegal choices as perceived by any and all stakeholders.
• Results in ethical dilemma

  
• Three (3) Foundational Values

  • Honesty
  • Integrity
  • Fairness
• II.1.1 Honesty


  • Honesty refers to truthfulness or trustworthiness • Issues related to honesty also arise because business is sometimes regarded as a game governed by its own rules rather than those of society as a whole

  • "Honesty is the first chapter in the book of wisdom." -Thomas Jefferson
• • Dishonesty can be broadly defined as a lack of integrity, incomplete disclosure, and an unwillingness to tell the truth.

  • The causes of dishonesty are complex and relate to both individual and organizational pressures.
• II.1.2 Fairness


  • Fairness is the quality of being just, equitable, and impartial.

  • Fairness clearly overlaps with concepts of justice, equity, equality, and morality.

  • There are three fundamental elements that seem to motivate people to be fair: equality, reciprocity, and optimization.
• Equality is about how wealth or income is distributed between employees within a company, a country, or across the globe.
• • Reciprocity is an interchange of giving and receiving in social relationships. An ethical issue regarding reciprocity for business is the amount CEOs and other executives are paid in relation to their employees.

  
• Optimization is the trade-off between equity (that is, equality or fairness) and efficiency (that is, maximum productivity). Discriminating on the basis of gender, race, or religion is generally considered to be unfair because these qualities have little bearing upon a person's ability to do a job.
• II.1.3 Integrity


  • Integrity is one of the most important and oft-cited elements of virtue, and refers to being whole, sound, and in an unimpaired condition.

  • In an organization, it means uncompromising adherence to ethical values

  • An organization's integrity usually rests on its enduring values and unwillingness to

  deviate from standards of behavior
• TYPES OF ETHICAL ISSUES AND DILEMMAS IN BUSINESS

  1.Misuse of company time and resources

  2. Abusive or intimidating behavior

  3. Lying

  4. A conflict of interest

  5. Bribery

  6. Corporate Intelligence

  7. Discrimination

  8. Sexual Harassment

  9. Fraud

  10. Financial Misconduct

  11.Insider Trading

  12. Intellectual Property Rights

  13. Privacy Issues

  14. Environmental Issues
• II.2.1 Misuse of company resources


  • leading form of observed misconduct in organizations

  • Misconduct can range from unauthorized use of equipment and computers to embezzling of company funds
• Embezzlement


  Intentionally using funds for a different purpose than they were intended to be used.
• Types of Embezzlement

  • Overtime Fraud
  • Check Kiting
  • Siphoning
  • Lapping
  • Payroll Embezzlement
  • Kickbacks
• What is Check Kiting

  • Kiting or check-kiting is defined as the practice of covering a bad check from one bank account to another. 
  • Check kiting is a form of financial fraud where individuals exploit the time it takes for checks to clear in order to withdraw funds that do not exist. An example of check kiting includes writing a check for an amount greater than what is available in one's account and then depositing it into another account.
• Overtime Fraud


  This occurs when employees falsely report extra hours worked or manipulate time records to claim additional compensation.
• Siphoning


  • individuals divert funds or assets from their intended use to their personal benefit through means like falsifying records or creating fake transactions.
  • is when someone takes money or things that belong to a company and uses them for their own personal gain.
• Lapping


  Lapping occurs when embezzlers manipulate accounting records to conceal the theft of money by using payments from one source to cover up previous thefts.
• Payroll Embezzlement

  • This is when someone messes with the company's payroll system to give themselves extra money or create fake employees to get paid for work that wasn't done.
• Kickbacks


   Embezzlers receive special favors or money in exchange for making decisions that benefit someone else, even if it's not good for the company they work for.
• Time theft:

  • cost companies hundreds of billions of dollars annually; average employee "steals" 4.25 hours per week
• Using company computers for personal business:

  • sending personal emails, shopping, downloading music, doing personal banking, surfing the Internet for information about sports or romance, visiting social networking sites
•  II.2.2 Abusive or intimidating behavior 


  • most common ethical problem for employees

  • These terms can refer to many things: physical threats, false accusations, being annoying, profanity, insults, yelling, harshness, ignoring someone, and unreasonableness
•  Bullying: 


  • associated with a hostile workplace where someone (or a group) considered a target is threatened, harassed, belittled, verbally abused, or overly criticized.

  • Regardless bullying can cause psychological damage that may result in health-endangering consequences to the target. Bullying can also occur between companies that are in intense competition
• II.2.3 Lying


  • The point at which a lie becomes unethical in business is based on the context of the statement and its intent to distort the truth.

  • A lie becomes illegal if it is determined by the courts to have damaged others.

  • We mentioned three types of lies: joking without malice; lying by commission; and lying by omission.
• Lying by commission

  • Commission lying is creating a perception or belief by words that intentionally deceive the receiver of the message
  • Lying by commission can involve complex forms, procedures, contracts, words that are spelled the same but have different meanings, or refuting the truth with a false statement.
  • Forms of commission lying include puffery in advertising
  • I am not lying, I am ADVERTISING
• What exactly is puffery?


  ▪ Legal definitions: the practice by a seller of making exaggerated, highly fanciful or suggestive claims about a product or service

  ▪ an exaggerated claim of quality exaggerated commendation especially for promotional purposes: "hype" 
• Lying by omission. 


  Omission lying is intentionally not informing others of any differences, problems, safety warnings, or negative issues relating to the product, service, or company that significantly affect awareness, intention, or behavior.
• Conflict of Interest


  A situation in which an entity or individual becomes unreliable because of a clash between personal (or self-serving) interests and professional duties or responsibilities.
• II.2.4 Conflicts of interest


  • A conflict of interest exists when an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group

  • The conflicts of interest usually relate to hiring friends, relatives, or retired military officers to enhance the probability of getting a contract.
• What is Conflict of Interest?

  EXAMPLE:

  • NEPOTISM - Giving favors to relatives and close friends.
  • SELF-DEALING - When someone acts in their own interest rather than the interest of the organization.

  WHEN IT IS ILLEGAL:

  • PUBLIC SECTOR -Judges must recuse themselves if there is a relationship with one of the parties in a case. -If the legislator attempts to profit from knowledge, this is an example of insider trading.
  • PRIVATE BUSINESSES - If a company has proof that a board member profited from their role on the board, the board member can be taken to court.
•  Conflict of Interest - Examples

  • Overreaching or Fraud - Example: Making a profit at expense of client

  • Witness - Example: Representing a client when you may be a witness

  • Financial interest in the case - Example: Being financially involved in the litigation of the client

  • Gifts - Example: Accepting more than nominal value

  • Intimate Relationship - Dating current and probably former client
•  II.2.5 Bribery 


  • Bribery is the practice of offering something (usually money) in order to gain an illicit advantage

  • The key issue regarding whether or not something is considered bribery is whether the act is illicit or contrary to accepted morality or convention. Bribery is therefore defined as an unlawful act, but it can also be a business ethics issue because it can be defined differently in varying situations and cultural environments
• Bribery (Examples)


  • A construction guaranteeing an elected official ten percent in kickback money in exchange for a large public infrastructure contract

  • A manufacturing firm paying foreign officials money for preferential treatment or to smuggle unregistered goods across a border

  • A pharmaceutical firm bribes doctors, hospitals, or other healthcare facilities with incentives to use prescribe their drug to patients

  • A professional sports franchise bribes an official for preferential treatment or to fix the outcome of a contest