CHAPTER 5: Business Ethics and Ethical Decision-Making

• Business is such an activity that is

  set up by people with the goal of

  making a profit.
• Business ethics is about

  implementing appropriate business

  policies and best practices in many

  areas, such as social responsibility,

  corporate governance, sexual

  harassment, employee relations,

  supply chain management, and

  corruption.
• Ethics binds humans because only

  we can speak and do things that

  are moral, just, and fair.
• Ethics is a branch of philosophy

  that prescribes and guides

  acceptable human conduct.
• Human conduct refers to

  individual/group interaction with

  other people and the environment.
• Ethics also refers to the

  development of an individual's

  ethical standards.
• According to Velasquez (2011), there are

  three kinds of ethical issues: systemic,

  corporate, and individual.
• Systemic refers to issues (such as

  the culture of corruption in

  government institutions) that need

  to be addressed through

  coordinated actions of different

  social groups
• Corporate pertains to issues that

  can and should be solved within

  the company.
• Individual simply means issues

  that need to be resolved through

  individual decision-making and

  behavioral change.
• Ethics is considered both an art and a

  science because it deals with the content

  (knowledge) of what is right and wrong,

  and is a process of determining what is

  right and wrong through moral reasoning.
• Utilitarian ethics

  (consequence-based) - can be

  related to the notion that the

  greatest Good produced must

  benefit the majority.
• Deontological ethics (duty-based)

  can be explained as respecting

  people's rights and should be

  treated with dignity.
• Virtue ethics (character-based)

  refers to righteousness and what

  makes a good person.
• Ethical relativism (culture-based)

  states that ethical standards

  cannot be absolute and be applied

  to all (people of all societies).
• FOUR THEORIES:

  1. Utilitarian ethics
  2. Deontological ethics
  3. Virtue ethics
  4. Ethical relativism
• SIX HIERARCHICEL STAGES by Lawrence Kohlberg:

  Stage 1: Punishment and obedience orientation.

  Stage 2: Instrumental relativist orientation.

  Stage 3: Interpersonal concordance orientation.

  Stage 4: Law and order orientation.

  Stage 5: Social contract orientation.

  Stage 6: Universal ethical-principles orientation.
• A right is a person's entitlement to

  something, such as legal, social, or

  freedom.
• Rights are considered normative

  rules about what a person is

  allowed to possess.
• A moral right (also referred to as

  human right) is an entitlement that

  every human being anywhere in

  this world possesses, such as the

  right to public assembly, right to

  work, freedom of expression, and

  others.
• A legal right is a right given upon

  by law to find resolutions or

  remedies to a conflict. In business,

  this right is often used to empower

  a company to act in a manner that

  others will have to follow or act in a

  certain way toward the company.
• Contractual rights and duties

  should be considered a premise in

  operating an enterprise.
• Contractual rights are the rights

  that a company is benefiting from a

  contract, and contractual

  obligations is a duty that the

  company is expected to perform

  under the contract.
• Moral responsibility is often

  referred to as one's moral duty or

  moral obligation.
• Code of Ethics is an aspirational

  document that describes the values and

  beliefs of the company that guides the

  conduct of its members.
• The Code of Discipline is a document

  that signifies the practices and behavior of

  an employee that is required of them so

  that they can remain in the company.
• HRM processes can build ethical decision-making capabilities:

  1. Be an ethical HR Leader
  2. Support training and development
  3. Acknowledge the importance of diversity in the workplace
  4. Manage conflict of interest (COI)
  5. Keeping things confidential
  6. Know and follow the law
• Conflict of Interest (COI) - This occurs

  when a person in a position has an

  "interest" that may motivate them to do the

  job in a way that may not be in the best

  interest of the company.
• Commercial bribery and extortion -

  When consideration is given or offered by

  one party outside the company (supplier)

  to the employee (buyer) when he or she

  transacts favorably with the employee's

  company.
• Gifts - The decision to accept tokens or

  gifts depends on a person's ethical values,

  combined with existing company policy

  and considering industry practice.
• The employee theft - This happens

  when employees appropriate additional

  benefits or make use of company

  resources for private use (e.g., office

  supplies for home use, misuse of

  representation expense).
• Computer theft Unauthorized use of

  computer information or programs

  constitutes computer theft, considering the

  nature of the property, which consists of a

  bundle of rights attached to company

  assets. Buying pirated and unlicensed

  programs is also considered a computer

  theft.
• Trade secrets This is about a

  company's activities or assets that would

  significantly affect a company's

  competitive advantage (e.g., secret food

  recipes, scientific formulations, major

  campaigns) if made known to a

  competitor.
• Insider trading "Inside" information is

  proprietary information about a company

  that is not available to the public, and if

  made known to the public, will have a

  significant impact on the price (increase or

  decrease) of the stock, and will also affect

  the current shareholders not privy to the

  information.
• Whistleblowing is an action taken

  by an employee or former

  employee to disclose wrongdoing

  by the company.
• Decisions that are sometimes difficult

  to arrive at but are necessary. Below

  are some of the issues to contend with:

  1. Conflict of Interest (COI)
  2. Commercial bribery and extortion
  3. Gifts
  4. The employee theft
  5. Computer Theft
  6. Trade secrets
  7. Insider trading