PROFESSIONAL ETHICS Topic 1: Moral Reasoning and ethical theory 1. Ethical problems in management are complex because of: a) Extended consequences b) Multiple Alternatives c) Mixed outcomes d) Uncertain occurrences and e) Personal implications 2. Ethics: a) Principles of morally acceptable conduct of individuals. b) An individual s personal beliefs about right and wrong behaviors. c) Ethics are Individually defined: people have ethics, whereas organizations do not 3. Professional Ethics: a) Moral values that a group of similarly trained people develop to control their performance of a task or their use of resources. 4. An individual s ethics is shaped by a combination of factors: a) Family b) Peers, c) Life experiences, d) Personal values and morals e) Situational factors. 5. Four Common Views of Ethics: a) Utilitarian: i. A morally correct action is one that results in the greatest good for the greatest number of people. ii. To apply this view, we need to identify: 1. Who are directly and indirectly affected; 2. What benefits and harms they would experience; and 3. How long these effects would last. b) Golden Rule: Do unto others as you would have them do unto you c) Kantian Rights: i. The right of free consent (Iuthiraaz) ii. Right of privacy iii. Right of freedom of conscience iv. The right of Freedom v. Right of due process d) Enlightened Self Interest: i. An action is morally right if it gives the individual or stakeholder maximum benefits without arbitrarily hurting others and, when possible, minimize any harm to others. 6. Normative Philosophy: a) The study of proper thought and conducts; that is, how we should behave. b) Moral reasoning requires an understanding of normative philosophy. 7. Ethical Relativism: (opposite of Moral Absolutism) Moral theories arguing that there are no universal moral standards for everyone in all cultures.
8. Ethical Theory: a) Eternal Law (Thomistic Natural Law): Associated with Thomas Aquinas & Thomas Jefferson i. The Eternal Law refers to moral standards that are revealed in Scripture or nature to religious leaders or human philosophers. The belief is that the Law is unchanging and valid for all times. 1. No two Natural Law theorists and very few religious writers have been able to agree on the exact provisions of the revealed or reasoned truth. 2. Cannot be applied universally. b) Utilitarianism (Classical Teleological Ethical Theory): Associated with Jeremy Bentham i. The outcome of a decision or action is of prime importance, and that it is the results that truly matter in our treatment of other people. The principle to be followed is that of beneficiency: a decision or act is right, proper and good only if it generates the greatest amount of benefit for the largest number of people at the lowest cost or harm to others. 1. Possibility of exploitation: justifying benefits for the great majority of the population by imposing sacrifices or penalties on a small minority. 2. At some point, greatest good and greatest number come into conflict, and then we have no single means of determining what is the right or best or proper act. 3. Some actions that are simply wrong, despite great apparent net benefits for a huge majority. (Eg. Killing everyone in prisons annually.) 4. Impossible to balance the benefits of the majority against the sacrifices of a minority. c) Universalism (Classical Deontological Ethical Theory): i. It is the intent behind a decision or action that is important, for we can never accurately foresee and evaluate all possible results. The principle to be followed is that of consistency: a decision or act is right, proper and good only if we can convince everyone facing the same set of circumstances to make the same decision or perform the same act. 1. There are no priorities or no degrees. 2. Difficult to treat others as ends and not as means all the time d) Distributive Justice Theory: Associated with John Rawls i. Based upon the dominance of a single value (i.e. justice) rather than a single principle. Belief in the dominance of justice will lead us to make decisions and take actions that are expected to result in compensating benefits for all, especially the least advantaged members of our society. 1. It is entirely dependent upon the acceptance of the proposition that social cooperation provides the basis for all economic and social benefits. 2. Individual effort is downplayed, if not ignored. e) Personal Liberty Theory: Associated with Robert Nozick i. Based upon the dominance of a single value (i.e. liberty) rather than a single principle. Belief in the dominance of liberty will lead us to make decisions and take actions that will result in greater happiness and increased benefits for all. 1. It is based on a very narrow definition of liberty which is limited to the negative right not to suffer interference from others.
Topic 2: Moral Social Responsibility 1. Conditions for Moral accountability and liability: a. Knowledge and freedom: He must be fully aware of what he is doing. He must act freely without any physical or psychological coercion. When knowledge or freedom is diminished, accountability and liability are proportionately diminished. i. Ignorance: Ignorance excuses someone only when it is non culpable (not liable, not guilty, not responsible and unaccountable), the person acting does not understand the nature of what is being done or cannot anticipate all the reasonably foreseeable consequences of the action. ii. Coercion: When a person is forced to do an action, accountability and liability for that action is diminished in proportion. If not forced he will be responsible. (Eg. Dumping toxic waste where it will pollute community water supply, they are responsible as they are not forced) 2. The Natural Law Solution: The natural law moralist holds that to the extent an act is involuntary; the person performing it is proportionately less responsible for it. The natural law moralist allows for coercion only in cases where grave fear destroys a person s freedom to consent to an action. The distinction between material and formal cooperation in someone else s wrongdoing is recognised. a. Formal cooperation: A person commits a morally wrong action, intends the moral wrong, and joins his/her action with the morally evil act of another. b. Material cooperation: The action a person performs is morally good in itself but someone else uses the action for his/her immoral purposes. 3. The Utilitarian Solution: A right moral decision is likely a good business decision. The utilitarian moralist would hold the people involved accountable for calculating the net good and bad results of their proposed actions and for performing only that action that will produce the most good. Coercion by itself does not carry any special weight in the calculation. 4. The Cultural Relativist s Solution: He locates liability and accountability solely in a society s mores (customs, way of life). Coercion is excusable only if the society s customary practices acknowledge it as such. 5. Historical Views of Social Responsibility: 3 TURNING POINTS a. Entrepreneurial Era: During late 1800 s in US, big business started to emerge and their executives wielded control and influence in a national level, and they started to abuse their power for more profit, so the federal government had to make laws to control these people and make them acknowledge the relations between businesses, government and the society. b. Depression Era: Early 1900 s. Large organizations dominated the US economy and practiced improper financial practices which led to the stock market crash of 1929. The government led by Franklin Roosevelt passed several laws to protect investors and small businesses. As an outgrowth of these and other actions, the social responsibility of organisations was more clearly defined c. Social Era: During 1960s, this period of American history was characterised by social unrest. The civil rights movement and widespread opposition to the war in Vietnam energized the American public to examine the nation s values, priorities and goals. Students and activists accused big businesses of trying to promote and extend the Vietnam War in order to increase profits i. Four Basic Consumer Rights by John F. Kennedy: 1. The right to safe products, 2. The right to be informed about all relevant aspects of a product, 3. The right to be heard in the event of a complaint, and 4. The right of consumers to choose what they buy.
6. Social responsibility: Set of obligations that an organisation has to protect. Organisations may be considered responsible to their constituents, the natural environment and the general social welfare. 7. Arguments for and against Social Responsibility: For Help problematic business Corporations are also citizens Business resources often help to solve problems Social responsibility can enhance profits Against Profit is one of the objectives of business Involvement in social programmes gives business too much power A possibility of conflict of interest Inadequate business expertise to manage social programmes 1. The approach that an organisation adopts toward social responsibility falls along a continuum ranging from social obstruction, social obligation and social response, to social contribution. 2. Government influences Organisations in two ways: a. Direct Regulation: Introducing and enforcing laws and regulations for organisations to obey. To implement these regulations the government creates special agencies to monitor and control certain aspects of activity. b. Indirect Regulation: Government indirectly influences organisations in matters related to how organisations should spend their money. The influence comes through taxation, either in the form of incentives or subsidies. 3. Organizations influence Government by: a. Personal contact: Personal contacts and networks offer one method of influence. b. Lobbying: It is an attempt to influence legislation by individuals or groups. c. Political Action Committee: Organisations created to solicit and then distribute the money to political candidates for their campaign. d. Favours: Depend on favours to gain support. 4. Some Ethical Problems in Management: a. Pricing Level: Fluctuation in price level is purely an economic problem, but has some impact on society. b. Advertising Messages: Varying degrees of truthfulness and deception in advertising should be analysed in order to remove any doubt in the minds of the public. c. Product Promotions: These are part of advertising agenda. The public should not be negatively influenced by the promotional message of any advertisement. d. Working Conditions: Working environment should be conducive to employees in their workplace. e. Customer Service: Customers should be given priority in any business transaction. 5. Formal Methods Organisations use to Manage Social Responsibility: a. Legal compliance: Organisations should comply with federal, state, local or even international laws. b. Ethical compliance: Members of the organisation should follow basic ethical standards of behaviour accepted by the society. c. Philanthropic giving: Awarding or donating funds to charitable programmes as part of the organisation s contribution to the public. 6. Leadership and allowing for Whistle blowing are informal means of managing social responsibility.
Topic 3: Nature of Ethics in Modern Business 1. Ethical problems are managerial problems because they represent a conflict between an organisation s economic performance and its social performance. 2. Characteristics of Ethical Problems in Management: a. Extended Consequences: The results of managerial decisions/actions extend throughout the society. For example, unsafe products affect individual lives. b. Multiple Alternatives: Multiple alternatives have to be developed in making ethical decisions or choices. c. Mixed Outcomes: Social benefits and costs as well as financial revenues and expenses are associated with almost all the alternatives in ethical choices. d. Uncertain Consequences: It is not always clear what consequences will follow from most ethical decisions or choices. e. Personal Implications: Individual benefits and costs as well as financial and social benefits and costs are associated with most of the alternatives in ethical decisions. 3. Analysis of Ethical Problems in Management: a. Economic Analysis: Microeconomics / macroeconomics theories which rely on an openmarket operation and supply and demand forces should be able, to a certain extent, to help solve some ethical problems. b. Legal Analysis: Should ethical problems become major problems, a law can be passed to deal with the situation. c. Ethical Analysis: Under the normative philosophy, if everybody is rational in a society and acts on the same principles, members of that society would be treated as fairly as possible. 4. The holistic approach of Islam is evident in its three core tenets: a. The unity in God, b. The unity of humankind c. The unity of religion. 5. The syariah (shareea ), or the law of Islam, is based on the Qur an. Probably the most encompassing and most universal ethical prescription of the syariah is contained in a verse of the Qur an which requires a Muslim, at all times and in all circumstances, to act in what can be translated from Arabic as a decent and benevolent way, and to refrain from wrongdoing.