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BUSINESS ADMINISTRATION, MANAGEMENT &
COMMERCIAL SCIENCES
Business Ethics 621
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BUSINESS ADMINISTRATION, MANAGEMENT &
COMMERCIAL SCIENCES
LEARNER GUIDE
MODULE: Business Ethics 621
(1
stSEMESTER)
Copyright © 2016
Richfield Graduate Institute Of Technology (Pty) Ltd Registration Number: 2000/000757/07
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TABLE OF CONTENT
Topics Page No
Section A: Preface
1. Welcome 4
2.Title of Modules 5
3.Purpose of Module 5
4.Learning Outcomes 5
5.Method of Study 5
6. Lectures and Tutorials 6
7.Notices 6
8.Prescribed & Recommended Material 6
9.Assessment & Key Concepts in Assignments and Examinations 7
10.Specimen Assignment Cover Sheet 10
11.Work Readiness Programme 12
12.Work Integrated Learning 13
Section B: Business Ethics
TOPIC 1: INTRODUCTION TO BUSINESS ETHICS
1.1 Introduction 17
1.2 What is Business Ethics 17
1.3 The Difference between a Code of Ethics and a Code of Conduct 19
1.4 Ethics and the Law 19
1.5 Ethics and Values 20
1.6 Business Ethics as a Management Discipline 20
1.7 The Myths about Business Ethics 21
1.8 The Benefits of Managing Ethics in the Workplace 23
Assessment Questions 26
TOPIC 2: KEY CONCEPTS AND DISTINCTIONS IN ETHICS
2.1Business 27
2.2Ethics 27
2.3 Business Ethics 29
2.4 Right, Wrong and dilemmas 30
2.5 Ethics and the Law 31
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2.7 Integrity 32
Assessment Questions 34
TOPIC 3: ETHICS ON THE MACRO LEVEL
3.1 Introduction 35
3.2 The Free Market System 37
3.2.1 Property rights 37
3.2.2 The marvel of the pricing system 38
3.2.3Competition 39
3.2.4 Profit and Personal Motivation 39
3.2.5The joint stock, Limited Liability Corporation 40
3.2.6 Justification of the Free Market 41
3.2.7 Equity and Equality 42
Assessment Questions 42
TOPIC 4: CLASSICAL ETHICAL THEORIES
4.1 Utilitarianism 43
4.1.1 Justice and Fairness 44
4.1.2 Command systems 44
4.1.3 The Socialist State 45
4.1.5 The Moral Dimensions of Different Economic Systems 47
4.1.6 Critiques against communism 48
4.1.7 Critiques against the socialist state 49
4.1.8 Macro-ethics and moral challenges to the enterprise 49
Assessment Questions 51
TOPIC 5:ETHICS IN THE ORGANISATION
5.1 Introduction 52
5.2 Business without Ethics 52
5.3 Motives and Ethical Neutrality 53
5.4 Amoral Managers 54
5.5 Amoral beliefs and Business language 55
5.6 stereotyping in advertising 56
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TOPIC 6: THEORIES OF THE MODERN CORPORATION
6.1 Introduction 63
6.2 Corporate Social Responsibility 63
6.3 Corporate Moral Agency 64
Assessment Questions 66
TOPIC 7: ADDENDUM 621 (A): CASE STUDY FOR TUTORIAL DISCUSSION
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TOPIC 8 :ADDENDUM 621 (B): SELF ASSESMENT QUESTIONS
6 SECTION A: PREFACE
1. WELCOME
Welcome to the Faculty of Business, Economics & Management Sciences. We trust you will find the contents and learning outcomes of this module both interesting and insightful as you begin your academic journey and eventually your career in the business world.
This section of the study guide is intended to orientate you to the module before the commencement of formal lectures.
The following lecturers will focus on the study units described.
SECTION A: WELCOME & ORIENTATION Study unit 1: Orientation Programme
Introducing academic staff to the students by academic head. Introduction of institution policies.
Lecture 1
Study unit 2: Orientation of Students to Library and Students Facilities
Introducing students to physical structures
Issuing of foundation student guides and necessary learning material
Lecture 2
Study unit 3: Assignments and tests –Importance, submission
dates, penalties Lecture 3
Study unit 4: Discussion on the Objectives and Outcomes of
Business Ethics Lecture 4
Study unit 5: Orientation and guidelines on completing Assignments
Review and Recap of Study units 1-4
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2. TITLE OF MODULES, COURSE, CODE, NQF LEVEL, CREDITS & MODE OF DELIVERY
2nd Semester
Title Of Module: NQF Level: Credits:
Mode of Delivery:
Business Ethics NQF 6
10 Contact
3. PURPOSE OF MODULE
The purpose of this module is to give students a thorough understanding of the basic business ethics required to enter the business/employment world. Naturally the module is only an introduction to what the working environment is all about, but we trust that students will gain sufficient knowledge about the various business functions to enable them to choose possible areas of work preference and further study and articulation.
3.1 Business Ethics 621
The purpose of this module is to expose the student to the subject terminology which i n c l u d e s t h e o r e t i c a l b a c k g r o u n d to business ethics,
corporative governance and ethics, business and social responsibility, accountability, power and values, recent developments to corporate governance theory and the governance environment and many other issues relevant to the business ethics.
4. LEARNING OUTCOMES
On completion of this module, students should have a basic / fundamental practical and theoretical knowledge of:
The performance dimensions of business ethics
Current issues under scrutiny in the field of business ethics
5. METHOD OF STUDY
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and examination, you will need an in-depth understanding of the content of these sections in the learning guide and the prescribed books. In order to master the learning material, you must accept responsibility for your own studies. Learning is not the same as memorising. You are expected to show that you understand and are able to apply the information. Use will also be made of lectures, tutorials, case studies and group discussions to present this module.
6. LECTURES AND TUTORIALS
Students must refer to the notice boards on their respective campuses for details of the lecture and tutorial time tables. The lecturer assigned to the module will also inform you of the number of lecture periods and tutorials allocated to a particular module. Prior preparation is required for each lecture and tutorial. Students are encouraged to actively participate in lectures and tutorials in order to ensure success in tests, group discussions, assignments and examinations.
7. NOTICES
All information pertaining to this module such as tests dates, lecture and tutorial time tables, assignments, examinations etc. will be displayed on the notice board located at your campus. Students must check the notice board on a daily basis. Should you require any clarity, please consult your lecturer, programme manager or administrator of your respective campus.
8. PRESCRIBED & RECOMMENDED MATERIAL
8.1Prescribed Material
Naidoo, R.(2002).Corporate Governance-an essential guide for South African companies. Cape Town
Rossouw, D. & Van Vuuren, L. (2010). Business Ethics. 4th ed. ABC Press, Cape Town.
Smith, P.J. & Cronje, G.J. (2002). Management Principles- A contemporary Edition for Africa. 3rd ed. Cape Town, Juta.
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8.2Recommended Material
Economic Commission for South Africa. (2002). Guidelines for Enhancing Good Economic and Corporate Governance in Africa- Final Draft, May 2002.
Gatamah, K.( 2004).The corporate enterprise in Africa: governance, citizenship and social responsibility. Corporate Ownership & Control
Okeahalam, C. C. & Akinboade, O.A. (2003). A Review of corporate governance in Africa: literature, issues and challenges.
8.3Independent Research:
The student is encouraged to undertake independent research with emphasis on the value of strategic thinking in companies and the business ethics.
8.4Library Infrastructure
The following services are available to you:
Each campus keeps a limited quantity of the recommended reading titles and a larger variety of similar titles which you may borrow. Please note that students are required to purchase the prescribed materials.
Arrangements have been made with municipal, state and other libraries to stock our recommended reading and similar titles. You may use these on their premises or borrow them if available. It is your responsibility to safe keeps all library books.
RGI has also allocated one library period per week as to assist you with your formal research under professional supervision.
RGI has dedicated electronic libraries for use by its students. The computers laboratories, when not in use for academic purposes, may also be used for research purposes. Booking is essential for all electronic library usage.
9. ASSESSMENT
Final Assessment for this module will comprise two Continuous Assessment Tests, an assignment and an examination. Your lecturer will inform you of the dates, times and the venues for each of these. You may also refer to the notice board on your campus or the Academic Calendar which is displayed in all lecture 9.1 Continuous Assessment Tests
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9.2 Assignment
There is one compulsory assignment for each module in each semester. Your lecturer will inform you of the Assignment questions at the commencement of this module.
9.3 Examination
There is one two hour examination for each module. Make sure that you diarize the correct date, time and venue. The examinations department will notify you of your results once all administrative matters are cleared and fees are paid up. The examination may consist of multiple choice questions, short questions and essay type questions. This requires you to be thoroughly prepared as all the content matter of lectures, tutorials, all references to the prescribed text and any other additional documentation/reference materials is examinable in both your tests and the examinations.
The examination department will make available to you the details of the examination (date, time and venue) in due course. You must be seated in the examination room 15 minutes before the commencement of the examination. If you arrive late, you will not be allowed any extra time. Your student registration card must be in your possession at all times.
9.4 Final Assessment
The final assessment for this module will be weighted as follows:
Continuous Assessment Test 1
Continuous Assessment Test 2 40% Assignment 1
Examination 60%
Total 100%
9.5 Key Concepts in Assignments and Examinations
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summarize, describe, interpret, contrast, predict, associate, distinguish, estimate, differentiate, discuss, extend
apply, demonstrate, calculate, complete, illustrate, show, solve, examine, modify, relate, change, classify, experiment, discover
combine, integrate, modify, rearrange, substitute, plan, create, design, invent, what if?, compose, formulate, prepare, generalize, rewrite
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Question Number Mark Allocation Examiner’s Mark Moderator’s Marks
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NB: Assignments are compulsory as it forms part of Continuous Assessment that goes toward the final mark.
ASSIGNMENT GUIDELINES
The purpose of an assignment is to ensure that the Student is able to:
1. Use methods of enquiry and research in a disciplined field as well as interpret and evaluate text. 2. Have a sound understanding of key principles and theories, rules and awareness.
3. Solve unfamiliar problems using correct procedures as well as investigate and critically analyse information and report thereof. 4. Present and communicate information reliably, coherently
Instructions and guidelines for writing assignments
1. Use the correct cover page provided by the institution. 2. All essay type assignments must include the following: 2.1 Table of contents
2.2 Introduction
2.3 Main body with subheadings 2.4 Conclusions and recommendations 2.5 Bibliography
3. The length of the entire assignment must have minimum of 5 pages, preferably typed with font size 12
3.1 The quality of work submitted is more important than the number of assigned pages.
4. Copying is a serious offence which attracts a severe penalty and must be avoided at all costs. If any student transgresses this rule, the lecturer will retain the assignments and ask the affected students to resubmit a new assignment which will be capped at 50%. 5. Use the Harvard referencing method.
ASSESSMENT CRITERIA
When the final mark is calculated the following criteria must be taken into account: 1. READING AND KNOWLEDGE OF SUBJECT MATTER
Wide reading and comprehensive knowledge in the application of theory
2. UNDERSTANDING, ANALYSIS AND ARGUMENT
Complete and perceptive awareness of issues and clear grasp of their wider significance. Clear evidence of independent thought and ability to defend a position logically and convincingly.
3. ORGANISATION AND PRESENTATION
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11.WORK READINESS PROGRAMME (WRP)
In order to prepare students for the world of work, a series of interventions over and above the formal curriculum, are concurrently implemented to prepare students. These include:
Soft skills
Employment skills
Life skills
End –User Computing (if not included in your curriculum)
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12. WORK INTEGRATED LEARNING (WIL)
Work Integrated Learning forms a core component of the curriculum for the completion of this programme. All modules which form part of this qualifation will be assessed in an integrated manner towards the end of the programme or after completion of all other modules.
Completion of all tests & assignment
Success in examination
Payment of all arrear fees
Return of library books, etc.
Completion of the Work Readiness Programme.
Students will be fully inducted on the Work Integrated Learning Module, the Workbooks & assessment requirements before placement with employers. The partners in the Work Integrated Learning are the same as the Work Readiness Programme (WRP):
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1. INTRODUCTION TO BUSINESS ETHICS
LEARNING OUTCOMES
On completion of this topic the student should be able to:
Understand the concept ethics
Understand the difference between a code of ethics and a code of conduct
Be able to discuss the 10 myths of business ethics
Understand the benefits of business ethics in detail
STUDY : Chapter 1 in
Rousseau & Van Vuuren (2010: 3-10)
1.1 INTRODUCTION
Ethics involves learning what is right or wrong, and then doing the right thing. Most ethical dilemmas in the workplace are not simply a matter of "Should John steal from Charles?" or "Should John lie to his boss Charles?”(Many ethicists assert there is always a right thing to do based on moral principle, and others believe the right thing to do depend on the situation -- ultimately it is up to the individual). Many philosophers consider ethics to be the "science of conduct Philosophers have been discussing ethics for at least 2621 years, since the time of Socrates and Plato. Many ethicists consider emerging ethical beliefs to be "state of the art" legal matters, i.e. what becomes an ethical guideline today is often translated to a law, regulation or rule tomorrow. Values which guide how we ought to behave are considered moral values, e.g. values such as respect, honesty, fairness, responsibility, etc. Statements around how these values are applied are sometimes called moral or ethical principles.
1.2 WHAT IS BUSINESS ETHICS
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individuals (Rossouw & Van Vuuren, 2010).
1) What is ethics? What are some common ethical types? Why do business people need it? Can ethics be taught to people?
Answer :Ethics is a study of morality, stems from the ancient Greek “ethos” meaning custom or habit. It is a study of theories concerning what is good and evil in human conduct. There is no particular set of laws defining what is ethical and what is not, because there is no right or wrong answer. The second sense of ethics speak of “codes of ethics”, which are a set of rules serve as guidance to people, often in fields of professions such as business or medical. Ethical contrasts with unethical, which goes against the codes of ethics. There are several ethical
theories in Western philosophy. Many of them look at the fruits of one’s action– categorized
under Consequentialism, while other theories uphold one’s right and duty, which is Deontology.
Consequentialism pertains to cost and benefits. It deals with the results and consequences of performing or not performing an action. For example: If war brings more good (money, oil, labor) than bad (casualties) then it is ethical. Some consequentialist theories are utilitarianism
and ethical egoism. Utilitarianism, according to Bentham and Mill, the right action is which
creates the greatest good for the greatest number. People should ask what action would promote the greatest amount of happiness for people who are affected. For example: a utilitarian would say euthanasia is ethical if that would bring satisfaction to the suffering patient and financial relief to the family. Ethical egoism, according to Ayn Rand, says we
should do what is purely in our best interest, as opposed to altruism. It promotes one’s well
-being above others.
Meanwhile, deontology pertains to rights, duties or obligations. It concerns the morality of the action that is being performed (or not performed) rather than the results deriving from said
action. In Kantian deontology, he promotes the olden rules (don’t steal, don’t lie, don’t
commit suicide) which are absolute rules that one must follow no matter what. Therefore it would be unethical to steal food even if it is for a dying person. In Lockean deontology, John Lock believes each individual is entitled to natural rights, such as right to live, right to freedom, right to pursue happiness, etc.
Another theory is virtual ethics, which is similar to Confucianism, in that a person’s virtues are
habits and characteristics that one exhibits.
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THREE BROAD DIMENSIONS OF BUSINESS
The macro or system dimension – the economic system or the wider socio-political framework within which business is conducted. The framework is determined at national level by political decisions, laws and regulations as well as social norms that determine the contours of the economic playing field and the rules that govern economic play. The macro- economic framework determines to a large extent what freedoms and responsibilities economic players will have and also which economic priorities will be pursued.
The organisational dimension – this relates to the role and responsibilities of business organisations. Business organisations developed their own systems of governance according to which they direct and control their own internal activities. The organisational dimension of the business thus encompasses the collective behaviour of the business organisation towards both its internal and external stakeholders.
The micro or individual dimension – This concentrates on the economic actions and decisions of individuals interacting with the business organisation. Although the structures, policies and culture of a business organisation pose distinct constraints within which employees, suppliers, contractors and other stakeholders have to operate, they never totally constrain the freedom and responsibility of these individuals.
Business ethics involves understanding how values – our standards of right, good and fair conduct – shape the decisions and actions of organizations and individuals making decisions on its behalf. The actions of organizations and their internal and external stakeholders (for example employees and suppliers, respectively) need to conform to a set of ethical standards as defined by society, by laws and regulations, and by organizations own internal policies and procedures.
Ethics concerns itself with what is good or right in human interaction. It revolves around three central concepts: ‘self’, ‘good’ and ‘other’. Ethical behaviour results when one does not merely consider what is good for oneself, but also considers what is good for others. It is important that each of these three central concepts be included in a definition of ethics.
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without taking the interests of the ‘self’ into consideration. It is however, dangerous to neglect your own interests, as a sense of your own wellbeing is a prerequisite for balanced and ongoing interaction with other people.
Equally, the ‘other’ cannot be excluded from the definition of ethics, as this will result in selfishness. A concern merely for what is good for the self neglects the very nature of ethics, which is to ensure the interests of both oneself and others.
QUESTIONS AND ANSWERS
What relevance does ethics have to business?
Operating according to ethical values is playing an increasingly important role in business today. Companies do not operate in a vacuum, but are part of a society which expects a certain standard of behaviour from businesses. Companies require what is often called 'a license to operate'.
Stakeholders want to be associated with responsible organisations. Being treated fairly, honestly and consistently is of value to a business’s customers, suppliers, investors and employees. It builds trust.
According to global Ipsos MORI research in April 2013, 74% of the public within the 24 countries surveyed say that a company's social responsibility is an important factor when deciding which product or service to purchase. 84% believe that companies should do more to contribute to society.
At the same time, employers cannot take for granted that their staff understand what ethical standards are expected of them in carrying out their work on behalf of the company. Provision of guidance is therefore essential for creating and sustaining an ethical culture and avoiding misconduct.
Avoiding costly crises and scandals is of value to businesses. Reputation hits can be hard to recover from without a foundation of trust. Furthermore, having clearly articulated values and an ethics policy is seen to be good governance practice; it is one of the hallmarks of a well-run business.
How do you know you have made the right ethical decision?
Operating with integrity is then a key part of sustainable success for business.
Organisations often articulate a set of values that aim to guide staff on "the way things are done around here”. Some companies provide employees with 'ethical tests' to help them to make decisions in line with those values.
These might involve a series of questions to ask yourself, such as: is it legal? Is it consistent with the company's code of business ethics? What would my mother think? How would I feel about it being on the front page of tomorrow's newspapers?
Are business ethics, corporate responsibility and sustainability different?
There is a difference between doing things ethically and doing ethical things.
Some argue that the use of these words is just a question of terminology, and certainly in business practice and literature they can be used interchangeably and there are overlaps in the roles and job titles of people with these remits. But what they mean varies across and within sectors.
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programmes. This latter is often known as Corporate Social Responsibility. The IBE believes that an organisation cannot be genuinely 'responsible' without an embedded and inherent culture that is based on ethical values such as trust, openness, respect and integrity.
More recently the concept of sustainability has become important in the notion of ethical and responsible business. By definition, this adds a long term dimension. Confusingly however, in practice the term is used to imply the viability of a business, the protection of natural resources, ecological wellbeing or long term social and economic health.
What is the difference between business ethics and an ethical business?
Business ethics relates to how any organisation conducts its business in order to make profit or achieve other goals. Any organisation can seek to do what it does in a way that is guided by ethical values.
Whether an organisation is judged to be ethical however, will involve a subjective assessment of any of the following: the products and services it offers, its founding priorities, goals and values, its philanthropy, its reputation among its stakeholders, the way it treats customers and staff etc.
Rather than claiming to be ‘ethical’, the IBE would suggest that a business or other organisation demonstrates that it ‘takes ethics seriously’.
What are core values?
If an organisation wants to take ethics seriously, it needs to identify the core values or principles to which it wishes to be committed and held accountable. It then needs to translate those values into guidance for all employees so that they are helped with discretionary decisions i.e. when there are no rules or when facing an ethical dilemma. These form the foundation for a set of corporate ethical commitments and the
organisation's approach to corporate responsibility.
Commonly used value words found in introductions/preambles to codes of ethics include: responsibility, integrity, honesty, respect, trust, openness, fairness and transparency. Organisations may also articulate a set of business values, such as quality, profitability, efficiency, reliability and customer service.
Can organisations achieve accreditation for their ethics? 24.
Companies are coming under greater pressure to address and be seen to be addressing social, environmental and ethical issues. In response, some look for external standards and verification.
In Living Up To Our Values: developing ethical assurance (2006), the IBE suggests that organisations
begin by assuring their ethical performance against the standards set by their own code of ethics.
The IBE has developed a charter mark in association with the Chartered Institute of Securities and Investment (CISI) to help businesses and organisations know if their ethics programme is embedded throughout their organisation. The Investing in Integrity (IiI) charter mark tests an organisation’s ethical standards against its own statements of ethical values, rather than that of an external framework. It can help them identify whether or not they are truly living up to their values.
Who in a company is responsible for business ethics?
Most organisations would say that all employees are responsible for conducting their work according to ethical expectations.
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responsibility at board level through committees such as Audit Committees or dedicated Ethics Committees. In the USA most large companies employ one or more "Ethics and Compliance Officers” and this is an established profession. In the UK, the person responsible for the programme is commonly found in the Company Secretary's office.
1.3THE DIFFERENCE BETWEEN A CODE OF ETHICS AND A CODE OF CONDUCT
A Code of Ethics has two components combined in one document:
A brief values statement – A short, inspirational document listing and defining a organization’s core ethical values, ideals or principles; and
A code of conduct – A longer, enforceable, compliance-oriented, operational document setting out policies, procedures and rules regarding best practices relating to daily operational issues affecting the organisation. A code of conduct provides illustrations of how values (contained in the values statement) translate into concrete decisions and actions, rather than a full or comprehensive catalogue of rules or prescriptions.
1.4 ETHICS AND THE LAW
There are obvious similarities between ethics and the law, but there are also significant differences. Both ethics and the law strive towards determining what is right in human interaction and society. The law does so through a public and political process and employs the power of the state to ensure that all abide by the stipulations of the law. Ethics emanates from personal values; as such the sense of obligation to do what is right is internal as opposed to the external pressure of the law.
Although ethical and legal behaviour often coincide, they also sometimes differ, as illustrated in the following table.
Legal Illegal
Ethical Unethical
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an example of ethical, but illegal conduct. An example of an action that is legal, but unethical is where a company dumps toxic waste in a river in a developing country where there are no laws preventing companies from harming the environment. Actions can also be both unethical and illegal as in the case of bribing government officials in countries where bribery is illegal.
It is clear in the preceding examples that legality and morality do not always coincide. Because such discrepancies between ethics and the law exist, we cannot simply hide behind the law to justify our business actions. Acting morally responsibly might at times imply that companies need to go further than the prescriptions of the law or, in extreme cases, which they should challenge the existing laws when they are perceived to be unfair or corrupt.
1.5 ETHICS AND VALUES
Although there is a definite link between ethics and values, the two concepts are not identical. Values can be defined as relatively stable convictions about what is important. Since it is possible to have values that have either nothing to do with ethics or that run counter to ethics, values cannot be equated with ethics. It is not only individuals that have values. We also find values within organisations. Normally, three different kinds of values can be distinguished within organisations.
Strategic values: refer to the shared conviction of the organisation about its desired objectives. As such, strategic values indicate the direction in which the organisation wishes to move. The strategic values of organisations are usually reflected in their vision and mission statements.
Work values: In order to move the organisation in the direction indicated by its strategic values, all members of the organisation need to do their jobs in a specific manner. Work values are the priorities that organisational members should adhere to in their jobs.
Ethical values: these include
1.6 BUSINESS ETHICS AS A MANAGEMENT DISCIPLINE
Business ethics has come to be considered a management discipline, especially since the birth of the social responsibility movement in the 1960s. In that decade, social awareness movements raised expectations of businesses to use their massive financial and social influence to address social problems such as poverty, crime, environmental protection, equal rights, public health and improving education.
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country to work to improve society. Many researchers, business schools and managers have recognized this broader constituency, and in their planning and operations have replaced the word "stockholder" with "stakeholder," meaning to include employees, customers, suppliers and the wider community.
The emergence of business ethics is similar to other management disciplines. For example, organizations realized that they needed to manage a more positive image to the public and so the recent discipline of public relations was born. Organizations realized they needed to better manage their human resources and so the recent discipline of human resources was born.
As commerce became more complicated and dynamic, organizations realized they needed more guidance to ensure their dealings supported the common good and did not harm others -- and so business ethics was born.
1.7 THE MYTHS ABOUT BUSINESS ETHICS
STUDY : Chapter 8 in
Rousseau & Van Vuuren (2010: 100-108)
Business ethics in the workplace is about prioritizing moral values for the workplace and ensuring behaviours are aligned with those values -- its values management. Yet, myths abound about business ethics. Some of these myths arise from general confusion about the notion of ethics. Other myths arise from narrow or simplistic views of ethical dilemmas.
1. Business ethics is more a matter of religion than management.
According to Kirrane, (1990), asserts that "altering people's values or souls isn't the aim of an organizational ethics program -- managing values and conflict among them is ..."
2. Our employees are ethical so we don't need attention to business ethics.
Most of the ethical dilemmas faced by managers in the workplace are highly complex. Kirrane mentions that when the topic of business ethics comes up, people are quick to speak of the Golden Rule, honesty and courtesy. But when presented with complex ethical dilemmas, most people realize there's a wide "gray area" when trying to apply ethical principles.
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theologians.
Lack of involvement of leaders and managers in business ethics literature and discussions has led many to believe that business ethics is a fad or movement, having little to do with the day-to-day realities of running an organization. They believe business ethics is primarily a complex philosophical debate or a religion. However, business ethics is a management discipline with a programmatic approach that includes several practical tools. Ethics management programs have practical applications in other areas of management areas, as well.
4. Business ethics is superfluous -- it only asserts the obvious: "do good!"
Many people react that codes of ethics, or lists of ethical values to which the organization aspires, are rather superfluous because they represent values to which everyone should naturally aspire. However, the value of codes of ethics to an organization is its priority and focus regarding certain ethical values in that workplace. For example, it’s obvious that all people should be honest. However, if an organization is struggling around continuing occasions of deceit in the workplace, a priority on honesty is very timely -- and honesty should be listed in that organization’s code of ethics. Note that a code of ethics is an organic instrument that changes with the needs of society and the organization.
5. Business ethics is a matter of the good guys preaching to the bad guys.
Some writers do seem to claim a moral high ground while lamenting the poor condition of business and its leaders. However, those people well versed in managing organizations realize that good people can take bad actions, particularly when stressed or confused. (Stress or confusion are not excuses for unethical actions -- they are reasons.) Managing ethics in the workplace includes all of us working together to help each other remain ethical and to work through confusing and stressful ethical dilemmas.
6. Business ethics in the new policeperson on the block.
Many believe business ethics is a recent phenomenon because of increased attention to the topic in popular and management literature. However, business ethics was written about even 2,000 years ago -- at least since Cicero wrote about the topic in his On Duties. Business ethics has gotten more attention recently because of the social responsibility movement that started in the 1960s.
7. Ethics can't be managed.
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etc.) can be very strong influences on morality. Laws, regulations and rules directly influence behaviours to be more ethical, usually in a manner that improves the general good and/or minimizes harm to the community. Some are still sceptical about business ethics, believing you can't manage values in an organization .
8. Business ethics and social responsibility is the same thing.
The social responsibility movement is one aspect of the overall discipline of business ethics. Writings about social responsibility often do not address practical matters of managing ethics in the workplace, e.g., developing codes, updating polices and procedures, approaches to resolving ethical dilemmas,etc.
9. Our organization is not in trouble with the law, so we're ethical.
One can often be unethical, yet operate within the limits of the law, e.g., withhold information from superiors, fudge on budgets, constantly complain about others, etc. However, breaking the law often starts with unethical behaviour that has gone unnoticed. The "boil the frog" phenomena are a useful parable here: If you put a frog in hot water, it immediately jumps out. If you put a frog in cool water and slowly heat up the water, you can eventually boil the frog. The frog doesn't seem to notice the adverse change in its environment.
10. Managing ethics in the workplace has little practical relevance.
Managing ethics in the workplace involves identifying and prioritizing values to guide behaviours in the organization, and establishing associated policies and procedures to ensure those behaviours are conducted. One might call this "values management." Values management is also highly important in other management practices, e.g., managing diversity, Total Quality Management and strategic planning
Group work:
Do you agree that there is ethics in business? Interrogate the advantages and disadvantages of ethics in business.
1.8 THE BENEFITS OF MANAGING ETHICS IN THE WORKPLACE
Attention to business ethics has substantially improved society.
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was applied through intimidation and harassment. Then society reacted and
demanded that businesses place high value on fairness and equal rights. Anti- trust laws were instituted. Government agencies were established. Unions were organized. Laws and regulations were established.
Ethics programs help maintain a moral course in turbulent times.
Attention to business ethics is critical during times of fundamental change -- times much like those faced now by businesses, both nonprofits and for-profit. During times of change, there is often no clear moral compass to guide leaders through complex conflicts about what is right or wrong. Continuing attention to ethics in the workplace sensitizes leaders and staff to how they want to act -- consistently.
Ethics programs cultivate strong teamwork and productivity.
Ethics programs align employee behaviours with those top priority ethical values preferred by leaders of the organization. Usually, an organization finds surprising disparity between its preferred values and the values actually reflected by behaviours in the workplace. Ongoing attention and dialogue regarding values in the workplace builds openness, integrity and community -- critical ingredients of strong teams in the workplace. Employees feel strong alignment between their values and those of the organization. They react with strong motivation and performance.
Ethics programs support employee growth and meaning.
Attention to ethics in the workplace helps employees face reality, both good and bad -- in the organization and themselves. Employees feel full confidence they can admit and deal with whatever comes their way. Bennett (1991) explained that a consulting company tested a range of executives and managers. Their most striking finding: the more emotionally healthy executives, as measured on a battery of tests, the more likely they were to score high on ethics tests.
Ethics programs are an insurance policy -- they help ensure that policies are legal.
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designed personnel policies is to ensure ethical treatment of employees, e.g., in matters of hiring, evaluating, disciplining, firing, etc.
According to Drake and Drake ( year), an employer can be subject to suit for breach of contract for failure to comply with any promise it made, so the gap between stated corporate culture and actual practice has significant legal, as well as ethical implications.
Ethics programmes help avoid criminal acts “ o f o m i s s i o n and can lower fines.
Ethics programs tend to detect ethical issues and violations early on so they can be reported or addressed. In some cases, when an organization is aware of an actual or potential violation and does not report it to the appropriate authorities, this can be considered a criminal act, e.g., in business dealings with certain government agencies, such as the Defence Department.
Ethics programs help manage values associated with quality management, strategic planning and diversity management -- this benefit needs far more attention.
Ethics programs identify preferred values and ensuring organizational behaviours are aligned with those values. This effort includes recording the values, developing policies and procedures to align behaviours with preferred values, and then training all personnel about the policies and procedures. This overall effort is very useful for several other programs in the workplace that require behaviours to be aligned with values, including quality management, strategic planning and diversity management. Total Quality Management includes high priority on certain operating values, e.g., trust among stakeholders, performance, reliability, measurement, and feedback.
Ethics programs promote a strong public image.
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Overall benefits of ethics programs
Managing ethical values in the workplace legitimizes managerial actions, strengthens the coherence and balances of the organization’s culture, improves trust in relationships between individuals and groups, supports greater
consistency in standards and qualities of products, and cultivates greater sensitivity to the impact of the enterprise’s values and messages.
Last - and most -- formal attention to ethics in the workplace is the right thing to do.
CONCLUSION
In this study unit, we provided you with an overview of the process of Business Ethics in organizations. We also briefly touched on the code of ethics in the organization. In the rest of the course material we will focus more details on Ethics in the organization. The ethics are more important to both employers and employees.
SELF - ASSESSMENT QUESTIONS
Define the concept ethics – how would you define ethics from your life perspective?
What is the difference between a code of ethics and a code of conduct.
Discuss 10 the myths of business ethics.
28 TOPIC 2
2. KEY CONCEPTS AND DISTINCTIONS IN ETHICS
LEARNING OUTCOMES
On Completion of this Topic The Student Should Be Able To:
Understand the key concepts and distinctions in ethics.
Understand the difference between ethics and values
STUDY : Chapter 1 in
Rousseau & Van Vuuren (2010: 3-10)
2.1 BUSINESS
The concepts ‘business’ can have different meanings, as is illustrated in the expression that ‘the business of business is business’. We will thus do well to clarify what we mean by business before defining what we mean by business ethics. Business, or economic activity, is any situation where individuals or parties voluntarily enter into transactions of economic exchange for goods or services. These goods or services can be provided by the state, public or private enterprises, and individuals. In narrow definitions of business ethics, the domain of business is confined to the economic activities of private enterprises and individuals, in broader understanding of business ethics, the economic activity of the state and public enterprises are also included. The broader understanding will be used in this module guide.
Activity
What are the three different levels of economic activity? Study page 3-6 of your prescribed book to find the answer.
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The macro or systemic dimension- This is the economic system or the wider socio-political framework within which business is conducted. The framework is determine d at national level by political decisions, laws and regulations as well as social norms that determine the contours of the economic playing field and the rules that govern economic play. When economic activity transcends national boundaries, international trade agreements also come into play. The macro-economic framework determines to a large extent what freedoms and responsibilities economic players will have and also which economic priorities will be pursued.
The organisational dimension- this relates to the role and responsibilities of business organisations. Business organisations developed their own system of governance according to which they direct and control their own internal activities. But businesses also inevitably find themselves in relationships of responsibility with a wide range of external parties such as the state, competitors, suppliers, customers, and organisations of civil society. The organisational of business thus encompasses the collective behaviour of the business organisation towards both its internal and external stakeholders.
The macro- or individuals dimension- this concentrates on the economic actions and decisions of individuals interacting with the business organisation. Although the structures, policies and culture of a business organisation pose distinct constraints within which employees, suppliers, constraint the freedom and responsibility of these individuals. To the contrary, they retain considerable freedom to display initiative and discretion.
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Ethics concerns itself with what is good or right in human interaction. It revolves around three central concepts: ‘self’, ‘good’, and ‘other’. Ethical behaviour results when one does not merely consider what is good for oneself, but considers what is good for others. It is important that each of these three central concepts be included in a definition of ethics. Should the concept ‘good’ be neglected, the unique nature of ethics collapses: ethics is not merely concerned with the interaction between a ‘self’ and an ‘other’, but with the quality of interaction. It wants to determine whether the interaction between the self and the other is good or bad for one or both of the parties.
Activity
Demonstrate your understanding of the three central concepts of self, good and other.
A similar distortion occurs when the ‘self’ is excluded from the definition of ethics. Then the concern is merely about what is good for others, without taking the interests of the’ self’ into consideration. This form of altruism is probably unattainable, as it almost impossible for someone to ignore their own interests. It is also dangerous to neglect your own interests, as a sense of your own wellbeing is a prerequisite for balanced and on-going interaction with other people.
Alisdair Macintyre (1999:160). capture this insight well when he said; ‘Self- sacrifice is as much of as selfishness’ Equally, the ‘other’ cannot be concern merely for what is good for the self neglects the very nature of ethics, which is to ensure the interests of both oneself and others. Ethical behaviour thus can be self-interested but not merely selfish. When you know your behaviour may have negative consequences for others, but care only about what is good for yourself, such action is selfish and unethical. If, on the contrary, you seek to serve your own interests, whilst simultaneously caring about the interests of others, then your behaviour is self-interested whilst also being ethical.
2.3 BUSINESS ETHICS
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ethics, also apply to business ethics. Business ethics is about a conception of what is good (values and standards) that guide the business (self) in its interaction with others (stakeholders). Consequently, what is at stake in studying and practising business ethics is to give content to the ‘good’(ethical values and standards) and to determine whether the interaction between the self (business) and others (internal and external stakeholders) lives up to these ethical values and standards.
Activity
Who are the internal and external stakeholders of an organization? Read your textbook page 5 and identify the answer. Provide examples of the various stakeholders at Richfield.
2.4 RIGHT, WRONG AND DILEMMAS
Ethics is often perceived as a grey area where there is little clarifies about what is right or wrong. This perception of ethics is mistaken. There is a broad consensus within and amongst societies about what is considered to be either ethically right or wrong. Both within and across societies there is, for example, a consensus that the protection of innocent life and telling the truth is ethically right. There is a similar consensus that the killing of innocent people and blatant lying is wrong. The same goes for ethics in business. There are certain behaviours that are considered ethically right, such as the respect for the dignity of employees and for company property. On the other hand discrimination against employees and theft of company property is considered wrong. Whether companies and their employees live up to these standards is another question, but they would generally agree to these standards of behaviour. However, difficult situations in business arise where it is hard to tell what should be considered right or wrong in a given situation. These tough choices are called moral dilemmas.
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considered right or wrong. It is typical of moral dilemmas that when different people look at the same issue, some would regard it as morally right, whilst others would regard it as morally wrong. Privacy in e-mail use is a typical moral dilemma in business whilst some would justify it as a legitimate managerial prerogative. Dilemmas can be either interpersonal or intrapersonal: they do not only occur between people, but a person may experience a dilemma within her or himself. This happens when an individual’s is faced with more than one option, but finds it hard to decide which option is morally the best. Both social (interpersonal) and (intrapersonal) dilemmas are characterised by the fact that there is no longer a choice between right and wrong, but between conflicting moral options. The challenges that faces businesses when it comes to the above distinction between right, wrong and dilemmas, is to provide clarify on what is right and wrong a guidance on how to deal with dilemmas that arise from time to time.
Have you ever been confused in your life? How does that confusion compare with the theory on dilemma?
. Case Study- Right/wrong Dilemmas: Read the case study and answer the questions that follow
A few years ago a young man faced an ethical dilemma where he had to make a choice between two responsibilities. One responsibility related to his job as Chairman of the Accounting Department at a small Midwestern university. The other responsibility related to his role as a father. He had made a commitment to attend an awards dinner that was being sponsored by a major employer of the accounting graduates. The employer had paid for his dinner and the dinners of some of the best accounting students. He had agreed to attend the dinner to represent the School and the
Accountancy program, and to show support for the employer’s interest in the students. Failure to
attend the dinner would likely disappoint the employer who had spent considerable resources to arrange for the dinner, and could damage a relationship that had been built over many years. The
employer had hired many of the program’s graduates and wanted to continue to recruit more of its
students. The department chairman did not want to appear ungrateful for the employer’s support.
On the afternoon before the dinner the young man learned that his two sons were having their long-awaited Eagle Scout ceremony at the same time as the dinner. The scout master had worked hard to arrange for the ceremony. Guests were invited. The program was well-planned except for one oversight. The scout master had forgotten to let the young man know about the time and day. Of course, the young man wanted to attend the ceremony to celebrate the accomplishments of his sons. Receiving the Eagle awards was the culmination of many years of work. His wife and sons wanted him there, and would be disappointed if he did not attend. His family was free to attend the ceremony, but he had already promised to attend the dinner, and it was too late to arrange for another faculty
member to attend the dinner in his place. A problem of this kind is termed a “right-versus-right
dilemma,” where the alternatives have conflicting virtues. The young man had conflicting
responsibilities. Fulfilling his promise to an important accounting employer was his responsibility as a Chairman of the Accounting Department, and he had promised to be there. Supporting his sons on such an important occasion was his responsibility as their father. No matter what he did, he could not avoid disappointing someone. In meeting one responsibility, he would fail to meet the other one.
If you were in the above situation what choice would you make?
Justify your choice.
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Which alternative best serves others' rights, including shareholders' rights?
. What plan can I live with, which is consistent with basic values and commitments?
Which course of action is feasible in the world as it is?
2.5 ETHICS AND VALUES
Although there is a definite link between ethics and values, the two concepts are not identical. Values can be defined as relatively stable convictions about what is important. Since it is possible to have values that have either nothing to do with ethics or that run counter to ethics, values cannot be equated with ethics It is not only individuals that have values. We also find values within organisations. By looking at the different kinds of values that we typically find within business organisations, the relation between values and ethics will become clear. Normally, three different kinds of values can be distinguished within business organisations. They are strategic values, work values and ethical values. Strategic values refer to the shared conviction of the organisation about its desired objectives. As such, strategic values indicate the direction in which the organisation wishes to move. The strategic values of organisations are usually reflected in their vision and mission statements. In order to move the organisation in the direction indicated by its strategic values, all members of the organisation need to do their jobs in the specific manner. The priorities that organisation member should adhere to in their jobs are called work values. Typical work values include punctuality, innovation, and quality. For any organisation to function optimally, good relations and interactions between stakeholders are required. In order to ensure that such good relations and interactions are maintained, members of organisations need to commit themselves to specific ethical values. Typical ethical values ensures that stakeholders inside and outside the organisation get along well with one another. Ethical values are thus a subset of values within the broader set of values of an organisation.
Highlight the values you place on your education? Why do students engage in dishonest academic practices? What does it say about their values in life?
Discuss How important Business Ethics is in Our Lives?
Ethical issues are the rights, responsibilities and duties between a company and its employees,
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practices, to curb the negatives. Today, many businesses be it large, medium or small scale, have learnt to accept ethics. This is due to its positive impact on the internal and external environment. Where there is no order, work cannot be done efficiently and productively. Many hindrances within a working environment such as abusive behavior and language, theft or fraud, sexual harassment, termination without notice, bribery, nepotism, racism, embezzlement, inappropriate dressing code and so on. These are unethical.
In places of work, the law requires one to observe an acceptable code of conduct at all times. The problem comes in where there are now the legal requirements and the personal standards. When the latter exceed the former, unethical issues is achieved. Business ethics needs to be observed not only at the individual level, but also organizational, societal and international. Organizations that promote an ethical climate provide an opportunity to develop an ethical culture.
Business ethics helps attract and keep investors, employees and customers. They get peace of mind working with the company since they are assured of careful utilization of their funds, resources and time by it. A business that takes care of its waste disposals reduces pollution effect to the environment around it. Control of social evils within businesses, help keep the society’s healthy traits. A person would love to seek employment in a company that respects its employees, treats them fairly in terms of rewards, fair salaries, promotions and appraisals. A company could also invest in improving infrastructure of its surroundings, helping people lead a better life. Business ethics brings about productivity and teamwork among its workers. Making of decisions becomes easy and efficient enough. This in return gives a good public image of the company. As its internal and external partners
witness this, the company’s assets are managed and protected well. This provides a good opportunity
for the growth and development of not only the business, but also the society and market at large.
2.6 Guidelines for enhancing good economic and corporate governance in Africa
These guidelines grew out of a NEPAD meeting that resolved to prioritize the enhancement of good governance and are intended to provide a framework of policies, processes, instruments, codes,
standards, indicators, best practices, and enforcement mechanisms that can be adopted and/or adapted by African countries to demonstrate their commitment to good economic and corporate governance practices. They aim to offer African countries a general framework for thinking about how they can approach and attain reputable and beneficial systems of economic and corporate governance. They also provide guidance on the key elements of a well-performing economic and corporate governance system. The document argues that good economic and good corporate governance matter to Africa because
they contribute to macroeconomic stability
they enhance a government’s ability to implement development and poverty reduction policies
with scarce resources
they enable public management functions to be executed in an accountable manner they contribute to the creation of a credible policy environment in which domestic and
international investors can have confidence and trade can be advanced
they lead to the strengthening of absorptive capacity to attract and mobilize development assistance flows
they enable the demonstration of transparent and participatory economic policy-making and execution as well as an open flow of information available to all stakeholders
they signal a government’s adherence to standards of institutional functioning free of
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2.7 INTEGRITY
Integrity is so closely aligned to ethics that it is sometimes used as a substitute for ethics. Persons with a strong commitment to ethical standards are often referred to as persons of integrity. Similarly, the term organisational integrity is often used to refer to the organisational ethics. Despite such equations between ethics and integrity, integrity is a much more restricted concept than ethics. Integrity refers specifically to the moral character of a person or organisation. A person is regarded as someone with integrity when s/he consistently adheres to a set of ethical standards. For this reason integrity is often associated with concepts like fairness, consistency, uprightness and wholeness. These characteristics make a person of integrity will always adhere to her or his values. The same applies to organisations with moral integrity.
Apples, barrels and warehouses
A last important distinction in business ethics is the one between personal (apple) and organisational (barrel) ethics (Ashkanasy, Windsor &Trevino, 2006). Unethical behaviour is often attributed to the defective moral upbringing of an individual. Such individual are termed ‘bad apples’ as it is believe that their upbringing has spoiled their moral character and they cannot be changed into morally responsible persons (good apples). This is a gross oversimplification. Individuals are affected by the organisational culture in which they find themselves, in the same way that apples are affected by the environment in which they are stored. The business organisations (barrels) that individuals work in can also have either a constructive or a corruptive influence on their moral character. People with dubious or even good moral character can turn to unethical behaviour if they find themselves in organisations where unethical conducted is the norm. Thus bad barrels can corrupt dubious or even good apples. The opposite is equally true. Dubious or even bad apples can be restrained from unethical behaviour should they find themselves in organisations that do not tolerate unethical behaviour, but reward ethical behaviour. Refer to the table below for an illustration of this point.
Good barrels Bad barrels
Good apples Bad apples
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society. Once more this relationship can be constructive or corruptive. It is however important to emphasise that this relationship between business and society is bidirectional. Society can corrupt or conserve the barrels, but given their immense power, business can also contribute towards corrupting or improving the moral fibre of society.
Activity
What does integrity mean to you? Have you ever used this concept when interacting with your colleagues or your lecturers? Provide examples.
REVIEW QUESTIONS
1. Explain the difference between Ethics and Values. 2. What is integrity associated with?
37 TOPIC 3
3. ETHICS ON THE MACRO-ECONOMIC LEVEL
LEARNING OUTCOMES
On completion of this topic the student should be able to:
Understand how the Free Market system works
Explain the justification of the free market.
Explain the difference between equity and Equality
STUDY : Chapter 2 in
Rousseau & Van Vuuren (2010: 13-31)
3.1 INTRODUCTION
As we study business ethics, the question will often arise: ‘When is enough enough? ‘ How do we justify that a leading import agent for sought-after brands such as Cartier, Gucci and other luxury perfumes is going through a messy divorce where his spouse spent in excess of R1 million a month on clothes, and that in a country where people are dying of hunger?
Generally, we can agree that at minimum, everyone needs foods, water, shelter and air. But how much more should each individual get, and how do we determine that? And do we make of the fact that of the four critical elements of survival mentioned, at least two, namely shelter and food (and increasingly water) are by-and-large supplied through private sector markets, and with market activity encroaching on the quality of water and air supply available to the global population? Clearly, business has an importance impact on the most fundamental elements of our human existence.
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growth in HNWIs than South Africa’s 14% growth rate in the last reported year (2007). During this same period, however, the gap between rich and poor nations and gap between rich and poor within each nation has increased. More than 1. 2 billion people globally get by on less than $2 a day, and thousands die of hunger despite the world producing more food than what its population can consume. US Senator, and once presidential candidate, George McGovern (2002) explained that we do not have a food problem.
Rather, we have a distribution problem, which is really a political problem. And Nobel Prize winner, Amartya Sen (2000), points out that there has never been a famine in a democratic state.
The high-level political choices made in society, including the choices of economic system, directly impact the citizens of each country, and when we study macro-ethics, we concern ourselves with the morality of these choices. Not merely as interested citizens, but also as business people who have to operate according to the rules and assumptions that underpin the choice of economic model. There are several considerations that inform the economic system choice. First and foremost, societies seek economic growth and development, because in a world of scarce resources, there is not a nation that need not concern itself with finding the optimum return on its citizens’ labour with the endowment of capital (natural resources, land, talent, skill and relationships with trade partners) that they have been dealt.
But, there is also a second and equally important dimension, namely asking what the moral ramifications are that guide the choice of a macroeconomics model. Is it inherently fair, just and sustainable without political contest? What systems deliver fair results? How do we morally justify particular elements of a specific political-economic system, should the system be regulated or completely free (laissez-faire), and who should be responsible for regulation if that is the choices? Would it be government or industry itself? And how does the choice for a particular economics system influence the operating environment of the business that is conducted in that society, and how does that affect the rights and obligations of individuals and groups?
