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8/4/2019 BE_ Case Studies

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ETHICSETHICS

CONCEPTCONCEPT


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RAYMOND BAUMHARTS STUDYRAYMOND BAUMHARTS STUDY

What doesWhat does ethicalethicalmeanto you ?meanto you ?

50%50% -- What my feelings tellme is right.What my feelings tellme is right.

25%25% -- Whatis accordingto my religiousWhatis accordingto my religiousbeliefs.beliefs.

18%18% -- What conforms to the GoldenRuleWhat conforms to the GoldenRule


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ETHICS ISETHICS IS

Accordingto DictionaryAccordingto DictionaryEthics meansEthics means MoralPhilosophy, Moral PrinciplesMoral Philosophy, Moral Principles The Principles of conductgoverninganThe Principles of conductgoverningan

individual or agroupindividual or agroup The study of moralityThe study of morality

EtymologicallyEtymologicallyEthics, in LatinEthics, in Latin EthicusEthicus andand

in Greekin Greek EthikosEthikos has come from thehas come from thewordword EthosEthos meaning Character, Homemeaning Character, Homeplace, Accustomed place.place, Accustomed place.


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WHAT IS CHARACTER ?WHAT IS CHARACTER ?

Character is expressed interms of conductCharacter is expressed interms of conduct

Conduct is a series of actions takentogetherConduct is a series of actions takentogether

Whenthese actions are expressed as goodWhenthese actions are expressed as good--bad,bad,

rightright--wrong, moralwrong, moral--immoralimmoral we are makingwe are makingmoral judgmentsmoral judgments

Moral judgment requiresMoral judgment requires moral standards.moral standards.

We can define morality, as the standard thatanWe can define morality, as the standard thatanindividual or agroup has about what is right orindividual or agroup has about what is right orwrong, good or evil.wrong, good or evil.


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WHERE DO THESE STANDARDSWHERE DO THESE STANDARDSCOME FROM ?COME FROM ?

FromFrom

-- Family, friends, various societal influencesFamily, friends, various societal influences

-- Experiences, learning and intellectual developmentExperiences, learning and intellectual developmentleads to Internalize, Revise, Discard, Adoptleads to Internalize, Revise, Discard, Adopt

-- Maturing process may lead to develop standards thatMaturing process may lead to develop standards that

are intellectually adequate and more suitable forare intellectually adequate and more suitable fordealing with moral dilemmas of adult life.dealing with moral dilemmas of adult life.


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Whatever we say for an individual is true alsoWhatever we say for an individual is true alsofor society in time crossfor society in time cross--fertilization andfertilization andrejection or absorption of values.rejection or absorption of values.


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WHAT, THEN, IS ETHICS ?WHAT, THEN, IS ETHICS ?

A Discipline that examines ones moralA Discipline that examines ones moralstandards or the moral standards of astandards or the moral standards of a

society how they apply to our lives.society how they apply to our lives.


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AND BUSINESS ETHICS ISAND BUSINESS ETHICS IS

Application of Ethics in businessApplication of Ethics in business


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Ethical IQ Test

1.

You are an executive in a large manufacturing firm. The business conference

you have been attending on behalf of your firm for the last two days in over.

You had planned to fly home, but a couple of friends youve made at the

conference are driving back by car and have invited you to ride with them. It

would be a five-hour drive instead of a two-hour flight, but they would drop

you at your doorstep. It would be stimulating to ride back with your new

friends and it might benefit the company. You reason that the additional

travel time would be out of your pocket, so to speak, not the firms. You

decide to drive back with you new colleagues. You toss Rs. 100 into the

refueling kitty during the midpoint stop.

Q. Would you cash in the return flightticket and keep the money? NO Depends YES


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Ethical IQ Test

2.You have a strict code of ethics in your office regarding employee

appropriation of office supplies. The most competent and longest-

tenured secretary is caught by you, the secretarys boss, taking

some office stationary home in a briefcase. There is a rule against

this as well as a clearly established procedure for providing

employees with supplies if they do companys work at home. The

code requires you to fire the secretary on the spot

Q. Would you make an exception forthis loyal worker? NO Depends YES


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Ethical IQ Test

4.You are a very senior executive in a large multinational

corporation. One of your long-time friends in the

marketing department confides to you that the boss is

subtly suggesting that sales representatives give

misleading information to prospective clients about a

particular product. Your friend is very upset about it and

wants your advice.

Q. Would you encourage your friendto follow the bosss suggestion? NO Depends YES


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Ethical IQ Test

5.You are a marketing professional in a reputed corporation. Your

client wants to promote throughout your region a brand. The

company claims the product is of high quality. The manufacturing

firm does not have a national reputation and despite your repeatedrequests, has been unable to provide you with any scientific proof

of its claims.

Q. Would you continue serving thisfirm as a client without thescientific proof?

NO Depends YES


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Ethical IQ Test

7.You are the Product Manager for one of your firms largest

brands. You know that your product will soon be challenged

by an improved version from a strong, well-financed

competitor. One of your vendors offer to provide you with a

confidential copy of the competitors strategic marketing plan.

No price for the copy is mentioned.

Q. Would you utilize this vitalinformation to help your brand? NO Depends YES


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Ethical IQ Test

8.

You have recently accepted the top marketing position at a new

company. One of your first assignments is to approve an all expenses-

paid trip for the senior purchasing officer of one of your largest client

firms. The four-day seminar abroad, sponsored solely by your

company, would include first-class airline tickets for client and spouse,

a three-day cruise following the seminar, plus a $ 500 honorarium. You

know that this particular company does not have a written conflict-of-

interest policy. You also know that your new boss is very eager to have

this purchasing officer of the seminar.

Q. Would you authorize theexpenditure for this client? NO Depends YES


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Ethical IQ Test

9.

You serve as an outside member on the audit committee of the board

of directors of a major pharmaceutical company that markets new

drugs through practicing physicians. You have secretly learnt that your

research department has developed an abortion pill that appears to be

100 percent safe and effective. However, it has been repeatedly

rumored that your Chief Executive Officer will not let this product be

brought to market because of deep religious convictions. Millions of

dollars of potential revenue and profits will be lost.

Q. Would you let this secret decisionof your CEO go unchallenged? NO Depends YES


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Ethical IQ Test

10.You happen to overhear a couple of engineers in your company

discussing a radically new product that your colleagues in upper

management are anxious to see hit the market on schedule. You

accidentally learn that the engineers are also quite concerned about

some design flaws that could be harmful to product users, although

the probabilities are very remote.

Q. Since you are not directlyresponsible for his product,would you completely ignoretheir comments?

NO Depends YES


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This is your ethical IQ

Total up the number of times you circled eachNo, Depends, or Yes. Take the highest number

in only one of the three categories, multiply itby 100, and then divide by 5.

Average is 100 perfect score is 200.


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What the categories mean:

Purist

A high number in No

- Confidence in your intrinsic sense of

what is good and true

- Kind of a person who always acts ethically


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-- You are first to cry out against unfairness orYou are first to cry out against unfairness orinjusticeinjustice

-- You would not authorize the lavish Expenses forYou would not authorize the lavish Expenses forSeminar abroadSeminar abroad

-- You would blow the whistle on the engineersYou would blow the whistle on the engineers


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-- You would not let the secret decisionYou would not let the secret decisionof the CEO go unchallenged regardingof the CEO go unchallenged regarding

the abortion pillthe abortion pill

-- As a purist, you bring ethical stability andAs a purist, you bring ethical stability andhigh standards to the groups of which youhigh standards to the groups of which youare an integral part.are an integral part.


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Expedient

A high number in the Yes- Willing to break rules if they seem silly

- You believe you are doing right and yourright is short term consequences

- Some may call you as self centered

- Purists will call you greedy ambitions


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-- You may ignore the rules in respect of Q2You may ignore the rules in respect of Q2

-- The secretaryThe secretary--code of ethics are for otherscode of ethics are for others

-- As an expedient manager you may in reply to Q7.As an expedient manager you may in reply to Q7.ask a copy of softwareask a copy of software


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-- As an expedient person your response will reflectAs an expedient person your response will reflectyour age, your ambition, the competitive intensity.your age, your ambition, the competitive intensity.

You ethical contribution to groups andYou ethical contribution to groups andorganisations is excitement and enthusiasmorganisations is excitement and enthusiasm

-- You tend to be a lonerYou tend to be a loner

-- You are economically motivated, probably rich butYou are economically motivated, probably rich butlonelylonely

-- You are capable of risky ethical decision some ofYou are capable of risky ethical decision some ofwhich could be disastrous.which could be disastrous.


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Pragmatist

A high number of depends

- likely to feel conscience ridden frequently

-You may appear to the ethically insecure sincepeople judge by actions and you are passive


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-- In Q4 you would take a long time to answer asIn Q4 you would take a long time to answer as

senior executive about misleading clientssenior executive about misleading clients

-- You may answer Q6 on hiring the person after youYou may answer Q6 on hiring the person after youthink through a number of factorsthink through a number of factors

-- You response to Q3 regarding software after youYou response to Q3 regarding software after youconsider a number of thingsconsider a number of things


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-- As a depends person in the group thoughtfullyAs a depends person in the group thoughtfully

reasoned temperate ethical leadershipreasoned temperate ethical leadership

-- You can bring extremes to centerYou can bring extremes to center -- you are lessyou are lessvocalvocal serve as ethical CATALYSTserve as ethical CATALYST


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CORPORATE GOVERNANCECORPORATE GOVERNANCE

Ethical decision become more complicated forrespondents higher up the corporate ladder


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As you move up the corporate ladder theethical side also expands

1. As greater number of constituents will

be affected by your decisions

2. Your decisions will have increasedvisibility throughout the company.


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1.1.3. Your decisions are more likely to have a permanent3. Your decisions are more likely to have a permanent

effect on employees, company policy andeffect on employees, company policy andcommunitycommunity

4. Doing the right thing will depend more on whose4. Doing the right thing will depend more on whoseperspective you takeperspective you take

5. One or more constituents likely to disagree5. One or more constituents likely to disagreestrongly with whatever decision you take.strongly with whatever decision you take.


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Sound ethical decision making in todaysbusiness environment requires a lucid and

vigorous instrument.

The ethical algorithm is such a tool

Four critical dimensions of corporateaction

Goals

Methods Motives Consequences


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How Ethical Algorithm works

Goals : What do you want to achieve?

Methods : How will you pursue the goals?

Motives : What personal needs drive you toachieve?

Consequences:What results can you anticipate?


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A career decision:

Goal : Get Rich

Method : Corruption

Motive : Financial security

Consequences : make crores retire early


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If you have an ethical side

Method : Would be unacceptable

Consequences : Caught, a prison term


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Motives make a big difference

Hardest to unravel

Rooted in childhood,training,culturally conditioned,

Shaped and sustained by beliefs.


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You can expand the algorithm

Goals :

1. Do you have multiple goals ?

- business goals- ethical goals

Softer side harder side

- Jobs - market share- Social benefits - profits


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2. Are your goals compatible?

- Achieve both?

- Might you have to sacrifice or reduce

profits to meet ethical goals?


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3. Which constituents get top priority?

Whom you feel accountable?- Stock holders - customers- Employees - employee- Management - government

Business side ethical side


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-- Business goals are fairly routine, ethical changeBusiness goals are fairly routine, ethical changewith situationwith situation

-- You can view ethical consideration as a constraintYou can view ethical consideration as a constraint Your mission statement does not have anYour mission statement does not have anovertone of ethicsovertone of ethics

- We are not suggesting that such companies arenot law abiding. They enter the arena when theytend to start practices which are unacceptable

price rigging


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Consequences

- What impact will your anticipatedconsequences have on your constituents?

- Put yourself in the shoes of each of yourconstituents in the GOALS go down the list andimagine consequences of each one of theconstituents

- Are there any exogenous factors ?Uncontrollable unpredictableMurphys law What can go wrong- Will


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Motives

Making money?OrDoing right things ?

What is best for your employer?

What is best for your own career?

What is best for the customer?


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CHARACTERISICS

Business Ethics is built on Personal Ethics

no real separation


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Business Ethics is based on fairness

Does each transaction take place on a

level playing field


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Business Ethics requires :

Integrity

Wholeness

Reliability

Consistency

Treat with respect

Honesty Keep promisesCommitment


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Business Ethics requires :

Truth telling

Advertising

Products

Promises


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Business Ethics requires dependability

- you may be new

- unstable

- going out of business


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Business Ethics requires a Business Plan

- an image of itself

- a vision of the future

Clearer the goal the stronger is the commitment


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Business Ethics applies internally and externally

- Conference room

- negotiations in good faith- Keep promises

Meet obligations to staff employers vendors


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Business Ethics requires profit

How we would live in the future is out of how

we live in the present means and also end.


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Business Ethics is values based

Ideals

Aspirations

Clarity must on intent


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Business Ethics comes from the Boss

- Sets the tone

Either lead the way or communicate whether

cutting corners, disrespect or deception


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3. Actions have consequences: even unseen or3. Actions have consequences: even unseen or

delayeddelayed4. What is perceived as ethical depend upon the4. What is perceived as ethical depend upon the

viewpoint of the constituent?viewpoint of the constituent?

5. The need for good ethics5. The need for good ethics

promotepromote -- permitpermit

Democracy and free enterpriseDemocracy and free enterprise

Foster:Foster:


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10 Myths about Business Ethics

1. Myth: Business ethics is more a matter of religionthan management.

Altering peoples values or souls isnt the aim of anorganizational ethics program managing values andconflict among them is..?

2. Myth: Our employees are ethical so we dont needattention to business ethics.

When the topic of business ethics comes up, people arequick to speak of the Golden Rule, honesty and courtesy.


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3. Myth: Business ethics is a discipline best led byphilosophers, academics and theologians.

Business ethics is a management discipline with aprogrammatic approach that includes several practicaltools.

4. Myth: Business ethics is superfluous it only assertsthe obvious: do good!

If an organization is struggling around continuingoccasions of deceit in the workplace


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5. Myth: Business ethics is a matter of the good guyspreaching to the bad guys

Stress or confusion are not excuses for ethical actions they are reasons.

6. Myth: Business ethics in the new policeperson on theblock.

Business ethics was written about even 2,000 years ago-

at least since Cicero wrote Business ethics has got moreattention recently because of the social responsibility1960s.


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7. Myth: Ethical cant be managed

Strategic priorities (profit maximization,expanding marketshare, cutting cost, etc.) are still skeptical about businessethics, believing you cant manage values in an

organization

8. Myth: Business ethics and social responsibility are thesame thing

Social responsibility movement is one aspect of the overalldiscipline of business ethics


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9. Myth: Our organization is not in trouble with the law,so were ethical.

Withhold information from superiors, fudge on budgets,

constantly complain about others, etc. The boil the frog

phenomena

10. Myth: Managing ethics in the workplace has littlepractical relevance

Values management is also highly important in otherManagement and strategic planning.

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