M1

Ethics are defined as moral principles that govern a person’s behaviour or the conducting of an activity.

There are many approaches to ethics including but not limited to: Utilitarian, Deontological, Virtue and Pragmatic.

External factors that contribute to a Business’ commitment to Ethics are:

-Legislation

-Industry Regulators & Associations: APRA, ASIC, AFMA and ABA -Competitors

-Investors & Shareholders

-Clients

-Indices and Surveys

-Economic trends & world events

-Society & Community Standards

Internal factors that impact ethical governance in a Business are: -Organisation type

-Management Structure

-Leadership & role-modelling

-Environmental, Social & Governance approach

-Reporting

-Values & Code of Conduct

-Remuneration policies and practices

-Risk management: audit & compliance

-Training and performance management

-Office environment

M2 Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 The Individual

Our moral compass, our own values & principles generally the results of influencing factors such as upbringing, family, culture and education etc, should be

aligned to our duties as an employee to provide a basis for ethical behaviour. This includes fiduciary, confidentiality, obeying the law, following regulators

and reporting to superiors.

Supporting employees to do the right thing -Policies & Practices

-Colleagues

-Manager or Boss

-HR

-Compliance

-Ethics Office

-Your own education and study

-Your own moral compass -Ethical framework of the organisation and society

-Lawyers and Regulators

Despite this level of support, the individual in a workplace will still face ethical dilemmas.

Challenges to individual integrity are

-Being asked to do something that isn’t right

-Being tempted to do something that isn’t right

-Feeling a personal conflict about a deal or transaction you are involved in.

-Witnessing bad behaviour

These dilemmas are made worse when the individual is:

-Time poor

-Under Pressure

-Unsupported

-Unsupervised -Stressed

-Fatigued

-Isolated M Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 Factors that influence individuals are: -Experience

-Team -Personal Opinion

-Time

-Theories, tools and technique

-Environment

M3 Workplaces

Modern Workplaces have created an environment that is

-Flexible -Considers work life balance

-Provides opportunities to train and mentor other people

However a downside is created:

-These workplaces are rather competitive

-Provide a lack of security

-Create a constant feeling of work as your list of work related task do not finish when you physically leave the office

Over time ethical work cultures have eroded due to

-Moral Muteness: people may couch their decisions under economic or time related reasons to hide them being unethical or immoral.

-Limited view of stakeholders: When unethical choices are justified as being in the best interest of particular stakeholders (mainly shareholders) others are

left out of the question.

-Unthinking custom and practice: Outdated work practices deemed as unethical.

-People faking it: Lack of integrity

Self deception theory 1. Tribalism: belief that the company is always right 2. Legalism: The inability to imagine moral obligations beyond the law

3. Moral Relativism: Excusing unethical practices by viewing business as a game and oneself as a “role” or “player”

4. Scientism: Elevation of science, management science to a position of unquestioned authority.

Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 When does a business problem involve ethics?

When you are made to reflect on what is a correct or incorrect response

When you are forced to consider where your obligations and duties lie

When it raises a problem for someone else

Common Workplace Dilemmas

-Misuse of information

-Morality of business deals

-Self Advancement

-Exploiting loopholes

-Being instructed to do something that isn’t right

-Witnessing bad behaviour

Ethical dilemmas & culture

Different ways of doing business

Bribes and facilitation payments

Dealing with superiors

Alcohol at work related events

Role of women in the workplace

Staff entertainment

M4 Dealing with Dilemmas Test of integrity:

-Put yourself in the other person’s shoes

-How would I feel if my actions were to become public

Good decision making:

1. What’s the story? Facts, Assumptions, Understandings, Non Negotiables, Extenuating circumstances. 2. Voices in the conversation. Identify the significant stakeholders, major values and principles related to the issue.

3. Frame The Dilemma: A choice between the options available

4. Generate Options: Brainstorm the options

5. Provisional Position: Final decision.

Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 6. Identify weaknesses in your position: Can you modify your position to reduce/eliminate weaknesses

7. Final Check: ‘The Golden Rule’ – putting yourself in other person’s shoes. Would your mentor/s agree to your decision? Sunlight test: what if your

decision was made public?

Business Case for being Ethical -Improves trust

-Reduces “integrity” and operational risks

-Avoiding legal and financial penalties for breaches -Constructing then external reputation

-High ranking in surveys and indices

-Recruit and retain top quality staff -Creates a sustainable business

Lecture 2 – Moral Philosophies

Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 M2

Moral Philosophies

-Teleology

-Deontology

-Virtue Ethics -Relativist Perspective

Welfare, Rights & Justice

Ethical Position 1 – Teleology

The teleological school of thought states that an action is only morally acceptable if and only if it produces a desired result for the greater good of the

greatest number of people. It namely branches off into 2 perspectives:

1. Egoism  right/acceptable behaviour entirely in terms of self interest consequences for the individual

2. Utilitarianism  concern with consequences for the greater good of the greatest number of people, concerning with the maximisation of utility.

“The evolution of utilitarianism”

Bentham’s View “Principle which approves/disapproves of an action, according to its impact to augment/diminish the happiness of a party whose interest is

pursued. Creates a focus on hedonistic calculus = quantitative aggregation of pleasure/pain.

Mill’s View “Actions are right in proportion as they tend to promote happiness, wrong, as they tend to produce the reverse of happiness” Asserts that

pleasure should be quality weighed.

Classical View An action is only right if it produces the greatest balance of pleasure over pain for everyone.

Act Utilitarianism “An action is only right if it produces the greatest balance of pleasure/pain for everyone” i.e. Merger & Acquisition.

Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 Rule Utilitarianism “An action is right if it conforms to a set of values and the general acceptance of which would produce the greatest balance of

pleasure/pain for everyone.”

Four elements to Utilitarianism

Consequentialism – only ends matter

Hedonism – only pleasure is good

Maximalism – greatest amount of pleasure is best

Universalism – consider the aggregate Economic argument of market efficiency states that markets will lead to Pareto optimality – but this may not necessarily be a fair/just outcome. There are

also many problems associated with this argument is that there are one too many assumptions such assuming perfectly competitive markets.

M3

Equality, Liberty and Virtue Ethical Position 2 – Deontology

Deontological Ethics

Deontology as a school of thought focuses on the rights of the individual and on the “intentions” underlying the behaviour, not its

consequences  There are things we should not do, regardless of the utility derived from them  Respect for others (and ourselves) as

rational people is a 2nd formation of Kant  Rationality gives people a greater moral value than anything else  This puts greater stress on

welfare of every person than utilitarianism. Kantian Ethics

Foundations underpinning decisions  Restores reason to moral life (things we ought not to do by virtue of being rational). He suggests a

binding moral law that is irrespective of consequences/utilitarianism. Kantian theory is quite simple “Act on rules that you would be willing to

see everyone else follow”.

Rawl’s Egalitarianism

Questions of justice arise when free and equal persons attempt to advance their own interests conflicting with other pursuing their self- interests. Social justice enables persons with conflicting ends to interact in mutually beneficial ways. We should aim to achieve the greatest

benefit of the least advantaged. Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 Rawl’s Principle of Difference states to achieve the greatest benefit of the least advantaged. Rawl’s Equal Opportunity Principle the offices positions open to all under conditions of fair equality of opportunity.

Libertarianism Hayek emphasises individual liberty, property rights and limited government – strong arguments favouring a market system.

Nozick’s entitlement theory – A distribution is just if everyone is entitled to the holdings they possess

• Principle of just transfer

• Principle of just original acquisition

Supports a market system with absolute minimum of government intervention. Common criticisms of libertarian theory are

-Some rights (minimum welfare) are at least as important as property rights.

-Not all restrictions of liberty are due to interference by the state.

-The principles are hardly realistic.

Ethical Position 3 – Virtue Ethics

Virtue can be considered as an acquired character trait that manifests itself in habitual action; a state of character; an admirable trait

Virtues are means to happiness, character traits that lead to a good life Morality is not something we think about but do out of habit. Virtue Ethics are defined by current societal definitions’

Vice Of Deficiency – Virtue As the Mean – Vice of Excess

“Behaviour when confronted by danger on a significant personal challenge”

These are intrinsic and habitual responses taken by us.

Can be applied in the business sense as getting along with others, having self-respect & being part of something to admire. Business related character traits need to be added to familiar personal character traits.

Considers relationships in business as opposed to basic teleology and deontology.

Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 Ethical Position 4 – Relativist According to the relativist school of thought, ethical behaviour is defined by experiences of the individual and the group. Personal growth in

emotion, human relationships and character formation promotes personal moral development which is becoming aware of one’s ethical

potential.

“Communitarianism” states that people are social and can only achieve their moral potential by being part of a growing and developing

community. Thus, different communities are expected to develop their own different set of values and moral principles.

“Self Interest” states that each person should seek their own happiness through a productive independent life in which their own rational

judgement is their only guide.

Implementation of theories • Trigger levels – of such importance that an action can be chosen because it meets this criterion alone

• Veto levels – of such importance that an action can be rejected regardless of all other criteria

• Reject level – criterion that should not be considered Lecture 3

– Internal Business Ethics

1. Loyalty and integrity

Employees are often expected to maintain the highest levels of honesty and integrity, both inside and outside working hours, maintain confidentiality as well as devote their best efforts to the business of the firm. Most organisations have a statement of mission and value, codes of ethics and codes of conduct.

These formal statements reflect senior management’s organisational values, rules and policies, but may not reflect shareholder values.

It is a key role of management to make sure that the integrity and loyalty expectations of the employees do not conflict with one another.

Sacrifice is about making the right trade-off between loyalty and integrity. Integrity demands the sacrifice of things (money, status, power) for its

maintenance. Loyalty is the sacrificing of integrity to obtain things (money, status, power) for oneself or for some other body such as an organisation.

2. Whistleblowing –

Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 exposing an employer’s wrongdoing to outsiders, such as the media or government, regulatory authorities.

Formal definition 

“The voluntary release of non-public information, as a moral protest, by a (former) member of an organisation outside the normal channels of

communication to an appropriate audience about illegal and/or immoral conduct in the organisation or conduct that is opposed in some significant way to

public interest. This is an example of upholding utmost integrity in one’s environment.” Principled resignations

Some people resigned as a matter of principle when they saw or experienced ethical wrongs at work e.g. harassment and bullying, employment

discrimination, in order to maintain their personal integrity. But they did not blow the whistle internally or externally; some went public after their

resignation.

Conditions for justifiable whistle-blowing

• Is the situation of sufficient moral importance to justify whistleblowing? A product or policy of an organisation needs to possess the potential to do harm

to some members of society.

• Do you have all the facts and have you properly understood their significance?

Documentary evidence should be in the possession of the prospective whistle-blower to be presented to external authorities.

• Have all internal channels and steps short of whistleblowing been exhausted? First report facts to immediate manager, if to no avail, take the matter to a

more senior manager, exhausting all available internal channels in the process.

• What is the best way to blow the whistle? Once you go public, to whom and how much information should be revealed? Should it be revealed

anonymously? Need clear plan of action.

• What is my responsibility in view of my role in the organisation? The whistle-blower must be acting in good faith, without malice or vindictiveness.

• What are the chances of success? The prospective whistle-blower must believe that the necessary changes will be implemented as a result of their

whistle-blowing act.

Good whistleblowing policy

• Effectively communicated statement of responsibility

• Clearly defined reporting procedure

• Well-trained personnel to receive and investigate reports

• Commitment to take appropriate action

• Guarantee against retaliation

Downloaded by chibin zhang ([email protected]) lOMoARcPSD|7424075 Pros and cons of a whistleblowing policy

Pros

• Early identification of problems

• Taking corrective action before problems are made public

• Signally moral fortitude to stakeholders

• Creating an ethical corporate climate