Chapter 2

Ethical Issues in Business

Ethical Issues are...

problems, situations, or opportunities requiring an individual to choose among actions that may be evaluated as right or wrong, ethical or unethical

ethical issues arise because of:– conflict among personal/organizational

values– conflicts with societal values

What do you see as some of the causes of unethical behavior?

Causes of Unethical Behavior...

meeting overly aggressive financial or business objectives

meeting schedule pressures

helping the organization survive

rationalizing that others do it

resisting competitive threats

saving jobs

Influences on Ethical Behavior...

personal values

attitudes/behaviors of supervisor

attitudes/behaviors of senior management

internal drive to succeed

performance pressures

no threat of punishment

friends/coworkers

Why not report organizational misconduct?

afraid of not being considered a team player

did not believe corrective action would be taken

fear retribution or retaliation from management

not on else cares about business ethics, why should I

fear lack of confidentiality

Classification of Ethical Issues...

conflict of interest

honesty & fairness

communications issues

organizational relationships

Conflict of Interest...

exists when an individual must choose whether to advance his or her own personal interests, those of the organization, or some other group

must be able to separate personal interests from business dealings

bribery is a significant concern

Honesty & Fairness

honesty relates to truthfulness, integrity & trustworthiness

fairness related to being just, equitable & impartial

breaking or bending laws violates trust

business should not be played as a “game”

lack of rules & poor enforcement leads to unethical behavior

Communications...

issues involved relate to advertising, product safety, pollution, & employee work conditionslying is a major ethical issue with internal & external communicationsfalse advertising relates to:– exaggerated claims– concealed facts & ambiguous statements– lying

Organizational Relationships...

relate to behavior of organizational members toward customers, suppliers, subordinates, superiors, peers & others

plagarism is one ethical issue of concern to organizations

Ethical Issues Related to Ownership...

owners have an obligation to society as well as their employees & customers– minimize pollution– compensate workers fairly– produce safe products

must be sensitive to legal & ethical risks of their industry & region

Financial Responsibilities...

reporting & use of the companies’ finances

pricing products/services fairly

avoiding any antitrust activities– price fixing

sensitivity to socially responsible investing

Employees & Management Concerns...

employee theft, sabotage & competitive intelligence

fear of layoffs

salary plateaus

upward mobility

discrimination

privacy & data access

health & safety

Consumer & Marketing Issues...

Must consider consumer feedback– safety– environmental (can lead to boycotts)– maximize positive publicity & avoid negative

How to Identify an Ethical Issue...

an activity approved by most members of the organization & customary in the industry is probably ethicalif the issue withstands open discussion between groups within & outside the organization is probably ethicalcovert discussion, destroyed or disguised documents indicate potential problems