Ethical Reasoning and Ethical Reasoning and Corporate ProgramsCorporate Programs

The Core Elements of Ethical Character Analyzing Ethical Problems in Business Whistle-blowing Making Ethics Work in Corporations

Chapter

6

Managers’ values in contrastManagers’ values in contrast

American managers were found to be more protective of organizational resources and more interested in compliance with rules than Russian managers.

German managers were found to be more ethical, although more difficult to work with, than other managers within the European Union.

Chinese were more concerned with profits and more willing to accept bribes than Americans, although Americans were less ethical in their reasoning than subjects from the developing country of Belize.

Exhibit 6.Aa

Managers’ values in contrastManagers’ values in contrast

Spanish executives were found to be more ethical than American managers and they were more concerned with global harmful impacts than Americans.

Chilean managers scored higher than Australian managers on issues of bribery, and American and Australian mangers were more concerned with who was being harmed in their ethical reasoning than Chilean or Ecuadorian managers.

Iranian managers were found to be conformists and were sociocentric. These traits were found in other predominantly Arab countries and differed significantly from traits exhibited by American managers.

Exhibit 6.Ab

Stages of moral development and Stages of moral development and ethical reasoningethical reasoning

Age Group Development Stage and Major Ethics Referent

Basis of Ethics Reasoning

Mature adulthood Stage 6 Universal principles: Justice, fairness, universal human rights

Principle-centered reasoning

Early adulthood, adolescence

Stage 3 Social groups: Friends, school, coworkers, family

Group-centered reasoning

Figure 6.1

Mature adulthood Stage 5 Moral beliefs above and beyond specific social custom: Human rights, social contract, broad constitutional principles

Principle-centered reasoning

Adulthood Stage 4 Society at large: Customs, traditions, laws

Society-and-law-centered reasoning

Adolescence, youth

Stage 2 Reward seeking: Self-interest, own needs, reciprocity

Ego-centered reasoning

Childhood Ego-centeredChildhood Stage 1 Punishment avoidance: Punishment avoidance, obedience to power

Ego-centered reasoning

Corporate culture and ethical climatesCorporate culture and ethical climates

Corporate cultureA blend of ideas, customs, traditional practices, company values, and shared meanings that help define normal behavior for everyone who works in a company.

Ethical climateThe unspoken understanding among employees of what is and is not acceptable behavior.

The components of ethical climatesThe components of ethical climates

Ethical Criteria Focus of Individual Person

Ethical Company Concern Society

Egoism (self-centered approach)

Self-interest Company interest Economic efficiency

Benevolence (concern-for-others approach)

Friendship Team interest Social responsibility

Figure 6.2

Principle (integrity approach)

Personal morality Company rules and procedures

Laws and professional codes

Source: Adapted from Bart Victor and John B. Cullen, “The Organizational Bases of Ethical Work Climates,” Administrative Sciences Quarterly 33(1988), p. 104.

Three methods of ethical reasoningThree methods of ethical reasoning

Method Critical Determining Factor

An Action is Ethical When…

Limitations

Rights Respecting entitlements

Basic human rights are respected

Difficult to balance conflicting rights

Utilitarian Comparing benefits and costs

Net benefits exceed net costs

Difficult to measure some human and social costs; majority may disregard rights of minority

Figure 6.3

Justice Distributing fair shares

Benefits and costs are fairly distributed

Difficult to measure benefits and costs; lack of agreement on fair shares

Figure 6.5a

An analytical approach to ethical problems

Step 1

Ask

NoYesNoYesNoYes

UtilityDo benefits

exceed costs?

RightsAre human

rightsrespected?

JusticeAre benefits

and costsfairly

distributed?

Figure 6.5b

An analytical approach to ethical problemsStep 2

Compare results

If yes is the answer to all three questions, it is

probably ethical

If the answers aremixed, it could be either

ethical or unethical

If no is the answer to allthree questions, it is probably unethical

Whistle-blowing protection around the worldWhistle-blowing protection around the world

United Kingdom—The U.K. Public Interest Disclosure Act protects most workers from retaliation by their employers, including dismissal, disciplinary action, or transfer.

European Union—The EU published a charter for whistle-blower protection, identifying terms under which commission staff may blow the whistle, imposing a duty upon officials to report suspected wrongdoing, and outlining the channels for reporting malpractice.

South Africa—The Protected Disclosures Act 2 prohibits employers from subjecting an employee to an occupational detriment for raising concerns about unlawful or irregular conduct.

Exhibit 6.Ba

Source: Lori Tansy Martens and Amber Crowell, “Whistle-blowing: A Global Perspective (Part 1),”Ethikos, May-June 2002, pp.6-8.

Whistle-blowing protection around the worldWhistle-blowing protection around the world

Israel—This country adopted whistle-blowing protection legislation that protects corporate and government workers.

Ghana—A whistle-blower protection act has been proposed to offer rewards and protection to people who volunteer information leading to the prosecution of white-collar criminals.

South Korea—The Anti-Corruption Act established the Korea Independent Commission Against Corruption, whose mission includes the encouragement, protection, and compensation of whistle-blowers.

Exhibit 6.Bb

Source: Lori Tansy Martens and Amber Crowell, “Whistle-blowing: A Global Perspective (Part 1),”Ethikos, May-June 2002, pp.6-8.

Stigmas against whistle-blowingStigmas against whistle-blowing

Divided loyalties—In some Asian countries, members of the company are treated as family members and it is considered wrong to report on family members.

History—The country may have a tragic history of reporting on others.

Logistics—Employees of global companies may be faced with numerous time zones and language differences that could prevent whistle-blowing or make it more difficult.

Fear of retribution—Despite government laws to protect whistle-blowers, many employees of global businesses fear retaliation.

Organizations’ ethics safeguards at workOrganizations’ ethics safeguards at workFigure 6.5

Ethics safeguard Fortune 1000

(1992)

Fortune 1000 (1999)

SW PA Organizations

(1996)

1,500 employees

(2000)

Promoted ethics at work 93% 71%

Developed code of ethics 93 98 57 79

Created ethics office 17 30

--Ethics hotline 9 51

--Ethics office or hotline 50

Offered ethics training 25 20 55

Conducted audit/evaluation 11 23

Corporate ethics awardsCorporate ethics awards

Business Ethics Awards criteria: Be a leader in the field, showing the way ethically. Have programs or initiatives that demonstrate sincerity and

ongoing vibrancy that reaches deep into the company. Have a significant national presence whose ethical behavior sends

a loud signal. Be a standout in at least one area of ethical performance. Have recently faced a challenging situation and overcome it with

integrity.