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Final Exam MGMT1040.pdf

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MGMT 1040
William(bill) Woof

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MGMT  1040   Ethics   Jessica  Gahtan     The  Ethics  of  Management-­‐  notes   Preface   The  Growing  Importance  of  Ethics  in  Management:   • The  conflicts  between  financial  performance  and  social  performance  of  business   firms  today  set  the  context  for  moral  problems  in  management.   • Students  today  will  have   to  face  challenging  moral  situations  in  the  business  world   very  soon  and  this  book  demonstrates  how  to  convincingly  propose  moral  solution   to  almost  any  problem  you  can  encounter  in  the  workplace.   • There  are  5  steps  in  convincingly  making  moral  solutions:   • Understand  that  moral  standards  of  behaviour  differ  between  individuals   • Recognize  that  moral  problems  in  business  are  complex  and  difficult  to   resolve   • Define  the  moral  prolem  in  understandable  terms   • Apply  objective,  rather  than  subjective  methods  of  analysi s  to  reach  a   logical  balane  and  be  able  to  convincingly  explain  why  a  given  balance   should  be  viewed  as  the  most  right,  fair  and  proper.   • Understand  the  multidisciplinary  approach  to  a  balance  resolution  is  crucial.   • The  goal  of  this  book  is  that  the  impleme ntation  of  the  steps  to  solve  moral  issues   will  lead  to  a  workplace  with  increased  trust  commitment  and  effort  amongst  the   individuals,  groups  and  organizations  associated  with  the  firm.     Chapter  1   • Nature  of  moral  problems  is  due  to  the  continual  pressures  on  managers  for  improved   performance  in  a  competitive  global  environment   • 3  Requirements  for  Resolving  Moral  Problems   • Recognize  that  moral  problems  in  business  are  complex  &  difficult  to  resolve   • Involve  individuals,  groups,  or  organizations  of  the  firm  tha t  will  be   harmed  in  ways  outside  their  control   • Rights  will  be  ignored/denied   • Understand  that  business  managers  can’t  rely  upon  their  moral  standards   • Moral  standards  differ  between  people    depends  on  their  goals,   norms,  beliefs,  &  values   • Depend  on  cultural  &  religious  traditions   • Accept  that  it  isn’t  enough  for  managers  to  decide  on  what  they  believe  is   far/right  for  the  benefits/harms  of  others   • Must  convincingly  explain  why  that  balance  is  best   • Economic  Outcomes   • Legal  Requirements   • Ethical  Duties   1   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     • Moral  standards  are  subjective  &  personal    Not  adequate  framework  for  decisions   • Personal  Goals:  Expectations  of  outcomes   • What  we/others  want  out  of  life   • Personal  Norms:  Expectations  of  behavior     • How  we/others  should  act   • Personal  Beliefs:  Expectations  of  thought   • How  we/others  should  think   • Personal  Values:  Priorities  among  goals,  norms,  &  beliefs   • How  we  judge  the  importance  of  what  we  want,  how  we  should  act,  &  how  we   should  think   • Vary  based  on  culture,  &  economic  &  social  situations   • Impacts:  Relative  outcomes  that  people  think  about  when  they  consider  a  moral   decision   • Benefits:  Well-­‐being  will  be  improved  by  the  action   • Harms:  Well-­‐being  will  be  harmed  by  the  action   • Rights:  Rights  that  are  exercised  by  the  action   • Wrongs:  Rights  that  are  denied  by  the  action   • Economic  Outcomes:  Net  balance  of  benefits  over  costs  for  the  full  society    Values  of   those  benefits  &  costs  are  determined  by  all  people  within  the  society   • Pareto  Optimality:  Maximum  social  benefit  with  minimum  social  cost   • More  is  better  than  less   • More  is  better  than  less  when  that  more  consists  of  what  people  really   want   • More  of  what  people  want  is  better  than  less  when  that  more  is  produced   efficiently  by  using  as  little  possible  of  what  people  least  want   • All  market  must  be  competitive   • All  customers  must  be  informed   • All  costs  must  be  included   • Legal  Requirements:  Laws  adopted  by  members  of  society  to  regulate  the  behaviors  of   that  society   • All  elections  are  open  &  competitive   • All  citizens  can  freely  participate   • Al  participants  are  informed   • Ethical  Duties:  Obligations  o wed  by  members  of  society  to  other  members  of  that   society   • Enlightened  Self-­‐Interest:  Never  take  an  action  that  will  bring  immediate   benefits  to  you  now,  but  one  that  will  provoke  reactions  in  the  future   • Personal  Virtues:  Never  take  any  action  that  is  not   honest,  open,  &  truthful  &   that  you  would  not  take  pride  in   • Religious  Injunctions:  Never  take  any  action  that  is  not  kind  &  compassionate     • Government  Requirements:  Never  take  any  action  that  violates  the  law   • Utilitarian  Benefits:  Never  take  any  action  that  does  not  result  in  the  greater   good  than  harm  for  the  society     • Universal  Rules:  Never  take  any  action  that  you  would  not  be  willing  to  see   others  take   2   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     • Distributive  Justice:  Never  take  any  action  in  which  the  last  among  us  will  be   harmed  in  any  way   • Contributive  Liberty:  Never  take  any  action  that  will  interfere  with  the  rights  of   others  for  self-­‐improvement     Chapter  2   • Logical  conviction  of  others  is  key   • People’s  moral  standards  always  differ   • Economic  Theory:  Normative  theory  of  society   • “It  would  be  impossible  to  make  any  single  person  better  off  without  making   some  other  person  worse  off”   • Profit  maximization  leads  to  the  well -­‐being  of  society   • 6  Variety  of  Demands   • Individual  Consumers:  Each  consumer  has  a  slightly  different  set  of   preferences   • Product  Markets:  All  the  individual  consumers  for  a  given  good/service   • Producing  Firms:  Adding  the  individual  supply  curves  of  all  the  producing   firms    Marginal  Revenues  &  Marginal  Costs   • Factor  Markets:  Technology  of  the  producing  firm  determines  the   maximum  output  of  goo ds/services   • Factor  Owners:  Demand  for  each  factor  of  product  equals  the  proportion  of   that  factor  used  in  the  production  function   • Supply  is  limited   • Overall  Society:  Owners  of  the  factors  of  production  are  also  customers  for   products/services   • Effective  use  of  resources:  Price  of  the  factor  markets  allocate  the  scarce   resources  of  society  to  their  most  effective  uses   • Efficient  conversion  of  resources  into  products:  Production  functions  of  the   producing  firms  convert  limited  input  factors  into  wanted  output  go ods/services   • Effective  distribution  of  products:  Price  of  the  product  markets  distribute  the   wanted  goods/services  to  their  most  effective  uses   • Complete  inclusion  of  costs:  All  external  costs  of  the  production  process  must   be  identified   • Political  adjustment  of  inequalities:  Should  reflect  the  social  values  of  that   society   • Economic  Model  is  utilitarian    Focuses  on  outcomes  rather  than  duties     Chapter  3     -­‐ The  analytical  method  of  legal  requirements  can  be  summarized  very  simply  in  the   proposal  that  everybody   should  always  obey  the  law   3   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     -­‐ The  law  in  democratic  society  can  be  said  to  represent  the  minimal  moral  standards  of   that  society     -­‐ The  proposal  from  Hobbes  comes  across  as  the  rule  that  everyone  should  obey  the  law   because  it  is  in  everyone’s  self -­‐interest  to  have  a  stable  and  orderly  society   -­‐ Hobbes  states:  you  may  not  like  the  laws  that  are  generated,  but  to  avoid  the  continual   war  of  all  against  all,  you  have  to  accept  them     -­‐ Both  economic  outcomes  and  legal  requirements  for  a  society  are  based  upon  the   enlightened  self-­‐interests  of  members  of  that  society       The  Definition  of  Law   -­‐ Law-­‐  a  consistent  set  of  universal  rules  that  are  widely  published,  generally  accepted,   and  usually  enforced   -­‐ The  laws  describe  the  ways  in  which  people  are  required  to  act  in  their  rel ationships   with  other  people  within  a  society     -­‐ The  law  can  be  defined  as  a  consistent,  universal,  published,  accepted,  and  enforced  set   of  rules     o Consistent-­‐  two  requirements  cannot  contradict  each  other   o Universal-­‐  applicable  to  everyone  with  similar  chara cteristics  facing  similar   circumstances   o Published-­‐  published  so  that  it  is  accessible  to  everyone  within  the  society   o Accepted-­‐  the  requirement  has  to  be  in  large  measure  obeyed   o Enforced-­‐  members  should  be  compelled  to  obey  the  law  if  they  don’t  choose  to   do  so  voluntarily.  If  any  disobedience,  member  will  suffer  from  loss  of   convenience,  time,  money,  freedom,  or  life   -­‐ Law  as  an  ideal  concept  of  consistent  and  universal  rules  to  guide  human  actions  and   managerial  decisions  and  actions  within  a  society     The  Law  as  Collective  Moral  Standards     -­‐ In  considering  the  possible  relationship  between  moral  judgments  and  legal   requirements,  there  would  seem  to  be  three  conclusions  that  can  be  reached  quickly:   o Considerable  overlap  –  the  published  requirements  of  the  law  ove rlap  to  a   considerable  extent  with  moral  standards  of  society  (ex.  A  person  who  violates   the  federal  law  against  bank  robbery  also  violates  the  moral  standard  against   theft).  However,  there  are  some  laws  that  have  no  ethical  content.  Also,  there   are  some  moral  standards  that  have  no  legal  standing.     o Negative  injunctions   –  the  requirements  of  the  law  tend  to  be  negative,  while   the  standards  of  morality  more  often  are  positive.  The  law  represents  the   minimum  set  of  standards  to  govern  behavior  in  society  and   the  actions  beyond   that  minimum  have  to  come  from  individual  initiative,  not  legal  force.     o Lengthy  delays  –  the  requirement  of  the  law  tend  to  lag  behind  the  apparent   moral  standard  of  society.     -­‐ None  of  these  arguments  are  truly  decisive  and  none  helps  to  determine  whether  a   given  legal  requirement  does  indeed  represent  a  collective  moral  judgment  by  members   of  a  society  and  consequently  can  serve  as  means  to  analyze  the  managerial  decisions   and  actions  of  a  company  within  society.       The  problems  in  the  Formulation  of  the  Law   4   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     -­‐ The  question  is:  does  the  law  actually  represent  the  collective  moral  judgment  of  our   citizens?     -­‐ There  would  seem  to  be  five  major  problems  in  the  transfer  from  individual  mor al   standards  to  universal  legal  requirements  through  the  various  stages  of  the  social  and   political  process:     o Inadequate  information  –  the  goals,  norms,  beliefs,  and  values,  and   consequently  the  moral  standards,  of  the  members  of  society  may  be  based   upon  a  lack  of  information  relative  to  issues  of  importance.  It  is  difficult  for   personal  moral  standards  to  actively  influence  the  formation  of  the  law  if   information  is  missing   o Incomplete  participation  –  the  moral  standards  of  some  members  of  society   may  not  be  included  in  the  formation  of  the  small  groups  that  subsequently   influence  the  formal  organizations  and  the  legal  institutions.     o Inarticulate  representation  –  the  moral  standards  of  some  groups  within  society   may  not  be  fully  represented  in  the  consensus  of  the  formal  organizations  that   subsequently  influence  legal  institutions.     o Inconsistent  formulation  –  The  moral  standards  of  some  organizations  within   society  may  not  be  equally  considered  in  the  agreements  of  the  political   institutions  that  result,  or  should  result,  in  the  formulation  of  the  law.     o Indefinite  wording  –  the  wording  of  legal  requirements  is  not  a  theoretical   problem.  It  has  nothing  to  do  with  the  proposition  that  laws  should  be  obeyed   because  they  either  represent  or  should  represent  the  m inimal  moral  standards   of  a  large  percentage  of  the  population.       Conclusion   -­‐ There  obviously  is  some  overlap  between  the  moral  standards  of  our  citizens  and  the   legal  requirements  of  our  society.   -­‐ There  is  no  direct  relationship  in  all  instances     -­‐ The  social  and  political  processes  by  which  the  law  is  formulated  are  too  complex   –  and   perhaps  too  subject  to  manipulation   –  for  changes  in  people’s  goals,  norms,  beliefs,  and   values  to  be  directly  translated  into  changes  in  that  set  of  universal  and  consistent  rul es   that  we  call  law   -­‐ Legal  requirements  can  serve  as  a  guide  to  managerial  decisions  and  actions   -­‐ Legal  requirements  are  useful,  but  they  are  not  enough   -­‐ They  don’t  include  the  full  range  of  personal  goals,  norms,  beliefs,  values  and  don’t   represent  the  true  nature  and  actual  worth  of  human  beings.     Chapter  4   **  I  would  suggest  going  over  page  88  individually  since  it  summarizes  the  steps  so  far     -­‐ Ethical  duties  -­‐  duties  you  believe  you  owe  to  other  people  based  upon  your  rational   through  the  processes.     -­‐ No  one  can  tell  you  what  you  ethically  owe  to  others;  you  have  to  decide  on  your  own.   But,  there  are  universal  principles  that  can  help  you  decide   -­‐ Universal  principle  –  rules  for  decisions  or  actions  that  are:   5   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     o 1)  not  limited  to  any  particular  cultural  or  religious  tradition  or  any  specific   economic  or  social  situation   o 2)  are  thought  to  lead  to  the  overall  well -­‐being  and  general  satisfaction  of  the   full  society   o 3)  have  an  easily  understood  rationale  why  the  application  of  that  universal   principle  will  lead  to  that  beneficial  result.     -­‐ Two  elements-­‐  applicable  to  all  and  understandable  by  all   –  are  fundamental  to  moral   philosophy     Definition  of  Moral  Philosophy     -­‐ Moral  philosophy   –  study  of  proper  thought  and  conduct;  that  is,  how  people   normatively  should  think  about  issues  that  are  important  to  themselves  and  our  society   -­‐ Moral  philosophy  will  help  you  to  more  accurately  estimate  the  degree  of  rightness  or   wrongness  of  a  given  decision  or  action   -­‐ Something  might  be  morally   wrong  if  (1)  not  openly  and  proudly  acknowledged  and  (2)   not  economically  efficient       -­‐ All  moral  problems  consist  of  situations  in  which  there  are  benefits  for  some  and  harms   for  others,  and  in  which  there  are  rights  recognized  for  some  and  denied  for  other s.     -­‐ All  moral  solutions  involve  compromises  on  the  nature  and  extent  of  those  benefits  and   harms,  and  of  those  rights  recognized  and  rights  denied     There  are  eight  universal  principles:     The  Principle  of  Self-­‐Interests     -­‐ Justice  was  seen  as  a  contract  in  which  each  citizen  agreed  not  to  harm  other  citizens,   either  by  acting  adversely  to  them  or  by  creating  envy  among  them,  and  it  was   proposed  that  all  parties  would  accept  this  contract  because  it  was  in  everyone’s  long -­‐ term  self  interest  to  live  in  a  peacefu l,  orderly  society  with  little  probability  of  harm.     -­‐ This  universal  principle  ties  good  personal  conduct  to  the  goal  of  a  stable,  cooperative   society,  and  they  were  using  the  long -­‐term  consequences  of  that  conduct  as  the  basis   for  this  principle     -­‐ In  modern  terms:  never  take  any  action  or  decision  that  is  not  in  the  long -­‐term,  or   enlightened,  self-­‐interests  of  yourself,  and  of  the  organization  to  which  you  belong,  in   order  to  avoid  the  possibility  of  retribution  and  harm  from  others     Principles  of  Personal  V irtues   -­‐ Everyone  should  act  in  ways  that  conveyed  a  sense  of  honor,  pride,  and  self -­‐worth   -­‐ We  have  to  be  honest,  truthful,  courageous,  temperate,  and  high -­‐minded  in  our  actions   because  the  goal  of  human  existence  is  the  active,  rational  pursuit  of  excellence ,  and   excellence  requires  those  personal  virtues     -­‐ The  goal  of  Socrates:  develop  the  first  rule  for  a  successful  life.  Successful  then  meant  to   be  happy;  it  would  properly  be  to  be  content  and  prosperous.  There  could  be  no   happiness  in  the  pursuit  of  pleasu re,  or  in  the  ownership  of  property,  unless  you  knew   how  to  use  each  one  of  those  well     the  knowledge  of  the  “good”  was  thus  the  goal  of   life   -­‐ Plato:  focused  more  on  politics,  on  the  need  to  have  a  good  society  in  order  to  have  a   good  life   6   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     -­‐ Aristotle:  focused  on  ethics,  on  the  need  to  have  good  men  in  order  to  form  a  good   society   -­‐ Active  use  of  reason  leads  to  excellence,  then  happiness  is  the  pursuit  of  excellence   -­‐ Excellence  is  focused  in  the  character  of  a  man  and  can  be  found  on  a  number  of   different  dimensions,  such  as  openness,  honesty,  truthfulness,  courage,  modesty,  and   pride   -­‐ Modern  terms:  never  take  any  decision  or  action  that  is  not  honest,  open,  and  truthful,   and  that  you  would  not  feel  proud  to  have  reported  on  the  front  pages  of  the   newspaper     The  Principle  of  Religious  Injunctions   -­‐ problem  with  be  open,  honest  and  proud  is  that  some  people  might  be  proud  and  open   about  behaviors  that  others  find  mean,  terrible,  and  self -­‐centered   -­‐ The  basic  teachings  of  most  religions  stress  a  sense  of  community   among  all  holders  of  a   given  faith,  a  belief  in  a  common  goal  for  that  community,  and  a  duty  of  kindness,   compassion,  and  help  to  people,  even  to  those  outside  the  faith   -­‐ In  modern  terms:  never  take  any  action  that  is  not  kind  and  compassionate  toward   others,  and  that  does  not  forward  a  sense  of  true  community,  a  belief  that  all  of  us   should  work  jointly  toward  a  common  goal     The  principle  of  Government  Requirements   -­‐ Hobbes  returned  to  the  early  “people  truly  are  self -­‐centered”   -­‐ People  were  essentially  equal  i n  strength  of  body  and  mind,  and  this  equality  of  ability   will  lead  to  an  equality  of  hope  in  the  achievement  of  ends,  and  that  in  turn  led  to  a   constant  struggle  for  gain,  for  safety,  and  for  reputation     could  easily  lead  to  a  war   -­‐ Hobbes  proposed  that  in dividuals  who  live  in  a  state  of  nature,  would  agree  to  live  with   a  powerful  central  authority  if  it  would  guarantee  the  peace  and  enforce  the  law   -­‐ Therefore,  the  basic  ethical  principle:  obey  the  law  to  avoid  chaos  and  loss   -­‐ In  modern  terms:  never  take  any  action  that  would  violate  the  law  because  the  law   represents  the  agreed-­‐up  minimal  moral  standards    of  our  society,  and  they  must  be   observed  by  all  to  maintain  peace     The  Principle  of  Utilitarian  Benefits   -­‐ The  fundamental  principle  was  the  creation  of  the   greatest  net  good  for  the  full  society   o The  greatest  good  for  the  greatest  number -­‐  Mill  objected  and  said  that  the   measure  should  be  the  net  effect  upon  the  full  society,  not  upon  a  fortunate   portion   -­‐ In  modern  terms:  never  take  any  action  that  does  not  resu lt  in  greater  net  benefits  than   harms  for  the  full  society  of  which  you  are  a  part  of     The  principle  of  Universal  Duties   -­‐ Kant  first  proposed  that  nothing  in  this  world  could  be  considered  to  be  an  absolute   good,  except  for  a  good  will   –  positive  intent,  beneficial  desire,  or  recognized  duty  to   help  others   -­‐ How  can  people  tell  whether  a  particular  individual’s  will  is  indeed  good?   -­‐ First  formulation:  Kant  proposed  that  a  will  could  be  considered  to  be  good  only  if  the   individual  involved  was  willing  to  have  his/her  intent  made  into  a  universal  law:   7   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     everyone  in  the  same  situation  should  then  be  free  or  even  encouraged  to  act  in  the   exact  same  way   -­‐ Second  Formulation:  Every  person  should  always  treat  others  as  ends,  worthy  of  dignity   and  respect,  and  never  as  mean s  to  his/her  own  ends   -­‐ In  modern  terms:  never  take  any  action  that  you  would  not  be  willing  to  see  others,   faced  with  the  dame  or  a  closely  similar  situation,  be  free  or  even  encouraged  to  take,   and  never  take  any  action  that  does  not  treat  all  others  as   ends,  worthy  of  dignity  and   respect     The  Principle  of  Distributive  Justice   -­‐ Moral  standards  are  based  upon  the  primacy  of  a  single  value,  which  is  justice   -­‐ Everyone  should  act  to  ensure  a  more  equitable  distribution  of  benefits,  because  this   promotes  individual  self-­‐respect,  which  is  essential  for  social  corporations   -­‐ In  modern  terms:  never  take  any  action  that  harms  the  least  among  us,  those  with  least   income,  education,  wealth,  competence,  influence,  and  power     The  Principle  of  Contributive  Liberty   -­‐ Moral  standards  are  based  upon  the  primacy  of  a  single  value,  which  is  liberty   -­‐ Everyone  should  act  to  ensure  greater  freedom  of  choice,  because  this  promotes  market   exchange,  which  is  essential  for  social  productivity   -­‐ In  modern  terms:  never  take  any  action  that  interferes  with  the  rights  of  others  to   develop  and  improve  their  skills  and  abilities  because  this  interference  would  deny  the   rights  of  all  of  us,  not  just  the  least  among  us,  to  pursue  our  own  self -­‐interests  through   our  own  voluntary  exchanges   **  see  the  chart  on  pages  99-­‐100,  it  summarizes  all  8  principles       8   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     Chapter  5   Why  should  a  business  manager  be  moral?     • Solely  relying  on  economic,  legal  and  ethical  duties  cannot  solve  the  problem     • Reciprocity  is    the  most  logical  reason  for  morality   • “Do  only  onto  others  what  you  would  only  do  onto  yourself”  rule   • Plenty  of  people  ignore  this  and  take  the  chance  to  do  inappropriate  actions,  risking   what  might  happen  to  them  by  other  people  in  the  future   • Other  reason  for  people  to  be  moral  is  concern  for  the  quality  o f  their  own  lives   • The  Question  in  ethics  is  “Do  you  have  an  obligation  to  leave  the  world  a  little  better  than   you  found  it,  or  can  you  simply  take  what  you  want  now,  and  et  other  people  worry  about   making  up  for  any  shortfall  later  on?”     Trust,  Commitment  and  Effort   • Other  than  reciprocity  and  quality  of  life,  it  is  important  for   managers  to  be  moral  in  order   to  create  trust,  commitment  and  effort  among   stakeholders  of  the  firm   • This  can  lead  to  a  chain  of  events  for  example   • Worker  has  a  great  idea  but  does   not  tell  manager  because  they  do  not  trust   manager,  they  think  the  manager  will  steal  their  idea  and  take  credit  fo   it  etc • According  to  Hosmer,  trust  is  most  likely  the  first  step.   • This  trust  requires:   • Moral  Responsibility   • “What  is  duty?”   • Comprehend  fist  that  people  are  actually  being  hurt  or  harmed,  rights   denied  etc.  by  company  decisions     • Moral  Reasoning   • “What  is  right?”   • logically  determining  the  reasons  to  which  their  base  their  decisions,  legal   solutions,  economic  solutions,  ethical  solutions  etc  and  r ationally  combine  the   solutions     • Moral  Character   • “What  is  “integrity”?”   • Having  the  courage  to  recognize  a  moral  problem   • Sometimes  recognizing  moral  problems  will  not  lead  to  popularity,  however,   this  is  why  it  takes  the  courage  to  stand  up  and  recognize  th e  need  to  take   action     Extended  Organizations  (just  a  description,  not  a  reason)   • Are  large  companies  that  are  dependent  on  many  other  firms  and  institutions,  that  are   outside  of  their  hierarchical  controls.   • Partnerships,  customers  etc     Cooperation,  Innovation,  and  Unification   9   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     • Since  companies  become  very  large,  and  control  is  becoming  limited   • This  increases  the  need  for  moral  managers   • 3  Steps  in  the  progression  of  moral  management  and  competitive  Success   • Moral  Management  builds  Individual  attitudes  of  commitment,  trust  and  effort   • It  sets  the  example   • Different  stakeholder  groups  may  disagree,  but  the  common  goal  of   achieving  a  moral  solution  is  the  first  step     • Individual  attitudes  of  commitment,  trust  and  effort  lead  to  organizational  behaviors  of   cooperation,  innovation  and  unification     • Altogether,  a  mutual  effort  with  the  influence  of  management  leads  to   positivity     • 3.  Organizational  behaviors  of  cooperation,  innovation  and  unification  =  ESSENTIAL  FOR   COMPETITIVE  SUCCESS  IN  A  RAPIDLY  CHANGING  GLOBAL   ECONOMY   • This  leads  to  companies  becoming  proactive,  enthusiastic,  and  advancement  in  both   efficiency  and  innovation.   • “Unification”  attitude  –  we’re  all  in  this  together   -­‐    is  essential  for  the  success  of  the   firm         Unify  &  Guide   • The  main  principle  of  the se  steps  is  Unify  &  Guide,  but  MORALLY   • This  involves  3  steps:   • Management’s  Moral  Goals   • Consider  stakeholders   • Balance  economic,  legal  and  ethical  solutions   • Think  about  unification  based  on  similarities  rather  than  differences     • Organizational  Goals   • What  are  the  company’s  goals  within?   10   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     • Environmental  protection?   • Tech  achievement?   • Financial  performance?   • Customer  satisfaction?   • Industry  position?   • Socia  contribution?  Etc…   • Long  term   • Mission  Statement   • Combines  steps  1  and  2  (goals  for  self  and  duties  towards  others)   • Defines  the  future  of  the  firm   Moral  Issues  in  Business-­‐  Notes   CHAPTER  1   Ethics  (or  moral  philosophy):     • A  broad  field  of  inquiry  that  addresses  a  fundamental  query  that  all  of  us  face  about   how  we  should  live  our  lives   • Moral  principles  that  govern  a   person’s  or  group’s  behavior   • Most  people  use  “Ethics”  and  “Morals”  interchangeably,  there  is  no  real  distinction   between  a  person’s  “morals”  and  “ethics”     Business  Ethics:   • Business  ethics  is  the  study  of  what  constitutes  right  and  wrong,  good  and  bad,   human  conduct  in  a  business  context.   • Business  =  Any  organization  whose  objective  is  to  provide  goods  or  services  for   profit   • Business  People  =  participants  in  the  planning,  organizing  or  directing  the  work  of   business   • Organization  =  group  of  people  working  toge ther  to  achieve  a  common  purpose   • BUSINESS  ETHICS  IS  NOT  AN  OXYMORON!  Business  and  Ethics  are  not  contradicting   terms  and  they  are  heavily  interrelated.       Moral  Versus  Non -­‐Moral  Standards:   • 3  Characteristics  that  set  moral  standards:   • They  concern  behavior  that  is  of  serious  consequence  to  human  welfare,   which  can  profoundly  harm  or  benefit  people.   • E.g.  moral  norms  against  lying,  stealing,  and  murder  deal  with   harms,  treating  people  with  dignity  and  respect  are  benefits.   • Take  priority  over  other  standards  in cluding  self-­‐interest.   • Their  soundness  depends  on  the  adequacy  of  the  reasons  that  support  or   justify  them.   • Etiquette  refers  to  the  norms  of  correct  conduct  in  polite  society  or  to  any  special   code  of  social  behavior  or  courtesy.   • E.g.  saying  please  and  tha nk  you  or  chewing  with  your  mouth  closed.   11   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     • Law:  Statutes  are  laws  enacted  by  legislative  bodies.    Defines  what  we  are  legally   bound  to  do  or  prohibited  from  doing.   • An  action  can  be  illegal  but  morally  justified   • e.g.  hiding  Jews  from  the  Nazi’s  in  the  Holoca ust  was  against   German  law  in  1939,  but  doing  so  was  an  admirable  and  ethically   justified  action   • An  action  that  is  legal  can  be  morally  wrong.   • e.g.  Legally  speaking  you  are  not  obligated  to  stop  and  give  a  person   in  need  first  aid  treatment  if  you  know  how  to  do  so,  but  it  is   morally  wrong  to  ignore  the  person  in  need  and  let  them  suffer.     Religion  and  Morality:   • There  is  a  strong  connection  between  religious  beliefs  and  how  people  view,  base   and  judge  their  morality  and  the  morality  of  like -­‐minded  and  oppos ing  groups.   • World  religions  provide  believers  with  moral  instruction,  values  and  commitments   that  they  are  obligated  or  guided  to  follow.     • Religion  often  gives  us  guidelines  as  to  how  to  morally  live  in  a  society  (although   each  religion  differs  on  certain   matters.   • There  are  moral  commandments  or  rules  given  to  believers  such  as  “Do  not   murder”,  “Do  not  steal”  and  “Do  unto  others  as  you  would  have  them  do   unto  you”.   • Morality  is  often  based  upon  religious  beliefs  but  transcends  and  goes  beyond  what   is  morally  derived  from  religion.     Ethical  Relativism:   • Not  all  people  believe  that  morality  boils  down  to  religion  but  rather  is  a  function  of   what  a  particular   society  chooses  to  believe.   • This  is  called  Ethical  Relativism   • The  theory  of  what  is  right  or  wrong  is   determined  by  what  a  culture  or  society   dictates.   • What  is  morally  justified  and  correct  in  one  place  may  not  be  so  in  th   next  society. • This  can  lead  to  unpleasant  implications  as  one  society  cannot  justifiably  hold  its   ethical  system  to  be  higher  than  oth er  societies,  even  though  some  of  the  actions   that  occur  in  those  societies  that  are  accepted  are  immoral  based  on  their   standards.   • E.g.  polygamy,  rape,  stealing,  slavery,  infanticide  and  cannibalism  have  been   morally  accepted  in  some  cultures.   • Business  has  its  own  norms  and  rules  that  differ  from  those  of  the  rest  of  society       Having  Moral  Principles:   • People  often  base  their  moral  standards,  behavior  and  actions  on  what  their   conscience.   • Simplification  of  the  conscience:  “A  complex  piece  of  developmental  p sychology,   our  conscience  evolved  as  we  internalized  the  moral  instructions  of  parents  or  other   authority  figures  that  raised  us  as  children.   • Our  consciences  grew  upon  the  foundation  of  receiving  reward  or  punishment   based  on  the  good  or  bad  actions  we  too k.   12   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     • It  is  often  bad  advice  to  simply  follow  your  conscience  for  moral  choices  because   sometimes  when  faced  with  a  moral  situation,  two  people’s  consciences  will  have   different  considerations  regarding  the  choices.   • You  cannot  purely  justify  your  actions  base d  on  what  your  conscience  may  tell  you,   but  it  is  often  a  good  idea  to  take  the  pangs  of  your  conscience  as  a  warning  and   stop  to  reexamine  a  situation.     Moral  Principles  and  Self -­‐Interest:   • Moral  principles  often  conflict  with  self -­‐interest  and  what  is  moral  for  one  to  do   may  be  in  opposition  to  his/her  own  desires.   • Morality  serves  to  restrain  our  purely  self -­‐interested  desires  so  we  can  live  together   in  society.   • The  moral  standards  of  a  society  provide  the  basic  guidelines  for   cooperative  social  existence   and  allow  conflicts  to  be  resolved  by  appeal  to   shared  principles  of  justification.     Individual  Integrity  and  Responsibility:   • Corporations  are  an  example  of  an  environment  that  can  potentially  damage   individual  integrity  and  responsibility.   • Organizational  Norms:   • Major  characteristic  of  an  organization  is  the  shared  acceptance  of   organizational  rules  by  its  members.   • These  organizational  norms  could  take  the  form  of  an  obvious  and   formally  written  out  guideline  or  a  subtle  and  unwritten  code  of   norms.   • One’s  degree  of  commitment  (by  accepting  the  group  norms  and  agrees  to   contribute  him/herself  to  the  organizational  goals)  measures  one’s  loyalty   to  the  team.   • Conformity:   • Conformity  is  an  essential  part  of  achieving  organizational  goals  to  a  certain   extent.    There  is  organization  pressure  to  conform  to  the  group’s  norms  and   goals  and  certain  expected  behaviors.   • There  are  many  extreme  examples  of  psychological  experiments  that  test   the  conformity  of  individuals  given  certain  situations,  such  as  Solomon  Ash’s   experiment  in  which  a  group  would  intentionally  say  the  wrong  answer  to   the  question  of  which  line  is  comparable  in  measure  to  the  first  line   displayed  and  the  test  subject  would  be  conflicted  to  either  conform  to  the   group’s  obviously  wrong  answer  or  to  answer   it  honestly  and  stray  away   from  the  group’s  conformity.   • Groupthink  happens  when  pressure  of  unanimity  within  a  highly   cohesive  group  overwhelms  other  members’  desires  or  ability  to   take  an  alternative  course  of  action,  ignore  warnings  about  group   activity  or  ignore  contrary  ideas  that  may  contradict  that  of  the   group’s  from  outside  sources.       • Group  think  is  often  irrational  and  can  cause  disastrous  decisions  to   be  made  that  can  potentially  damage  one’s  moral  thinking.   • Diffusion  of  Responsibility:   13   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     • Pressure  to  conform  to  a  group  and  comply  with  its  norms  and  beliefs  can   lead  to  the  surrender  of  autonomy   • This  often  results  in  the  diffusion  of  responsibility  and  destructive  obedience   to  a  superior,  such  as  the  case  in  many  psychological  experiments  such  as   the  one  shown  in  class  of  Stanley  Milgram’s  electric  shock  treatment   experiment  for  wrong  answers  given  and  often  the  test  subjects  chose  to  go   all  the  way  up  the  scale  of  increasing  electric  shocks  that  would  have  killed   the  person  answering  the  questions  inco rrectly.  Their  justification  was  the   instructor  sitting  in  the  room  told  them  to  do  so.   • When  extending  the  individual’s  responsibility,  we  must  give  the  employee   5  obligations  as  to  which  they  recognize  in  requirement  of  their  precautions:   • Obligation  of  investigation   • Obligated  to  discern  the  nature  of  their  own  work  and  the   projects  of  those  around  them.   • Obligation  of  communication:   • Must  communicate  knowledge  of  morally  troublesome   events  to  others  within  the  organization.   • Obligation  of  protection:   • Protect  their  subordinates  from  the  consequences   investigation  and  communication,  must  protect   whistleblowers  from  retaliation.   • Obligation  of  prevention:   • Must  set  up  preventative  measures  and  organization   structures  to  avoid  major  problems   • Obligation  of  precauti on:   • Members  of  the  organization  can  be  held  responsible  for   joining  an  institution  they  know  is  immoral  and  will   inevitably  be  part  of  the  actions  the  organization  takes.     Moral  Reasoning:   • Moral  reasoning  is  best  viewed  in  the  context  of  an  argument,  in  wh ich  a  conclusion   must  be  reached  and  the  claims  are  the  premises.   • Correct  Example:   • If  a  person  is  a  mother,  the  person  is  female   • Fran  is  a  mother   • Therefore,  Fran  is  female.   • Incorrect  Example:   • If  a  person  is  a  mother,  the  person  is  a  female.   • Fran  is  a  female   • Therefore  Fran  is  a  mother.   • Correct  Example  (of  a  moral  situation):   • If  an  action  is  the  only  practical  way  to  remedy  a  social  problem,   then  it  is  morally  permissible   • Affirmative  action  on  behalf  of  women  and  minorities  in  personnel   matter  is  the  onl y  practical  way  to  remedy  a  social  problem  of   unequal  employment  opportunity   • Therefore,  affirmative  action  on  behalf  of  women  and  minorities  in   personnel  matters  is  morally  permissible.   14   Notes   Final  Exam   MGMT  1040   Ethics   Jessica  Gahtan     • Defensible  Moral  Judgments:   • If  a  moral  judgment  or  conclusion  is  defensible,  then  it  must  be  supportable   by  a  defensible  moral  standard.   • A  moral  standard  supports  a  moral  judgment  if…   • The  standard,  taken  with  the  relevant  facts,  logically  entails  the   moral  judgment   • The  standard  itself  is  a  sound  standard.   • Moral  judgments  mus t  be  logical  and  should  be  based  on  fact  and   acceptable  moral  principles.   • If  a  person  cannot  correctly  defend  his  moral  judgments  you  are  obligated   to  go  and  laugh  in  his  face  and  tell  him/her  to  come  back  when  they  can  do   so.     “It’s  Good  Business”  –  Robert  C.  Solomon:   • Why  is  ethics  important  in  a  business  environment  and  how  can  it  ruin/be  beneficial   to  an  organization?   • Ethical  errors  end  careers  more  quickly  and  more  definitively  than  any  other   mistake  in  judgment  or  accounting.   • To  err  is  human  nature,  but  bad  moral  judgments  like  cheating,   stealing,  murder,  etc.  can  be  inexcusable.   • Ethics  provides  the  broader  framework  within  which  business  life  must  be   understood.   • Nothing  is  more  dange
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