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MGMT 1040 (37)


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York University
MGMT 1040
William(bill) Woof

th The Ethics of Management – Hosmer 7 Edition Chapter 1 • Accounts of corporate wrong-doing have always been with us • Ex. Enron had deliberately modified the balance sheet to report greater profit • Today, the nature of moral problems has shifted from senior executives for personal gain to the managers in an increasingly competitive global environment • Financial performance of a firm (profit) is often in conflict with its social performance (overall well-being of those associated with firm) • 3 requirements can be used for solving this conflict: i. Recognize that moral problems in business are complex and difficult to resolve – mixture of rights exercised and rights denied ii. Moral standards differ between people; must be objective rather than subjective – moral standards depend upon personal goals, norms, beliefs, and values iii. Not enough for manager to reach a decision that is fair and proper balance of benefits and harms; they must be able to convincingly explain why the decision is best. This is based on (a) determining economic outcomes, (b) considering legal requirements, (c) evaluating ethical duties • The 7 elements needed to make a convincing (objective) decision will be looked in detail Understand the Different Standards • Moral standards of behaviour are our intuitive gauges for decisions and actions • Moral standards of behaviour are subjective/personal • Lying to a friend may be acceptable; lying to stockholders is a major moral problem • Moral standards are not a good framework for decision, since they are subjective • They vary by individual, group, region, country, culture, time • Moral standards of behaviour differ between people due to goals, norms, beliefs, values • Goals, norms, beliefs, and values differ due to variations in religious and cultural traditions and the economic and social situations Personal goals – Goals are our expectations of outcomes. They are things we want out of life and expect others want out of life as well. Include material possessions (cars), lifestyle preferences (money) personal goods (health), and social aims (equality). GOALS  OUTCOMES Personal norms – Norms are our expectations of behaviour. They are ways we expect to act and the ways in which we expect others to act in a given situation. They are not right or wrong. Norms are different from moral standards. Norms are expectations of behaviour, while morals are judgement on behaviour. NORMS  EXPECTATIONS OF BEHAVIOUR, MORALS  JUDGEMENT Personal beliefs – Beliefs are our expectations of thought. They are ways we expect to think, and the ways we expect others to think about given situations. Beliefs generally support our norms, and norms usually lead toward our goals. Ex. I believe smoking is bad and causes cancer (belief), and I expect you not to smoke in my presence (norm) because I want good health (goal). Personal values – Values are our order to goals, norms, and beliefs. Most people do not consider that all of their goals, norms, and beliefs are of equal importance. But, there are times where one is more “valued” than others. • Cultural and religious traditions of people living in North America differ from those living in the developing regions of Asia and Africa • The economic situation includes relative income and living standards of the individual • The social situation refers to a person’s membership in different organizations that can influence his/her goals, norms, beliefs, and values, thus moral standards • The importance is to connect different moral standards, and arrive at a unified ethical solution that is morally acceptable by everyone involved in the decision or action Recognize the Moral Impacts • Moral problems are complex; benefits for some and harms for others • The impacts are the relative outcomes that people think about when deciding on action • It is recommended that we start our analysis by identifying who is going to be benefited and who is going to be harmed, and who’s rights will be exercised and who’s denied • Therefore, everyone in the moral problem must understand what’s happening State the Moral Problem • To reach a solution, you want to get everyone to fully understand your view of the issue • Always reveal the consequences of a decision before acting on it Determine the Economic Outcomes • Refers to the net balance of benefits over costs for the full society, given that the values of the benefits and costs are determined by the people within the society • This concept is known as Pareto Optimality • This concept is that no one could be made better off without making someone worse off • However, it is good when more people are benefited that people who are harmed • The method of “economic outcomes” is expressed as: i. More is better than less ii. Specifically, more is better than less when that “more” consists of what people really want, as expressed through their preferences in the product markets iii. Even more specifically, the more of what people want is better than less when that “more” is produced as efficiently as possible Consider the Legal Requirements • Refers to the laws adopted by members of society to regulate behaviour of members • The problem is: every regulation protects – to some extent – the rights of some individuals and groups within society even while it limits – also to some extent – the rights of other individuals and groups within the same society • Economic outcomes in moral analysis focused on a balance between benefits and harms • Legal requirements in moral analysis also focuses upon a balance; a balance between an increase in rights for some and a decrease in rights for others • The challenge is how these balances are to be determined • The balance between rights exercised and rights denied is determined by impartial and fair elections i. All elections are open and competitive ii. All citizens can freely participate iii. All participants are fully informed • Sometimes elections aren’t impartial and can favour one party at the expense of others • Ex. Residents living beside a mall might not be so happy with the noise. But others living close to that area might be satisfied since they have access to shopping/entertainment. Therefore, by holding an election, residents will probably lose even though it is their right to live in a quiet home with comfort Evaluate the Ethical Duties • Refers to the obligations owed by members of society to other members • Ex. We should not lie to each other; not to cheat each other; not to steal each other • If a person lies, cheats, and steals a little bit, the society would still be maintained (weakened), but they would benefit while others (honest) would be harmed • Look for balance between self-interest and social-interest • A brief summary of ethical duties: i. Long-term interests – The goal of Pre-Socratic Greek philosophers was to define behaviours that led to an enjoyable life. An enjoyable life required a stable and friendly society with no one seeking retribution or revenge, and taking the interests of others into account. We must look at permanent benefits rather than temporarily. ii. Personal virtues – We can do as we like, and follow our self-interests, as long as we set standards for our treatment of others. We must be honest, open, and truthful in order to feel pride of our character. iii. Religious injunctions – Honesty, truthfulness, and temperance are not enough; compassion and kindness toward each other are also needed. They are part of almost all of the world’s religions. Reciprocity and compassion together build a sense of community. iv. Government requirements – People compete for property and position and all don’t possess compassion and kindness. To avoid chaos, we
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