Business ethics and social responsibility Flashcards
THE MEANING OF ETHICS - ETHICS & DECISION-MAKING
Why do we need to consider the real meaning of ethics and how and why it impacts on our making of decisions?
What are 2 dictionary definitions of ethics?
What is the dictionary definition of moral?
What is the strategic problem?
= a fundamental requirement of strategy and change, within ourselves and within our organisations
Ethics = (2) a code of behaviour considered correct, (3) the moral fitness of a decision, course of action, etc.
Moral = concerned with or relating to human behaviour = distinction between good and bad or right and wrong behaviour
While shaping vision, need to consider the ethical drivers of the people involved in the organisation THEN the wider context of the ethical expectation of the internal and external stakeholders
THE MEANING OF ETHICS - ETHICS & DECISION-MAKING
How does the 2nd definition of ethics relate to the role of the company secretary?
What is an Ethics Code?
What is the purpose?
The ethics of governance is based around what?
(Ethics = (2) a code of behaviour considered correct,)
Cosec often become involved in setting or helping to establish expected standards of corporate behaviour = sometimes have to write or be expected to judge others against an Ethics Code
ethics code = a set of norms that are expected to apply to all people within a particular organisation or grouping
Purpose of intended organisational norms = to act as a benchmark to allow us and others to measure the behaviour of ourselves, and others, against the perceived ‘moral fitness’
the alignment of the ethics of individuals = CA2006 makes no reference to a collective board and each individual duty starts ‘A director…’
THE MEANING OF ETHICS - VIRTUE, EXPECTATIONS, & RULES
What distinction does Steare (2006) draw between 3 different moral philosophies?
What is an alternative approach? (2)
- Principled conscience = effectively a moral DNA, which interrelates with our:
- Social conscience = what is right and wrong with regard to the way individuals behave towards each other within society
Both of these consciences then need to exist within the context of: - Rule compliance as dictated by those in authority within any particular societal grouping, e.g. country, religion, company, profession, club, etc.
To draw a distinction between principle ethics and situational ethics:
(1) Principle ethics = suggests we are left little room for choice = defines the way that we behave as an individual based around our personal beliefs and principles = personal moral DNA
(2) Situational ethics = our response will be based upon the particular circumstances of the decision with which we are faced
(No single correct answer = any consideration of ethics and ethical thought processes will suggest options, opposing views and a greater or lesser acceptance of individualism)
THE MEANING OF ETHICS - INTEGRITY & REPUTATION
What is the dictionary definition of integrity?
Why is it it so important?
Ethical behaviour is based upon the diversity of different inputs and forces that derive from inherited traits, as moulded and matured through life.
What is the requirement and expectation from a qualified, chartered professional?
In the consideration of personal ethical behaviour, integrity should be linked to what?
Integrity = the quality of being honest and having strong moral principles
Integrity sits at the heart of the ethical requirement of any human being, and how we are expected to behave as professionals (core trait or cosec expected by law and society)
= to have a proactive intent to do the right thing in the right way, and not be knowingly involved in anything that might challenge or bring into question personal integrity or the integrity of the organisation or profession (which could have a negative impact on reputation)
objectivity = not being influenced by personal feelings or opinions in considering and representing facts
THE MEANING OF ETHICS - INTEGRITY & REPUTATION
Reputation has been defined as the beliefs or opinions that are generally held about someone or something.
What does this mean?
As individuals, at any ‘today’ point in time, we have our own cognitive biases. What do these dictate?
Reputation could therefore be seen as what?
What do we need to recognise?
How can this impact the development of strategy?
Our reputation and that of our organisations is only ever based upon the ethical opinions and beliefs that are held and developed by others, each with their own diverse ethical opinions and beliefs.
dictate the way that we behave, practically and ethically, and the way in which
we view other people and their behaviour and beliefs.
Reputation = the accumulation of the bias of others.
Recognise our biases can change rapidly through the influence of experience, events and other people = internet and media means people’s views can be swayed very quickly
what it might seem reasonable to expect from others today, might change
very rapidly
BUSINESS ETHICS IN THE DEVELOPMENT OF STRATEGY
How does the Institute of Business Ethics describe business ethics? (3)
Ethics goes beyond the legal requirements for a company and is, therefore, about what?
THE SCOPE OF BUSINESS ETHICS
At any time within any organisation, the organisational business ethics, and therefore the reputation, can be seen to be a combination of what 5 things?
Business ethics = (1) is the application of ethical values to business behaviour. (2) It is relevant to the conduct of individuals and organisations as a whole. (3) It applies to any and all aspects of business conduct.
discretionary decisions and behaviour guided by values
- individual and combined values of all of the people involved
- the prevailing tone of the corporate culture
- codes of conduct that might apply across differing aspects of personal and organisational behaviour
- societal and internal and external stakeholder expectations
- local, national and international law
BUSINESS ETHICS IN THE DEVELOPMENT OF STRATEGY - THE SCOPE OF BUSINESS ETHICS
Stanwick and Stanwick (2014) discuss how the ethical cycle within a business enables employees to understand what?
What does this cycle involve?
What does this align with?
Stanwick and Stanwick further suggest that there are 3 core questions that need to be answered to enable what?
What are the 3 questions?
who they are and their strategic responsibilities from an ethical perspective.
involves decisions being made with an ethical dimension, the results of such decisions being understood and then influencing the next time such a decision needs to be made
aligns with the thinking of Argyris (1990) and the ‘ladder of inference’
to enable an organisation to make and deliver effective ethical decisions within the wider business context:
1. the individual needs to ask, ‘Who am I?’
2. the team or group needs to ask, ‘Who are we?’
3. the organisation needs to ask, ‘Who is the company?’
BUSINESS ETHICS IN THE DEVELOPMENT OF STRATEGY - THE SCOPE OF BUSINESS ETHICS
Foss (1997) suggested that within the decision-making context, the decision-maker needs to integrate what into the process?
Why is this important?
Constance Bagley (2003) devised a straightforward ‘decision tree’, to encapsulate the core ethical questions at the heart of strategic decision-making.
What is the importance of this tree?
By following the decision tree, when are the only 2 situations when an action should be taken?
need to integrate ethical issues into the process
by being able to demonstrate its ethical virtues to its various stakeholders, firms
incorporate ethical planning as part of the strategic planning process, and are then able to generate a positive reputation to the stakeholders
importance = it illustrates that the ethical nature is not always straightforward = sometimes the ethical decision may not always be in the best interests of the organisation (identified by Bagley as maximising shareholder value).
Should only ‘do it’ if:
(1) the proposed action is legal, it maximises shareholder value, and it is ethical; OR
(2) the proposed action is legal, it doesn’t maximise shareholder value but it would not be ethical to not take the action
BUSINESS ETHICS IN THE DEVELOPMENT OF STRATEGY - DIMENSIONS OF ETHICS
Chryssides and Kaler (1996) suggest that the same 2 core dimensions of ethical behaviour that affect each individual – principles and situation – will also strongly influence what?
What are the 5 different views of business ethics they suggest?
Name an example for each.
the evolution of ethical norms within a business
- Business is business = the aims of an organisation are purely commercial and therefore the maximisation of the perceived expectations will outweigh any ethical dimension
(e.g., selling goods with a known fault might be perceived as acceptable under this view) - Act consistently within the law = it is accepted that the law is there to protect the greater good of all concerned and therefore should underpin ethical decision-making
(e.g., faulty goods would not be perceived as acceptable under this view, but such goods may not be for the greater benefit of the individual or for society) - Good ethics mean good business = the coincidence theory = organisational sustainability is closely aligned with the perception by stakeholders of good business ethics
(e.g., it might be acceptable to manufacture and sell a particular product, but if deemed to be damaging to organisation’s reputation, it would likely be withdrawn) - Conventional morality = the business will operate in line with the prevailing moral codes of the society within which it is based
(problems = such codes will evolve with the passage of time and codes will differ significantly within different geographic locations (e.g. bribery is accepted in some parts of the world and illegal in others)) - Universal morality = people in the business world should maintain the same standards of ethical behaviour in business as they would in their private lives = seen as setting a high ethical standard.
BUT from the perspective of business sustainability, it would rely upon competitors following similar standards
(e.g., strategic thinking is often aligned with the tactics developed to win a war; this raises an interesting challenge to the concept of universal morality and to the ‘categorical imperative’ of Kant)
BUSINESS ETHICS IN THE DEVELOPMENT OF STRATEGY - THE PURPOSE OF A CODE OF ETHICS
The code of ethics document will inevitably include 2 complementary but necessarily different aspects of a code. What are they?
In a code, we are trying to anticipate what might or might not happen in the future, based on our understanding of today.
What are the 3 key areas that are required to deliver an appropriate mix for a code, similar to the core drivers of strategic thinking?
What are the pressures and what will they affect?
- principles, standards and expected modes of conduct that the organisation, or the profession or sector, expects e.g., core beliefs and expectations of the organisation and behaviours expected from differing stakeholders
- practical guidelines = a decision-tree type approach (‘if this happens, what do I do’) or set of quite specific instructions (common for handling bribery or conflicts of interest)
(1) The structural requirements will ensure alignment or compliance with the underlying and professional levels of conduct that are associated with our organisation, our sector or our profession.
(2) The practical input will be a wide view of how the organisation, sector or profession expects people adhering to the code to behave.
(3) The personal section may well include specific examples illustrating how people are expected to behave, how they will be judged, and the potential organisational and personal consequences of non-compliance.
The pressures = combination of societal values and legal requirements, will affect style, impact and veracity of the eventual fate and/or effectiveness of the code
BUSINESS ETHICS IN THE DEVELOPMENT OF STRATEGY - THE PURPOSE OF A CODE OF ETHICS
The Chartered Governance Institute UK & Ireland members are expected to adhere to what?
This comprises of what 4 core principles?
The CGIUKI Code of Professional Ethics and Conduct
- Integrity = the quality of being honest and having strong moral principles = requires that members are impartial, independent and informed
- High standard of service/professional competence = should be delivered throughout one’s working life = involves an understanding of relevant technical, professional and business developments
- Transparency = members should be clear and open in their business and professional conduct
- Professional behaviour = members should act in a way and pay regard to all regulations which may have a bearing on their actions
CORPORATE SOCIAL RESPONSIBILITY AS PART OF STRATEGY
Corporate social responsibility (CSR) is aligned with a range of differing aspects of the life of an organisation. Name 4.
What is recognition of CSR by an organisation, in its fundamental form?
In practice what does this mean?
(1) The impact that organisational decisions have on the world and on people.
(2) The ethical norms and behaviour that can/cannot be expected from any organisatio
(3) The manner in which employees of the organisation are treated.
(4)The ethics and ethos that are expected throughout the organisation = ethics being the behavioural traits that are visible and ethos being the ethical stance being taken by those who structure and oversee the culture within an organisation.
= a commitment to contribute to economic development from within an ethical framework, while seeking to improve the quality of life for its employees and their families, the local community and society at large
In practice = the ability of an organisation to link its DM to a set of ethical values, while complying with legal requirements and maintaining a respect for how the organisation will/may affect the people within its wider stakeholder environment.
CORPORATE SOCIAL RESPONSIBILITY AS PART OF STRATEGY
CSR has seen a gradual growth of consideration across the world to the point where it has become an expected benchmark within organisational structure and reporting.
CSR could be perceived as what?
To achieve this, an organisation needs to have what?
What advantage can CSR bring?
the obligation that any organisation has to develop and implement its strategy with a positive awareness of how that strategy is likely to affect society
a wide and conscious awareness of the social issues and norms that are affecting society at any point in time
= competitive advantage may be gained from a perception by stakeholders that the organisation is operating in an ethical manner = the organisation will be seen as a good corporate citizen choosing to do ‘the right thing’
CORPORATE SOCIAL RESPONSIBILITY AS PART OF STRATEGY - CARROLL’S PYRAMID OF CSR
Carroll (1991), places the concept of CSR into a pyramid framework to help businesses what?
What are the 4 levels?
Carroll suggests that the following core attributes need to be associated with each responsibility
ETHICAL RESPONSIBILITIES
Carroll suggests that what 3 core attributes need to be associated with the ethical responsibilities?
challenge and consider 4 distinct levels of responsibility, which are required to ensure that CSR is part of the wider business objectives
(1) economic responsibility = be profitable. required by society
(2) legal responsibilities = obey laws and regulations. required by society
(3) ethical responsibilities = do what is just and fair; avoid harm. expected by society
(4) philanthropic responsibilities = be a good corporate citizen. desired by society
Ethical responsibilities
(1) An organisation needs to develop its own ethics code (the way it expects employees to behave)
(2) There needs to be some concept within an organisation of the moral and ethical norms that are acceptable to society (both generic and specific)
(3) An organisation needs to encourage its employees to be ‘good corporate citizens’.
CORPORATE SOCIAL RESPONSIBILITY AS PART OF STRATEGY - CARROLL’S PYRAMID OF CSR
ECONOMIC RESPONSIBILITIES
Carroll suggests that what 4 core attributes need to be associated with the economic responsibilities?
LEGAL RESPONSIBILITIES
Carroll suggests that what 3 core attributes need to be associated with the legal responsibilities?
Economic responsibilities:
(1) If an organisation is enabled or allowed to exist within a society, then it has a responsibility to that society in return.
(2) Society needs organisations that are profitable (within a democracy this allows for the levying of taxation to generate funds for the public good)
(3) Profits enable the direct reward of owners, but also allow reinvestment in the organisation to drive forward both the organisation and the stakeholder society that it is serving.
(4) Organisations that are not successful within their projected field of operation will eventually fail = will have a knock-on cost to society.
Legal responsibilities:
(1) Any organisation needs to operate within the legal framework of the society where it exists.
(2) The laws are there for the greater good and protection of society as a whole.
(3) It is important for an organisation to produce products/services that meet at least the minimum legal standards required for the protection of consumers.
