BUS200: Business Ethics

Ethics sets the standards that govern our personal and professional behavior. To conduct business ethically, we must choose to be a professional of integrity. This section will introduce you to definitions of ethics and integrity as a foundation for learning about ethical behavior.

All the company's stakeholders benefit from managers' ethical conduct, which also increases a business' goodwill and, in turn, supports profitability. This section will discuss how ethical behavior impacts the profitability of an organization.

Adopting a single ethical code is the mark of a professional of integrity and is supported by the reasoned approach of each of the normative theories of business ethics. This section discusses the difference between a single approach to ethics and ethical behavior that is more fluid in nature.

This video is an interview with distinguished business ethicist Kirk Hanson. He speaks with a finance major about ethical challenges that a recent college graduate can expect to face when starting their first job in the business world. After you watch, you will be able to identify different types of ethical challenges in the workplace.

In this video, we explore the role of ethics. Values, principles, beliefs, and norms to ask questions that impact our decisions.

Watch this video on why ethics matters. As you listen, think about what guides you when there are no regulations, laws, or rules in place. Different industries have best practices even if there or no written rules. What are the signs of ethical behavior in companies?

The role of Athenian ethical theories in philosophy has been profound, and Athenian principles continue to be influential in contemporary philosophy. As a form of applied philosophy, ethics was a major focus among the leaders of ancient Athens, particularly teachers like Socrates, Plato, and Aristotle. They taught that ethics was not merely what someone did but who someone was. Ethics was a function of being, and as the guiding principle for dealings with others, it also naturally applied to the sensitive areas of money and commerce.

As an iconic figure, Confucius affected China's politics, literature, civil administration, diplomacy, and religion. Even so, he considered himself a failure by most accounts, never having achieved the position and security he sought during his lifetime. However, his story is a testament to the reward of a life lived with integrity and simplicity.

Aristotle and Confucius each constructed an ethical system based on virtue, with Aristotle's ultimate aim being happiness, and Confucius' harmony. Each addressed a particular problem. For Aristotle, happiness consisted of the search for truth, which, in turn, required a centered, stable individual who could surmount misfortune or weak character. Confucius looked to settle the soul of the Chinese people by creating a system that reflected the heavenly order on Earth. Both systems rely on reasoned means to achieve reasoned ends.

Although the ultimate aim of Aristotelian virtue ethics was eudaimonia, later philosophers began to question this notion of happiness. If happiness consists of leading the good life, what is good? More importantly, who decides what is good? Jeremy Bentham (1748–1842), a progressive British philosopher and jurist of the Enlightenment period, advocated for women's rights, freedom of expression, the abolition of slavery and the death penalty, and the decriminalization of homosexuality. He believed that the concept of good could be reduced to one simple instinct: the search for pleasure and the avoidance of pain. All human behavior could be explained by reference to this basic instinct, which Bentham saw as the key to unlocking the workings of the human mind. He created an ethical system based on it, called utilitarianism.

Immanuel Kant (1724–1804) was not concerned with the consequences of one's actions or the harm caused to one's interests. Instead, he focused on motives and the willingness of individuals to act for the good of others, even though that action might result in personal loss. Doing something for the right reason was much more important to Kant than any particular outcome.

John Rawls (1921–2002) wanted to change the debate in the West in the 1960s and 1970s about maximizing wealth for everyone. He sought not to maximize wealth, a utilitarian goal, but to establish justice as the criterion by which goods and services were distributed among the populace. Justice, for Rawls, had to do with fairness – in fact, he frequently used the expression justice as fairness – and his concept of fairness was a political one that relied on the state to take care of the most disadvantaged. In his justice theory, offered as an alternative to the dominant utilitarianism of the times, the idea of fairness applied beyond the individual to include the community and analysis of social injustice with remedies to correct it.

Have you ever had a stake in a decision someone else was making? Depending on your relationship with the person and your interest in the decision, you may have tried to ensure that the choice made was in your best interests. Understanding your somewhat similar role as a stakeholder in businesses large and small, local and global, will help you realize the value of prioritizing stakeholders in your own professional life and business decisions.

As we saw earlier, the law only partially captures the ethical obligations firms owe their stakeholders. A particular stakeholder claim (that is, any given stakeholder's interest in a business decision) may therefore challenge the ethical stance even of an organization that complies with the law. A related theme to recall is that even though all stakeholder claims are important for a company to acknowledge, not all claims are equally important. Most business leaders appreciate that a company's key stakeholders are essential to its efficient operation and growth, and that its overall mission, goals, and limited resources will force its managers to make choices by prioritizing stakeholders' needs. In this section, we look at ethical ways business managers can begin to make those decisions.

The first step in stakeholder management (accurately assessing stakeholder claims so an organization can manage them effectively) is defining and prioritizing significant stakeholders to the firm. Then, the firm must consider stakeholders' claims. Given that there are numerous types of stakeholders, how do managers balance these claims? Ethically, no group should be treated better than another, and managers should respond to as many stakeholders as possible. However, time and resource limitations require organizations to prioritize claims as stakeholder needs rise and fall.

Thus far, we have discussed stakeholders primarily as individuals and groups outside the organization. This section focuses on the business firm as a stakeholder in its environment. It examines the concept of a corporation as a socially responsible entity conscious of its influences on society. We look at the role companies, and large corporations in particular, play as active stakeholders in communities.

Corporate law, which enables businesses to take advantage of a legal structure that separates liability from ownership and control, was introduced in most states in the nineteenth century. The separation of ownership and liability means that, unlike sole proprietors and members of partnerships, owners of modern business corporations enjoy the advantage of limited liability for the corporation's debts and other financial obligations, a concept at the heart of a US economic system built on capitalism.

Public concern for the natural environment is a relatively new phenomenon, dating from the 1960s and Rachel Carson's seminal book Silent Spring, published in 1962. The preoccupation with business success through investment in corporations, in contrast, is a much older concept, dating back at least to the creation of the British East India Company in 1600 and the widespread emergence of the corporation in Europe in the 1700s. If you were a business owner, would you be willing to spend company resources on environmental issues, even if not required to do so by law? If so, would you be able to justify your actions to shareholders and investment analysts as smart business decisions?

Ideally, all levels of government – local, state, and federal – should work with each other and with private-sector businesses to accomplish a fair and rational balance between their respective roles in maintaining a just society. Rarely does one actor alone solve a problem; more often, it takes either a state-federal or a government-business partnership to make a significant impact on a social or economic challenge.

All employees want and deserve a physically and emotionally safe workplace where they can focus on their job responsibilities and obtain some fulfillment, rather than worrying about dangerous conditions, harassment, or discrimination. Workers also expect fair pay and respect for their privacy. This section will explore employers' ethical and legal duties to provide a workplace where employees want to work.

The concept of a fair wage has a greater significance than simply one worker's pay or one company's policy. It is an economic concept critical to the nation as a whole in an economic system like capitalism, where individuals pay for most of what they need in life rather than receiving government benefits funded by taxes. The ethical issues for the business community and society at large are to identify democratic systems that can effectively eradicate the financial suffering of the poorest citizens and generate sufficient wages to support the economic sustainability of all workers in the United States.

The issue of worker representation in the United States is a century-old debate, with economic, ethical, and political aspects. Are unions good for workers, good for companies, good for the nation? There is no single correct response. Your answer depends upon your perspective – whether you are a worker, a manager, an executive, a shareholder, or an economist. How might an ethical leader address the issue of the gap between labor's productivity gains and their stagnant wages compared with that of management?

Employers are justifiably concerned about threats to and in the workplace, such as property theft, data security breaches, identity theft, viewing of pornography, inappropriate or offensive behavior, violence, drug use, and others. They seek to minimize these risks, and that often requires monitoring employees at work. Employers might also be concerned about the productivity loss resulting from employees using office technology for personal matters while on the job. At the same time, however, organizations must balance the valid business interests of the company with employees' reasonable expectations of privacy. New technology lets employers track all employees' Internet, e-mail, social media, and telephone use, compounding privacy concerns. What kind of monitoring do you believe should be allowed? What fundamental privacy rights should a person have at work? Does your view align more closely with the employer or the employee?

The relationship between employee and employer is changing, especially our understanding of commitment and loyalty. An ethical employee owes the company a good day's work and their best effort, whether the work is stimulating or dull. A duty of loyalty and our best effort are our primary obligations as employees, but what they mean can change. A manager who expects a twentieth-century concept of loyalty in the twenty-first century may be surprised when workers express a sense of entitlement, ask for a raise after six months, or leave for a new job after twelve months. This chapter will explore a wide range of issues surrounding how employees contribute to the overall success of a business enterprise.

A good employment relationship is beneficial to both management and employees. When a company's products or services are legitimate and safe, and its employment policies are fair and compassionate, managers should be able to rely on their employees' dedication to those products or services and their customers. Although an employer should not call on an employee to lie or cover up the firm's missteps, every employee should be willing to make a sincere commitment to an ethical employer.

All sorts of personalities populate our workplaces, but employees owe one another courtesy and respect regardless of their working style, preferences, or quirks. That does not mean always agreeing with them, because evaluating diverse perspectives on business problems and opportunities is often essential for finding solutions. At the same time, however, we are responsible for limiting our arguments to principles, not personalities. This is what we owe to one another as human beings, and to the firm, so worksite arguments do not inflict lasting harm on the people who work there or on the company itself.

Employees may face ethical dilemmas in finance, especially in situations such as bribery and insider trading in securities. Such dubious "profit opportunities" can offer the chance of realizing thousands or millions of dollars, creating severe temptation for an employee. However, insider trading and bribery are serious violations of the law, resulting in incarceration and significant fines.

This chapter has explained the many responsibilities employees owe their employers. But workers are not robots. They have minds of their own and the freedom to criticize their bosses and firms, even if managers and companies do not always welcome such criticism. What kind of criticism is fair and ethical, what is legal, and how should a whistleblowing employee be treated?

Diversity is not simply a box to be checked; instead, it is an approach to business that unites ethical management and high performance. Business leaders in the global economy recognize the benefits of a diverse workforce and see it as an organizational strength, not a mere slogan or a form of regulatory compliance with the law. They recognize that diversity can enhance performance and drive innovation; conversely, adhering to the traditional business practices of the past can cost them talented employees and loyal customers.

The traditional definition of diversity is broad, encompassing not only race, ethnicity, and gender but also religious beliefs, national origin, cognitive and physical abilities, and sexual preference or orientation. This section examines two of these categories, religion and ability, looking at how an ethical manager handles them as part of an overall diversity policy. In both cases, the concept of reasonable accommodation means an employer must try to allow for differences among the workforce.

As society expands its understanding and appreciation of sexual orientation and identity, companies and managers must adopt a more inclusive perspective that keeps pace with evolving norms. Successful managers are willing to create a more welcoming work environment for all employees, given today's wide array of sexual orientations and identities.

The gap in earnings between the United States' affluent upper class and the rest of the country grows every year. The imbalance in income distribution among the participants of an economy, or income inequality, is an enormous challenge for US businesses and society. The middle class, often called the engine of growth and prosperity, is shrinking, and new ethical, cultural, and economic problems follow that change. Some identify income inequality as an ethical problem, some as an economic problem. Perhaps it is both. This section will address income inequality and the way it affects US businesses and consumers.

Ethical questions about our treatment of animals arise in several different industries, such as agriculture, medicine, and cosmetics. This section addresses these questions because they form part of the larger picture of how society treats all living things – including nonhuman animals and the environment. All states in the United States have laws to protect animals; some violations carry criminal penalties, and some carry civil penalties. Consumer groups and the media have also applied pressure to the business community to consider animal ethics seriously. Businesses have discovered money to be made in the booming business of pets. Of course, as always, we should acknowledge that culture and geography influence our understanding of ethical issues at a personal and a business level.

This video discusses the importance and best practices for creating an ethical culture in business. It will help you better understand what you can do as an employee stakeholder to develop and support an ethical culture in your workplace.

What if your business wanted to expand its local operations from six employees to ten but did not have the office space to add more workers? Today's businesses have a toolkit of technical solutions to set up working relationships with employees far and wide through voice, computer, video connections, and offsite work-sharing spaces. Coworkers can share files on a remote network server or the cloud, and managers can use nontraditional methods to monitor activity and performance. Companies like General Assembly, WeWork, and Workbar are leasing access to communal spaces equipped for the business needs of remote workers. Telecommuting is now easier to implement than ever. But what exactly are the benefits and drawbacks of telecommuting, and what ethical issues does it raise?

The physical workplace is changing. Most companies still inhabit traditional office spaces in which managers and employees each have an allotted space, whether an office, a cubicle, or just a desk. However, a growing number are redesigning their spaces with fewer separate offices, substituting flexible or shareable workstations built around communal spaces. The idea is that such "open plan" environments allow for more collaboration and brainstorming because employees are no longer walled off from one another. Shared, multipurpose spaces open to all enable people to gather informally throughout the day. In effect, then, these changes are aimed to augment productivity.

New ideas about the way we work and for how long are challenging many traditional business strategies. Job sharing and flexible hours (or flextime), the access or sharing economy, and the rise of gig workers force us to evaluate how they affect management, employees, and customers alike. Although new business models provide increased autonomy and flexibility, they have also led to the rise of "the new precariat". The precariat, for "precarious proletariat," is a new social class of people whose work offers little predictability or security. The existence of such a class raises ethical dilemmas for business managers, who may be tempted to substitute gig workers, to whom benefits like health insurance are ordinarily not provided, for regular employees entitled to costly benefits.

As we have seen earlier in this chapter, general advances in computer technology have already enabled significant changes in the workplace. This section will look at how future workforce demographics may be affected by existing and emerging technologies. The combination of automation and robotics has already changed not only the workplace but everyday life as well. It also comes with a host of ethical and legal issues, not least being where humans will fit in the workplace of tomorrow. Managers of the future may ask, "Does my company or society benefit from having a human do a job rather than a robot, or is it all about efficiency and cost?"

Not only does the world seem to have shrunk, but the twenty-first-century pace of change seems to have sped up time itself. As the world becomes smaller and faster and companies adapt their practices to fit new conditions, the core of business ethics that guides corporate behavior remains the same, directed, as always, by shared values and morals as well as legal restraints. What happens when these are ignored?

Professionalism' is the conduct, aims, or qualities that characterize or mark a profession or professional person. It implies there is a quality of craft or service. Ethical professionals work for companies whose values align with their own. How do you evaluate a company to see whether it is a good occupational fit and one that will allow you to live your ethical values every day?

Professionalism' is the conduct, aims, or qualities that characterize or mark a profession or professional person. It implies there is a quality of craft or service. Ethical professionals work for companies whose values align with their own. How do you evaluate a company to see whether it is a good occupational fit and one that will allow you to live your ethical values every day?

On what will you base your professional identity? Do you believe an employer's enlightened self-interest is enough to ensure the ethical behavior of employers and employees? Or do you embrace "the critical importance of individual ethical choice in making our organizations, our professions, and our culture serve all of humanity"? The values we choose to honor are the essence of ourselves, and we carry them with us wherever we live, work, and play. As we noted, the career you choose should reflect your values.

Understand ethics and compliance and how the definitions translate to corporations. A commitment to shared values, rather than a culture based on distrust of employees, encourages employees to aspire to success. The speaker elaborates on the importance of ethics, which she deems as a necessary component of a business. Take notes on the numerous case studies mentioned where she emphasizes that the means of obtaining financial gain ethically should never be trivialized or overlooked.

Turning on the news often brings images and reports of unethical business practices. In 2014, General Motors' alleged mishandling of safety recalls landed the CEO in front of a U.S. House subcommittee to answer questions about decisions inside the company that resulted in dozens of deaths and millions of recalls. How is it possible that highly educated corporate executives can make such unethical and sometimes criminal decisions? As you conclude your study of ethical behavior and corporate social responsibility, consider the outcome of one of the largest corporate scandals in U.S. history shown in the video.