o   Values and principles that help individuals distinguish right from wrong

o   Refers to the study of moral values, principles, and rules including the determination of standards of conduct and obligations for individuals and organizations.

·       Stages through which individuals evolve, ranging from the lowest stage (obedience and punishment orientation) to the highest stage (universal ethical principles)

·       Kohlberg didn’t assume that everyone progresses through all of the stages

·       What defines a person’s stage of moral development is not the specific ethical choice, but the person’s ethical reasoning used to justify that choice.

o   For ex) individuals may talk and think at a higher moral level, but may not always behave accordingly

1.     Obedience and Punishment Stage

2.     Instrumental Stage

3.     Interpersonal Stage

4.     Law & Order Stage

5.     Social Contract Stage

6.     Universal Stage

a.     Individual does the right thing mainly to avoid punishment or to obtain approval

b.     Only the immediate consequences of an action determine whether it’s good or bad

a.     Individual becomes aware that others also have needs and begins to defer to them to get what the individual wants

b.     Proper behavior is what satisfies the person’s self-interest

a.     Individual considers appropriate behavior as that which pleases or is approved by friends or family

b.     Being seen as a “good person” with basically good motives is important

a.     Individual recognizes that ethical behavior consists of doing a person’s duty, showing respect for authority, and maintaining the social order or its own sake

b.     Person sees other people as individuals and also as parts of the larger social system that gives them their roles and obligations

c.      Rules are considered to be necessary for the effective functioning of the entire organization, and they should be followed even when it requires some self-sacrifices or resisting pressures from peers

a.     Individual is aware that others hold a variety of conflicting personal views that go beyond the letter of the law

b.     Individual understands that, although rules and laws may be agreed on and for the most part must be followed, they can be changed if necessary

c.      Individual at this stage recognizes that employees are expected to follow the rules but also accepts the idea of breaking the rules when those rules conflict with accepted social values

a.     Individual views appropriate conduct as determined by a person’s conscience, based on universal ethical principles.

b.     People at this stage of ethical reasoning recognize the universal principles (justice, public welfare, the equality of human rights, respect for the dignity of individual human beings) and act in accordance with them rather than rules or laws.

·       Mental capacity to determine how universal human principles that cut across the glove should be applied to personal values, goals, and actions

o   Integrity: acting consistently with principles, values, and belief; telling the truth; standing up for what is right; and keeping promises

o   Responsibility: taking responsibility for personal choices; admitting mistakes and failures; embracing responsibility for serving others

o   Compassion: actively caring about others

o   Forgiveness: letting go of one’s own mistakes; and letting go of others’ mistakes

ETHICAL INTENSITY

(component of Making Ethical Decisions)

The degree of moral importance given to an issue

MAGNITUTE OF CONSEQUENCES

(Factor of Ethical Intensity)

o   the harm or benefits accruing to individuals affected by a decision or behavior

§  Ex) a decision that causes the death of a human being is of greater consequence that one that causes a sprained wrist

PROBABILITY OF EFFECT

(Factor of Ethical Intensity)

o   the likelihood that if a decision is implemented it will lead to the harm or benefit predicted

§  Ex) the sale of a gun of a known armed robber has a greater probability of harm than the sale of a gun to a law-abiding hunter

SOCIAL CONSENSUS

(Factor of Ethical Intensity)

o   the amount of public agreement that a proposed decision is bad or good

§  Ex) actively discriminating against minority job candidates is worse than not actively seeking out minority job candidates

TEMPORAL IMMEDIACY

(Factor of Ethical Intensity)

PROXIMITY

(Factor of Ethical Intensity)

·       the sense of closeness (social, cultural, psychological, or physical) that the decision maker has for victims or beneficiaries of the decision.

o   Ex) recently, Citigroup cut 53,000 jobs.  This reduced its labor force to 300,000 empl. With more layoffs anticipated.  This action had a greater impact on the remaining empl than the personal impact the news reporters feel when announcing this layoff.

CONCENTRATION OF EFFECT

(Factor of Ethical Intensity)

o   the inverse function of the number of people affected by a decision

·       Ex) A change in an insurance policy denying coverage to 40 people with claims of $50K each has a more concentrated effect than a change denying coverage to 4000 people with claims of $500 each

o   Numerous principles and rules have been suggested to provide an ethical justification for a person’s decisions and behaviors.

o   They range from those that justify self-serving decisions to those that require careful consideration of others’ right and costs

SELF SERVING PRINCIPLES

(part of Ethics-based principles)

used to justify self-service decisions and behaviors

BALANCING INTERESTS PRINCIPLES

(part of Ethics-based principles)

used to justify decisions intended to balance the interests of multiple individuals or groups

CONCERN-FOR-OTHERS PRINCIPLES

(part of Ethics-based principles)

focus on the need to consider decisions and behaviors from the perspective of those affected and the public as a whole:

HEDONIST PRINCIPLE

(part of Self-Serving Principles)

MIGHT-EQUALS-RIGHTS PRINCIPLE

(part of Self-Serving Principles)

ORGANIZATION INTERESTS PRINCIPLES

(part of Self-Serving Principles)

MEANS-END PRINCIPLES

(part of Balancing Interests Principles)

UTILITARIAN PRINCIPLES

(part of Balancing Interests Principles)

PROFESSIONAL STANDARDS PRINCIPLE

(part of Balancing Interests Principle)

DISCLOSURE PRINCIPLE

(part of Concern for Others Principle)

DISTRIBUTIVE JUSTICE PRINCIPLE

(part of Concern-for-Others principle)

·       you act on the basis of treating an individual or group equitably rather than on arbitrarily defined characteristics (e.g. gender, race, age)

DICLOSURE PRINCIPLE

(part of Concern-for-Others principle)

you act on the basis of how the general public would likely respond to the disclosure of the rationale and facts related to that decision

CONCERN FOR AFFECTED INDIVIDUALS

(component of Making Ethical Decisions)

·       The highest form of ethical decision making involves a careful determination of who will receive benefits or incur costs as a consequence of a decision

·       For major decisions, this assessment may include a variety of stakeholders- shareholders, customers, lenders, suppliers, employees, and governmental agencies, among others.

·       The more specific an individual or group can be about who may benefit and who may incur costs from a particular decision, the more likely it is that ethical implications will be fully considered.

EMPLOYMENT AT WILL

(part of Concern for Affected Individuals)

·       An employment relationship in which either party can terminate the employment relationship at ill with no liability if there was not an express contract for a definite term governing the employment relationship.

BENEFITS AND COSTS

(Component for Making Ethical Decisions)

·       An assessment of the ethical implications of the benefits an costs of a decision or issue requires a determination of the interests and values of those affected by the decision(s)

·       Benefits refer to whatever a party considers desirable

·       Costs refer to whatever a party considers undesirable

·       Benefits and Costs can refer to monetary or nonmonetary effects

·       Ex) a low-cost, coal-burning power plant (monetary effect) that produces high levels of pollution (nonmonetary effect) results in a benefit to the firm and a cost to the public

·       One party’s benefits in a decision may create or be perceived to create costs for one or more other parties

DETERMINATION OF RIGHTS

(Component of Making Ethical Decisions)

o   The notion of rights also is complex and continually changing

o   One dimension of rights focuses on who is entitled to benefit from or participate in decisions

o   If rights change, then the mix of benefits and costs changes

PROCEDURAL JUSTICE

refers to the quality of interpersonal treatment individuals receive during the use of organizational procedures

o   Examples include disciplinary appeals procedures; procedures for reporting ethical misconduct; procedures for appealing dismissals or annual performance reviews; and sexual or racial harassment appeal procedures

   individuals)

o   Individuals who have high moral intelligence are likely to find it natural to implement the interactional justice criteria when striving to implement both procedural justice and distributive justice in their leadership roles

o   Leaders who use procedural and interactional justice believe that employees are going to be more motivated to perform at a high level when they perceive the procedures and their implementation as fair

reflects the shared and learned values, beliefs, and attitudes of its members

refers to the tendency to view a few incidents, cases, or experiences with individuals as representative of a larger population

o   For example, observations of unethical conduct by a few Gen Y coworkers may be seen as applying to the supermajority of them and fits the popular stereotype of this generation as not being very ethical as a whole.

are individuals or groups that have interests, rights, or ownership in an organization and its activities

o   Customers, suppliers, employees, and shareholders are examples of primary stakeholder groups. Each has an interest in how an organization acts

o   For any particular organization, some stakeholder groups may be relatively more important than others

o   The most important groups- the primary stakeholders- are those whose concerns the organization must address to ensure its own survival.  They directly impact the financial resources available to the firm

o   Secondary stakeholders are also important because they can take actions that can damage or assist the organization