BECG Pt.

-I
Introduction to business ethics

BECG-1: Ethics, Morals and

Values
 Ethics , Morals and
Values



 Understanding Morality
§ Several years ago, B.F. Goodrich-manufacturer of vehicle parts was
granted contract to design, test and manufacture aircraft brakes for the
A7D , a new airplane, the Air Force was designing
§ To conserve weight: Goodrich guaranteed:
o Weight of their compact brake: not more than 106 pounds
o Contain max four braking discs or “rotors”
o Stop aircraft within certain specified distance
§ Contract quite lucrative for the company
§ Kermit Vandivier- a Goodrich employee, given task of working with
Goodrich engineers to write up report of tests run on the brake-
Government not likely to question and even less likely to repeat the test
§ Vandivier- found and wrote, when the small brake was
tested, the brake linings on the rotors repeatedly
“disintegrated” because “there simply was not enough
surface area on the disks to stop the aircraft without
generating the excessive heat that caused the lining to
fail”
§ His superiors told that regardless of what the brake does
on tests, we are to qualify
§ After several tests, Vandivierwas told to write report that brake
passed the tests
§ Vandivier explained to his superior that “ the only way such a
report could be written was to falsify the test data” to which
 Moral Standards
• Vandivier’s beliefs: examples of Moral standards
– It is right to tell the truth
– It is wrong to endanger lives of others
– Integrity is good and dishonesty is bad
• Morality: the standards that an individual or a
group has about what is right and wrong or
good and evil
• Moral Standards: the norms about the kinds of
actions believed to be morally right and wrong
as well as the values placed on the kinds of
objects believed to be morally good and morally
bad
– For example:
• Always tell the truth
• It is wrong to kill innocent people
• Actions are right to the extent they produce happiness
– Moral values can be expressed as statements
describing objects or features of objects that
have worth, such as :
• Honesty
Morality : set isofgood
beliefs and practices about how to
• Injustice
lead a good life is bad
 Sources of Moral Reasoning
Religion Here are some examples of
–Reflects the basic statements which express moral
judgments :
tenants of religious
faith . 1 . Dumping chemicals in the rivers is
wrong and ought be banned .
Culture / Community 2 . It ’ s wrong that our company is trying
–Reflects commonly shared to avoid the regulations and it
moral values should stop .
Codes of Professional 3 . He ’ s a bad person — he never treats
Conduct people well and doesn ’ t seem to
–Reflects guidelines for respect anyone.
professional conduct . Moral judgments tend to be
Moral Theory characterized by words like ought ,
–Basic Ethical Theories should , good and bad . However , the
and Principles mere appearance of such words does
not mean that we automatically have
a statement about morals
A person ’ s moral standards are first absorbed as a child from
family , friends , and various societal influences like Church
temple , television , magazines , music and associations
As person grows up , with experience , learnings and intellectual
development - revised by maturing person
Øsome discarded and new ones adopted
We do not always live up to the moral standards we hold , that is ,
we do not always
do what we believe is morally right , nor we always pursue
what we believe is morally good
 Non Moral Standards
• Vandivier later stated:
–My job paid well, it is pleasant and challenging, and the future
looked reasonably bright. My wife and I had bought a
home…………………………. If I refused to take part in the A7D fraud,
I would have to either resign or to be fired. The report would be
written by someone anyway, but I would have the satisfaction of
knowing I had no part in the matter. But bills are not paid with
personal satisfaction, nor house payments with ethical principles.
I made my decision. The next morning I telephoned [ my
We can summarize , in and
superior] Vandivier
told him ’ s I case , that
was ready to probably he believed
begin the qualification
that : report
oReports should be written with good grammar
oGetting fired from a well paid , pleasant , and challenging job
took precedence over a truthful report
oHe is right to follow the law

M o ra l sta n d a rd s ca n b e co n tra ste d w ith sta n d a rd s , w e h o ld

a b o u t th in g s th a t a re n o t m o ra l:
–Standards of etiquette , by which we judge manners as good or bad
–Standards we call ‘ law ’, by which we judge legal right and wrong
–Standards of language by which we judge what is grammatically
right and wrong
–Standards of aesthetics by which we judge good and bad art
–Athletic standards by which we judge how well a game is played
Non Moral Standards: the standards by which we judge what
is good or bad and right or wrong in a non moral way
 Five Characteristics of Moral
Standards
1 ) Matters that we think can seriously injure ( theft , rape , enslavement , murder ,
child abuse , assault , fraud , law breaking and so on ) or seriously benefit
human beings
2 ) Not established or changed by the decisions of particular authoritative
bodies
( laws and legal standards are established by authority of
legislature - validity of moral standards does not rest on voting procedures
but on adequacy of the reasons that are taken to support and justify them -
so long these reasons are adequate , standards remain valid )
3 ) Should be preferred to other values including ( specifically ) self interest
5 ) Based on impartial considerations - “ the moral point of view ”- that does not
evaluate standards according to whether they advance the interests of a
particular individual or group , but one that goes beyond personal
interests to a “ universal standpoint ” in which everyone ’ s interests are
impartially counted as equal
7 ) Associated with special emotions and a special vocabulary - if I act contrary
to a moral standard , I will normally feel guilty , ashamed - I will
characterize my behavior as “ immoral ” or “ wrong ”
ØIn Vandivier case , it was clear that lying in the government
 report and endangering lives of pilots were felt to be serious
 harms and so both were moral matters
ØHe should have chosen the moral values of honesty and respect
for life over non moral values of keeping his well paid ,
pleasant and challenging job ( Means it is wrong to choose self -
interest over morality )
ØVandivier later testified before the congress ( in an attempt to
make things right ) that he later felt shame and remorse about
what he did
 Ethics
E th ics : th e d iscip lin e th a t e x a m in e s o n e ’ s m o ra l
sta n d a rd s o r th e m o ra l sta n d a rd s o f a so cie ty - h o w th e se
sta n d a rd s a p p ly to o u r liv e s a n d w h e th e r th e se sta n d a rd s a re
re a so n a b le o r u n re a so n a b le - th a t is w h e th e r th e y a re
su p p o rte d b y g o o d re a so n s o r p o o r o n e s , in o rd e r to a p p ly
th e m to co n cre te situ a tio n s a n d issu e s
qA p e rso n sta rts to d o e th ics w h e n h e / sh e ta k e s th e m o ra l
sta n d a rd s fro m fa m ily , ch u rch a n d frie n d s a n d a sk s :
oW h a t d o th e se sta n d a rd s im p ly fo r th e situ a tio n s in w h ich I
fin d m y se lf?
oD o th e se sta n d a rd s re a lly m a k e se n se ?
oW h y sh o u ld I co n tin u e to b e lie v e in th e m ?
oW h a t ca n b e sa id in th e ir fa v o r a n d w h a t ca n b e sa id a g a in st
• Ethics
th e m ?is the formal study of moral standards and conduct. For
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re These
a so n a are
b le ?some of the questions asked in the field of ethics, a
branch of philosophy which has some of the most immediate and
obvious consequences for how we live our lives.
•  Ultimate aim of ethics is to develop a body of moral standards that we
feel are reasonable to hold- standards that we have thought about
carefully and have decided are justified standards for us to accept
and apply to the choices that fill our lives
Ethic s : A rational reflection on
 Examining: What is Right/ Wrong
• Vandivier initially had apparently chosen to accept the moral
standard that one has an obligation to tell the truth, and so
he felt that in this particular situation it will be wrong to
write a false report on the brakes
• But let us ask, whether writing what he felt was a false report
was really wrong in his particular circumstances?
– He had several financial obligations: towards himself and
other people
• Just married
• Bought a house-mortgage payments to be made each
month
• Support to be provided to his family
– If he does not write report as desired- gets fired- not able to meet
these obligations
– What is basis of his obligation to tell the truth and whether this
greater or lesser than a person’s obligations towards himself
and family?
– His obligations to his employer? Does it outweigh the obligation
not to write a false report?
– All seniors insisted to write a qualifying report-If something went
wrong with the brake or the contract, the company will be held
accountable, not the individual- a lower level employee
– Does the moral right to make a decision belong to the party who
will be held accountable for the decision?
 Morality & Ethics: the Difference
T h e d iffe re n ce b e tw e e n e th ics a n d m o ra ls ca n se e m
so m e w h a t a rb itra ry to m a n y , b u t th e re is a b a sic ,
th o u g h subtle ( difficultt o perceive or describe ) ,
d iffe re n ce . M o ra ls d e fin e p e rso n a l ch a ra cte r, w h ile
e th ics stre ss a so cia l sy ste m in w h ich th o se m o ra ls
a re a p p lie d . In o th e r w o rd s , e th ics p o in t to sta n d a rd s
o r co d e s o f b e h a v io r e x p e cte d b y th e g ro u p to w h ich
th e in d iv id u a l b e lo n g s . T h is co u ld b e n a tio n a l e th ics ,
so cia l e th ics , co m p a n y e th ics , p ro fe ssio n a l e th ics , o r
e v e n fa m ily e th ics . S o w h ile a p e rso n ’ s m o ra l co d e is
u su a lly u n ch a n g in g , th e e th ics h e o r sh e p ra ctice s
ca n b e o th e r- d e p e n d e n t.
• One of the most important characteristics of moral
judgments is that they express our values. Not all
expressions of values are also moral judgments,
but all moral judgments do express something
about what we value. Thus, understanding
morality requires investigating what people value
and why.

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Business Ethics: What Does it
 What is Ethics?

Latin word ‘Ethicus’ Greek word ‘Ethikos’
meaning character or manners.
§ systemizing, defending and recommending concepts of
right and wrong behavior.
§ Science of moral, moral principles and recognized rules
of conduct.
 Ethics is the study of how people should act
Ethics also refers to the values and beliefs related to
the nature of human conduct
–Based on ethical standards or moral orientation
Ultimate aim of ethics is to develop a body of moral
standards that we feel are reasonable to hold -
standards that we have thought about carefully and have
decided are justified standards for us to accept and
apply to the choices that fill our lives
Ethics is a normative study - an investigation that
attempts to reach normative conclusions - that is
conclusion about what things are good or bad or about
what actions are right or wrong - aims at discovering
 The Fall of Arthur Andersen
Opening Case
• Arthur Andersen founded the firm, making its credo, “Think
straight, talk straight.” His commitment to integrity
became known as the “Andersen Way.”
• For years after his death the firm maintained high standards.
• Consulting services became a huge part of the firm that
eventually broke away after a battle with the accounting side
of the business.
• A new consulting group within Arthur Andersen emerged;
To cut costs, partners were forced to retire at age 56, removing a layer
auditors were
of leadership evaluated
experienced on the
in the amount
Andersen Way. of additional services
Under they sold, auditors
pressure to clients.
became reluctant to alienate clients resulting
• in a series of disgraceful audit performances.
At Enron an Arthur Andersen auditor was coerced into writing an opinion
letter stating that certain tax audits were legitimate, leading to
the collapse of both companies.

Arthur Andersen founded a culture of rectitude that warped because

several generations of management allowed the Andersen Way to be
undermined.
 Morals and Values
Ethics: A study of right and wrong behavior –with the
aim of defining what is right and wrong
Ethics - is a field of enquiry
Morality- is object of enquiry
• Morality: The standards that an individual or group has about
what is right and wrong or good and evil
• Moral Standards: The norms about the kind of actions
believed to be morally right and wrong as well as the values
placed on the kinds of objects believed to be morally good
and morally bad
• Values are defined in literature as everything from eternal
ideas to behavioral actions.
– Criteria for determining levels of goodness, worth or beauty.
– Act of valuing
– Part of the affective system
– Also provide an important filter for selecting input and
connecting thoughts and feelings to action
–Moral justification is the process of
reinterpreting
– immoral behavior in terms of a
– higher purpose .
 Value
§V a lu e s re p re se n ts b a sic co n v ictio n s ( ce rta in ty ) th a t
“ a specificmode of conduct or end - state of existence
is p e rso n a lly o r so cia lly p re fe ra b le to a n o p p o site o r
co n v e rse m o d e o f co n d u ct o r e n d - sta te o f e x iste n ce ” .
§V a lu e s la y fo u n d a tio n fo r u n d e rsta n d in g o f a ttitu d e s
a n d m o tiv a tio n
§G e n e ra lly in flu e n ce a ttitu d e a n d b e h a v io r

§
Types of Values –- Rokeach Value
Survey
Te rm in a l V a lu e s
Desirable end-states of
existence; the goals that a
person would like to achieve
during his or her lifetime.

In stru m e n ta l V a lu e s
Preferable modes of behavior
or means of achieving one’s
terminal values.
Values in
the
Rokeach
Survey
Values in
the
Rokeach
Survey
(cont’d)
L e v e ls o f M o ra l D e v e lo p m e n t
1 . Preconvention
Self-interest motivates behavior to
meet one’s own needs to gain rewards
while following rules and obedient
to authority to avoid punishment.

2 . Conventional
Living up to expectations of
acceptable behavior defined by
others motivates behavior to fulfill
duties and obligations. Common for
followers to copy the behavior of
the leaders and group.
3 . Post conventional
Behavior is motivated by universal
principles of right and wrong,
regardless of the expectations of
the leader or group. One seeks to
balance the concerns for self with
those of others and the common good.
 6 stages of moral
E te rn a l V a lu e s o f
development
M a n k in d
• Pre-conventional (personal Derived from Great
interest) Religions
– Do what you are told, self- v Mutual love and
interest
trust
– Others have interests too,
but self interests v Equity
predominate v Self fulfillment
• Conventional (maintaining through action
norms) which bring closer
– Conform, cooperate with to GOD .
others
vGod works
– Obey the law for good of
through
•
society
Post-conventional Golden Rule People
 – Universal principles
Christianity - Whatever
– Reciprocity, you want men to do to you , do also to
social justice them .
Islam - No one of you is a believer until he loves for his
neighbor what he loves for himself .
Buddhism – Hurt not others with that which pains yourself
Hinduism – This is the sum of duty ; do naught unto others what you
would not have them do unto you .
Bahai – And if thine eyes be turned toward justice , choose thou for
thy neighbor that which thou choosest for thyself .
Jainism – A man should wander about treating all creatures as he
himself would be treated

 How Do You Want To Be
Treated?

vI want to be valued.
vI want to be appreciated.
vI want to be trusted.
vI want to be respected.
vI want to be understood.
vI do not want others to take advantage
of me.
 Three Models of
Management Ethics

Amoral
Amoral Management
Management

Moral
Moral Management
Management

Immoral
Immoral Management
Management
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Management Ethics
Three Models of
 Ø
Intentionally
Characteristics of Characteristics
do wrong
of
Moral ØManagers Immoral
Ø Self-
ØConform to high level centered and
of ethical or Managers
self-
right behavior  absorbed
Ø Conform to high Ø Care only
level of personal
about self or
and professional  organization’s
standards
profits
Ø Ethical leadership
is commonplace Ø Actively
ØGoal is to succeed oppose what
within confines of is
sound ethical  right, fair, or
precepts just
Ø High integrity is Ø Exhibit no
displayed
concern for
ØEmbrace letter and
spirit of the law
 stakeholders
ØPossess an acute Ø Are the
moral sense and “bad guys”
moral maturity an
ØAre the “ good guys ”  ethics course
 Characteristics of Amoral
Managers
Intentionally Amoral Managers:


• Don’t think ethics and business should “mix”

• Business and ethics are existing in separate spheres
• A vanishing breed

Unintentionally Amoral Managers:



• Don’t consider the ethical dimension of decision making

• Don’t “think ethically”
• Have no “ethics buds”
• Well-intentioned, but morally casual or unconscious
• Ethical gears are in neutral
•
Duryodhan said , “ I know what is right but I am
not able to act accordingly . I also know what is
wrong but I am not able to restrain myself doing it ”

Indian philosophy says that we become what we

think . Western philosophy also accepts this