Foundations of Ethics

Module 1

Ethics

The word ethics comes from the Greek word ethos, meaning character or custom. Today we use the word ethos to refer to the distinguishing disposition, character, or attitude of a specific people, culture, or group. The etymology of ethics suggests its basic concerns: (1) individual character, including what it means to be “a good person,” and (2) the social rules that govern and limit our conduct, especially the ultimate rules concerning right and wrong, which we call morality.

Some philosophers like to distinguish ethics from morality; in their view “morality” refers to human conduct and values and “ethics” refers to the study of those areas. “Ethics” does, of course, denote an academic subject, but in everyday parlance we interchange “ethical” and “moral” to describe people we consider good and actions we consider right. And we interchange “unethical” and immoral” to describe what we consider bad people and wrong actions.

Foundations of Ethics

Although ethical behavior in business does reflect social and cultural factors, it is also highly personal and is shaped by an individual’s own values and experiences. In your daily life, you face situations where you can make ethical or unethical decisions. You make your choices based on what you have learned from parents, family, teachers, peers, friends, and so forth. In addition, your ethics are also determined by your values.

Values are the relatively permanent and deeply held preferences of individuals or groups; they are the basis upon which attitudes and personal choices are formed. Values are among the most stable and enduring characteristics of individuals. Much of what we are is a product of basic values we have developed throughout our lives. An organization, too, has a value system, usually referred to as its organizational culture.

To better understand the role of values as the foundation for ethical behavior, let us take a look at a values framework. Rokeach developed a values framework and identified two general types of values: instrumental values and terminal values. Instrumental values, also called means-oriented values, prescribe desirable standards of conduct or methods for attaining an end. Examples of instrumental values include ambition, courage, honesty, and imagination. Terminal values, also called ends-oriented values, prescribe desirable ends or goals for the individual and reflect what a person is ultimately striving to achieve. Terminal values are either personal (peace of mind) or social (world peace). Examples of terminal values are a comfortable life, family security, self-respect, and a sense of accomplishment.

Different groups of people tend to hold different values. For instance, business school students and professors tend to rate ambition, capability, responsibility, and freedom higher than people in general do. They tend to place less importance than the general public on concern for others, helpfulness, aesthetics, cultural values, and overcoming social injustice.

In most cases, the ethical standards and social responsibility of an organization or business reflect the personal values and ideals of the organization’s founders and dominant managers. Over the years, those values and ideals become institutionalized and become integral to the organization’s culture.

Why Should A Person Act Ethically?

This is one of the great questions of philosophical ethics that has been addressed by many of the great philosophers, beginning with Socrates, Plato, and Aristotle. Why? The answer might be something like this.

To act ethically is, at the very least, to strive to act in ways that do not hurt other people; that respect their dignity, individuality, and uniquely moral value; and that treat others as equally important to oneself. If you believe these are worthwhile goals, then you have reason to strive to act ethically. If you do not believe these are worthwhile goals for human beings to pursue, then you may believe that it is not important to act ethically.

Those who forsake the importance of ethics either renounce these goals completely or believe that such goals can just as well be pursued on occasion, when convenient, to maintain appearances, and can just as well be ignored when inconvenient. Probably very few people give up such goals altogether. A lifestyle characterized by complete lack of ethical behavior would be so antisocial that it might well result to imprisonment or social exclusion.

Many people, however, seem to think that they can live their lives in ways that are ethical much of the time but unethical at other times. Such an intermittently unethical lifestyle has many pitfalls, some of which are worth listing briefly here:

1. Such a lifestyle, when discovered by others, usually leads them to lose trust in the person.

1. Those who discover such behavior sometimes seek to retaliate against the offenders.

1. Living in such ways sometimes leads people to act unethically at the wrong time. We all rely on our habits and inclinations when there is too little time to deliberate. Unethical behaviors weaken our inclinations to act ethically and may lead us, in times of stress, to act in ways we later regret.

1. Living in such ways may make us feel guilty if we have been brought up in families and societies that established in us a sense of conscience.

1. Acting ethically only at selected times leads us to lose trust in ourselves. As a result, we may become worried, unsure, and anxious about the possibility that we may make a mistake and act unethically at the wrong times.

1. Acting unethically, when we choose, leads us to occasional violations of many values that are important to us.

1. The intermittently unethical lifestyle may violate our religious beliefs.

As such, the now and then unethical lifestyle may lead to a life of more misery than the ethical lifestyle. Of course, this point does not prove conclusively that each of us will live better if we strive to act ethically all of the time. Whether that is true is a matter each person must judge as life progresses. However, in making such choices, we should not ignore the lessons provided from the cultural, religious, literary, and moral traditions in which we live. Our values have emerged from those traditions and are deeply intertwined in them. They may shed important light on the hard decisions we face in life.

Questions to Answer:

1. What is meant by “ethics”?
2. What are values? Name and describe the two types of values.
3. In your own words, why should a person act ethically?
4. Are you living ethically? Kindly explain your answer.

Module 2

Ethical Systems

Moral Philosophy

Moral philosophy refers to the principles, rules, and values people use in deciding what is right or wrong. This is a simple definition, in the abstract, but often terribly complex and difficult when facing real choices. How do you decide what is right or wrong? Do you know what criteria you apply, and how you apply them?

Universalism

Ethics scholars point to various major ethical systems as guides. The first ethical system, universalism, states that individuals should uphold certain values, such as honesty, regardless of the immediate result. The important values are those that society needs to function. For instance, people should always be honest because otherwise communication would break down. But rarely are things so simple.

Teleology

Teleology considers an act to be morally right or acceptable if it produces a desired result. The result can be anything desired by the person, including pleasure, personal growth, money, knowledge, or other self-interest. The key criterion is the consequences of the act, so teleology is sometimes referred to as consequentialism.

Two types of teleology are egoism and utilitarianism.Egoism defines acceptable behavior as that which maximizes consequences for the individual. “Doing the right thing,” the focus of moral philosophy, is defined by egoism as “do the act that promotes the greatest good for oneself.” If everyone follows this system, the well-being of society as a whole should increase. This notion is similar to Adam Smith’s concept of the invisible hand in business. Smith argued that if every organization follows it own economic self-interest, the total wealth of society will be maximized.

Utilitarianism

Utilitarianism is also concerned with consequences, and as such is a teleological philosophy. But unlike egoism, utilitarianism seeks the greatest good for the greatest number of people. A utilitarian approach seeks to maximize total utility, achieving the greatest benefit for people affected by a decision. It is often referred to as a cost-benefit analysis because it compares the costs and benefits of a decision, a policy or an action. These costs and benefits can be economic (expressed in money), social (the effect on society at large), or human (usually psychological or emotional impact). This type of results-oriented ethical reasoning tries to determine whether the overall outcome produces more good than harm—more utility or usefulness than negative results. The utilitarian approach supports the ethical issues of profit maximization, self-interest, and rewards based on abilities and achievements, sacrifice and hard work, and competition.

The main drawback to the utilitarian approach is the difficulty of accurately measuring both costs and benefits. For example, some things, such as goods produced, sales, payrolls, and profits, can be measured in monetary terms. Other items, such as employee morale, psychological satisfactions, and the worth of human life, do not easily lend themselves to monetary measurement. Another limitation of the utility approach is that the majority may override the rights of those in the minority.

Despite these limitations, cost-benefit analysis is widely used in business. If benefits (earnings) exceed costs, the organization makes a profit and is considered to be an economic success. Because this method uses economic and financial outcomes, managers sometimes rely on it to decide important ethical questions without being fully aware of its limitations or the availability of other approaches that may improve the ethical quality of decisions.

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Deontology

Deontology focuses on the rights of individuals. Attention to individual rights ensures that equal respect is given to all persons. In this way, actions that maximize utility for many parties will be rejected if they do serious injustice to just one party. In contrast, utilitarianism might allow such an action in the spirit of maximizing overall consequences. Utilitarianism concentrates more on ends, and deontology more on means.

Deontology holds that human beings have certain moral entitlements that should be respected in all decisions. These entitlements guarantee an individual’s most fundamental personal rights (life, freedom, health, privacy, and property, for example). A right means that a person or group is entitled to something or is entitled to be treated in a certain way. The most basic human rights are those claims or entitlements that enable a person to survive, make free choices, and realize his or her potential as a human being. Denying those rights to other persons and groups or failing to protect their rights is considered to be unethical. Respecting others, even those with whom we disagree or whom we dislike, is the essence of human rights, provided that others do the same for us.

Deontology holds that individuals re to be treated as valuable ends in themselves simply because they are human beings. Using others for your own purposes is unethical if, at the same time, you deny them their rights to their own goals and purposes. For instance, an organization that denies a group of women employees an opportunity to bid for all jobs for which they are qualified is depriving them of some of their rights.

The main limitation of using deontology as a basis for ethical decisions is the difficulty of balancing conflicting rights.

The degree to which human rights are protected and promoted is an important ethical benchmark for judging the behavior of individuals and organizations. Most people would agree that the denial of a person’s fundamental rights to life, freedom, privacy, growth, and human dignity is generally unethical. By defining the human condition and pointing the way to a realization of human potentialities, such rights become a kind of common denominator setting forth the essential conditions for ethical actions and decisions.

Justice

Under the justice approach, decisions are based on an equitable, fair, and impartial distribution of benefits (rewards) and costs among individuals and groups. Justice is essentially a condition characterized by an equitable distribution of the benefits and burdens of working together. It exists when benefits and burdens are distributed equitably and according to some accepted rule. For society as a whole, social justice means that a society’s income and wealth are distributed among the people in fair proportions.

A common question is “Is it fair or just?” Using the justice approach, the organization considers who pays the costs and who gets the benefits. If the shares seem fair, then the action is probably just.

Determining what is just and unjust can be an explosive issue if the stakes are high. Since distributive rules usually grant privileges to some groups based on tradition and custom, sharp inequalities between groups can generate social tensions and clamorous demands for a change to a fairer system.

As with utilitarianism, a major limitation of the justice approach is the difficulty of measuring benefits and costs precisely. Another limitation is that many of society’s benefits and burdens are intangible, emotional, and psychological. People unfairly deprived of life’s opportunities may not willingly accept their condition. Few people, even those who are relatively well off, are ever entirely satisfied with their share of society’s wealth. For these reasons, the use of the justice approach can be tricky. Although everyone is intensely interested in being treated fairly, many are skeptical that justice will ever be fully realized.

Virtue Ethics

Virtue ethics is a perspective that goes beyond the conventional rules of society by suggesting that what is moral must also come from what a mature person with “good” moral character would deem right. Society’s rules provide a moral minimum, and then moral individuals can transcend ruled by applying their personal virtues such as faith, honesty, and integrity.

Individuals differ in this regard. Kohlberg’s model of cognitive moral development classifies people into one of three categories based on their level of moral judgment. People in the preconventional stage make decisions based on concrete rewards and punishments and immediate self-interest. People in the conventional stage conform to the expectations of ethical behavior held by groups or institutions such as society, family, or peers. People in the principled stage take a broader perspective in which they see beyond authority, laws, and norms and follow their self-chosen ethical principles. Some people forever reside in the preconventional stage, some move into the conventional stage, and some develop further yet into the principled stage. Over time, and through education and experience, people may change their values and ethical behavior.

What criteria do you use? You may or may not be able by this point to choose the perspective that you use or would use in making tough decisions. But it should be clear that ethical issues can and are evaluated from many different perspectives, that each perspective has a different basis for deciding right and wrong, and that people will disagree about what is and is not ethical because they are assessing ethics by different ethical standards.

Questions to Answer:

1. Enumerate and describe briefly, in your own words, the different ethical systems.
2. Which among this ethical systems applies to your life? Kindly explain and cite examples that will support your answer.
3. “To cheat or to repeat?” Kindly comment on this.

Module 3

Business Ethics

The Context of Ethics in Business

Business ethics is not a special set of ethical rules that differ from ethics in general. Business ethics is the application of the general ethical rules to business behavior. If a society deems dishonesty to be unethical and immoral, then anyone in business who is dishonest with employees, customers, creditors, stockholders, or competition is acting unethically and immorally.

Businesses pay attention to ethics because the public expects a business to exhibit high levels of ethical performance and social responsibility. Many ethical rules operate to protect society against various types of harm, and business is expected to observe these ethical principles. High ethical standards also protect the individuals who work in an organization. Employees resent invasions of privacy, being ordered to do something against their personal convictions, or working under hazardous conditions. Businesses that treat their employees with dignity and integrity reap many rewards in the form of high morale and improved productivity. People feel good about working for an ethical company because they know they are protected along with the general public.