BE MID-TERM
KNOWLEDGE
SESSION
HUMANE - R
TOPICS
COVERED
BASIC CONCEPTS OF ETHICS
01 AND ETHICS IN THE WORLD
OF BUSINESS 05 BIASES AND ETHICAL
REASONING
02 ETHICAL BREAKDOWNS
06 TESTS FOR ETHICAL
REASONING
03 MORALDEVELOPMENT OF
BUSINESS
04 ETHICAL THEORIES
Basic Concepts of Ethics
Some general terms Ethical Dilemma
• Occurs when the options available are unethical and hurting others
• MORALS – personal philosophies (context driven rules) in someway or the other
that define write and wrong • E.g. Misrepresenting/ outright lying of data – FTX scandal (Sam
derived from the Latin word ‘mores’ [customs] Bankman-Fried: cryptocurrency)
• PRINCIPLES – specific boundaries for behavior that often Ethical dilemma occurs due to differences in
become the basis for rules • Individual vs. organization
• VIRTUES – it judges a person by his/ her character rather • Organization vs. society
than by an action that may deviate from his/ • Society vs. individual
her normal behavior Sources
• VALUES – enduring beliefs and ideals that are socially • “kaam” (desire or lust)
enforced • “krodh” (anger)
• ETHICS – defined as behavior or decisions made within a • “lobh” (greed)
groups’ values. • “moh” (worldly attraction)
• derived from the Greek word ‘ethos’ [character] • “ahankar” (false ego)
• “bhay” (fear)
Basic Concepts of Ethics
WHAT DETERMINES ETHICAL What is Business Ethics?
BEHAVIOR – CHARACTER OR Comprises of organizational principles, values, and norms that
SITUATION? may originate from individuals, organizational statements, or from
the legal system that primarily guide individual and group behavior
Character in business. Includes (but not limited to)
• Personal shortcomings
• Unconscious biases • Personal responsibility
• Lack of awareness • Corporate responsibility
• Judgement and action • Loyalty
• Respect
Situation • Trustworthiness
• Instinctive/ intuitive reaction • Social responsibility
• Deliberative/ reflective reaction
• Environmental responsibility
Ethics in the World of Business
Elements of Ethical Culture Social Responsibility and Business Ethics
Steps of Social Responsibility
Ethics in the World of Business
Steps to utilizing the stakeholder framework to manage responsibility and business ethics
(1) Assessing the corporate culture
(2) Identifying stakeholder groups
(3) Identifying stakeholder issues
(4) Assessing organizational commitment to social responsibility
(5) Identifying resources and determining urgency
(6) Gaining stakeholder feedback
Ethical Breakdowns
Constructive distance refers to a healthy Five Barriers to an Ethical Organization
level of psychological or emotional space
between individuals or groups
Destructive distance refers to an unhealthy
or detrimental level of psychological or
emotional separation between individuals or
groups, which can lead to misunderstandings,
conflicts, and disconnection
Moral engagement refers to the active
involvement of individuals in moral or ethical
decision-making processes.
Moral disengagement involves the
Reasons for these barriers:
psychological processes that allow
Moral Justification Diffusion of Responsibility
individuals to justify immoral or unethical
Euphemistic Labelling Distortion of consequence
behavior, thereby reducing feelings of guilt or
Advantageous Comparison Attribution of blame
shame.
Displacement of responsibility Dehumanization
Moral development in business
Framework for understanding ethical decision
making in business
Factors affecting ethical decision making
Individual
Nationality
Gender
Age
Education
Locus of control - internal vs external
Organisational
Corporate culture
Ethical decision-making model: Focus on preparation for informed decisions.
Ethical culture
Factors influencing ethical decisions: Scholars study regularities and dynamic
Obedience to authority
interactions.
Opportunity
Understanding ethical decision-making: Sensitizing individuals to recognize
Immediate job context
issues and dilemmas.
Balancing values with business knowledge: Requires combining moral
philosophies with business understanding.
Moral development in business
Business Ethics Intentions, Behavior, and Evaluations
Business Ethics Signs of Unethical Decisions
Ethical business issues involve ambiguous problem-solving.
Guilt or uneasiness as the initial sign.
Uncertain outcomes make immediate ethical determination
Behavior change follows to alleviate guilty feelings.
challenging.
Critical thinking and personal responsibility are key. Justifications for Unethical Behavior
Employee Empowerment Common justifications include paycheck dependence, peer
influence, and fear of negative references.
Train employees for independent ethical decision-making.
Belief in separate business ethics rules and fear of others
Real-life example: Taco Bell employee's refusal to serve a
being rewarded for unethical actions.
deaf customer.
Success Measures in Business
Impact of Work Environment
Success defines intentions and behavior.
Workplace culture influences ethical recognition and Measures include money, security, family, power, wealth,
judgment. and personal/group gratification.
Inconsistency between intentions, behavior, and judgment Likelihood of rewards and punishments influences behavior.
may lead to guilt.
Ethical Theories
Ethical Theories FRAUD Triangle
Set of rules or guidelines that people use to make
decisions are ethical theories.
Rationalization - Cognitive Stage
1. EGOISM - Ethical egoism is a philosophical belief stating that it is
morally appropriate for an individual to act in their self-interest.
2. CONSEQUENTIALISM - It states that moral value of an action or
decision should be judged on its consequences.
3. UTILITARIANISM - It states that if the output of a decision is
beneficial for greatest number of people, then it is ethical.
4. DEONTOLOGY - This states that morality of the action is based
on intentions and an obligatory set of rules regardless of the Pressure Opportunity
action. (motivation for employees) (means for misconduct)
5. TEOLOGY - The act is moral if it produces some desired result. (can be financial pressure, (Absence of control framework)
6. VIRTUE - Individual who endorse virtue ethics will act according Various vices,
to how that benefit a virtue person should act.
work pressure)
Biases and Ethical Reasoning
Biases in Ethical Decision Making Framework for Ethical Reasoning and Individual Decision Making
What is Bias ? Answer these 4 questions when faced with ethical dilemma in decision making -
Distortion of cognition thatleads to Impaired decision 1. Am I comfortable with the likely consequences of this action.
making. 2. Am I meeting my duties & respecting others’ rights.
3. Am I respecting the community & its norms.
1. Implicit Prejudice - Judging according to unconscious
4. Am I meeting my commitments& my company’s committments.
stereotypes rather than merit.
2. Ingroup Favouritism - Granting favors to people with the
Ethical Principles to be adhered to (maximise your performance on these principles) -
same background as yours.
1. Fiduciary - act in the best interest of the company and its investors.
3. Overclaiming Credit - Considering ourselves better than
2. Property - Respect property & the rights of those who own it.
everyone else.
3. Reliability - Keep promises, agreements, contracts and other commitments.
4. Conflict of Interest - When one act impacts multiple
4. Transparency - Conduct business in a truthful and open manner.
aspects of a person’s life, making decision to better one
5. Dignity - Respect the dignity of all people.
of them.
6. Fairness - Deal fairly with all parties.
7. Citizenship - Act as a responsible member of the community.
8. Responsiveness - Be responsive to the legitimate claims and concerns of others.
Tests for Ethical Reasoning
Quick Tests to provide cues - Moral Disengagement -
Visibility Tests (Testing the consequences) - Most people have developed personal standards of moral behavior
Would I be comfortable if this action be described on the front page that serves as a self regulatory role. Behaving in ways that counter
of a respected newspaper ? these standard results in self - censure (sense of guilt / loathing)
Generality Tests (Testing for bright lines) - Moral Self Regulation can be activated & deactivated selectively.
Would I be comfortable if everyone in the similar situation did this ? Moral disengagement is the key deactivation process.
Suitability Tests (Testing for the value of community) -
How would my action be viewed by a member of this community ? Cognitive mechanisms of moral disengagement -
Legacy Tests (Testing for Commitments) - 1. Moral justification
Is this how I would like my leadership to be remembered ? 2. Euphemistic labelling
Family Tests - 3. Advantageous comparison
Would I take the decision if my family were affected by the action ? 4. Displacement of responsibilities
5. Diffusion of responsibility
6. Distorting the consequences
7. Dehumanisation
8. Attribution of blame
Tests for Ethical Reasoning
Workplace Deviance Typology of deviant behaviour -
Voluntary behavior that violates
significant organisational norms and in
doing so, threatens the well being of the
organisation, its members or both.
THANK YOU!
