1. What is ethics, and what does it mean to "put business and ethics together"? What would it mean for a company to do this well?
Ethics can be defined as behaving in a morally just way as one moves throughout their life and activities. Ethics and morality are closely related - one behaves according to a set of principles that dictates how the world and the people in it should work. In the realm of business, having proper business ethics often means putting other concerns ahead of merely seeking profit - in essence, there are concerns far from the economic that have to be weighed in order to act as an ethically responsible company. By behaving ethically, a business can ideally earn profit while making sure that the ends do not justify the means in terms of behavior and morality.
It can often be hard for companies to combine business with ethics. Everything about business states that the overall goal is to earn money and make a profit; with that in mind, that priority is often given precedence. However, with the addition of these ethical concerns (the environment, welfare of employees, etc.), the energy of these companies has to be moved in another direction from time to time.
In order for a company to perform appropriate business ethics, a number of things would have to be attempted. Proper ethical management would have to be exercised, including sincere efforts to place the welfare of its employees ahead of pure profit-seeking measures. An ethical company would have to take steps to ensure that their efforts and initiatives remain within the boundaries of law; in essence, the company could not do anything illegal in order to further their own bottom line.
2. What are the three traditions of ethics, and how do they provide guidance to help inform your managerial decision-making?
There are typically three traditions of ethical thought that are pertinent to business and capitalism: virtue ethics, deontology and utilitarianism (Jones et al., 2005). In the case of virtue ethics, individuals and entities operate based on their own moral reasoning and 'virtues' in order to make their decisions. In the case of my own managerial decision making, virtue ethics guides a great deal of my own actions and behavior as a manager; I often weigh what good would come out of lying or being deceitful, and I determine that the risk of being caught informs me to avoid that action. Since doing unethical things would bring about bad consequences, my ethical choice is to not do those things.
Deontology relies on the establishment of a series of rules in order to abide by ethical behavior. For the deontologist, something is ethical if the rules allow it to happen. One has an obligation to the rules, and therefore following the rules is good. Deontology plays a large role in my decision making as well, since I do treat the rules and regulations as an absolute. While I can choose not to do things that even the rules allow me to do, I do not allow myself the option of something that is illegal or unsanctioned.
Utilitarianism revolves around making decisions according to the overall 'happiness' of either the individual or society as a whole. According to utilitarians, only after the fact can a choice be determined as moral or not. Did a decision make someone happier? If so, then it is ethical. In my mind, utilitarianism ties in closely with virtue ethics, as I believe what would help achieve the 'greatest' happiness is finding ways to profit while maintaining no negative consequences from violating the law or messing with peoples' livelihoods or safety.
4. Before this class discussion in module 1, what was your sense of why organizational ethics like Enron, Arthur Anderson, and Worldcom, happen?
In my mind, organizational ethics like those found at Enron and other companies occurred because of a certain managerial distance that executives have with their own culpability. Often, in positions of extreme power like that, people can feel as though they are 'above the law' - that they do not have to explain their behavior to anyone. Furthermore, they think that they have enough money to make potential problems go away, or insulate themselves from any possible fallback. Add to that an increasingly culpable and permissive government oversight and regulation system, and you have a management culture that feels it can get away with murder.
The actions displayed by Enron executives, in particular, showed a lack of concern not only for the customer, but for their own lower-level employees. By masking the dire straits of the company from everyone to save face, they ensured that employees would not be prepared for potential fallback or the possible downfall of the company. Due to the fallout that occurred from the realization of Enron's dire straits, many people were disenfranchised and defrauded. At the very least, the scandal helped to awaken the world to the out-of-touch perspectives of many corporate executives, who may feel as though they do not have to hold themselves to ethical accountability standards. What happened at Enron and these other firms was an unrealistic an unethical business model where corporate executives considered themselves above the law and free from accountability. That attitude must be corrected if proper ethical behavior is to take place.
6. Which factors seem to be most important in diagnosing why bad things happen? What role does the individual, and individual conscience, play in making sure good things happen organizations?
Often, the most important things to consider when examining unethical behavior are the financial incentives for said behavior. If someone will make more money making that unethical decision than they would with an ethical one, that helps to explain the motive for the decision (particularly in a business or managerial context). The circumstances surrounding the company's history and performance might also play a factor in the choices leading up to fraud and other bad events. The company's organizational ethics policies, and the activities and attitudes of its executives, are huge indicators of potential ethical grey areas that can be exploited to the level of fraud.
The individual and his or her conscience is the most important barometer for ensuring business ethics and managerial accountability in organizations. In the world of business ethics, one reason that many unethical actions go unreported is because of bribery or other forms of extortion. Many people will just take more money in order to keep quiet, making themselves culpable and, essentially, part of the problem. However, if someone's conscience trumps their need or desire for money, they will place their own sense of righteousness above what the company wants or needs from them, and take steps to expose or change the unethical behavior. Furthermore, if a manager has this crisis of conscience, it can prevent them from making the unethical decision in the first place. If the individual conscience is weighed with greater concern while making financial decisions, the course of a company can be shaped with a more even-handed approach, combining ethical sense with financial profit-seeking.
Issue to Consider: Marge Norman and Miniscribe Corporation
Miniscribe, a manufacturer of disk drives and hard drives, among other computer products, found itself losing supply contracts and profits fell across the line. Furthermore, in 1985 they lost out on a supply contract with IBM, so MiniScribe hard drives would not get the advertisement and business that they needed or anticipated. With that in mind, corporate executives had an ethical dilemma to face: would they fudge the numbers and effectively defraud their customers in order to cover their mistake, or let their company go under?
In essence, MiniScribe falsified sales records in order to give the impression that their numbers were better than they are. This was done by shipping masonry inside hard drive boxes (giving them legitimate serial numbers) in order to keep the money from the initial purchases. The hard drives would then get shipped to replace the masonry, giving them the time to use the money they had earned in the short term to deal with their expenses. They then laid off the employees who were tasked with packaging the masonry, who then took the story to the press leading to the reveal of the fraud.
In this case, MiniScribe demonstrated rampant and inexcusable fraud against their customers. By knowingly sending them fraudulent products in order to play a short-term con game, the managers showed that they do not care about their customers. Any company that is shown to be willingly ignorant of the customer's welfare for their own gain is not behaving in an ethical manner.
References
Ferrell, O.C., Fraedrich, J., & Ferrell, L. (2010). Business Ethics; Ethical Decision Making and
Cases. Cengage Learning.
Jones, C., Parker, M., & ten Bos, R. (2005). For Business Ethics. London: Routledge.
Machan, T. R. (2007). The Morality of Business: A Profession for Human Wealthcare. Boston:
Springer.
Wicks, A. C., Freeman, R. E., Werhane, P. H., and Martin, K.E. (2010). Business Ethics: A
Managerial Approach. Pearson/Prentice Hall Publishing.
