CHAPTER 1

AN OVERVIEW OF ETHICS
Quote “Man when perfected, is the best of animals, but when separated from law and justice, he is the worst of all.”
– Aristotle

Learning Objectives:
1. What is Ethics, and why is important to act according to a code of principles?
2. Why is business ethics becoming increasingly important?
3. What are corporations doing to improve business ethics?
4. Why are corporations interested in fostering good business ethics?
5. What approach can you take to ensure ethical decision making?
6. What trends have increased the risk of using information technology unethically?

What is ethics?
Each society forms a set of rules that establishes the boundaries of generally accepted behavior. These rules
are often expressed in statements about how people should behave, and they fit together to form the moral code by
which society lives. Unfortunately, the different rules have contradictions, a person can be uncertain about which rule
to follow.

Example: A conflict between loyalty to a friend and the value of telling the truth.
Telling a white lie.
Sometimes, the rules do not seem to cover new situations, and you must determine how to apply the existing
or develop new ones. You may strongly support personal privacy, but in a time when employers track employee e-
mail and Internet usage, what rules do you think are acceptable to govern the appropriate use of company resources?
 Cases of people fired from their jobs because of playing while on duty
 Entering someone’s room
 Opening messages, inbox/outbox, gallery of your classmates cellphones

What is Morality?
Refers to social conventions about right and wrong that are so widely shared that they become the
basis for an established consensus.

However, ones view of moral may vary on the following:

 Age , Cultural Group, Ethnic Background, Religion, Gender

There is widespread agreement on the immorality of murder, theft, arson but other behaviors that are accepted
in one culture may be unacceptable to another.
 Placing elderly parents to in a managed care facility or home for the aged.
 Illegal copying of software, copyright infringement, etc.

Strong disagreements may also occur in the same society

 Issues on abortion
 Death penalty
 Reproductive Health
 Gun Control (in the United States)
 LGBTQ discrimination

Definition of Ethics
Ethics is a set of beliefs about right or wrong behavior. Is a universal norm.
Which is unethical? Situation: Stealing an umbrella from someone’s home OR Finding an umbrella somewhere and decided to keep it.

A person’s opinion of what represents ethical behavior is strongly influenced by the following combinations:
 Family influences
 Life experiences Ethical behavior sometimes depends
 Education and poverty on the environment once was born in
 Religious beliefs
 Personal values or exposed to.
 Peer influences

Virtue vs. Vices

Virtues are habits that incline people to do what is acceptable and vices are habits of unacceptable behavior.
Examples of Virtues Examples of Vices
 Fairness Vanity Peoples virtues and vices helps define their
 Generosity Greed value system, the complex scheme of
 Honesty Envy
moral values by which they live.
 Loyalty Anger
What is the importance of Integrity?
A person who acts with integrity acts in accordance with personal code of principles – ergo integrity is one of
the cornerstones of ethical behavior.
Things to ponder:
 Is it okay to lie to protect someone’s feelings?
 Can you keep the extra 100 pesos when the cashier mistook your 100 peso bill for a 200 peso bill?
 Should you intervene with your classmate because he has alcohol or drug dependency problem?
 Is it okay to exaggerate personal achievement to boost oneself?

Extending people the respect and consideration they deserve.

 Difficult to achieve when one is in a situation that conflicts with ones own moral standard.
 Many ethical dilemmas are not about right vs. wrong but involve choices between right vs. wrong.

ETHICS IN THE BUSINESS WORLD

Risk – is the product of multiplying the likelihood of an event by the impact of its occurrence. Thus, if the
likelihood of an event is high and its potential negative impact is large, the risk is considered great.

Ethics has risen to the top of business agendas because the risks associated with inappropriate behavior have
increased, both in their likelihood and their potential negative impact.

Why fostering Good Business Ethics is important?

Corporations have at least 5 reasons for promoting a work environment on which they encourage employees
to act ethically when making business decisions:
1. To gain the goodwill of the community
2. To create an organization that operated consistently
3. To produce good business
4. To protect the organization and its employees from legal action
5. To avoid unfavorable publicity

1. Gaining the goodwill of the community.

Providing social responsibility can result goodwill from the community
examples:
1. Contributions to charitable organizations and nonprofit institutions
2. Providing additional benefits for employees who are doing well in their work
NOTE: Companies that harm a community can harm themselves
2. Create an Organization that operates consistently.
Promoting good values in the workplace environment:
 Operates with honesty and integrity, staying true to corporate principles
 Operate according to standards of ethical conduct, in words and in actions.
 Treat colleagues, customers, and consumers with respect
 Strive to be the best as what matters most to the company
 Accept personal responsibility for actions
 Value diversity
 Make decisions based on facts and principles.
3. Good ethics can mean good business.
Good ethics can mean good business and profits.
 Companies that produce safe and effective products avoids lawsuits and recalls
 Companies that provide excellent service maintain their costumers rather than losing them to other competitors of the business
 Companies that treat their employees well, improve work productivity and boosts morale
 Being fair and ethical in treating others established good relationship with suppliers and other business partners.
“Bad ethical practices can lead to bad business results.”
4. Protecting the Corporation and its employees from legal actions
“Does the corporation have negative impact to everyone including the community itself?”

5. Avoiding unfavorable publicity

The public reputation of a company strongly influences the value of its stocks, how consumers regards its
products and services, the degree of oversight it receives from government agencies and the amount of
support and cooperation from business partners

Companies that operate unethically often suffer negative consequences and bad publicity.

IMPROVING CORPORATE CODE OF ETHICS

The risk of unethical behavior are increasing , so the improvement of business ethics
* Appointing a Corporate Officer * Conduction social audits
* Ethical Standards set by Board of Directors * Including Ethical Criteria in Employee appraisals
* Establishing a corporate code of ethics * Requiring Employees to take Ethics Training
 1. Corporate Ethics Officer – is a senior level manager who provides vision and direction in the area of business
conduct. Ethics officers can come from diverse backgrounds such as legal staff, human resources, finance,
auditing, security or line operators.
2. Ethical Standard set by Board of Directors
The board of directors is responsible for the careful and responsible management of an organization.
Responsibilities of BOD
a. For-profit Organization
Oversee the organizations business activities and management for the benefit of all stakeholders,
including shareholders, customers, suppliers and the community.
b. For non-profit corporation
the BOD reports to different set of stakeholders, particularly the local community that the nonprofit serves.
3. Establishing a Corporate Code of Ethics
A code of ethics highlights an organization’s key ethical issues and identifies the overarching values
and principles that are important to the organization and its decision making.
The code frequently includes the following that acts as the guide for the employees actions:
A. Set of formal and written statements about the purpose of the organization
B. Values
C. Principles
4. Conducting Social Audits
Companies identify the ethical lapses they committed in the past and set directives for avoiding similar
missteps in the future.
5. Requiring Employees to take Ethics Training
According to ancient Greek Philosophers - “Personal convictions about right and wrong behavior could be
improved through education”
6. Including Ethical Criteria in Employee Appraisals
Employees are increasingly evaluated on their demonstration of qualities and characteristics
That are stated in the corporate code of ethics.
Example:
1. Treating others fairly and with respect
2. Operating effectively in multicultural and diverse environment
3. Accepting personal accountability to meet business needs.
4. Continually developing themselves and others
5. Operating openly and honestly with suppliers, customers and other employees

When Good Ethics Result in Short-Term Losses

Operating ethically does not always guarantee business success.
Situation to consider:
A major global telecommunications company faced significant competitive disadvantages by
consistently applying its corporate values to its South American business. Although the organization’s code of
ethics prohibited the practice of financially “influencing” decision makers on project bids, its competition did not
play by the same rules. As a result, the company lost many projects and millions of dollars in revenues. Senior
management argued in favor of integrity and the consistent application of corporate ethics, reasoning that the
situational ethics was wrong and that the practice could be hard to stop once it was started. Their hope was
that good ethics would prove to be good business in the long term.

CREATING AN ETHICAL WORK ENVIRONMENT

Most employees want to perform their jobs successfully and ethically, but good employees sometimes make
bad ethical issues especially when pressured by the management.
Ethical Decision Making
The Seven step approach that helps the management level in ethical decision making.
1. Get the Facts
2. Identify the stakeholders and their positions
3. Consider the consequences of ones decision
4. Weigh various guidelines and principles
5. Develop and evaluate options.
6. Review decision
7. Evaluate the results of the decision.

1. Getting the facts

“Know the facts before making a decision”

2. Identifying the stakeholders and their positions.

Stakeholder – is someone who stands to gain or lose from how a situation is resolved.
Things to consider:
1. Involving the stakeholders in the decision making to arrive to a recommended course of outcome.
2. What is at stake for each stakeholder?
3. What does each stakeholder value and what outcome does the stakeholder want?
4. Do some of the stakeholders have greater stake because they have special needs or because the
company has special obligations to them?
5. To what degree should they be involved in the decision making?

3. Considering the consequences of your decision.

Several perspectives:
1. Your decision could sometimes affect you, although you must guard against thinking too narrowly and
focusing only on what is best for you.
2. Consider the harmful and beneficial effects your decision will have on the stakeholders.
3. Is to ask whether your decision will help the organization meets its goals and objectives.
4. Consider the decisions impact on the broader community of other organizations and institutions, the
public and the environment.
When all of this are considered by the manager, he/she will have gain additional insights that can affect the decision .

4. Weighing Various Guidelines and Principles

Philosophical theories for Ethical Decision Making

A. Virtue Ethics Approach

The ethical choice best reflects moral virtues in yourself and the community.
In doing this approach, you are dealing this in a manner of how you are practicing the virtue that you
are upholding within the organization and in the community. Act not from the basis from the principles and
rules that people should follow but act on what is the right thing to do. Also depends on the situation of what
culture you have and the cultural norm it follows.

B. Utilitarian Approach
The ethical choice produces the greatest excess of benefits over harm.
This approach to ethical decision making states that you should choose the action or policy that has
the best overall consequences for all people who are directly or indirectly affected. The goal is to find the single
greatest good by balancing the interests of all affected parties.

C. Fairness Approach
The ethical choice treats everyone the same and show no favoritism and discrimination.
Treating all people the same way in the decision making. Being impartial.

D. Common Good Approach

The ethical choice advances the common good.
This approach to decision making is based on a vision of society as a community whose members
work together to achieve a common set of values and goals.

5. Developing and Evaluating Options

Providing different options and evaluation them. To also consider what benefits and harm will each
course of action will produce and which alternative will lead to best overall consequences.
6. Reviewing your Decision
Consider what everyone thinks of the decision that you are going to make. Would everyone see it as
fair, just, right and good?
 7. Evaluating the results of your decision.
Monitoring the results of the decision in order observe its impacts to employees and other affected
parties. To improve oneself in decision making activities in the future.

ETHICS IN INFORMATION TECHNOLOGY

The growth of the Internet, the ability to capture and store vast amounts of personal data online , and greater
reliance on information systems in all aspects of life have increased the risk of using information technology unethically.
In the midst of the many IT breakthroughs throughout the years, the importance of ethics and human values has been
underemphasized – with a range of consequences.

Here are some examples that raise public concern about the ethical use of information technology:
 Todays workers might have their email and Internet access monitored while at work, as employees struggle to
balance their need to manage important company assets and work time with employees’ desire for privacy and
self-direction.
 Millions of people have uses peer-to-peer networks to download music and movies at no charge and in no
apparent violation of copyrights laws.
 Organizations contact millions of people worldwide through unsolicited email (spam) at an extremely low-cost.
 Hackers break into databases of financial institutions and steal customer information, then use it to commit
identity theft, opening new accounts, and charging purchases to unsuspecting victims.
 Students around the world have been caught downloading material from the Internet and plagiarizing content
in their term paper.
 Web sites plants cookies and spyware on visitors’ hard drives to track their Internet activity.

Summary for Chapter I

 What is Ethics and why is it important to act according to a code of principles?
Ethics is a set of beliefs about right or wrong behavior. A person who acts with integrity acts in
accordance with a personal code of principles. Integrity is one of the cornerstones of ethical behavior.
 Why is business ethics becoming increasingly important?
Ethics in business is becoming more important because the risks associated with inappropriate
behavior have grown in number, complexity, likelihood, and significance.
 What are corporations doing to improve business ethics?
Corporations can appoint corporate ethics officer, set ethical standards at a high organizational level,
establish a corporate code of ethics, conduct social audits, required employees to take ethics training,
and include ethical criteria in employee appraisals.
 Why are corporations interested in fostering good business ethics?
Corporations want to protect themselves and their employees from legal actions, to create an
organization that operates consistently( because good ethics can be good business), to avoid negative
publicity, and to gain the goodwill of the community. Being ethical however does not always
guarantee business success.
 What approach can you take to ensure ethical decision making?
One approach involves seven steps: get the facts of the issue, identify the stakeholders and their
positions, consider the consequences of the decision, weigh various guidelines and principles,
develop and evaluate various options, review the decision, and evaluate the results. This is not a
linear process, some backtracking and repeating of previous steps may be required.
 What trends have increased the risk of using information technology unethically?
The growth of the Internet, the ability to capture and store vast amounts of personal data online, and
greater reliance on information systems in all aspects of life have increased the risk of using
information technology unethically. In the midst of the IT breakthroughs in recent years, the
importance of ethics and human values has been underemphasized – with a range of consequences.

END OF CHAPTER I

Reference: Ethics in Information Technology, SECOND EDITION.

Author : GEORGE REYNOLDS
“Ethics is knowing the difference between what you have a right to do and what is a right to do.”

“I believe in capitalism. I need to make a profit, but I would like to do with ethics, dignity, and morals. It’s my dream”

“The first step in the evolution of ethics is a sense of solidarity with other human beings

“Great people have great values and great ethics.”

“Action indeed is the sole medium of expression of ethics”

“Our very lives depends upon the ethics of strangers, and most of us are strangers to other people.”

“People who truly understand what is meant by self-reliance know they must live their lives by ethics rather than by
rules.”

“A people and their religion must be judged by social standard who have any meaning if religion is held to be
necessary good for the well-being of the people.”

“While we are guarding the country, we must accept being the guardian of the finest ethics. The country needs it and
we must do it.”

“Ethics are not necessarily to do with being law-abiding. I am very interested in the moral path, doing the right
thing.”

“Don’t violate your own code of values and ethics, but don’t waste energy trying to make other people violate theirs.”