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Business Ethics
Overview
This unit covers the following topics:
���� What is ethics?
���� Business ethics
���� Why ethics?
���� Values and social responsibility
���� The work ethic
���� The levels of ethical behavior
���� Managing ethics in organizations
���� Ethical decision making
���� How to deal with specific unethical conduct
���� Ethics in the public service and professionalism
Objectives
By the end of this unit, you will be able to:
���� Differentiate ethical conduct from unethical conduct
���� Discuss the consequences of unethical conduct on society
���� Evaluate an ethics infrastructure in a work environment
���� Follow the steps for ethical decision making
���� Explain the importance of ethical conduct among public servants
���� Analyze the relationship between ethics and professionalism
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I have done no falsehood.I have done no falsehood.I have done no falsehood.I have done no falsehood. I have not robbed.I have not robbed.I have not robbed.I have not robbed.
I have not been rapacious.I have not been rapacious.I have not been rapacious.I have not been rapacious. I have not built a dam on flowing water.I have not built a dam on flowing water.I have not built a dam on flowing water.I have not built a dam on flowing water.
I have not killed men.I have not killed men.I have not killed men.I have not killed men. I have not destroyed food supplies.I have not destroyed food supplies.I have not destroyed food supplies.I have not destroyed food supplies.
I have done no crookedness.I have done no crookedness.I have done no crookedness.I have done no crookedness. I have not stolen the God's offerings.I have not stolen the God's offerings.I have not stolen the God's offerings.I have not stolen the God's offerings.
I have not told lies.I have not told lies.I have not told lies.I have not told lies. I have not taken food.I have not taken food.I have not taken food.I have not taken food. I have not been sullen.I have not been sullen.I have not been sullen.I have not been sullen.
I have not seen a thirsty man and refused him water.I have not seen a thirsty man and refused him water.I have not seen a thirsty man and refused him water.I have not seen a thirsty man and refused him water. I have not killed a sacred bull.I have not killed a sacred bull.I have not killed a sacred bull.I have not killed a sacred bull. I have not committed perjury.I have not committed perjury.I have not committed perjury.I have not committed perjury.
I have not stolen bread.I have not stolen bread.I have not stolen bread.I have not stolen bread. I have not eavesdropped.I have not eavesdropped.I have not eavesdropped.I have not eavesdropped.
I have not babbled.I have not babbled.I have not babbled.I have not babbled. I have not disputed except as concerned my ownI have not disputed except as concerned my ownI have not disputed except as concerned my ownI have not disputed except as concerned my own property. property. property. property.
I have not diverted water at its season.I have not diverted water at its season.I have not diverted water at its season.I have not diverted water at its season. I have not misbehaved.I have not misbehaved.I have not misbehaved.I have not misbehaved. I have not made terror.I have not made terror.I have not made terror.I have not made terror.
I have not laid anything upon the weights of the handI have not laid anything upon the weights of the handI have not laid anything upon the weights of the handI have not laid anything upon the weights of the hand----balance.balance.balance.balance. I have not been hotI have not been hotI have not been hotI have not been hot----tempered.tempered.tempered.tempered.
I have not been deaf to words of truth.I have not been deaf to words of truth.I have not been deaf to words of truth.I have not been deaf to words of truth. I have not commanded to I have not commanded to I have not commanded to I have not commanded to kill.kill.kill.kill.
I have not hoodwinked.I have not hoodwinked.I have not hoodwinked.I have not hoodwinked. I have not made others to weep.I have not made others to weep.I have not made others to weep.I have not made others to weep.
I have not been neglectful.I have not been neglectful.I have not been neglectful.I have not been neglectful. I have not been quarrelsome.I have not been quarrelsome.I have not been quarrelsome.I have not been quarrelsome.
I have not caused pain.I have not caused pain.I have not caused pain.I have not caused pain. I have not been impatient.I have not been impatient.I have not been impatient.I have not been impatient.
I have not washed out the picture of a God.I have not washed out the picture of a God.I have not washed out the picture of a God.I have not washed out the picture of a God. I have not calumniated a servant to his masI have not calumniated a servant to his masI have not calumniated a servant to his masI have not calumniated a servant to his master.ter.ter.ter. I have not deprived the orphan of his property.I have not deprived the orphan of his property.I have not deprived the orphan of his property.I have not deprived the orphan of his property.
I have not waded in water.I have not waded in water.I have not waded in water.I have not waded in water. I have not been loud voiced.I have not been loud voiced.I have not been loud voiced.I have not been loud voiced.
I have not daily made labour in excess of what was due to be done for me.I have not daily made labour in excess of what was due to be done for me.I have not daily made labour in excess of what was due to be done for me.I have not daily made labour in excess of what was due to be done for me. I have not impoverished my associates.I have not impoverished my associates.I have not impoverished my associates.I have not impoverished my associates. I have not made distinctions for myself.I have not made distinctions for myself.I have not made distinctions for myself.I have not made distinctions for myself.
I am not wealthy except with my own property.I am not wealthy except with my own property.I am not wealthy except with my own property.I am not wealthy except with my own property. I have not blasphemed God in my city.I have not blasphemed God in my city.I have not blasphemed God in my city.I have not blasphemed God in my city.
Egyptian Book of Egyptian Book of Egyptian Book of Egyptian Book of DeadDeadDeadDead
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Introduction
For thousands of years people have developed “elaborate and
sophisticated rules and codes” of ethics for individual and organizational
behavior (Kast & Rosenzweig, 1986, p. 25-26). For example, the Code of
Hammurabi, 2000 B.C., provided guidelines for merchants and peddlers; as far
back as the Ancient Greeks and Romans the need was felt to regulate
commercial activities. By the end of the sixteenth century, with increasing trade
activities within Europe and with increasing trade with Asian countries, trades
people were introduced to the beliefs and values of other societies.
The capitalistic ethic slowly evolved out of the increase in commercial
activities. During the later centuries, changes in the religious ethic with the
Protestant movement provided the ethical and economic climate, which was
favorable for the development of the capitalistic ideology.
In the nineteenth century, Adam Smith’s An Enquiry into the Nature
and Causes of Wealth of Nations lay the foundations of the capitalistic ethic
that has continued until today. According to Adam Smith maximizing the self-
interest of every individual would also maximize the benefit of the whole society.
The twentieth century has been a period in history when business firms
have gone through a transformation and the idea that the business firm is the
“steward of physical, human and financial resources” has developed in society
(Lessem, 1999, p.366). This philosophy led the business community to the
notion that it is best to act with consideration towards society.
In the twentieth century, the growing social awareness and activism of
minorities, women, consumer protection groups and environmentalists;
increasing trade relations; globalization of the production of goods and services
and growing global capital interaction; the rising tide of individualism and the
emphasis on self-fulfillment and self development led to a transformation of the
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basic values of the capitalistic ethic. Intangible goals rather than substantial
wealth became the main symbols of the new values.
Also all over the world individuals increasingly found out that they have to
face a conflict between their personal ethical beliefs and the organizational
pressures for performance and profits (Kast & Rosenzweig, 1986, p.34-37,
168). These developments furthermore strengthened the drive and striving for
ethical behavior in the business community.
Exercise: How did I Live Today?
Everyone should ask themselves the following questions at the end of each day: How Did I Live Today?
���� Did I practice any virtues (e.g., integrity, honesty, compassion)? ���� Did I do more good than harm? ���� Did I treat others with dignity and respect? ���� Was I fair and just? ���� Was my community better because I was in it? ���� Was I better because I was in my community?
Have you ever thought about these questions before?
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What is Ethics?
Nowadays much has been said and written about ethics within the
business communities of countries. A number of people in the public and private
sector have introduced the subject into their vocabulary and various business
processes.
Ethics refers to:
���� Well based standards of right and wrong that are prescribed in terms
of human rights
���� Obligations to refrain from rape, stealing, murder, assault, slander,
fraud
���� Virtues like honesty, compassion and loyalty
���� Rights like the right to live, the right to freedom from injury, and the
right to privacy
���� The study and development of one’s ethical standards to ensure that
they are reasonable and well founded
���� Continuous efforts to assess our moral beliefs and our moral conduct
���� Trying to ensure that the institutions we help shape, have standards
that are reasonable and solidly based
How do you define ethics related to your experiences?
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Ethics is not:
���� Related to feelings. Feelings frequently deviate from what is ethical.
���� The same thing as religion. Religion can set high ethical standards
and provide motivation for ethical behavior. But, ethics is not confined
to religion.
���� Following the law. The law may encompass ethical standards and
may also deviate from ethical standards.
���� Doing whatever society accepts. A society may become ethically
corrupt.
Ethics is concerned with the right and the
wrong and the good or the bad. But generally it
is not an easy matter to decide between “right”
or ”wrong” and to differentiate between them.
Business activity often demands that we select
from alternatives that are neither right nor
wrong as a whole. (McNamara, 1999, p.3)
Therefore, it can be stated that ethics is the
study of moral issues and choices where “right”
versus “wrong”, “good” versus “bad”, and “the many shades of gray” in black-
and-white issues exist side by side.
Ethics is the code of moral
principles and values that govern the
behavior of a person, a firm or a group
of companies with respect to what is
“right” or “wrong” and sets standards
as to what is to be considered “good”
or “bad” in conduct or decision
making.
What is Ethics?
How can you illustrate ethical and unethical conduct related to these
explanations?
I suggest that one of the things which determines whether an act is
ethical or not is its effect on another’s experience or expectation of
happiness.
The Dalai Lama
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The world is full of wrongdoing. Crime, family violence, drug abuse,
employee fraud—each of these problems represents a collection of individual
acts of wrong.
Most people when faced with a choice between the right, the wonderful,
and the good on the one hand, and the wrong, the terrible, and the bad on the
other, would choose to do the right thing. However, sometimes it is tempting to
do wrong, and it often takes moral courage to make the right choice.
The four tests which are given below can be used to find out if the issue
at hand involves an ethical choice. It involves four tests that act together. While
one test by itself may not leave you completely convinced, answering either yes
or no to all four of the following questions will probably leave no doubt in your
mind that an action is wrong.
The Legal Test: Is this choice against the law? It is wrong to
pass a stopped school bus, take a candy bar without paying
the shopkeeper, cut trees on your neighbor's property, or
throw an empty bottle on to the road. More significant, it is
wrong to bribe public officials, refuse to pay the rent, pass bad
checks, or beat your spouse. These kinds of wrongdoing involve breaking the
law. You can break the law by mistake (you may not know a law exists) or on
purpose (you may not agree to follow it).
The Gut-Feeling Test: Do you feel good after making this
choice? Often our intuition can determine right from wrong
before our brains can think it through. Physical reactions often
indicate a need for more thought before taking action.
The Front-Page Test: Would you feel good if your choice
were on the front page of the local newspaper? In imagining
this, you are holding up your choice to be considered by
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everyone you know. What would your parents think? What would your friends
think in the work environment? How would you feel if your child read about your
decision?
The Role-Model Test: Name a person you respect highly --
perhaps a parent, teacher, relative, or local community figure.
If this person had to make the decision you are about to make,
would she or he make the same decision you are considering?
Sometimes imagining how someone else would decide can help clarify your
choices.
When the answer to one of the questions is “no” or “not much!” we can
be reasonably sure that some kind of action we would call "wrong" is in the
offing (Kidder, Rushworth M., 2001).
Ethics is concerned with human consequences of decisions and actions,
in order to achieve more sophisticated technology or larger market share. A
firm with an ethical outlook has a wider consideration beyond its own self-
interest: It is concerned with the interests of a wider community of people which
include the employees, the consumers, the suppliers, other companies, the
general public and even foreign governments. The ethical perspective
advocates behavior, which is better or with higher standards of conduct. This
behavior is related to behavior that is better than the standards of behavior
defended by law (Lane, DiStefano, Maznevski, 1992, p.394).
Ethical and unethical conduct is a subject that concerns the individuals
in a society, the rich and the poor nations; international, multinational and
national companies; and public officials.
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Business Ethics
Business ethics is concerned with the way firms conduct their operations.
It is concerned with truth and justice in conducting their affairs and with:
���� The expectations of society
���� Fair competition
���� Advertising
���� Public relations
���� Social responsibilities
���� Consumers
���� Behavior of companies
Figure 1: Levels of Business Ethics
* This figure was adopted from Weiss p. 142.
International
Societal
Institutional
Organizational
Individual
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Individuals and organizations act within a framework of laws. Their
actions affect other individuals and organizations or the welfare of the society as
a whole. To this degree individuals and organizations have to abide by the rules
and values set by the legal system. Courts enforce these rules and regulations.
However, laws do not regulate all actions of individuals and organizations.
There are areas where they have the free choice when making
decisions. An individual’s decision to buy “x” brand of ice cream or car; an
organization’s decision to produce “y” amount of refrigerators are not regulated
by law. Outside of these two areas, there is a third domain where individuals
and organizations have to abide by the norms of the society in which they
operate. This is called the ethical domain. In this domain the standards of
conduct are based on common principles and values of the society in general.
An ethically accepted decision is also acceptable by legal and moral standards
of the community as a whole (Daft, 1997, p.142).
Figure 2: Three Domains of Human Action * This figure was adopted from Daft, 1997, p. 142.
It is easy to make a decision when there is a law or regulation about it.
However, when individuals and organizations are faced with ethical problems a
difficult situation may arise. The individual or the organization is said to be faced
with an ethical dilemma when it is difficult to distinguish right from wrong and all
Domain of Codified Law
Domain of Ethics
Domain of Free Choice
(Legal Standard) (Social Standard) (Personal Standard)
High Amount of Explicit Control Low
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alternative choices and behaviors are considered undesirable because of the
negative ethical consequences (Daft, 1997, p.142). And, in this case, individuals
and organizations need guidelines to solve these ethical dilemmas. Then, it is
natural that organizations develop some ethical criteria to help them solve the
problems they are facing within the ethical framework. Different ethical criteria
are translated into different basis of behavior in individuals, in organizations or
in the societal framework.
Exercise: Ethical Climate Items
Some employees say that in their organization:
1. Some members of my department use their position for private gain.
2. Members of my department have misused their position to influence
the hiring of their relatives and friends in (city/country) government.
3. My supervisor encourages employees to act in an ethical manner.
4. Managers in my department have high ethical standards.
5. There are serious ethical problems in my department.
6. My superiors set a good example of ethical behavior.
How can you describe your organization’s ethical climate?
Why do we act or have to act ethically in our life?
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Why Ethics?
Basically it appears that being ethical and socially responsible is not
rational for an organization. In the short term, the costs of developing and
maintaining an ethical organization may seem to have large costs in terms of
time, effort and money. However, in the long term, the benefits of being ethical
and having a reputation for being ethical outweigh the costs undertaken in the
beginning. Nowadays investors prefer to put money into stocks of businesses
which have a reputation for being ethical and socially responsible. Investors
quickly run away from shares of unethical companies. In a progressive society,
organizations that are known to have an unethical record have a difficult job
surviving because ethical behavior is exposed to market forces (Donaldson,
1992. p.40).
Unethical conduct always leads to
increased costs for the organization and for the
consumer. It always leads to reduced quality of
the service or product, which also increases
costs and reduces customer satisfaction. It
ultimately decreases the profitability of the
organization. Low morale and cynicism, distrust
and anger dominate the unethical work
environment. Abiding by norms and procedures
becomes the norm. High personal stress levels and high employee turnover
predominate, disrespectful treatment of employees occurs, loss of work pride
and loss of meaning overcome the organization, disregard for integrity leads to
loss of work commitment (Petrick & Quinn, 1997, p.25). The ultimate result is a
decline in the welfare of the society as a whole. When all the parties stay within
Low morale
Cynicism
Distrust
Anger
High stress levels
High employee turnover
Loss of work pride
Alienation
Loss of commitment
Impact of Unethical Conduct
What is the use of running if you are not on the right track?
German Proverb
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the framework of ethical conduct, with reduced costs and increased satisfaction
there is a more equitable distribution of income in society.
Figure 3: Consistency and Integrity
Ethics sets the standards to be applied in making a choice from different
alternatives. In this context, it has some key principles that should be
considered when making a choice. In practice there are two terms that are an
inseparable part of ethics: Consistency and integrity. The same moral standards
must be applied to similar situations unless the two situations differ from one
another in relevant ways. This is the term “consistency” which ethics requires in
terms of moral standards, actions and values. “Integrity” is the term used for
people whose actions are in harmony with their values. Ethics also requires that
there be consistency among our moral standards and how we apply those
standards. Ethics also requires a consistency between our ethical standards
and our actions, as well as among our inner desires. Finally, ethics requires that
there be consistency between how you treat yourselves and how you treat
others (Santa Clara University, Markkula Centre for Applied Ethics, 1998).
Inseparable Parts of Ethics
Consistency Integrity
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The following matrix in Figure 4 shows the relationship among ethical,
unethical, legal and illegal behavior.
Figure 4: A Framework for Classifying Behavior
* This figure was adopted from Lane, DiStefano, Maznevski, 1992 p. 400
The actions or decisions that fall into quadrant 4 are legal and ethical; the
ones that lie within quadrant 2 are illegal and unethical; the decisions that
create dilemmas are the ones that fall into quadrants 1 and 3. For example, if a
manager of a chemical company refuses to promote a pregnant woman into a
job where she will be exposed to toxic chemicals, she would be acting ethically
but illegally. Marketing infant formulas in third world countries is not illegal but
unethical. Apartheid in South Africa was not illegal, but was unethical. In similar
situations one guideline may be finding ways to stay within the local law and
within high standards of conduct as well, which is a difficult decision to make.
Ethical Dilemma No Ethical Dilemma
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Exercise: Which is Correct?
Below are four courses of action which can be classified on an ethical/legal
scale and a set of examples (classified from A to H) to go with them. Please
match the corresponding number to each example and write it into the space
provided on the left.
1. Ethical and legal
2. Unethical and legal
3. Ethical and illegal
4. Unethical and illegal
……... A. To give a minister in a foreign country a present worth $50 000 with the
expectation that he will ensure your company gets a contact in that country; to
show this gift as expenditure in the firm’s accounts.
……… B. To sell 1% of the car tires you have produced although you know that
they are defective; to replace those tires if there are any complaints from
consumers.
……… C. To develop and produce an additive that would decrease petrol
consumption by 10% in cars.
……… D. To promise to give one of the representatives in the local municipal
council $100 000 if she votes in favor of your application for a local television
franchise.
……… E. To publish in your newspaper a story about the governor of the city
(who is a political opponent of your newspaper) not implicating openly but
hinting vaguely that she is hindering the use of educational funds in your state.
……… F. To gain $2 million on the stock exchange by obtaining insider
knowledge about a firm.
……… G. To develop a vaccine for preventing bone cancer which has been
approved by the relevant authorities.
……… H. To develop and sell a drug that is claimed to decrease heart attacks
before completing the necessary legal procedures.
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When conflicts arise in the ethical
domain one needs a set of rules and guidelines
in order to make a decision. Furthermore,
decision making in the ethical domain is difficult
because the meaning of “right” or “wrong” may
differ in different cultures, in different societies and at different times. It is also
accepted that apart from ethical standards legal standards may be different in
different countries and societies (Koontz & Weihrich, 1988. p. 616). Because of
the relative and abstract nature of most of the problems that arise in the ethical
domain, it is necessary to have an agreed set of guidelines and rules to follow.
Such a set of rules and guidelines also provide a guarantee of equitable and fair
treatment of everyone involved in a problem situation.
Although it is the responsibility of the individual to be ethical in any action
taken, the organizational climate has an important influence on the individual’s
conduct. In such instances, the existence of a code of conduct, which states the
clear guidelines for behavior, helps individual behavior in leading the way out of
the dilemma (Kast & Rosenzweig, 1986, p.169-170).
It is claimed by a number of managers
that if a company has a reputation of
being “ethical” it is not usually
subjected to unethical demands.
Setting the Standard
But while it is conceivable that a given act is ethically sound under one
set of circumstances the same act at another time and place and under a
set of different circumstances may not be.
Have you ever been in a situation where you had to choose between your
duties and individual values?
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Values
Values are the determinants of ethical conduct. Any decision is
influenced by the values of the individual, the organization and the society
(Chapman, 1993, p.16).
Figure 5: The Circle of Values
Individual values are guidelines used in decision-making. The individual,
like the organization, internalizes the norms set by the social group to which
he/she belongs.
Organizations exist within society. They are influenced by and operate
within the framework set by the values, norms and ideologies that are dominant
in that society. In other words, values are the guidelines for decision-making
and action in the organization. In turn “values of the organization shape its role
and activities in the society” (Kast & Rosenzweig, 1986, p. 24).
Individual
Organizational
SOCIETY
Governmental/ Educational
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The government and educational
institutions at all levels have an important impact
on societal values. So the simple process of
importing the resources of the environment and
transforming them into the goods and services
demanded by society is an act of influencing the values of society by the
organization.
On a more general context, every society
and culture has different values about how the
world does and should operate. Rules, laws,
operational procedures and perceptions about
performance levels and prescriptions of behavior
are the tools which explicitly define the norms for
most cultures. These values or norms may be
particular to an organization or common to a
society as a whole (Wart, 1998, p. 168-169).
Values are principles or standards
that guide judgment about what is
good and proper.
What are Values?
Honesty
Integrity
Independence
Obedience
Sense of accomplishment
Happiness
Pleasure
Wisdom
Love
Ambition
Some Values
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Exercise: What is Your Ethical Orientation?
Four incidents have been described below. With your personal values,
evaluate the acceptability of the behavior described in each incident. Show your evaluation on the scale below.
1 2 3 4 5 6 7
Never Sometimes Always
Acceptable Acceptable Acceptable
���� A company president was aware that sending expensive gifts to purchasing agents of other companies at Christmas and New Year might compromise their positions. However he continued the policy since it was common practice. He thought that changing it might result in a loss of business.
Your rating: ---------------
���� A government worker concealed from the public the real financial figures regarding the amount of budget money that was spent on an unsuccessful military project. The real figures would have embarrassed the government.
Your rating: -----------------
���� You are working at a customs office and you are responsible for checking documents at a busy border crossing. It is an especially crowded day. You realize that one TIR driver has handed you a fat envelope amongst his documents while at the same time telling you that he is in a hurry. You think at first glance that his documents are correct and complete.
Your rating: -----------------
���� You are a TIR driver. You go to the restrooms at a TIR parking area at a border crossing. There is a guard in the parking area. You take your time. When you come back you see that your truck is gone. After a lengthy discussion you realize that if you pay 5 000 DM the guard will return your truck.
Your rating: -----------------
Share your rating with another participant.
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Social Responsibility
The concept of “social responsibility” refers to the management’s
obligation to make choices and take actions that will contribute to the welfare
and interests of the internal and external stakeholders of a company. In Figure
6, the stakeholders of a transport company are given:
It is a shame for a person to be happy only by himself. A. Camus
Figure 6: The Stakeholders of a Transport Company
* This figure was adopted from Daft, 1997, p.151.
International Customers
Foreign Government
Truck Manufacturer
Domestic Customers
International Competitors
Domestic Government
Other Trade Associations
IRU
Transport Company
FIATA
Truck Owners
Arbitration Courts
Environmentalists
Foreign Logistic Suppliers
Media
Special Interest Groups
Investors
Domestic Logistics Suppliers
Employees/ Unions
Domestic Competition
Stockholders
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The Work Ethic
All the terms described up to this point are related to the work
environment. The major part of an individual’s life is spent in
an organization and at work. Therefore the type of work and
one’s involvement in that work defines his/her relationship with
the environment. If a person identifies with his/her work: They derive pleasure
and pride from it, he/she is a happy and content person. If the reverse is true;
then the person becomes unhappy, maladjusted and unhealthy. Therefore,
conditions in the work environment are a major factor in determining one’s job
satisfaction.
Work provides personal status and identity for a person along with other
things such as the setting life goals, providing self-esteem, providing economic
security, enforcing goal oriented activity and providing a sense of fellowship. In
different cultures the importance of work may differ, but in most cases work is a
major part of one’s life. The nature of work is changing rapidly in all societies
and the importance given to job satisfaction is increasing.
The “work ethic” defines the role of work in a society. It reflects the
importance that an individual gives to work. A strong work ethic is related to
greater earnings, initiative, job satisfaction, productivity, need for achievement
and conservative values. And the physical and mental health of an individual is
directly related to work factors such as good pay and meaningful diversity of job
activities as well as his/her self-esteem and personal life.
The factors mentioned above lead us to the conclusion that harmony in
the organization, meaningful work and good interrelationships within the
organization which includes an ethical climate, are necessary for an individual
to perform his/her job and express himself/herself in his/her job and vocation.
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Exercise: The Work Ethic Scale
1. When the workday is finished, people should forget their jobs and
enjoy themselves.
Agree completely 1----2----3----4----5 Disagree Completely
2. Hard work does not make an individual a better person.
Agree completely 1----2----3----4----5 Disagree Completely
3. The principal purpose of a job is to provide a person with the means to
enjoy his/ her free time.
Agree completely 1----2----3----4----5 Disagree Completely
4. Wasting time is not as bad as wasting money.
Agree completely 1----2----3----4----5 Disagree Completely
5. Whenever possible, a person should relax and accept life as it is,
rather than always striving for unreachable goals.
Agree completely 1----2----3----4----5 Disagree Completely
6. A person’s worth should not be based on how well he/she performs a
job.
Agree completely 1----2----3----4----5 Disagree Completely
7. People who do things the easy way are the smart ones.
Agree completely 1----2----3----4----5 Disagree Completely
8. If all things are equal, it is better to have a job with little responsibility
than one with a lot of responsibility.
Agree completely 1----2----3----4----5 Disagree Completely
TOTAL= -------------------
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The process describing the impact of work and non-work factors on the
quality of life can be seen in figure 7 below:
Therefore ethical or unethical behavior cannot be differentiated from the
dominant factors of an organization, society and the culture the individual is a
member of.
Family satisfaction
Quality of Life
\
Work Factors
Good pay
Variety in job activities
Self-esteem
Non-work Factors
Job Satisfaction
Life Satisfaction
Physical health
Mental health
Individual Differences
Figure 7 : The Impact of Work and Non-work Factors on the Quality of Life
* This figure was adopted from Kreitner & Kinicki, 1992, p.59.
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The Level of Ethical Behavior
The Individual
A number of different factors influence an individual towards behaving
ethically in an organization. As seen below, there are the cultural,
organizational and environmental factors in addition to an individual’s
characteristics that influence a person to act ethically or unethically. At the
centre of this model lie the individual’s personality, values and past experience.
The personal experience of being rewarded for certain behavior and being
punished for others shape the individual’s tendency to act ethically or
unethically (Kreitner & Kinicki, 1992, p.109).
Figure 8: A Model of Ethical Behavior in the Workplace
* This figure was adopted from Kreitner & Kinicki, 1992, p. 109.
Cultural Influences
Political/Legal/ Economic Influences
Individual Organizational Influences
���� Ethical codes ���� Organization culture ���� Perceived pressure
for results ���� Reward/Punishment system
���� Personality Ethical ���� Values ���� History of Behavior
reinforcement
���� Family ���� Education ���� Religion ���� Media/
Entertainment
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Factors like one’s family background, the type of education received,
religion, the values and lifestyles supported by the media and the entertainment
world also influence the decisions made to be ethical or not.
An important set of organizational factors such as the presence of a code
of ethics; an organizational culture which supports or undermines ethical
behavior; role models of the leaders in the organization; the perceived pressure
for results in the work environment; and, the reward and punishment systems in
the organization set the medium and influence the ethical and unethical
behavior in an organization (Kreitner & Kinicki, 1992, p.109-110).
Finally, the focus of the legal, political and economic environments of the
organization are the important influences which will shape an individual’s
perceptions of what is “right” or “wrong”, “good” or “bad”.
The individual has to be conscious of the ethical aspects of different
situations to be able to make a choice on the matter. Ethical consciousness of
an individual can only be developed through education and training which starts
with the family the child is raised in. The schooling system will either reinforce
the teachings of the family or undermine it. In the later years, the other
environmental factors such as the culture of the organization and the dominant
behavior patterns in the society will be decisive in the development of a
person’s consciousness and his/her acceptance of considering ethical issues as
relevant decision making parameters.
Figure 9: Steps of Ethical Awareness
Ethics Perception Ethical Awareness Ethics Sensitivity
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Ethical sensitivity is the
capacity to value the relative
importance of the ethical
dimensions or features of a
situation. Some managers may be morally
perceptive but morally insensitive; that is they
“see” the ethics issue but assign little importance to it. Being morally sensitive
does entail the capacity to appropriately demonstrate four key elements of
sensitivity: Empathy, sympathy, moderation, and indignation.
Ethical perception is the capacity of a person to “see”,
“recognize”, or “discover” the ethical dimensions or features of
a situation.
Ethical awareness is the capacity of the individual to perceive
and be sensitive to relevant moral issues that deserve
consideration in making choices that will have a significant
impact on others. The stage of ethical awareness, therefore, is
composed of two steps: Ethical perception and ethical sensitivity.
The indivudual’s overall state of heart and mind or motivation, in the
moment of action is, the key to determining its ethical content. It’s easily
understood when we consider how our actions are affected when we are
gripped with powerful negative thoughts and emotions such as hatred
and anger.
The Dalia Lama
Empathy
Sympathy
Moderation
Indignation
Key Elements of Sensitivity
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The Organization
An organization’s culture either encourages and supports ethical
behavior or gives no importance to it. If bribery is considered to be the accepted
way of doing business with customs officials, the employees of an organization
doing business at customs will see no harm in bribing them. They will believe
that if they do not abide by the unwritten rules of conducting business; by the
socially accepted way, then they will not be able to achieve their goals. But if
bribery is considered to be an unacceptable way of conducting business, they
will not readily try to bribe customs officials. In turn, the customs officials will not
coerce them to give bribes in return for their legal right to conduct business.
Table 1: Factors that have an Effect on the Ethical Values of an Organization
Another factor which is an important determinant of an ethical
organization is the trust atmosphere in the work place. People working in an
organization have to develop a trustful relationship to be able to perform their
assigned tasks efficiently and form a team.
In your opinion, does developing a trustful relationship or climate in the
workplace affect the employee’s performance and efficiency ?
���� Written formal rules and regulations
���� Policies
���� The reward system
���� Importance given to individuals
���� The recruitment system
���� Emphasis on professional and legal standards
���� The example set by the leader
���� The decision process
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To build and maintain a trustful relationship in a team or an organization,
the following guidelines are to be followed:
���� Communication – The team members and subordinates have to be
kept informed about policies and decisions with accurate feed back.
One should always be open and candid about one’s problems and
limitations.
���� Support – One should always provide help, advice, coaching and
support to team members.
���� Respect – In a respectful relationship there is a delegation of
decision making authority.
���� Fairness – Performance appraisals should be impartial and objective.
���� Predictability – One should always be consistent and predictable.
���� Competence – One should be able to show one’s technical
expertise, business sense and professional attitude (Kreitner &
Kinicki, 1992, p.408.).
The Society
The cultural values of a society have influences on the conduct of those
in that society. The most prominent cultural values related to ethics can be
listed as:
���� Honesty – is the most important value on the list. If people are not
honest it is difficult to maintain a medium of communication amongst
people.
���� Consistency – is the characteristic that relates actions to certain
principles rather than whims.
���� Coherence – is the reasoned attempt to harmonize principles.
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���� Reciprocity – is the reasoned attempt to act towards others as you
would have them act towards you under similar conditions.
(Steidlmeir, 1992, p. 29).
Dominant societal values are the key determinants of an ethical climate.
Unless these values are supported by society, it is difficult to devise an ethical
climate both in private and public sector organizations.
Trust relationships arise here as well.
Research shows that in societies where there is
a high level of trust among individuals and
organizations, the economic wealth of the
nation increases faster. In societies where
there is a low level of trust among members economic development is slower
and the country is poorer. Therefore one of the necessary factors of trustful
relationships is an ethical standpoint.
Managing Ethics in the Organization
Ethical dilemmas occur frequently in the workplace both in the private
and public sector. Employees need help in identifying ethical problems and
situations (Boone & Kurtz, 1999, p.48). Organizations are responsible for
making it clear to their employees the type of behavior expected of them.
Managers are also responsible for providing and maintaining an ethical
environment so employees can perform their duties efficiently and provide
guidance to subordinates (Lane, DiStefano, Maznevski, 1992, p.399).
Improving the ethical climate of an organization also improves the
relationships with stakeholders as well as the profitability and image of the
organization in the society.
Trust
Ethical environment
Democracy
Musts for Development
How can these values affect the society as a whole ?
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Management has to build an ethics infrastructure to promote ethical
behavior in an organization. The key variables of an ethics infrastructure are
summarized in Figure 10.
Figure 10: Key Variables of an Ethics Infrastructure
* This figure was adopted from OECD, 1996, p. 28.
These elements are essential for creating an ethical climate in an
organization. They are also the guidelines for managerial action.
Coordinating Body
Professional Socialization
Legislative Framework
Codes of Conduct
Accountability and Control
Public Service Conditions
Commitment
Political Leadership
CONTROL
GUIDANCE
MANAGEMENT
Public Involvement
and Scrutiny
200195190185180
175170165160
1551 50
Mill io
ns
of
Do
llars
19921991199 0
Prod uction Costs
Unit Price
Profi ts
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The most commonly used methods employed to create and maintain an
ethical environment can be described as the example set by the leader, an
organizational code of ethics, ethical structures such as an ethical committee or
an ethical ombudsman and a climate and organization that encourages whistle
blowing.
Leadership by Example
If the chief executive officer in an
organization is committed to high ethical
standards, the employees at lower levels have
a visible and powerful example to follow. When
middle level managers and lower level
employees see that their superiors are taking
ethical problems seriously and trying to resolve them, it becomes the most
expressive message for them that their company values ethical behavior
(Wood, 1990, p. 246).
The top management of an organization plays an important role in setting
up an environment which is morally encouraging to employees. The actions and
decisions of top management are the guidelines for employees to follow.
Also, it is important that top management should not force others in the
organization into unethical conduct in order to accomplish unrealistic results
(Kast & Rosenzweig, 1986, p.168-169).
To improve and maintain an ethical
environment in the organization is the
job of top management and should be
linked clearly to a reward and
punishment system.
Top Management Role
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Organizational Code of Ethics
Sometimes individuals and organizations find themselves faced with
issues which are not defined by laws and regulations. Mostly, these areas can
easily be regulated by a code of ethics within or outside an organization.
Usually organizations and professions tend to devise a code of ethics to guide
the behaviors of their members.
A code of ethics mainly defines the
values and principles that should guide
decision-making. It shows the world the values
and principles the organization abides by in the
conduct of its operations.
A code of ethics is the values statement
of an organization.
Code of Ethics
Exercise: Who do you respect?
Who do you respect most of all? We are not talking about people you love,
like, envy or choose to be around, but the people you respect.
You may not know some of the people you respect. Some of these people
may be a world leader like Atatürk or Mother Theresa, who dedicated her life to
helping others. Maybe you think of your parents who raised you well against
heavy odds. Maybe your most respected person is an athlete who overcame a
handicap. Whoever they are, they are the people who have earned respect by
being hard workers who are true to their values.
Managers don’t earn the respect of their subordinates by dressing in the
corporate uniform or being “nice people”. They earn respect by being
principled, acting fairly, deciding reasonably, respecting rights. You will have
to earn the respect of your subordinates before you can expect their
commitment to your agenda.
How can you describe respected people?
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A code of ethics may also list the principles within which the company
treats its stakeholders. Or, it may be a statement of policies which guide the
decisions the managers make. These statements may be concerned with
marketing practices, conflicts of interest, law abiding, gifts, political
contributions, bribes and kickbacks, handling of corporate assets and equal
opportunities or confidentiality of information. The code should be kept simple,
easy to understand at all levels of the hierarchy.
Such an ethical code should also have an accompanying information
system to detect any violations. And, all the violators of the code should be
treated equally in punishment.
It is advisable for businesses to develop and maintain policies and
procedures that will assist them in conforming to the principles set down by the
code of ethics. These policies and procedures may include control instruments
such as forms, report formats and checklists to ensure adherence to the code of
conduct.
Or they may be defined through job descriptions by highly valuing
technical knowledge, creativity or systems thinking; or they should be described
in the criteria for performance appraisals by rewarding advanced degrees,
design skills, patents etc; or in addition, they should be declared in the policies
regarding responsiveness to customer inquiries.
These policies and procedures should also include measures to
implement in case of unethical behavior or in a grievance policy for employees
to resolve disagreements with supervisors and staff (McNamara,1999, p. 14).
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Figure 11: Developing a Code of Ethics Process
A Code of Ethics that has been developed for the Transport Industry is
given in the following table.
Data Intake & analysis
Keep leadership informed
Draft your code of ethics
Field test the code& make
any final revisions
Decide on goals & meaning
of success
Revise & update regularly
Create a code development
task force
Obtain Board approval of final draft
Get leadership
buy-in
Submit code to leadership
for review
Have the code reviewed by your legal counsel
Decide on communication
& education strategy
Does your organization or sector have a code of ethics?
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Table 2: A Model Code of Ethics for the Transport Industry
A Code of Ethics for the Transport Industry
1. To avoid misrepresentation in all business dealings, recognizing that
permanent business relations on a professional level can be maintained only
on a basis of honesty and fairness.
2. To buy and sell on the basis of value, recognizing that value represents that
combination of quality of service and price which assures the greatest
ultimate economy to the user.
3. To respect obligations incurred and neither express nor imply a performance
which you cannot reasonably expect to fulfill.
4. To adjust and settle disputes on the basis of facts and fairness only.
5. To recognize that character is the greatest asset in commerce, and to give it
consideration in all business transactions for the betterment of the profession.
6. To avoid statements tending to injure or discredit and to divulge no
information acquired in confidence with the intent of giving or receiving an
unfair advantage in a competitive business transaction.
7. To provide, accept or demand no gifts or entertainment in the guise of sales
expense, where the intent or effect is to unduly prejudice the recipients in
favor of the donor; and to renounce all forms of commercial bribery.
8. To strive consistently for knowledge and the growth of knowledge within the
profession.
9. To counsel and accept counsel from colleagues whenever the occasion
permits, in the furtherance of the profession.
10. Not to use the fraternity or allow the fraternity to be used for overt commercial
purposes.
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Ethics Committees and Ethics Ombudsman
Organizations may set up different structures to shape and maintain the
ethical environment of their company. A code of ethics should make it clear to
all members of an organization the behavior expected from them. In addition,
measures should be taken to enforce the code. Ethics committees are one of
the most common structures to follow up adherence to the code. The members
of the committee may be selected from among the directors of the organization
and should include members from outside the company. Outside members will
ensure that organizational relationships and politics do not interfere with
decisions of the committee.
Table 3: The Job of the Ethics Committee (Koontz & Weihrich, 1996, p. 611-617).
An ethics committee will be an agent to enforce the code.
The committee will:
���� Review and update the code periodically
���� Recommend rewards for personnel that are diligent in adhering to
the code
���� Advise punishments to those who violate the code
���� Organize meetings to introduce and explain the code to all working
in the organization
���� Make decisions on issues which are not clear on ethical grounds
���� Check all actions for possible violations of the code
Do you have an ethics committee in your organization?
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Whistle Blowing
If an employee thinks at some point that the practices of his/ her
organization are illegal, immoral or inefficient, he/she informs legal authorities or
others in the organization of the problem. This is whistle blowing. One other
imperative is to resign without telling anybody. However, a lot of people would
consider whistle blowing rather than resigning without informing anyone about
the misdeeds. However, whistle blowing may be an embarrassing experience
for the organization as a whole. And, especially in the public sector the media
serves as a very powerful watchdog over the actions of the public officials and
big companies.
* This case was adopted from Solomon, C. Robert & Hanson, R. Kristine, 1983.
Case Study: Unstable Worker
A worker in an airplane manufacturing firm’s design department is
convinced that the latch mechanism on a plane’s cargo door is not sufficiently
secure and that the door has to be redesigned in order to insure against the
possibility of an accident. He goes to his supervisors with this information and is
told that the Federal Aviation Administration has given the legitimize approvals and
that he should not “rock the boat”. He goes to the president of the firm and gets the
same answer.
Would the worker be justified in taking this information to the media?
Some Comments:
���� Yes, if he is prepared to accept the consequences.
���� No, he should go first to the Federal Aviation Administration.
���� The worker, if he is absolutely sure of his belief, he should go to the media.
���� Yes, after resigning.
���� What do you mean, “justified”? If he’s right, of course the answer is “yes”.
1. How would you answer the question?
2. Have you ever been in a similar situation to this?
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It is necessary for top management to take precautions in order to
decrease the chances of whistle blowing in the organization.
Below are the possible measures that can be taken to discourage whistle
blowing:
Table 4: Precautions to Decrease Whistle Blowing (Kast&Rosenzweig, 1986, p.170-171).
Management Development and Training Programs
Management development and training programs that have ethical
themes and guidelines about ethical decision-making and that contain some
case studies that deal with resolving ethical problems may help all concerned to
identify ethical issues, these will equip organization with the knowledge of
possible approaches to ethical issues, provide them with a key to assist in the
making of an acceptable decision in order to resolve the ethical issue at hand.
These programs should interpret the code of ethics of the organization in order
to make clear all the issues that may be encountered. A development or training
program will also evaluate and emphasize the decision processes on ethical
issues in the organization and enable participants to apply the steps of the
���� Encouraging an open environment where employees may freely express
controversial views.
���� Develop an effective grievance procedure so that employees can get a
direct, fair and prompt hearing.
���� Develop awareness of the social responsibilities of the organization
whereby all employees have a contribution to the organization’s social
performance.
���� Recognize and communicate to all employees a respect for their
individual consciences.
���� Recognize that dealing harshly with a whistle blowing employee may
result in negative publicity and public reaction.
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decision making process. Such programs will also help participants to become
aware of the possible outcomes of ethical situations and decisions.
Ethical Decision Making
Do you think that training programs are an effective way of increasing
sensitivity and awareness towards ethical issues?
Exercise: Decision Making
Take the quiz below and see if you have any trouble in reaching a decision.
If you were given a choice, which option would you choose?
a) Abandon marketing a very profitable product, or b) Maim thousands of babies
a) Earn an honest profit, or b) Steal millions from taxpayers?
a) Tell a few lies, or b) Save a few people from serious injury?
It is easy to make a choice in the above questions. However, there are situations where the choice is not as clear, not as black and white:
���� It becomes clear that after trying every possible avenue within the company that no one is going to correct a safety problem you have pointed out in the new trucks under production. Should you “blow the whistle” and take your information outside?
���� A senior executive in your company insists that you offer a summer job to his niece in your department. Should you do it?
���� The chief engineer gives you a batch of test data to write up and tells you to “smooth the curves”. Should you do it?
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In decision making situations it is best to approach each situation
according to its unique set of characteristics. In addition, a person that is fully
aware of the situation and who has access to all the facts should make the
decisions.
Ethical decision-making is first based on the distinction between
statements that are factual and those that are value-based. Factual statements
may be divided into true ones and untrue ones. It is wise to base decisions on
truth, rather than build them on lies.
Value statements may be divided into those involving right and wrong,
and those that involve two rights, both of which can claim some influence on the
decision. When you come to the latter, you must decide on what the two rights
is based, and which has precedence. Some perspectives may involve the end
outcome: others the rules and still others care and love. Some are a mixture of
all three. Ethical thinking and decision-making deals with the defense and
evaluation of that value perspective that eventually decides the case.
In addition to the above considerations, the ethical decision making
process has to take into account:
Ethical Decision Making
Factual Statements
True
Untrue
Value Statements
Right
Wrong
Figure 12: Statements of Ethical Decision Making
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���� The personal traits of the decision makers
���� The organizational traits
���� The decision process of the organization
Steps in Ethical Decision Making
In organizations people should have a clearly defined path to follow in
tackling ethical decisions. The first step when making a decision about a
problem is defining the problem. Therefore, before starting the process it is
necessary to decide if there is an ethical problem at hand.
Figure 13: Steps in Ethical Decision Making
Defining Ethical Situations
To identify if one is involved in an ethical situation, one may ask the
following questions:
���� Is someone likely to be hurt in this situation?
���� Is anyone being coerced, manipulated or deceived?
���� Is there anything illegal about the situation?
���� Does the situation feel wrong?
Step 1
Evaluate Alternative Actions
Get the Facts
Define Ethical Situations
Choose One of the Alternatives
Act, Then Reflect on the Decision Later
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���� Would you be ashamed to tell your best friend, your spouse or your
parents?
���� Do the outcomes; appear to be positive or negative?
���� Do you have the right or a duty to act in this situation?
���� Are you denying and avoiding the situation?
If the answer to any of the questions is positive, then you are faced with
a choice involving ethical values (Wood, 1990, p.218-219).
Get the Facts
After answering the above questions, you should then answer the
following questions in order to develop alternative courses of action:
���� What are the relevant facts of the case?
���� What individuals and groups have an important stake in the outcome?
���� What are the options for acting?
���� Have all the relevant persons or groups been consulted?
Evaluate the Alternative Actions
To be able to evaluate alternative courses of action you should first
answer the following questions:
���� Which option will produce the most good and do the least harm?
���� Which option respects the rights and dignity of all stakeholders?
���� Which option would promote the common good?
���� Which option would enable the deepening or development of those
virtues or character traits that we value as individuals? As a
profession? As a society?
Step 2
Step 3
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Choose One of the Alternatives
Finally, by answering the following questions, one should choose
the alternative best suited to their conditions:
���� Which of the options is the right thing to do?
���� If you told someone you respect why you chose this option, what
would that person say?
Act, and then Reflect on the Decision Later
Once you make a decision, it is best to take action as decided.
After taking action you will have to evaluate the decision and the
results achieved. You should answer the question below for an
evaluation of the decision and its outcome. Such an evaluation will serve as a
guideline for future ethical problems and decisions.
���� How did it turn out for all the concerned? If you had to do it over
again, what, if anything, would you do differently? (Santa Clara
University, Mark Kula Centre for Applied Ethics, 1998).
Step 4
Step 5
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Exercise: Make a Decision
���� You are negotiating the wording of a proposed new customs rule with a
customs official. She hints that she will soon be leaving government service
and will be ready for a new position. Should you offer her a new job in your
transport company?
���� You arrive at your new international post, and your new boss tells you that
everyone here is “on the take” and you are expected to grease some palms in
order to do business in the country. Should you do it?
���� Your boss gives you the petty cash accounts of your department and tells you
to work on it so it conforms to legal accounting rules.
1. Make a decision about the above by using the ethical decision making steps.
2. What are your solutions? Discuss.
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How to Deal with Specific Unethical Conduct
Figure 14: Actions against Perceived Unethical Practices
* The figure was adopted from Kreitner&Kinicki, 1992, p.112.
Fighting with unethical conduct in an organization is a difficult endeavor.
As with all managerial action, one needs courage, patience and support from
others in the organization. Some luck is also necessary. As some unethical
actions may also be illegal or against regulations, it is essential that all actions
be documented in order to support one’s case.
Have you ever been in a situation where the type of action you took was
individual or collective?
Degree of Situational Support
High/Much Low/Little
Type of Action Taken
Individual
���� Amount of time available ���� Personal leadership ability ���� Trustworthiness of authority figures ���� Tolerance of dissent in organization’s
culture ���� Potential for win-win outcome
Type of Action Taken
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The key contingency variable is the situational support one can obtain in
an organization. The amount of time available to follow up the case, leadership
ability, trustworthiness of authority figures, the organizational climate in respect
to dissent and the effects the end result will have on the parties involved in the
case will decide the degree of support one can receive. If these factors are low,
then one has to act alone.
Depending on the situational factors one
can blow the whistle publicly or secretly inside
or outside the organization. Instead of blowing
the whistle the offenders may be warned.
Another strategy may be to refuse to implement
an unethical policy, practice or order. Or,
alternatively if the case is relevant, one may
refuse to take part in any cover up action.
Ethics in the Public Service
In the private sector ethics concerns the stakeholders of
the companies involved in unethical conduct. However, in the
public sector unethical behavior has wider repercussions on a
larger number of stakeholders and mostly the public.
Therefore unethical conduct concerns the whole society and results in the
allocation of scarce resources inequitably among the participants rather than
the equitable distribution of wealth amongst the population.
Can you give an example of unethical behaviour which can be observed
both in the private and the public sector?
Collect support
If not, go alone
Whistle blow publicly
Whistle blow secretly
Refuse to implement an unethical policy, practice, order
Refuse to take part in a cover up
Situational Support
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In the public service, the main goal is to optimize public value that is a
completely different concept from optimizing the market value of a firm.
Furthermore, public officials deal with decisions that affect ordinary people’s
lives; they decide on behalf of the public and make decisions concerning the
use and allocation of public resources. In making these decisions they have to
consider the political demands of their public. Although their decisions have a
relevance to the political environment they are operating in, public officials are
in a position of trust. And, theoretically they are expected to consider and
maintain the society’s diverse economic, social and political values. In addition,
they are not under pressure to rapidly improve quantity, quality, costs and the
time of service delivery like the private sector. Overall, they are expected to be
fair. The public sector has the responsibility of being efficient and effective in the
use of the public’s resources (Wart, 1998, p.146).
The integrity of politicians and public servants is a critical ingredient in a
democratic society. Public servants use discretionary power in their work all the
time in the allocation of public resources, in their interface with the public and in
their policy making. And, ethical decision-making is an important ingredient in
the use of this discretionary power and ensures the quality and credibility of the
public service (OECD, 1996, p.15).
Ethics in the public service is also
important because it provides the preconditions
for the making of a good public policy
(Thomson, 1992, p.255). The maintenance of
What are the effects of the actions of politicians and public servants in the
public sector?
Why are public service ethics important?
Public service ethics are a prerequisite
to public trust, and are a keystone of
good governance.
Ethics is for Good Governance
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democratic values, such as individual dignity, liberty, freedom, fairness,
neutrality, responsiveness, equity, due process, participation, openness and
accountability depends on the existence of an environment where ethical
behavior is an accepted norm. Ethics make democracy safe for debate on the
substance of public policy (Thomson, 1992, p.256). And, public confidence for
government depends on ethical conduct (OECD, 1996 p.62).
Trust is a prerequisite of ethical behavior. Building trust in public
institutions is a major challenge for the governments of today.
The public servant’s position amongst his/her superiors, the public and
the laws of the country puts him/her in an especially difficult position when
making decisions. He/she has to be loyal to his/her superiors; he/she has to be
considerate of the citizens; and he/she has to be exemplary in obeying laws.
Figure 15: The Bureaucrat’s Ethical Relations
Superiors Citizens The Bureaucrat
CONSIDERATION LOYALTY
The Law
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Obedience to law is the cornerstone of public service ethics.
And in the legal domain, the constitution of a country is the
guideline to all the values and constraints in daily decision-
making. The constitution also defines the duties of public
servants, to guide the public on what they should expect of public
administrators. The public servant is also the most knowledgeable expert on the
workings of the government and is therefore able to advise the public on the
making and interpretation of the constitution and laws (Chapman, 1993 p.162-
163).
The constitution and laws serve as a check and balance system against
public servants or public administrators wielding excessive power. And, they
also serve as the guidelines for expected conduct.
In the public sector political commitment is the key ingredient in the
existence of an ethical climate. If government leaders do not openly condemn
unethical conduct in public, all efforts to improve ethical conduct in the public
service will be useless. In the public service, in some countries, external
mechanisms such as legislative and parliamentary committees or whistle-
blowing provisions are used.
It is particularly difficult to reach a
decision in the public sector if no guidelines
of proper conduct are devised for different
situations. Public service codes of ethics are
statements of principles and standards that
define and regulate the right conduct of civil
servants this is the same in the private
sector. In the public sector codes of conduct
are more widely used because they concern the whole society rather than the
particular stakeholders of a company.
Care values
Impartiality
Legality
Integrity
Transparency
Efficiency
Equality
Responsibility
Justice
Core values in OECD Countries
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ANNEX
International Code of Conduct for Public Officials
I. GENERAL PRINCIPLES
1. A public office, as defined by national law, is a position of trust, implying a duty to act in the
public interest. Therefore, the ultimate loyalty of public officials shall be to the public interests
of their country as expressed through the democratic institutions of government.
2. Public officials shall ensure that they perform their duties and functions efficiently and
effectively, in accordance with laws or administrative policies, and with integrity. They shall at
all times seek to ensure that public resources for which they are responsible are administered
in the most effective and efficient manner.
3. Public officials shall be attentive, fair and impartial in the performance of their functions
and, in particular, in their relations with the public. They shall at no time afford any undue
preferential treatment to any group or individual or improperly discriminate against any group
or individual, or otherwise abuse the power and authority vested in them.
II. CONFLICTS OF INTEREST AND DISQUALIFICATION
4. Public officials shall not use their official authority for the improper advancement of their
own or their family's personal or financial interest. They shall not engage in any transaction,
acquire any position or function, or have any financial, commercial or other comparable
interest that is incompatible with their office, functions and duties or the discharge thereof.
Also, in the public sector professional codes of conduct are necessary to
define the guidelines for the particular profession with reference to the specific
problems faced by those professionals.
Table 5: International Code of Conduct for Public Officials
�
�
�
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Do you think that all countries can have the same code of conduct in their
public services?
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5. Public officials, to the extent required by the officials' position, shall in accordance with
laws or administrative policies, declare business, commercial and financial interests, or
activities undertaken for financial gain that may raise a possible conflict of interest. In
situations of possible or perceived conflict of interest between the duties and private interests
of public officials, they shall comply with the measures established to reduce or eliminate
such conflict of interest.
6. Public officials shall at no time improperly use public moneys, property, services or
information that is acquired in the performance of, or as a result of, their official duties for
activities not related to their official work.
7. Public officials shall comply with measures established by law or administrative policies in
order that after leaving their official positions they will not take improper advantage of their
previous office.
III. DISCLOSURE OF ASSETS
8. Public officials shall, in accord with their position and as permitted or required by law and
administrative policies, comply with requirements to declare or to disclose personal assets
and liabilities, as well as, if possible, those of their spouses and/or dependents.
IV. ACCEPTANCE OF GIFTS OR OTHER FAVOURS
9. Public officials shall not solicit or receive directly or indirectly any gift or other favours that
may influence the exercise of their functions, performance of their duties or their judgement.
V. CONFIDENTIAL INFORMATION
10. Matters of a confidential nature in the possession of public officials shall be kept
confidential unless national legislation, the performance of duty or the needs of justice strictly
require otherwise. Such restrictions shall apply also after separation from service.
VI. POLITICAL ACTIVITY
11. The political or other activity of public officials outside the scope of their office shall, in
accordance with laws and administrative policies, not be such as to impair public confidence
in the impartial performance of their functions and duties.
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Professionalism
A profession is defined as “a calling requiring
specialized knowledge and often long and intensive academic
preparation; a vocation”.
A professional is someone “engaged in one of the learned professions”;
or “one that engages in a pursuit or activity professionally”.
Professionalism is defined as “the conduct, aims or qualities that
characterize or mark a profession”.
The three main tasks which are the purpose of public service have been
listed as being:
���� A facilitator of a dialogue in society
���� Being a steward of the society’s resources and
���� Providing leadership in the resolution of technical and social problems
And in performing these tasks it is advocated that the public service
should have a vocational calling which is defined as “professionalism”.
There are some attributes for an ideal profession. These characteristics
are given in the table below:
Universal responsibility also leads us to commitment to the principle of
honesty. The Dalai Lama
Do you think that transport industry is well organized as a profession?
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Table 6: Characteristics of ‘Ideal’ Professions
Values of Professionalism
Professionalism has values of its own that guide behavior in its practice.
It brings many values to the public sector and helps its legitimization.
The expertise of professionals allows them to have greater control over
their work that is a determinant of job satisfaction. Professionalism requires
one to keep abreast of new developments in their field, which is an innovative
approach for the public service.
���� The professional practice is based on a body of abstract knowledge which to
be adequately mastered requires a lengthy period of education, training,
apprenticeship and/or internship.
���� Standards for preparatory training, entry into journeyman status, and
continuing competence are established and enforced by the profession.
���� The sternest measure a profession can take against one of its members is
expulsion from the profession.
���� The profession’s primary purpose is to serve a given societal need, and
practice of the profession is done under the legitimization of that society.
���� Members of the professions are bound by an oath and/or ethical code which
place altruistic service and the good of society among its goals.
���� There is collegial sense among the members of the profession, where each is
subject to the dictates of the profession, yet charged with insuring the
integrity of it at the same time. One’s behavior is controlled by rules made by
his/her compatriots while at the same time each individual, as part of the
larger group, is prescribing and monitoring the behavior of colleagues with
whom they share a professional and, not infrequently, a personal bond.
���� Viewed in the strictest sense, members of a profession must be prepared to
make the supreme sacrifice when their society is in chaos.
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This innovative approach is necessary for
the public service to serve the needs of the
society which is evolving at a faster rate then
ever before. Thus, client satisfaction, which is a
requirement in professional practice, in turn
means the satisfaction of the needs of the
community as a whole (Wart, 1998 p.74-75). Professionalism in the public service makes sure that there is continuing
professional training and education; that public servants are involved in
professional associations which have codes of conduct and ongoing
improvements in the practice of the profession; they are continuously required
to follow the literature related to their field; and, keep a sense of responsibility
for the professional role (Gartner, 1991, p.155). Professionalism in the public
service ensures that diverse viewpoints and values in a pluralistic system are
used in policymaking and implementation (Gartner, 1991, p.155).
Professional socialization mechanisms, such as orientation programs for
new entrants to the profession, training programs and good role models from
the profession are essential elements of the vocation. In most professions it is
common practice to have an official body like a professional institute, which
prescribes the principles of conduct for the whole profession. Such an institute
usually also reviews the codes of conduct and makes the necessary
improvements in the principles and regulations according to the changing
values in society. Such an institute also gives counseling services to its
members and acts as the controlling agent for adherence to the code of conduct
with special rights to deal with grievances. And, it may impose remedial or
disciplinary measures against those who breach the regulations for proper
conduct.
Expertise
Autonomy
Profession as a calling
Service to clients
Self regulation
Some Professional Standards
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Summary
Ethical conduct is a global subject that concerns the individuals in a society, rich
and poor nations: International, multinational and national companies and public officials.
Meaningful work and good interrelationships within the organization of which an
ethical climate is an important area are necessary for an individual to perform his/her job
and express him/herself in his/her job and vocation.
Individuals and organizations act within the framework of laws when their actions
affect other individuals and organizations or the welfare of the society as a whole.
However, laws do not regulate all the actions of individuals and organizations. There are
areas where they have free choice in making decisions. Outside of these two areas, there
is a third domain where individuals and organizations have to abide by the norms of the
society in which they operate. In the ethical domain the standards of conduct are based
on the common principles and values of society in general. An ethically acceptable decision
is also that which is accepted by the legal and moral standards of the community as a
whole.
Principles guide the behavior of the individual: Whereas rules and procedures
guide behavior in an organization and laws and professional codes guide behavior in a
society. Therefore, it is natural that organizations develop some ethical criteria stated in
codes of conduct to help them solve the problems they are faced with.
Ethical conduct is also important in the public sector where decisions affect the
welfare of the whole society. Therefore, professionalism is an important factor in the public
sector in developing and maintaining an ethical environment.
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Key Terms
Business Ethics Sensitivity
Code of Ethics Ethics Ombudsman
Ethics Professionalism
Ethics Awareness Social Responsibilities
Ethical Behaviour The Work Ethic
Ethics Committee Values
Ethical Decision Making Whistle Blowing
Ethics Perception
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Progress Check
1. What is ethics concerned with?
a. The right and the wrong, the good and the bad
b. Feelings
c. Abiding by the law
d. Doing whatever is socially acceptable
e. The same thing as religion
2. What is considered an ethical dilemma?
a. If a person cannot decide if an action is right or wrong
b. When there are clear guidelines to behavior
c. When all alternative choices and behaviors are considered
undesirable
d. Free choice of the individual
e. The common principles and values of the society in general
3. Why is business ethics important?
a. It is nice to be seen as an ethical and responsible organization
b. Because investors prefer to buy the stocks of ethical companies
c. It is costly to be ethical
d. Unethical conduct leads to loss of consumer satisfaction with reduced
quality and bad consumer relations
e. In order to be a famous organization
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4. Why are clear statements of ethical rules necessary in an organization?
a. It makes it easier for employees to differentiate between right and
wrong
b. It makes decision making easier
c. It guides behavior
d. It creates a motivating, respectful and trustful environment
e. All of the above
5. The major factors that induce ethical or unethical behavior in the
workplace are:
a. The laws and regulations of the country
b. The ethical conduct of competitors
c. Ethics of the system, ethics of the organization and ethics of the
individual
d. None of the above
e. All of the above
6. Trust is an important matter for an ethical environment because:
a. In a trustful environment wealth of a nation increases faster
b. Trust flourishes in an environment where rules, laws and regulations
are abided by
c. It creates a motivating, respectful and orderly environment
d. None of the above
e. All of the above
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7. Why is it important to get support from your superiors in the organization
to deal with unethical conduct?
a. It is more rational to act as a group if the situation is favorable
b. It is easier to stand up to threats as a group than as an individual
c. Support will make it easier for one to prove that he /she is right
d. All of the above
e. None of the above
8. Why is ethical conduct in the public sector more important than in the
private sector?
a. Because the public servants are trusted with the stewardship of public
resources
b. Because public servants get lower pay than their counterparts in the
private sector
c. Because public servants represent the top administrators of a country
d. None of the above
e. All of the above
9. Why is building trust important in the public sector?
a. Because the welfare of the citizens are in the hands of public
servants
b. Because it is necessary for democracy to flourish
c. Because the public servant has to obey his/her superiors
d. None of the above
e. All of the above
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10. Professionalism in the public sector is a necessity because:
a. It is a facilitator of dialogue in society
b. Public resources are trusted to the public officials
c. They are the leaders in solving social, economic and technical
problems in society
d. All of the above
e. None of the above
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