I.

Foundation of Ethics
 Theological foundation: explains human beliefs in religious terms
 Philosophical ethics: provides justifications that are applicable to all people
regardless of their religious starting point.
II. Ethical Theories
1. Utilitarianism
o Decisions based on the consequences of our actions: promote human well-
being: happiness, health, dignity, integrity, freedom, respect of all the people
affected.
o Support democratic policies as they emphasize producing the greatest good
for the greatest number. -> the economy, economic institutions are
utilitarian
o Pragmatic: depend on specific facts of consequences, no act is ever
absolutely right or wrong
o Profit-Maximization Perspective: free and competitive markets are the best
means for attaining utilitarian goals -> free market capitalism economy.
Businesses seek to maximize profits, scarce resources are used effectively,
provide optimal overall satisfaction.
o Public Policy perspective: government, legislative bodies establish and
execute public goals and policies to maximize overall happiness. Businesses
are insured to contribute to the overall good.
o Benefits:
 Liberal
 Able to describe most of human decision-making
 Easy to understand
 Examine the outcomes of our actions
o CONSEQUENTIALIST
2. Deontology
o The ends do not always justify the means -> principle-based
o Ex: the law, other rules from various institutions or social roles (legal rules,
organizational rules, role-based rules, and professional rules)
o Organize and ease relations between individuals
o One fundamental ethical principle that we should follow, no matter the
consequences: Respect the dignity of each individual human being. (Kant’s
theory)
o Humans are capable of making free and rational choices, not only out of
instinct and conditioning -> autonomy. Treating someone as a means or an
object is to deny this distinctive and essential characteristics -> deny their
humanity
 o Equal treatment and consideration is also a fundamental right

Legal Rights Moral Rights

Granted on the basis of legislation
or judicial rulings
Arise from contractual agreements
Lie outside the bargaining that
occurs in a contract
Establish moral framework for legal
environment, for any contracts that
are negotiated within business

o Rawl’s theory: A fair decision is an impartial decision. Seek out original

perspective from behind a “veil of ignorance”, strive towards a perspective of
ignorance with regard to our position and instead to strive towards
impartiality. 2 fundamental principles: equal rights are a fundamental
element of social justice, benefits and burdens of a society should generally
be distributed equally.
3. Virtue Ethics
o Seeks a full and detailed description of character traits or virtue that would
constitute a good and full human life
o Wants, beliefs, values and attitudes -> who a person is
o Understand how traits are formed and which traits bolster and which
undermine a meaningful, worthwhile, and satisfying human life, encourage
full description instead of describing people as right or wrong
 Facing difficult dilemma, what would a virtuous person do?
o Which set of virtues are more likely to embody a full, satisfying, meaningful,
enriched, and worthy human life.
 Decision-Making Model for Business Ethics:
 Determine the facts: no unintentional bias
 Identify ethical issues involved: ethical dimension, ethical issue, ethical
dilemma
 Identify stakeholders: who are affected by this decision, their
relationships, priorities to me, their power over my decision or results,
who has a stake in the outcome
 Consider available alternatives: moral imagination -> creative ways to
resolve conflicts, how the situation appears from other points of view
 Consider how decision affects stakeholders: point of view of other people
involved -> a decision prove acceptable to all parties
III. Business Decision Making
1. Levels of Decision Making
a. The Individual
b. The Organization
 c. The Business System
2. 7 Principles of Ethical Decision Making
a. Integrity
b. Respect
c. Responsibility
d. Fairness
e. Compassion
f. Courage
g. Wisdom
3. Market Ethics
a. Features: private ownership, voluntary exchange, profit motive
b. Justification: efficiency, welfare enhancement, liberty, limited and spontaneous
order, info gathering
c. Market outcomes: greater gains for some than others, returns are results of risks
taken, address justness of market outcome
d. Ethics in markets: self-interest, morally free zone, imperfect markets
e. Breaches and fraud: implicit, incomplete, lack remedies, fraud and manipulation
IV. Downsizing Strategy
- Strategies to improve an organization’s efficiency by reducing the workforce,
redesigning the work, or changing the systems of the organization
- Survivor: an employee remaining with an organization after a downsizing -> job
insecurity
 Negative attitudes and behaviors
 Reduced performance capabilities
 Lower organizational productivity
 Emotions: anger, anxiety, cynicism, resentment, retribution, hope
- Reasons to downsize:
 Declining profits
 Business downturn or increased pressure from competitors
 Merging with another organization, resulting in duplication of efforts
 Introduction of new tech
 The need to reduce operating costs
 Desire to decrease levels of management
 Getting rid of employee “deadwood”
- Disadvantages of downsizing:
 May infringe on principles of distributive, procedural and interactional justice
 Communication during downsizing may be mismanaged
 Managers may use and abuse info as a source of power
  Managers may choose to conceal or distort info regarding the financial status of
the business
- Alternatives:
 Cutting non-personnel costs
 Cutting personnel costs
 Providing incentives for voluntary resignation or early retirement
 Short-term: hiring freeze, mandatory vacation, reduce workweek, reduce
overtime, reduce salaries, facility shutdowns, employee input for alternatives to
cutbacks.
 Medium-term: extending reductions in salaries, voluntary sabbaticals, lending
employees, exit incentives
 Outplacements: providing a program of counselling and job-search assistance for
workers who have been terminated
 Inplacement: reabsorbing excess or inappropriately placed workers into a
restructured organization
- Benefits for losing a job:
 Time to reflect
 Grow new ideas, direction and career plan
 Set out a job that was substandard
 Spend more time with family and hobbies
- Three types of justice warrant consideration:
 Procedural justice: determine which employees will be down-sized
 Interactional justice: interpersonal treatment of employees received during the
implementation of the downsizing decision
 Distributive justice: fairness of the downsizing decision
- Effective strategies:
 Increased communication
 Increased employee participation
 Systematic analysis of tasks and personnel requirements
 Visibility of senior management
 Focus on rightsizing
 Establish a sense of ownership
 Active role for HR department
 Monitor downsizing and link to organizational strategy
 Train management with downsizing techniques
- Best practices:
 Initiated from the top
 Selective in application and long-term in emphasis
 Special attention to both who lose their jobs and survivors
 Identify where indifferences and costs exist
 Result in formation of small, semi-autonomous organizations within the broader
organization
 Proactive strategy focused on increasing performance
