WEEK 3 LESSON 1

Business Values and Ethics

Ethical Issues in Business
23rd January 2022

Business Values and Ethics; Dr (Eng) Musebe Edward Achieng 8–1

Ethical Issues are...

 Problems, situations, or opportunities requiring

an individual to choose among actions that may
be evaluated as right or wrong, ethical or
unethical

 Ethical issues arise because of:

– conflict among personal/organizational
values
– conflicts with societal values
Reasons for Unethical Behavior

 Bad apples (individual factors):

– Unethical choices are more likely from people with specific
personal characteristics — specific views and values.
Overwhelmingly, these employees are driven by self-
interest.
– For example, they manipulate others for their own personal
gain, fail to see the connection between their actions and
outcomes, and believe that ethical choices are driven by
circumstance.
– They obey authority figures’ unethical directives and act
merely to avoid punishment.
Reasons for Unethical Behavior

 Bad cases (issue-specific factors):

– An employee might make an unethical choice in one
situation, but not in others.
– Some issues are more likely to lead to unethical choices.
– Employees are more likely to act unethically when they
don’t see their action clearly causing harm — for example,
when the victim is far away or the damage is delayed.
– Unethical choices also occur when an employee feels that
peers will not condemn their actions.
Reasons for Unethical Behavior

 Bad barrels (environmental factors):

– Unethical choices are more likely when the organization
encourages individualistic behaviour rather than doing what
is best for other employees, customers, and the community.
– For example, the performance management system might
reward individual bottom-line achievement, no matter how it
is achieved.
 Ethical Issues in Business
 Discrimination
o Discrimination is not just unethical; in many cases, it is also
illegal. There are statutes to protect employees from
discrimination based on age, gender, race, religion, disability,
and more.
 Harassment
o The second major ethical issue businesses face is harassment,
which is often related to racism or sexism. This can come in the
form of verbal abuse, sexual abuse, teasing, racial slurs, or
bullying. Harassment can have a long-term impact on
employees: psychologically, in terms of earnings, and even
impacting a person’s entire career path.
 Unethical Accounting
o Publicly-traded companies may engage in unethical accounting
to appear more profitable than they actually are.
 Ethical Issues in Business
 Health and Safety
o Another type of ethical issue that is often protected by law is
health and safety. Companies may decide to cut corners to
reduce costs or perform tasks faster.
 Abuse of Leadership Authority
o Abuse of power often manifests as harassment or
discrimination. However, those in a leadership role can also use
their authority to pressure employees to skip over some aspects
of proper procedure to save time (potentially putting the
employee at risk), punish workers who are unable to meet
unreasonable goals, or ask for inappropriate favors.
o Managers can use their position to change reports, give
themselves credit for the work of a subordinate, misuse
expenses, and accept gifts from suppliers or clients.
 Ethical Issues in Business
 Nepotism and Favoritism
o Nepotism is when a company hires someone for being a family
member. Favoritism occurs when a manager treats an employee
better than other workers for personal reasons.
 Privacy
– The distinction between work life and personal life has become
less clear. This is mainly due to the advances in technology.
– Employers may punish employees for posts on social media,
particularly if they complain about work conditions or the
company as a whole.
– Employers can monitor all worker activity on laptops and
cellphones.
 Corporate Espionage
Influences on Ethical Behavior...

 Personal values

 Attitudes/behaviors of supervisor
 Attitudes/behaviors of senior management
 Internal drive to succeed

 Performance pressures
 No threat of punishment
 Friends/coworkers
Why not report organizational misconduct?
Ethical Issues Related to Ownership...

 Owners have an obligation to society as well as

their employees & customers
– minimize pollution
– compensate workers fairly

– produce safe products

 Must be sensitive to legal & ethical risks of their

industry & region
Financial Responsibilities...

 Reporting & use of the companies’ finances

 Pricing products/services fairly

 Avoiding any antitrust activities
– price fixing

 Sensitivity to socially responsible investing

 Employees & Management Concerns...

 Employee theft, sabotage & competitive intelligence

 Fear of layoffs
 Salary plateaus
 Upward mobility

 Discrimination
 Privacy & data access
 Health & safety
Consumer & Marketing Issues...
 Must consider consumer feedback
– safety
– environmental (can lead to boycotts)
– maximize positive publicity & avoid negative
How to Identify an Ethical Issue...

 An activity approved by most members of the

organization & customary in the industry is probably
ethical
 If the issue withstands open discussion between
groups within & outside the organization is probably
ethical
 Covert discussion, destroyed or disguised documents
indicate potential problems
Conclusion

Make no mistake about it: When you enter the

business world, you’ll find yourself in situations in which
you’ll have to choose the appropriate behavior.

How, for example, would you answer questions like the

following?
 Conclusion

 Is it OK to accept a pair of sports tickets from a supplier?

 Can I buy office supplies from my brother-in-law?
 Is it appropriate to donate company funds to my local
community center?
 If I find out that a friend is about to be fired, can I warn her?
 Will I have to lie about the quality of the goods I’m selling?
 Can I take personal e-mails and phone calls at work?
 What do I do if I discover that a coworker is committing
fraud?
Conclusion

All these issues can be considered

as: bribes, conflicts of interest, conflicts of
loyalty, issues of honesty and integrity,
and whistle-blowing.
End