BEV-Module 3

•Difficulties in Ethical Decision Making•Ethical Decision making Model

•Ethical Dilemmas•Suggestions for Ethical Decision Making•Comparison of Codes of Ethics, Codes of

Conduct, Codes of Practice•Ethic courses and Training

Prisoner’s Dilemma

• Two thieves arrested for a crime vow not to betray each other. But the police put them into separate rooms and tell each thief the same thing: “If your partner confesses and you keep silent, he goes free and you get five years in prison; if you confess and he keeps silent, you go free and he gets 5 years in prison. If both of you confess, then you both get 3 years in prison. If you both keep silent, then we’ll give you each I year in prison on a lesser charge"

Prisoner Prisoner B B Defecting CooperatingPrisoner A DefectingPrisoner ACooperating The Prisoner’s Dilemma and the Opportunity Costs

of Lost Opportunities

-3,-3 -5,0

0,-5 -1,-1

• When two managers talk with each other they have a choice of cooperating by telling the truth or try to take advantage by lying to each other.

• When two investors who each own property have a choice of cooperating in the norm against theft or trying to take advantage of each other by stealing each other’s property.

• Although taking advantage of another may pay off in a one-time meeting it rarely exists in managerial environment.

Difficulties in Ethical Decision Making

Difficulties in ethical decision making may arise from the following:

1. Cross-cultural contradictions.- It may arise when corporations do business in other societies where ethical standards differ from those at home.

2. Competitive pressures- When companies are squeezed by severe competition, managers sometimes engage in ethical activities to beat out a competitor.

3. Manager’s values and attributes- Managers are key people to investigate whether a company will act ethically or unethically as they have more opportunities than others to set ethical time for their company.

4. Personal gains/Dubious character- Personal gain even greed causes ethical problems. Business sometimes employ people whose personal values are less than desirable.

5. Individual values in conflict with organizational goals.-Ethical conflicts in business frequently occur when a company pursues goals or uses methods that are not acceptable to some of its employees.

How to Clarify Ethical problems1. Have you defined the problem accurately/2. How would you define the problem if you stood

on the other side of the fence?3. How did this situation occur in the first place?4. To whom and to what do you give your loyalty as

a person and as a member of the corporation?5. What is your intention in making the decision?6. How does this intention compare with the

probable results?7. Who could your decision or action injure?

8. Can you discuss the problems with the affected parties?

9. Are you confident that your decision will be as valid over a long period as seems now.

10.Could you discuss your decision with your boss/CEO/family without qualms?

11.What is the symbolic potential of your decion being understood? If misunderstood?

12.Under what circumstances would you allow exceptions to your stand?

The Ethical Decision Model

1. Clarify the question. What is the question? (What is at stake? Who is affected? How?)

2. Determine its relevance for this business. How does it affect the business?

3. Identify the circumstantial constraints. What are the external constraints(legal, regulatory, marketing etc)?

4. Assess the available options. Apply the Ethical principles. [ Which of the various options conform to justice and decency while maintaining long term owner value]

ISSUES RESULTING IN ETHICAL DILEMMAS A dilemma is a situation in which two or

options are available for action, representing varied interest are available. Decisions are important, but not simple,

• Accounting procedures• Customer service• Crisis management• Government regulations• Targeted advertising

• Sexual harassment• Community spirit etc • Fair hiring• Treatment of grievances• Materials• Buildings• Plans• Locations.

SUGGESTIONS FOR ETHICAL DECISION MAKINGI. Top management can improve behaviourII. Codes of ethics improves decision making. –

codes of ethics are formal statements of what the company expects. Top management must eliminate opportunities for unethical behaviour.

III. Interaction with peers and other colleagues help people to learn ethical behaviour.

IV. Control Systems.- Policies, rules regulations worked into control system ensures ethical behaviour.

COMPARISON 0F CODES OF ETHICS, CODES OF CONDUCT, CODES OF PRACTICE

Codes of Ethics•Statements of values of values and principles – ‘This is how we expect you to behave’•Seeks to clarify and define the ethics of the corporation. ‘This is who we re and what we stand for’•General guides to decisions about the acting in the work place

Codes of Conduct•Statement of Rules-This is what you must/must not do.•Penalties for transgression

•Potential conflicts of interest are described with rules for guidance*Contain examples of appropriate behaviour to be meaningful.

Codes of Practice•Interpretations and illustrations of corporate values and principles- This is how we do things around here.* The codes seek to shape the expression of corporation’s stated values through practice of its employees- Tends to provide guidance for decisions-using such rule of thumb ” as act and disclose” or “seek advice “ . ‘What we do is because it is our character.

Ethics Courses and Training

Ethics courses and training can achieve:• Provide people with rationales, ideas to participate in

ethical decision making• Help people to ‘make sense’ of their environment.• Provide intellectual weapon to fight those who violet

ethical standards• Enable employees to act as alarm system for not meeting

expected ethical standards.• Enhance conscientiousness and sensitivity to moral issues.• Encourage and strengthen moral courage• Improve moral climate in the firm by increasing people’s

ability to be autonomous ethical dissenters.