Ethical principles
Utilitarianism
Consequential principle: results-focussed
Cost-benefit analysis to all stakeholders, rather than self-interest
We should act to produce the greatest ratio of good to evil for everyone
Advantages Disadvantages
• Think about “greater good” • No bad actions??: end justify the means
• Think in stakeholder terms • Minority interests
• Not good/bad – judged for situation • Difficult to make rules
Kant
Duty-based
Obligatory nature of actions AND reasoning on right and wrong
3 principles, not all of them is always applicable
1. Only act on rules you would be willing to see everyone follow.
2. Each person has dignity and moral worth and should not be exploited/manipulated/used
as a means to an end.
3. Every rational being is able to regard itself as a maker of universal law.
Advantage
Everyone included all stakeholders
Disadvantage
Emphasis on duty rather than consequences
Respect for other people key
Principle of rights
Moral rights and Legal rights
o cannot be overridden for “greater good”
o more focused on individual
o Includes positive & negative rights
Principle of justice
= fair treatment of each person
Distributive justice
- Everybody gets same share
Compensatory justice
- Make right what is wrong
Procedural justice
- Why is there action, written warning, fire (LAST)
Ethics of care
Similar to stakeholder principle
Relational
Responsibilities to others!
CARE = RELATIONSHIP
Virtue ethics
Not action focused
what should I become?
Character development
Honesty Integrity
Loyalty Promise keeping
Fairness Respect
Servant Leadership
, Serving others before yourself:
• Employees, customers, community, stakeholders
• Look at their scenario before your own, manager goes to employees and
stakeholders before making a decision.
• Ask what is their interest
Listening Empathy Building community
Healing Persuasion Stewardship
Awareness Foresight Commitment
Golden rule
Do unto others as you would have them do unto you…
Ethical tests
1. Test of common sense
Does this course of action make sense??
2. Test of one’s best self
Is this action compatible with my concept of myself??
- Requires concern about esteem and reputation!
3. Disclosure rule
What if this becomes public knowledge?
4. Test of ventilation
Expose your thoughts to others for perspective
Others’ opinions in terms of your decision i.to whether your decision is good or not.
5. Test of purified idea
Approved as appropriate by person with authority
Go to senior (board of directors or ethics committee)
- Can be dangerous, because their opinion could be bias
6. Test of big four
Test of big four:
1) Greed, decision made for your own benefit
2) Speed, decision made in haste
3) Laziness
4) Haziness
7. Gag test
Feeling sick at thought of carrying decision out
, 1. Personal
o She made a promise to someone
o You have a right to privacy
o Can ask the manager whether it would make a difference since the actions have
already been taken
2. Justice
o Was it fair for the manager to ask such a question – no
Caring
o Are you looking at all your stakeholders or just the organisation (manager)
3. Refrain from answering …
If you had to choose… break promise and explain to friend the circumstances
Ethics
What is right and wrong
Decision making based on consequences
Business Ethics
- Business ethics is the study of proper business policies and practices regarding potentially
controversial issues, such as corporate governance, insider trading, bribery, discrimination,
corporate social responsibility and fiduciary responsibilities.
Linked with:
Morality
Etiquette
Law
Professional code of conduct
Religion
Values
Ideals
Why is it necessary?
- Allows business decisions to be for the survival of the business, not the profit
- Success requires knowledge, skills and integrity
- Unethical business behaviour leads to unacceptable risks
Audit risk
Reputation risk
Definition Examples
Morals Individualized code of what is Honest, fair and caring in his
right or wrong dealings
Acceptable / responsible
behaviour
Ethics Standardized code of what is Company or regulatory code of
right or wrong ethics
Etiquette Rules governing socially Attire, Politeness, Best
acceptable behaviour behaviour.
Good behaviour that Hand shakers, Table manners
distinguishes humans from and diplomacy.
animals Tone of voice
Follow up on emails
Law Law is society codification of All laws and regulations
what is right or wrong applicable i.e.: Companies Act,
Income Tax Act, Mercantile
law, FSB
Professional Code of Regulation by Professional SAICA and IRBA
Utilitarianism
Consequential principle: results-focussed
Cost-benefit analysis to all stakeholders, rather than self-interest
We should act to produce the greatest ratio of good to evil for everyone
Advantages Disadvantages
• Think about “greater good” • No bad actions??: end justify the means
• Think in stakeholder terms • Minority interests
• Not good/bad – judged for situation • Difficult to make rules
Kant
Duty-based
Obligatory nature of actions AND reasoning on right and wrong
3 principles, not all of them is always applicable
1. Only act on rules you would be willing to see everyone follow.
2. Each person has dignity and moral worth and should not be exploited/manipulated/used
as a means to an end.
3. Every rational being is able to regard itself as a maker of universal law.
Advantage
Everyone included all stakeholders
Disadvantage
Emphasis on duty rather than consequences
Respect for other people key
Principle of rights
Moral rights and Legal rights
o cannot be overridden for “greater good”
o more focused on individual
o Includes positive & negative rights
Principle of justice
= fair treatment of each person
Distributive justice
- Everybody gets same share
Compensatory justice
- Make right what is wrong
Procedural justice
- Why is there action, written warning, fire (LAST)
Ethics of care
Similar to stakeholder principle
Relational
Responsibilities to others!
CARE = RELATIONSHIP
Virtue ethics
Not action focused
what should I become?
Character development
Honesty Integrity
Loyalty Promise keeping
Fairness Respect
Servant Leadership
, Serving others before yourself:
• Employees, customers, community, stakeholders
• Look at their scenario before your own, manager goes to employees and
stakeholders before making a decision.
• Ask what is their interest
Listening Empathy Building community
Healing Persuasion Stewardship
Awareness Foresight Commitment
Golden rule
Do unto others as you would have them do unto you…
Ethical tests
1. Test of common sense
Does this course of action make sense??
2. Test of one’s best self
Is this action compatible with my concept of myself??
- Requires concern about esteem and reputation!
3. Disclosure rule
What if this becomes public knowledge?
4. Test of ventilation
Expose your thoughts to others for perspective
Others’ opinions in terms of your decision i.to whether your decision is good or not.
5. Test of purified idea
Approved as appropriate by person with authority
Go to senior (board of directors or ethics committee)
- Can be dangerous, because their opinion could be bias
6. Test of big four
Test of big four:
1) Greed, decision made for your own benefit
2) Speed, decision made in haste
3) Laziness
4) Haziness
7. Gag test
Feeling sick at thought of carrying decision out
, 1. Personal
o She made a promise to someone
o You have a right to privacy
o Can ask the manager whether it would make a difference since the actions have
already been taken
2. Justice
o Was it fair for the manager to ask such a question – no
Caring
o Are you looking at all your stakeholders or just the organisation (manager)
3. Refrain from answering …
If you had to choose… break promise and explain to friend the circumstances
Ethics
What is right and wrong
Decision making based on consequences
Business Ethics
- Business ethics is the study of proper business policies and practices regarding potentially
controversial issues, such as corporate governance, insider trading, bribery, discrimination,
corporate social responsibility and fiduciary responsibilities.
Linked with:
Morality
Etiquette
Law
Professional code of conduct
Religion
Values
Ideals
Why is it necessary?
- Allows business decisions to be for the survival of the business, not the profit
- Success requires knowledge, skills and integrity
- Unethical business behaviour leads to unacceptable risks
Audit risk
Reputation risk
Definition Examples
Morals Individualized code of what is Honest, fair and caring in his
right or wrong dealings
Acceptable / responsible
behaviour
Ethics Standardized code of what is Company or regulatory code of
right or wrong ethics
Etiquette Rules governing socially Attire, Politeness, Best
acceptable behaviour behaviour.
Good behaviour that Hand shakers, Table manners
distinguishes humans from and diplomacy.
animals Tone of voice
Follow up on emails
Law Law is society codification of All laws and regulations
what is right or wrong applicable i.e.: Companies Act,
Income Tax Act, Mercantile
law, FSB
Professional Code of Regulation by Professional SAICA and IRBA
