Review the ethical cycle. Discuss a decision you have made (at home or in the workplace), and describe the steps of the cycle in relation to your decision making process. Now review the section on rationalizing unethical behaviors. What is the relationship between the ethical cycle and the three simple ethical tests used for business decisions? The steps of the ethical cycle are: Identification of moral problem —> analysis of the moral problem —> the available options that one can take to resolve the problem —> using ethical judgment to evaluate the problem —> final reflection on decisions that were made.
Discuss a decision you have made (at home or in the workplace), and describe the steps of the cycle in relation to your decision making process. Scenario: I work as an accountant in a public accounting firm, and one of our big clients asked me to manipulate their accounting transactions, to make their company look more profitable than it is, in order to secure a bank loan the company was trying to get. Identification of the moral problem – whether or not I should commit the act the client requested, and change the accounting transactions into accounts that would make the financial statement and company more profitable than it actually is.
Analysis of the moral problem – I can change the information, and most likely do so undetected. Because this is not a public company, the accounting adjustments will probably go undetected indefinitely. If I do change the transactions, I am not acting ethically, and am also committing fraud, even though it wouldn’t be noticed by investors, or any other interested parties. Available options – I can leave the information as it is, or I can change the information to make the company appear more profitable.
Using ethical judgment – I will evaluate this problem with my best, most professional sense of judgment, and come to the conclusion that my actions need to speak louder than my words. Based on ethical judgment, I need to act accordingly and notify my client that I cannot make the requested changes. Final reflection – I reflect upon the decisions I made for the moral problem at hand, and realize that my decision was the right one to make.
Although I may have strained the relationship our firm has with the client, which can possibly risk the income that the client brings to our firm from continued services, I know that my decision was the right one to make. I used my personal morals and professional sense of ethics and wise judgment to not make the changes as the client requested, due to the nature of the request. I can use the three simple ethical tests, and reasoning to justify unethical behavior, although I would still be acting unethically.
I can basically try to reason and justify each step of the ethical cycle, to rationalize why it would be ok to act as the client requested. I can justify that it will never be caught, it will further enhance the client’s business because he will be able to secure funding and to expand, which will make his business more profitable. I can justify that even though I have gone into the stage of ethical reasoning of the moral problem, that even though I reasoned correctly, I could have chosen the other option.
If I had chosen to falsify the records, I could try to justify the fact that I did this under the view that it was in the best interest of the client, and insignificant to affect my overall ethical and moral standpoints, because the good outweighed the bad. I can also reason that it was the right thing to do in this instance, if I had changed the transactions, because it would have hurt no one in the immediate scenario. 2. Discuss the eight ethical principles in the Global Business Standards Codex.
Using these principles, describe an example of a company that does follow one of these principles, and then describe an example of a company that does not follow one of these principles. Global Business Standards Codex Paine, Deshpande, Margolis, and Bettcher (2005) propose the Global Business Standards Codex comprised of eight principles. The eight principles are detailed below: 1. Fiduciary Principle: This principle is grounded in diligence in maintaining the company’s interests, economic health, and return on investments, as well as, loyalty to the company. 2.
Property Principle: This principle is grounded in protecting the company’s assets, including protection from theft through embezzlement. This principle also maintains the importance of respecting the assets of rival companies. 3. Reliability Principle: This principle is grounded in the notion that the organization should honor commitments, including paying suppliers, as well as, faithfully adhering to promises (legal or otherwise). 4. Transparency Principle: This principle is grounded in honest and open business practices, including disclosing of important information. . Dignity Principle: This principle is grounded in the respect for the individual and their health and safety. This principle discourages coercion and promotes a safe, healthy workplace. Another important tenet of this principle is to respect privacy and confidentiality. This principle also discourages unfair labor practices and encourages learning. 6. Fairness Principle: This principle is grounded in dealing fairly with and fair treatment of employees, suppliers, customers, and investors. This principle encourages fair company processes and policies for employees. . Citizenship Principle: This principle is grounded in being a conscientious member of the community. This includes obeying all applicable laws in and abstaining from corruption. This principle also encourages sustaining and protecting our natural environment. 8. Responsiveness Principle: This principle is grounded in being receptive to legitimate requests into company activities, including those made by stakeholders, the government, and the public. This can also include responsiveness to employee concerns and suggestions.
An example of a business that does follow the Dignity Principle is hospitals, public health institutions, and other medical professionals. For instance, I work for a state health department. As a public health agency, we adhere to Principle #5 by respecting and protecting the privacy and confidentiality of our clients who seek services in our local county health department’s clinics. Personal demographic information and protected health information is safeguard. In fact, health department employees are not allowed to access personal or health information of clients unless they have a reason to.
The reason has to involved aspects of treatment, payment, or operations. All businesses and organizations in the United States dealing in protected health information are required by HIPAA (Health Insurance Portability and Accountability Act of 1996) to protect the privacy and confidentiality of clients. An example of a business that does not follow the Fairness Principle is Wal-Mart. If you will remember, Wal-Mart has come under fire over the last several years for gender discrimination.
In 2007, the Ninth Circuit Court of Appeals ruled that Wal-Mart would face a class action lawsuit claiming the retailer discriminated against female associates in regards to pay and promotions. This goes directly against the Fairness Principle proposed in the Global Business Standards Codex. 3. Which relates to the myths about business ethics? Select three myths, and discuss why they represent a general misunderstanding about business ethics. 1. I think one of the biggest myths in business ethics is that if an act isn’t caught, that makes it acceptable. Even if the act is legal, it isn’t necessarily ethical.
Oftentimes, management commits an unethical act and it is never caught by other executives, by shareholders, or by any other party so management determines that if the act was not caught, which means it was never stopped, that it is okay to continue committing the same act. This is one of the biggest myths in business. Just because an unethical act was not detected, it does not mean that it is ethically acceptable. 2. Another big business ethics myth is the belief that most employees are ethical individuals. While this might be true in many companies, believing that this exists in every company is a myth and leads to unfortunate situations.
When management assumes that all individuals are ethical and honest, it oftentimes compromises internal control because management also believes that strong internal control policies aren’t needed. This quickly turns into a situation where unethical employees take advantage due to the lack of internal control structure that comes from the managerial belief that all of their employees are ethical, honest individuals. 3. One of the other biggest business ethics myths is that people will act ethically in all circumstances and that written policies regarding ethics aren’t needed.
While the SEC has solved this issue for public companies by requiring that all public companies have a written code of ethics, we still see situations where management believes that the code of ethics and ethical principles are assumed, therefore there is no need to communicate specific ethical principles to employees. This is a common myth in many companies. All companies need to ensure that they create and distribute a code of ethics and they should ensure that all employees are aware of the contents of the code of ethics. 5.
Examine the three simple ethical tests of transparency, effect, and fairness identified by the Institute of Business Ethics. Use these tests, and discuss a decision dealing with ethics. The three simple ethical tests have the decision-maker take into account answering questions that specifically deal with each aspect. For transparency, the main ethical question to be answered is, “is my decision transparent to investors and other stakeholders? ” This basically refers to the fact that the decision must be transparent – nothing should be hidden regarding the decision, and if there is a hidden genda or other factors that have not been disclosed, the decision cannot be considered to pass the transparency test. For effect, the main question is, “what effect will my decision have on others, including internal and external individuals that the decision affects? ” The main issue in this part of the ethical test is to consider the effect that the decision, including alternative decisions have on all persons that are affected by the decision. Fairness is identified by the question, “is my decision fair to those involved? ” If the decision is not fair, it does not pass this part of the ethical test.
A decision dealing with ethics would be if a company should let long-time employees go, so that the company can save money from paying their high salaries. According to transparency, the decision and all reasons surrounding the decision would have to be disclosed to all individuals affected. It needs to be transparent. The effect should be considered, in which case the effect of this decision will have a detrimental effect on the employees involved and their families. This decision would also fail the fairness test, as it would not be fair to the employees to discontinue their employment.