TOPIC 1: ETHICS AND ITS SIGNIFICANCE IN John Stuart Mill (English philosopher)

THE BUSINESS DISCIPLINES • Goal of life is to maximize happiness

(physical & psychological) and to
Ethics minimize unhappiness.
1. A general pattern or ‘way of life’. • The goal of the society is to maximize the
2. A set of rules of conduct or moral code of social benefits to all people.
conduct. • This theory implies that the goal of a
3. Inquiry about ways of life and rules of business is to contribute to increasing the
conduct. physical and or psychological benefits to
society.
Morality or Moral Codes • This does not mean the goal of a business
1. Beliefs about nature of man. is to maximize profit; but rather to
2. Beliefs about ideals, what is contribute to the overall good of society.
good/desirable/worthy of pursuit for its
own sake. John Rawls (American philosopher)
3. Rules laying down what ought to be • Introduces the theory of justice.
done/not to be done. • Society should be structured, so a fair
4. Motives that incline us to choose/wrong distribution of rights and benefits and
course. that any inequalities should be to
everyone’s advantage.
Aristotle (Greek Philosopher) • This implies that businesses act in an
• The goal of life is happiness. ethical manner when:
• Happiness is achieved by leading a • No price discrimination & hiring
virtuous life in accordance with reason. systems.
• The virtues include integrity, honor, • Not to provide goods and services
loyalty, courage, and forthrightness. to one segment of society at the
• In business sense, the above means, expense of other segment of
directors, executives, and accountants society.
should demonstrate integrity in business • No polluting & exploiting.
dealings, should honor the terms of
contracts, should be loyal to employees, Ethical Dilemma Case Analysis
customers, and suppliers, should have the 1. Key facts.
courage to be transparent and should be 2. Key factors.
forthright when providing explanations 3. Key players.
of good and bad business behaviors. 4. Whistle-blower.
5. Stakeholders.
Immanuel Kant (German philosopher) 6. Interest of stakeholders.
• People are ethical when they do not use 7. Issues.
other people opportunistically and when 8. Ethical dilemma.
they do not act in a hypocritical manner 9. Ethical decision.
demanding a high level of conduct for
everyone else while making exceptions for Reasoning Process
themselves. The benefit if proceed The burden if proceed
• Businesses should never treat employees, with decision. with the decision.
customers, suppliers merely as a means, The benefit if does The burden if does
exploiting them for short-term goal. not proceed with the not proceed with the
decision. decision.
Final ethical decision is………..

Zieqah Fauzay :P
 TOPIC 2: ETHICAL THOUGHT & MORAL Velasquez Modified Moral Standards
REASONING IN BUSINESS • Whether the decision will provide benefits
to the society? (Well-offness)
Factors affecting public expectation for • Whether the decision is fair to all
business stakeholders? (Fairness)
1. Physical (Environmental concerns) • Whether the decision will offend the
2. Sense of morality rights of the decision-maker and
3. Bad judgement stakeholders? (Rights)
4. Activist stakeholders • Whether the decision demonstrate the
5. Economic pressure virtues expected by stakeholders? (Good
6. Competition Values)
7. Financial malfeasances
8. Governance failures Type of Justice
9. Accountability 1. Distributive justice: Benefit and burden
10. Synergy among factors should be equally shared.
11. Institutional reinforcement 2. Restorative justice: Apology to show one is
truly sorry.
Theory of Profit by Milton Frie 3. Retributive justice: Punishment is fair
A corporate executive has the responsibility to and just.
make as much money as possible while 4. Compensatory justice: Fair compensation
conforming to the basic rules of society, both in for any injury or loss.
law and in ethical customs.
Traditional 5-Qtns Approach (Velasquez)
Critical issues: Whether the decision is:
1. If you were to deviate from just 1. Profitable?
concentrating on profit, it does not 2. Legal?
mean profit will decline. 3. Fair?
2. Profit alone is an incomplete measure of 4. Right?
corporate performance. 5. Going for further sustainability
3. In making profit, the expected development?
performance must be within the law and
ethical custom. Ethical Relativism
• There are no absolute truths in ethics.
Moral standard • What is morally right/wrong varies from
• Rules in common with every society person to person or from society to
because they are necessary for society to society.
exist.
• Generally acceptable based on your Egoism
culture, race, religion. The doctrine that holds individuals are always
motivated by self-interest.
Legal standard E.g. It is very difficult to admit our own mistake.
• Systems of incentive and punishment to
be enforced based on regulations, law,
rules.

Zieqah Fauzay :P
 Consequentialism Egalitarian (Theory of Justice)
• An idea that the moral worth of an • Political doctrine by William K.Frankena
action is determined solely by its that holds all people should be treated as
contribution to overall utility: that is, its equals and have the same political,
contribution to happiness or pleasure as economic, social, and civil rights.
summed among all persons. • Eg: Everybody deserves a bonus regardless
• An act is morally right if and only that of performance.
act maximizes the net good or minimizes
the net negative impact of choices where Libertarian (Theory of Justice)
one must be made. • A term used by a spectrum of political
philosophies which seek to promote
Deontology individual liberty and seek to minimize or
• An approach to ethics that focuses on the even abolish the state.
rightness or wrongness of actions. • Eg: Employees who do not perform should
• It is sometimes described as "duty" or not get bonus as they do not make the
"obligation" based ethics because same contribution.
deontologists believe that ethical rules
"bind you to your duty". Virtue ethics
• It motivates a decision/action rather • It is a branch of moral philosophy that
than the consequence of the actions. emphasizes character, rather than rules
• Immanuel Kant: Actions which would be or consequences, as the key element of
good for the decision maker and all ethical thinking.
members of the society. • Eg: Patience, helping those who are in
• Deontology perspective states it is good to need and respect them is a virtue.
tell the truth as you also do not want • Different people, cultures and societies
people to lie to you. often have vastly different opinions on
• Relate to the GOLDEN RULE (enlightened what constitutes a virtue.
self-interest). Be good to others and
others will be good to you. Rawls Veil of Ignorance
This concept is to encourage individuals to think
Utilitarianism impartially and rationally about people so that
• Can thus be characterized as a they will not be biased in making decision.
quantitative and reductionist approach
to ethics. The key point is that, in the veil of ignorance, a
• It can be contrasted with deontological person does not know who they are in the real
ethics (which do not regard the world.
consequences of an act as the sole
determinant of its moral worth) and That is, a person does not know:
virtue ethics (which focuses on 1. Their class position or social status.
character), as well as with other varieties 2. Their natural talents, abilities,
of consequentialism. intelligence, or strength.
3. What their plan for a good life is.
Altruism
• Holds that individuals have a moral
obligation to help, serve, or benefit
others, if necessary, at the sacrifice of
self-interest.

Zieqah Fauzay :P
 Kohlberg-Cognitive Moral Reasoning ISLAMIC ETHICS

The Concept Of Self or The Essence Of A Man

(Al-Ghazzali)
• Qalb (heart): A man puts his belief in his
heart, utters it in his words and finally
manifests it through his actions.
• Aql (Intellect): A man acquires knowledge
to understand and interact with
surroundings.
• Nafs (desire): A strong feeling, crave for
something.
• Ruh (soul): Yearns to achieve for
perfection.

Six Powers In The Self/Qalb

• Basic powers in a man:
• Appetite or Al-Bahimiyya (beasty)
Level 1: Pre-conventional
• Anger or As-Sabiyya (ferocious)
• Stage 1: Obedience.
• Intellect or Ar-Rabbaniya (divine)
• People behave accordingly to socially
acceptable norms because they are told
• Cannot take place unless there is an
to do so by parent or teacher.
activity in the basic powers:
• This obedience is compelled with threat
• Impulsive
or application of punishment.
• Apprehension
• Will (Irada)
• Stage 2: Self-interest.
• A view that right behavior means acting
Elements in The Nature of Man
in one’s own best interests.
• Sage: The aql
Level 2: Conventional • Pig: Ash, shahwa, lust, gluttony
• Stage 3: Conformity. • Dog: Al-ghadab, anger, ferocity
• Characterized by an attitude which seeks • Devil: Shaytaniyya
to what will gain the approval of others.
How The Forces Work?
• Stage 4: Law and Order. • Aql & Shaytaniyya are contra forces.
• One oriented to abiding the law and They function through shahwa & ghadab
responding to the obligations of duty. for construction & destruction.
• Destructive: Animal forces are instigated
Level 3: Post-Conventional by shaytaniyya & revolts against aql. The
• Stage 5: Human Rights. aql becomes subservient to the animal
• Unity of the community of faith, an forces.
understanding of social mutuality and a • Constructive: Aql becomes dominant and
genuine interest in the welfare of others. being divine nature it able to fight the
animal forces, divert and control them to
• Stage 6: Universal human ethics. the constructive channels.
• Respect for universal principle and the
demands of individual conscience
(Golden rule).
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 Types Of Nafs TOPIC 3: APPROACHES TO ETHICAL DECISION
1. Nafs al-Mutma’inna: Successful MAKING
accomplishment, aql makes the animal
forces submissive, weaken the devil forces Ethics at Workplace
and eventually leads to harmony (the Why is it Important?
tranquil soul). • The ways employees view their own
2. Nafs al Ammara: The evil forces becomes treatment by the company determines
stronger and dominant, causing the what the employees think about their
divine elements to be weakened until it is company’s ethics program.
almost completely smothered (the • If an organization wants employees to
instigating soul). observe a set of corporate ethical values,
3. Nafs al-Lawwama: Does not achieve the workers must be convinced the
calmness, yet sets itself against the love organization really means what it says.
of passions and objects to it. Devine • There must be a level of trust that
elements fight and struggle continue. permits this belief to flourish.
(the admonishing or self-accusing soul).
Balance of Interest and Trends.
Sources Of Islamic Ethics • Expectations for ethical behavior in
• The Qur’an: the most significant source workplace have changed. Why? Because
for human being to referred. of public sensitivity and stakeholders’
• Sunnah of the Prophet Muhammad pressure on employers/regulators for a
(p.b.u.h) – As the role model to be more responsible corporate behavior.
imitated.
The balance of consideration has moved from
Axioms Of Islamic Ethical Philosophy employer-interest-only model to an employee-
• Responsibility (Fardu ain & Kifayah) and-employer-interest model.
• Benevolence (Kindness to others)
• Free will (ability to think and form Workplace Dos and Don’ts of Employer and
judgments) Employee
• Unity (Tauhid, belong to Allah) • Employees cannot be fired based on
• Equilibrium (Justice & equity, zakat) emotional whim or personal bias.
• Employees cannot be hired based on
Degrees Of Lawful And Unlawful Behaviour In family status, religion, sexual preference,
Islam several other legally protected subjects,
but based on their ability to do jobs.
• Fard
• Employer should provide a harassment-
• Mustahabb
free workplace.
• Mubah (Halal)
• Employers are expected to observe legal
• Makruh statutes/regulations for employee’s
• Haram (Forbidden) protection (privacy and civility).

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 Employees’ Right Fair Treatment
• Employer cannot order his employee to • No discrimination on employees at
pollute, risk their health or safety or say workplace.
nothing when the truth was distorted. • Discrimination: Unethical and illegal if it
• Some of the rights has become protected involves age, race, sexual preference (fair
by new legislation, common law, union treatment for the disabled).
contract, corporate practices. • Equal opportunity for employment,
• Privacy and dignity of person, personal policies, salaries, promotion, working
information, and property. hours, benefits equal pay for equal work.
• Fair treatment.
• Healthy and safe work environment. Healthy & Safe Workplace
• Ability to exercise conscience. • Conducive working environment.
• Trust (key to leadership, innovation, • Smoke-free area.
loyalty & performance). • Family-friendliness workplace (on-site
daycare for children of employees).
Privacy & Dignity • Flexible working hours.
• Individual personal rights are more • Friendly facilities.
important than those of an employer • Safe parking area.
unless the employer’s interest is • Safe office area.
reasonable, legitimate, and morally • Fitness/recreation center.
accepted.
• Eg: It is not acceptable to place a CCTV Ability to Exercise One’s Conscience
in a washroom unless there is a threat to • Conscience: Moral sense of right and
life and health and if there is an wrong.
informed consent. • Each employee should be free to give
opinion/suggestion to improve workplace
Civil Conduct Uncivil Conduct condition for the sake of the
Treating others Shouting, profanity, stakeholders.
with dignity, abusive, aggressive, • Employees should exercise their right to
respects, politeness, violent language, come forward and speak out their ideas.
considerations. slamming doors. • Dare to become a whistle-blower.
Speaking in Throwing objects,
appropriate humiliating, degrading, Trust
voice/tones. insulting, etc • Is there a sufficient trust for people to
Being respectful of Telling inappropriate share ideas without fear of losing jobs or
others’ right to jokes. the respect of their coworkers and
express their views managers.
even if you disagree. • If employees have sufficient trust, they
Managing conflict Distributing unjustified will participate wholeheartedly in
in a respectful way comments. restructuring sessions involving
than a downsizing (ethical renewal).
confrontational • They may accept the necessity of shared
way. work assignments with greater
understanding (contingent workforce).

Zieqah Fauzay :P
 Bribery 4. Influence and Power: Bribes can be used
Fraud and white-collar crimes encompass a to influence individuals in positions of
range of deceptive or unlawful activities often power or authority for personal or
committed by individuals or organizations in organizational benefits.
professional or business settings for financial 5. Cultural Norms: In some regions or
gain. These can include various forms of deceit, industries, bribery might be normalized
misrepresentation, or violations of trust. due to cultural practices or historical
precedents.
Bribery is the act of offering, giving, receiving,
or soliciting something valuable to influence the Stakeholder Impact Analysis
actions, decisions, or behaviour of an individual • When a businessman or professional
in a position of trust or power. While bribery accountant faces an ethical problem, the
often involves financial incentives, it's not first resource for guidance should be to
limited to money matters. corporate and professional codes of
conduct.
Types of Bribes: • However, the corporate and professional
1. Cash Bribes: Direct payments of money codes of conduct often do not
offered or received to influence decisions specifically apply to the problem faced
or actions. by a professional accountant.
2. Kickbacks: Payments made to someone in • The decision maker can be guided by
return for a favour or as a reward for general ethical principles within a
arranging a business transaction. For framework to arrive at a defensible
instance, a vendor might offer a ethical decision.
percentage of a contract's value to an
employee who facilitated the deal. Who are Stakeholders?
3. Non-Monetary Bribes: These include Employees, suppliers, competitors, customers,
gifts, services, vacations, valuable items, communities, trade unions, etc.
or favours offered to influence someone's
behaviour or decisions. Fundamental Interests of Stakeholders
4. Political Bribes: Attempts to influence • Well-offness
government officials or politicians • The proposed decision should
through donations, gifts, or promises of result in more benefits than costs.
support, aiming to gain preferential
• Fairness
treatment or influence policy decisions.
• The distribution of benefits and
burdens should be fair.
Reasons for Bribing:
• Right
1. Gaining Advantage: Bribes are often
• The proposed decision should not
offered to gain a competitive edge, secure
offend the rights of the
a contract, or receive preferential
stakeholders and the decision
treatment.
maker.
2. Securing Business Deals: Some use bribes
to secure business deals or expedite • Virtuosity
administrative processes. • The proposed decision should
3. Avoiding Penalties or Consequences: demonstrate virtues reasonably
Bribes might be given to avoid penalties, expected.
evade legal consequences, or obtain
confidential information.

Zieqah Fauzay :P
 Measurement Of Quantifiable Impacts Dealing With Uncertain Outcomes
PROFIT: The analysis can be based on the best estimates,
• is a fundamental to the interests of the on three possibilities: most optimistic,
shareholders. pessimistic, and best estimate.
• it is a short-term measure, and that
several important impacts are not Expected Value of an Outcome = Value of the
captured in the determination of profit. Outcome x Probability of that Outcome
occurring
Items Not Included in Profit:
Measurable Directly Not measurable The advantage of this expected value
Directly formulation is that the cost-benefit analysis
When a company Other externalities framework can be modified to include the risk
pollutes, the cost of exist where the cost is associated with outcomes to be included.
cleanup is usually included in the
absorbed by determination of the Risk-adjusted or Expected Value of Net Benefits
individuals, company’s profit, but = Expected PV of Future Benefits - Expected PV
companies, or where the benefit is of Future Costs
municipalities. These enjoyed by persons
Identifying Stakeholders & Ranking Their
costs are referred to outside of the
Interests
as externalities. Their company.
impacts can often be Examples: Donation • The usefulness of a SIA depends on the
measured directly by and scholarship. The full identification of all stakeholders
the costs of cleanup benefit cannot be and their interest, and on a full
incurred by others. measured directly. appreciation of the significance of the
impacts on the position of each.
It is possible to • Sometimes, CBA does not fully reflect the
measure these importance of a stakeholder or of the
impacts directly using impact involved.
surrogates or mirror
image alternatives. Assessment Of Non-Quantifiable Impacts
For example, a • Fairness Among Stakeholders.
scholarship. A • A decision will be considered unethical
surrogate for the unless it is seen to be fair to all
benefit could be the stakeholders.
increase in earnings • Fairness is evidenced by a relatively even
gained by the distribution of the benefits and burdens
recipient. springing from a decision.
• Example: it is possible that a decision to
Bringing The Future to The Present increase taxes may weigh more heavily on
Future values are discounted at an interest rate high-income earners but be seen as
that reflects the expected interest rates in relatively fair in terms of their capacity
future years (NPV). to pay those taxes.

NPV = PV of benefits − PV of costs of proposed • Rights Of Stakeholders.

action. • A decision will only be considered ethical
if its impacts do not offend the rights of
the stakeholders impacted upon, and the
rights of the person making the decision.

Zieqah Fauzay :P
 Types of Stakeholder Impact Analysis
• Traditional 5-question approach:
Graham Tucker.
• This approach involves the examination
or challenge of a proposed decision
through the five questions.
• Is the decision:
i. Profitable?
ii. Legal?
iii. Fair?
iv. Right?
v. Going to further sustainable
development?

• Traditional Pastin’s approach.

• Key aspect:
i. Ground rule ethics (To
illuminate an
organization’s and/or an
individual’s rules and
values).
ii. End-point ethics (To
determine the greatest net
good for all concerned).
iii. Rule ethics (To determine
what boundaries a person
or organization should
take into account
according to ethical
principles).
iv. Social contract ethics (To
determine how to move the
boundaries to remove
concerns or conflicts).

• Traditional moral standards approach:

Valesquez
• This approach offers a framework that is
more suited to the consideration of
decisions which have significant impacts
outside the corporation.
• Moral standard:
i. Utilitarian: Maximize the net
benefit to society.
ii. Individual rights: Respect and
protect.
iii. Justice: Fair distribution of
benefits and burdens.

Zieqah Fauzay :P