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 social benefits to all people.
of 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
1. Beliefs about nature of man. business is to maximize profit; but
2. Beliefs about ideals, what is rather to contribute to the overall good
good/desirable/worthy of pursuit for its of society.
own sake.
3. Rules laying down what ought to be John Rawls (American philosopher)
done/not to be done. • Introduces the theory of justice.
4. Motives that incline us to choose/wrong • Society should be structured, so a fair
course. distribution of rights and benefits and
that any inequalities should be to
Aristotle (Greek Philosopher) everyone’s advantage.
• The goal of life is happiness. • This implies that businesses act in an
• Happiness is achieved by leading a ethical manner when:
virtuous life in accordance with reason. • No price discrimination & hiring
• The virtues include integrity, honor, systems.
loyalty, courage, and forthrightness. • Not to provide goods and services
• In business sense, the above means, to one segment of society at the
directors, executives, and accountants expense of other segment of
should demonstrate integrity in business society.
dealings, should honor the terms of • No polluting & exploiting.
contracts, should be loyal to employees,
customers, and suppliers, should have the Ethical Dilemma Case Analysis
courage to be transparent and should be 1. Key facts.
forthright when providing explanations 2. Key factors.
of good and bad business behaviors. 3. Key players.
4. Whistle-blower.
Immanuel Kant (German philosopher) 5. Stakeholders.
• People are ethical when they do not use 6. Interest of stakeholders.
other people opportunistically and when 7. Issues.
they do not act in a hypocritical manner 8. Ethical dilemma.
demanding a high level of conduct for 9. Ethical decision.
everyone else while making exceptions for
themselves. Reasoning Process
• Businesses should never treat employees, The benefit if proceed The burden if proceed
customers, suppliers merely as a means, with decision. with the decision.
exploiting them for short-term goal. The benefit if does The burden if does
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)
1. Physical
Factors (Environmental
affecting concerns) for
public expectation • Whether the decision is fair to all
2. Sense of morality stakeholders? (Fairness)
business
3. Bad judgement • Whether the decision will offend the
4. Activist stakeholders rights of the decision-maker and
5. Economic pressure stakeholders? (Rights)
6. Competition • Whether the decision demonstrate the
7. Financial malfeasances virtues expected by stakeholders? (Good
8. Governance failures Values)
9. Accountability
10.Synergy among factors Type of Justice
11.Institutional reinforcement 1. Distributive justice: Benefit and burden
should be equally shared.
Theory of Profit by Milton Frie 2. Restorative justice: Apology to show one
A corporate executive has the is truly sorry.
responsibility to make as much money as 3. Retributive justice: Punishment is fair
possible while conforming to the basic rules of and just.
society, both in law and in ethical customs. 4. Compensatory justice: Fair compensation
for any injury or loss.
Critical issues:
1. If you were to deviate from just Traditional 5-Qtns Approach (Velasquez)
concentrating on profit, it does not Whether the decision is:
mean profit will decline. 1. Profitable?
2. Profit alone is an incomplete measure 2. Legal?
of corporate performance. 3. Fair?
3. In making profit, the expected 4. Right?
performance must be within the law 5. Going for further sustainability
and ethical custom. development?

Moral standard Ethical Relativism

• Rules in common with every society • There are no absolute truths in ethics.
because they are necessary for society • What is morally right/wrong varies from
to exist. person to person or from society to
• Generally acceptable based on your society.
culture, race, religion.
Egoism
Legal standard The doctrine that holds individuals are always
• Systems of incentive and punishment to motivated by self-interest.
be enforced based on regulations, law, E.g. It is very difficult to admit our own mistake.
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, equals and have the same political,
its contribution to happiness or pleasure economic, social, and civil rights.
as 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 Libertarian (Theory of Justice)
choices where 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 even abolish the state.
the 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 what constitutes a virtue.
(enlightened self-interest). Be good to
others and others will be good to you. Rawls Veil of Ignorance
This concept is to encourage individuals to
Utilitarianism think impartially and rationally about people so
• Can thus be characterized as a that they will not be biased in making decision.
quantitative and reductionist approach
to ethics. The key point is that, in the veil of ignorance,
• It can be contrasted with deontological a person does not know who they are in the
ethics (which do not regard the real 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 demands of individual conscience
(Golden rule).

Level 1: Pre-conventional
• Stage 1: Obedience.
• People behave accordingly to socially
acceptable norms because they are told
to do so by parent or teacher.
• This obedience is compelled with threat
or application of punishment.

• Stage 2: Self-interest.
• A view that right behavior means acting
in one’s own best interests.

Level 2: Conventional
• Stage 3: Conformity.
• Characterized by an attitude which
seeks to what will gain the approval of
others.

• Stage 4: Law and Order.

• One oriented to abiding the law and
responding to the obligations of duty.

Level 3: Post-Conventional
• Stage 5: Human Rights.
• Unity of the community of faith, an
understanding of social mutuality and
a genuine interest in the welfare of
others.

• Stage 6: Universal human ethics.

• Respect for universal principle and the
Zieqah Fauzay
:P
 ISLAMIC ETHICS

 Qalb (heart): A man puts his belief in The Concept Of Self or The Essence Of A
his heart, utters it in his words and Man (Al-Ghazzali)
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)
• Anger or As-Sabiyya (ferocious)
• Intellect or Ar-Rabbaniya (divine)

 Cannot take place unless there is

an activity in the basic powers:
• Impulsive
• Apprehension
• Will (Irada)

Elements in The Nature of Man

 Sage: The aql
 Pig: Ash, shahwa, lust, gluttony
 Dog: Al-ghadab, anger, ferocity
 Devil: Shaytaniyya

How The Forces Work?

 Aql & Shaytaniyya are contra forces.
They function through shahwa &
ghadab for construction &
destruction.
 Destructive: Animal forces are
instigated by shaytaniyya & revolts
against aql. The aql becomes
subservient to the animal forces.
 Constructive: Aql becomes dominant
and being divine nature it able to
fight the animal forces, divert and
control them to the constructive
channels.

Zieqah Fauzay
:P
 Types Of Nafs
TOPIC 3: APPROACHES TO ETHICAL
1. Nafs al-Mutma’inna: Successful
DECISION 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 treatment by the company
becomes stronger and dominant, determines what the employees think
causing the divine elements to be about their company’s ethics
weakened until it is almost completely program.
smothered (the instigating soul). • If an organization wants employees to
3. Nafs al-Lawwama: Does not achieve observe a set of corporate ethical values,
calmness, yet sets itself against the the workers must be convinced the
love of passions and objects to it. organization really means what it says.
Devine elements fight and struggle • There must be a level of trust
continue. (the admonishing or self- that permits this belief to
accusing soul). flourish.

Sources Of Islamic Ethics Balance of Interest and Trends.

• The Qur’an: the most significant source • Expectations for ethical behavior in
for human being to referred. workplace have changed. Why? Because
• Sunnah of the Prophet Muhammad of public sensitivity and stakeholders’
(p.b.u.h) – As the role model to be pressure on employers/regulators for a
imitated. more responsible corporate behavior.

Axioms Of Islamic Ethical Philosophy The balance of consideration has moved from
 Responsibility (Fardu ain & Kifayah) employer-interest-only model to an employee-
 Benevolence (Kindness to others) and-employer-interest model.
 Free will (ability to think and form
judgments) • Employees
Workplace cannot
Dos and Don’tsbeoffired basedand
Employer on
 Unity (Tauhid, belong to Allah) emotional whim or personal bias.
Employee
 Equilibrium (Justice & equity, zakat) • Employees cannot be hired based on
family status, religion, sexual preference,
 Fard several other legally protected subjects,
Degrees Of Lawful And Unlawful Behaviour
 Mustahabb but based on their ability to do jobs.
In Islam
• Employer should provide a harassment-
 Mubah (Halal)
free workplace.
 Makruh
• Employers are expected to observe legal
 Haram (Forbidden) statutes/regulations for employee’s
protection (privacy and civility).

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

Zieqah Fauzay
:P
 Bribery 4. Influence and Power: Bribes can be used
Fraud and white-collar to influence individuals in positions of
crimes encompass a range of deceptive or power or authority for personal or
unlawful activities often committed by organizational benefits.
individuals or organizations in professional or 5. Cultural Norms: In some regions or
business settings for financial gain. These can industries, bribery might be normalized
include various forms of deceit, due to cultural practices or historical
misrepresentation, or violations of trust. precedents.

Bribery is the act of offering, giving, receiving, Stakeholder Impact Analysis

or soliciting something valuable to influence  When a businessman or professional
the actions, decisions, or behaviour of an accountant faces an ethical problem, the
individual in a position of trust or power. first resource for guidance should be to
While bribery often involves financial corporate and professional codes of
incentives, it's not limited to money conduct.
matters.
 However, the corporate and
professional codes of conduct often do
Types of Bribes:
not specifically apply to the problem
1. Cash Bribes: Direct payments of money
faced by a professional accountant.
offered or received to influence decisions
 The decision maker can be guided by
or actions.
general ethical principles within a
2. Kickbacks: Payments made to someone in
framework to arrive at a defensible
return for a favour or as a reward for
ethical decision.
arranging a business transaction. For
instance, a vendor might offer a
Who are Stakeholders?
percentage of a contract's value to an
Employees, suppliers, competitors, customers,
employee who facilitated the deal.
communities, trade unions, etc.
3. Non-Monetary Bribes: These include
gifts, services, vacations, valuable items,
Fundamental Interests of Stakeholders
or favours offered to influence someone's
behaviour or decisions. • Well-offness
4. Political Bribes: Attempts to influence • The proposed decision should
government officials or politicians result in more benefits than costs.
through donations, gifts, or promises of • Fairness
support, aiming to gain preferential • The distribution of benefits and
treatment or influence policy decisions. burdens should be fair.
• Right
Reasons for Bribing: • The proposed decision should not
1. Gaining Advantage: Bribes are often offend the rights of the
offered to gain a competitive edge, secure stakeholders and the decision
a contract, or receive preferential maker.
treatment. • Virtuosity
2. Securing Business Deals: Some use bribes • The proposed decision should
to secure business deals or expedite demonstrate virtues reasonably
administrative processes. expected.
3. Avoiding Penalties or Consequences:
Bribes might be given to avoid
penalties, 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 on three possibilities: most optimistic,
the 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, = Expected PV of Future Benefits - Expected PV
companies, or but where the of Future Costs
municipalities. These benefit is enjoyed by
costs are referred to persons outside of  The usefulness
Identifying of a& SIA
Stakeholders depends
Ranking Theiron
as externalities. Their the company. the full Interests
identification of all
impacts can often be Examples: Donation stakeholders and their interest, and
measured directly by and scholarship. The on a full appreciation of the
the costs of cleanup benefit cannot be significance of the impacts on the
incurred by others. measured directly. position of each.
 Sometimes, CBA does not fully reflect the
It is possible to importance of a stakeholder or of the
measure these impact involved.
impacts directly
using surrogates or Assessment Of Non-Quantifiable Impacts
mirror image  Fairness Among Stakeholders.
alternatives. For • A decision will be considered unethical
example, a unless it is seen to be fair to all
scholarship. stakeholders.
• Fairness is evidenced by a relatively
A surrogate for the even distribution of the benefits and
benefit could be the burdens springing from a decision.
increase in earnings • Example: it is possible that a decision to
gained by the increase taxes may weigh more heavily on
recipient. high-income earners but be seen as
relatively fair in terms of their capacity
Bringing The Future to The Present to pay those taxes.
Future values are discounted at an interest
rate that reflects the expected interest rates  Rights Of Stakeholders.
in future years (NPV). • A decision will only be considered
ethical if its impacts do not offend the
NPV = PV of benefits − PV of costs of rights of the stakeholders impacted
proposed action. 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