RECOGNIZING AN

ETHICAL ISSUE
(ETHICAL AWARENESS)
Learning outcomes
After studying this chapter students will be able to explain;
• Recognizing an ethical issue
• Integrity
• Honesty
• Fairness
 RECOGNIZING AN ETHICAL ISSUE (ETHICAL
AWARENESS)

Although we have described a number of relationships and

situations that may generate ethical issues, in practice it can be
difficult to recognize them.

Failure to acknowledge or be aware of ethical issues is a great

danger in any organization.

Some issues are difficult to recognize because they are gray areas
that are hard to navigate.
Business decisions, like personal decisions, may involve a
dilemma ‫المی ہ‬.

In a dilemma all of the alternatives have negative consequences, so

the less harmful choice is made.

An ethical issue is simply a situation involving a group, a problem,

or even an opportunity that requires thought, discussion, or
investigation before a decision can be made. Because the business
world is dynamic, new ethical issues emerge all the time.

Any type of manipulation or deceit, or even just the absence of

transparency in decision making, can create harm to others.
For example, collusion is a secret agreement between two or more
parties for a fraudulent, illegal, or deceitful purpose. “Deceitful
purpose” is the relevant phrase in regard to business ethics, as it
suggests trickery, misrepresentation, or a strategy designed to lead
others to believe something less than the whole truth. Collusion
violates the general business value of honesty. Next, we examine
three foundational values that are used to identify ethical issues.
 FOUNDATIONAL VALUES FOR IDENTIFYING
ETHICAL ISSUES

Integrity, honesty, and fairness are widely used values for

evaluating activities that could become ethical issues. Ethical
issues can emerge from almost any decision made in an
organization.

Understanding these foundational values can help identify and

develop discussions and a constructive dialogue on appropriate
conduct. It is just as important to emphasize appropriate conduct
associated with these values as it is to discover inappropriate
conduct.
Integrity

Integrity is one of the most important and oft-cited elements of

virtue, and refers ‫ ق‬to ‫غ‬being whole, sound, and in an unimpaired
‫ی ن‬
condition ‫ای ک ی ر ی ی حالت‬.

Integrity is a value that relates to all business activities, not just

ethical issues.

Integrity relates to product quality, open communication,

transparency, and relationships.

Therefore, integrity is a foundational value for managers to build

an internal organizational culture of trust.
In an organization, it means uncompromising adherence to a set or
group of values.

‫ن‬
Integrity is connected to acting ethically; in other words, there are
substantive ‫ ب ی ادی‬or normative constraints on what it means to act
with integrity.

An organization’s integrity usually rests on its enduring values and

unwillingness to deviate from standards of behavior as defined by
the firm and industry.
At a minimum, businesses are expected to follow laws and
regulations.

In addition, organizations should not knowingly harm customers,

clients, employees, or even other competitors through deception,
misrepresentation, or coercion ‫ج بر‬.

Although they often act in their own economic self-interest, business

relations should be grounded in values such as honesty, integrity, and
fairness.

Failure to live up to these expectations or abide by laws and standards

destroys trust and makes it difficult, if not impossible, to continue
business exchanges.

These values become the glue that holds business relationships

together, making everything else more effective and efficient.
Honesty

Honesty refers to truthfulness or trustworthiness.

To be honest is to tell the truth to the best of your knowledge

without hiding anything.

Issues related to honesty also arise because business is sometimes

regarded as a game governed by its own rules rather than those of
society as a whole.
Author Eric Beversluis suggests honesty is a problem because
people often reason along these lines:

1. Business relationships are a subset of human relationships

governed by their own rules that in a market society involve
competition, profit maximization, and personal advancement within
the organization.
2. Business can therefore be considered a game people play,
comparable in certain respects to competitive sports such as
basketball or boxing.
3. Ordinary ethics rules and morality do not hold in games like
basketball or boxing. (What if a basketball player did unto others as
he would have them do unto him? What if a boxer decided it was
wrong to try to injure another person?)
4. Logically, then, if business is a game like basketball or boxing,
ordinary ethical rules do not apply.
This type of reasoning leads many to conclude that anything is
acceptable in business. Indeed, several books have compared business to
warfare—for example, The Guerrilla Marketing Handbook and Sun
Tsu: The Art of War for Managers. The common theme is that surprise
attacks, guerrilla warfare ‫رنے واال‬B‫ک حملہ ک‬B‫اچان‬, and other warlike tactics
are necessary to win the battle for consumer dollars. Larry Ellison, the
CEO of Oracle, exemplified this when he sold PeopleSoft’s technology
and let most of its 8,000 employees go. PeopleSoft CEO Craig Conway
stated, “Ellison has followed a page straight out of Genghis Khan.”
Ellison frequently quotes the thirteenth-century Mongol warlord, saying
things such as, “It’s not enough that we win; everyone else must lose.”
Even when Ellison was ordered to donate $ 100 million to charity and $
22 million to the attorneys who sued him for alleged stocktrading
abuses, he argued he acted in good faith and in the best interests of
Oracle and Oracle’s shareholders. This business-as-war mentality fosters
the idea that honesty is unnecessary in business.
Many argue that because people are not economically self-
sufficient, they cannot withdraw from the relationships of
business.

Therefore, business ethics must not only make clear what rules
apply in business but also develop rules appropriate to the
involuntary nature of its many participants. Such rules should
contain the value of honesty.

The opposite of honesty is dishonesty. Dishonesty can be broadly

defined as a lack of integrity, incomplete disclosure, and an
unwillingness to tell the truth.

Lying, cheating, and stealing are actions usually associated with

dishonest conduct. The causes of dishonesty are complex and
relate to both individual and organizational pressures.
Many employees lie to help achieve performance objectives. For
example, they may be asked to lie about when a customer will
receive a purchase. Lying can be defined as

(1) untruthful statements that result in damage or harm;

(2) “white lies,” which do not cause damage but instead function
as excuses or a means of benefitting others; and

(3) statements‫ ن‬obviously meant to engage or entertain without

‫ت‬
malice ‫ب د ی ی‬.
Fairness

Fairness is the quality of being just, equitable, and impartial.

Fairness clearly overlaps with concepts of justice, equity, equality,
and morality.

There are three fundamental ‫ ت‬elements that motivate people to be

fair: equality, reciprocity ‫ب اہ می عاون‬, and optimization ‫ اصالح‬.

In business, equality about the distribution of benefits and

resources. This distribution could be applied to stakeholders or the
greater society.

Reciprocity is an interchange of giving and receiving in social

relationships.
Reciprocity occurs when an action that has an effect upon another
is reciprocated with an action that has an approximately equal
effect.

Reciprocity is the return of favors approximately equal in value.

For example, reciprocity implies workers be compensated with
wages approximately equal to their effort.

An ethical issue regarding reciprocity for business is the amount

CEOs and other executives are paid in relation to their employees.
Is a 380 to 1 pay ratio an example of ethical reciprocity? That is
the wage differential between a CEO and an average worker in the
United States.
Optimization is the trade-off between equity (equality) and
efficiency (maximum productivity).

Discriminating on the basis of gender, race, or religion is generally

considered unfair because these qualities have little bearing upon a
person’s ability to do a job.

The optimal way to hire is to choose the employee who is the most
talented, proficient, educated, and able. Ideas of fairness are
sometimes shaped by vested interests.

One or both parties in the relationship may view an action as unfair

or unethical because the outcome was less beneficial than expected.
Reference
BUSINESS ETHICS
Ethical Decision Making and Cases
TENTH EDITION

O. C. Ferrell
University of New Mexico
John Fraedrich
Southern Illinois University—Carbondale
Linda Ferrell
University of New Mexico
 • Thank You
• Best of Luck for the Learning Process